The Challenge

[bond_trader1]

I left work early yesterday and when I got home and logged on, I saw that the Bund was in the middle of a strong move upwards. The only reason I could see for this was a drop across the equity markets.

I was still feeling bullish on the longer term and thought that the market might break out of the descending trend line it was now targeting for the second time in the day.

Once I logged into TD Waterhouse, however, I couldn't find the Bund. Infact, the whole platform seemed to have changed - all futures prices were no longer being quoted.

I rang up and spoke to the dealing desk and customer services. The dealing desk told me the Bund was still actively traded and they had no idea why I couldn't see it; customer services told me they didn't quote futures at all and if I traded them before with them (which of course I have done), it was a mistake.

By this time, the market was surging still higher, so rather than argue the case, I hung up in frustration and logged into E*Trade.

I had wanted an entry at around 110.90 but the market was now well over 111.00 and still moving higher. At this point I realised that I was probably chasing the market and trading because I was angry I had missed an excellent entry and didn't want to miss out on a further rise, rather than trading because it looked like a good place to get in the market.

At any rate, I went long £3 at 111.10.

 

[bond_trader1]

I then waited to see what would happen and after a brief fall back below 111.00, it then had another go at the intraday high.

As it broke it to the upside, I added another £3 at 111.19.

However, this time, rather than bring the stop on my first position to breakeven, I left it where it was (the lower of the two yellow lines on the chart)

The market then came off and formed a pin bar which looked decidedly bearish. At this point, although I was confident on my stops because they were trailing ema's that I think are useful in defining the trend, I was wary that I was overexposed and could be holding a £6 net long position overnight.

 

[bond_trader1]

This is when it all went wrong for me...

The three bar high was a danger sign and there was a sharp drop in the last hour.

At this point, I panicked and moved my higher stop lower and my lower stop higher.

Moving stops away from the price is of course extremely foolish under most circumstances although it should be noted that since I moved them closer together, my risk didn't increase, it just meant that if one was hit, it was likely the other one would be too.

So, after the close I started to worry that the price could gap down but with nothing I could do about it, I went to sleep.

On the open, I waited anxiously and sure enough, the market gapped down and hit my first stop. Then I moved my remaining stop from 110.79 to 110.80. I have absolutely no idea why I did this - best explanation I can come up with was that I thought it was going to come off hard and I would save a tick.

And as it happened, 110.80 was the low of the morning. Which meant it touched off my stop and then promptly rallied to above both of them.

 

[bond_trader1]

I've had a long, hard think about the reasons