Taishara's GY / GU Trading Journal

[timsk]

I should have gone to bed. I saw a sell set up on both GU and GY and I took both. I lost both. Right now I have a headache and I am pissed off... !

Hi Tai,
You would only have reason to feel pissed off if the trades were not taken in accordance with your trading plan. If they were, then you haven't got anything to feel pissed off about!

Here's a little story - a true one at that. Over the years, I've had a variety of sales jobs, the very first of which proved to be a life changing experience for me. I was a Fine Art student and, on the Monday after the last day of my last term (summer 1982!), I set about looking for a job. One week later, after a 2 day training course, I was pounding the streets of Bristol trying to sell life insurance door to door. Like most other new recruits, I was hopeless, made very few sales and got totally demoralized. The office had a young manager only few years older than me in his mid twenties at the time and he was very charismatic. He needed to be! One day, to help us toughen up and to become immune to the pain of rejection, he held a competition for the salesperson who could get the most rejections in a day. Not sales - but rejections! Instead of looking for the illusive customer who said "yes", we looked for those who said "no". With each 'no' we heard, that was another tick in the box and, instead of that sinking feeling inside, the little voice in our heads went 'yippee'!

Traders are like sales people in as much as a salesperson never knows for sure where the next sale is coming from. They work on basic averages just like we do. They know that if they knock on X number of doors or make X number of phone calls that they will make X sales. They know that most people will say no to their offering, but sooner or later, someone will say yes. If you're confident in the stat's you posted earlier, the figures will play out if you keep to your plan. So, all trades executed in accordance with your plan are successful trades. ALL of them, regardless of whether they're winning or losing trades. The only unsuccessful trades are those where you wing it and deviate from your plan, regardless of whether they're winning or losing trades. That is why, allegedly, really successful traders don't care if any one trade is a winning or losing one. Their emotional response is the same. Given the cliche about the markets being a constant shift in the balance between fear and greed, it's easy to see that the calm, 'emotionless' trader has an edge over everyone else.

Regarding your terminology, you use the word bias a lot. By this do you mean trend? It strikes me that your success will be dependant upon, in part at least, ensuring that you're trading with the trend on your 30 min' timeframe (or higher). Divergence patterns indicating a trade in the opposite direction of that which the market is trending are next to useless IMO, and will result in a losing trade more often than not. Having a simple method in which you have confidence for identifying the prevailing trend is essential. If this is backed by a simple plan to enter and exit each trade confidently and can be executed repeatedly, trade after trade, then you have yourself an etremely potent combination.
Tim.

 

[Black Swan]

Nice one Tim, I 'invented' a phrase in the early nineties whilst I was in charge of a great bunch of lads, we were flogging office equipment into city clients by way making appointments first; "smile and re-dial".

 

[robster970]

I was a Fine Art student and..........

I said to Glady's earlier in the week that you looked like the 3rd member of Gilbert & George ;-)

Carry on............

 

[Taishara]

Hi Tai,
You would only have reason to feel pissed off if the trades were not taken in accordance with your trading plan. If they were, then you haven't got anything to feel pissed off about!

Tim - Yep! You hit the nail on the head. I am not pissed off at losing trades. I am pissed off that 3 times in a row I made choices that were violating my plan. I will not even give myself the slack to say they were mistakes. I knowingly made the choice every time. THAT is what pisses me off.

Regarding your terminology, you use the word bias a lot. By this do you mean trend? It strikes me that your success will be dependant upon, in part at least, ensuring that you're trading with the trend on your 30 min' timeframe (or higher). Divergence patterns indicating a trade in the opposite direction of that which the market is trending are next to useless IMO, and will result in a losing trade more often than not. Having a simple method in which you have confidence for identifying the prevailing trend is essential. If this is backed by a simple plan to enter and exit each trade confidently and can be executed repeatedly, trade after trade, then you have yourself an etremely potent combination.
Tim.

Yes - for me bias is the trend. I agree about the divergence against the trend is useless... That is my first rule. Identify the bias (trend). Don't trade against the trend. THUS... back to my original point... why I am pissed enough at myself that I dare not walk back to the charts until I have cooled my head a bit. (besides the fact that I have a migraine headache brewing).

These last two days I feel like I can't see the forest for the trees. I am getting so wrapped up in the micro activity of look for the trigger to get in / out, that I am not even allowing myself to see what direction price is moving.

Even with being pissed at myself for these mistakes, I am glad that I am making them now and becoming aware of the potential for this to happen. It is not a new problem, it will be a difficult problem to over come. But I will never overcome a problem I am not aware of. So, yay for me that it is added to the list of things to work on!

I appreciate your encouragement and your validation of what can make a good secret sauce in this business!

Have a great weekend!

Tai

 

[timsk]

Tim - Yep! You hit the nail on the head. I am not pissed off at losing trades. I am pissed off that 3 times in a row I made choices that were violating my plan. I will not even give myself the slack to say they were mistakes. I knowingly made the choice every time. THAT is what pisses me off.

Hi Tai,
What a lot of traders do to combat this problem - me included - is to have a 'fun' account. This is a small account with money that you expect to lose. It's for fun trades, gambles and testing new ideas etc. Sometimes these accounts work out well, e.g. C_V's 10p Gold thread and sometimes they don't. Some people will question the logic of having an account in which you expect to lose money. Ideally, you don't, obviously. However, if you have a strat' that only offers a handful of trades every so often, it's better that you get your trading 'fix' on a small play account than run the risk of serious damage to your main trading account. I think of it as playing a part of my overall risk management strategy. Also, psychologically, I find I can mess up my play account and it doesn't matter and I don't feel bad about it and berate myself (as you're doing now). But, if I do that in my main account - it hurts - and not just financially. How you would do this in the U.S. - I'm not sure. This side of the pond we have Spread Betting companies which are ideal for this very purpose. Many of them even credit you with £100 or so when you open an account, enabling you to play with their money rather than your own. Ideal!

Regarding bias or trend - call it what one will - how are you identifying it?
Tim.

 

[Taishara]

I thought I would post something that I just realized. A sort of epiphany... I was really upset about these three trades, but more specifically the last three. But I was not mad at the *trades* or what the market did. I was mad at myself for knowingly making choices.

I think that is a positive step in accepting the responsibility involved in trading. I am not responsible for what the market does, but I am responsible for everything else.

I think that is a positive thing. Now... get rid of the headache... and I am golden for another look at trend confirmation.

 

[Taishara]

Tim,

I am using money management to ensure that these kinds of things are not too seriously painful. 3 big mistakes, but I am still in the black for the week.

I find it really confusing to try to switch between accounts, since as you already have said, its become complicated in the US to have different accounts and stuff. Even between live and demo I find it confusing to do quickly.

Hi Tai,
Regarding bias or trend - call it what one will - how are you identifying it?
Tim.

Ok... doing this chart free from memory...
I look at the behavior of price with RSI 3 and RSI 14.

If price is establishing higher highs I am looking at an up trending market, at least for a short term. I would expect to see RSI 3 heading up and establishing above the 50 and possibly even above the 80. I would expect to see RSI 14 establishing in an upward direction.

I also have the 5 and 13 EMA (and on the GU I sometimes add in the 62 EMA). So I am looking to see the 5 above the 13 and continuing to move up at a greater rate (so not running parallel). These indicators on my charts are back from when I was doing systems trading. That knowledge can be useful in confirming bias (sorry... I still use it interchangeably) and if a systems trade sets up perfectly, maybe could be an option. Got to establish rules for that though.

When price starts to falter and I am not seeing follow through, I start to look for a possible trend shift.

Reverse all and call it a downward trend.

Sideways is... well.. sideways! Price is moving sideways, EMAs are moving sideways and converging.

It makes me interested enough to consider buying that book that wprins recommended to read about the fractals and the alligators.

Also, I try to focus on the bigger picture. For example... maybe the last 5 candles are moving downward very strongly. But if you look at the last 12, 24, 48 hours, the overall trend is upward, maybe this is a retrace rather than a trend shift. In that case (if I were following my rules), I would wait and see if price falters and a resumption of the upward trend establishes. I would be watching that trade closely, however, to verify the upward momentum continues past the previously established high. Otherwise, it might be lacking follow through and indicating a trend shift and perhaps time to accept whatever I have been offered. If that lack of follow through happens and I am seeing the appropriate behavior of RSIs / EMAs, I would consider looking towards a sell. That is obviously not a formal set of rules. I need to beef up my rules to formalize my trend direction identification. I see that I need to have that written down as well.

My issue the last 2 days has been I haven't bothered to LOOK at the 30 minute chart once I sat down and decided the bias for the moment. I decided the bias for the DAY and promptly forgot about checking it again.

And worse... I had the wrong notion in my head about bias for the GU anyway. At some point, I had the correct information, but let myself get stuck on the idea of it going down. And I never checked it again! Add that to greed of getting into two trades at the same time banking on the same move... very naughty day.

It doesn't do any good to have the perfect trend identification method if you don't use it!

 

[timsk]

Hi Tai,
Regarding trend - if what you've outlined works for you, fair play to you, I won't knock it. Personally, it strikes me as being too complex, but I'm just a simple bloke! If you want to simplify things and you've not looked at it already, I recommend having a gander at Captain Currency's The 3 Duck's Trading System thread.
Tim.

 

[shabec]

Taishara where have you been?? We miss you!!

 

[Taishara]

Taishara where have you been?? We miss you!!

Thanks Shabec! I miss you guys too.

I have been going back to the basics. I got the 3 Ducks trading system and have found that useful in helping me see trends, though I don't trade that system precisely the way it is described. I still use my 5 minute / 1 minute triggers.

I have backed away from the GY and am looking at the GU / EU.

I haven't been posting much because I need to keep my focus on what I am doing at the charts rather than what I am going to say here. But I will be back more regularly when I am feeling more comfortable.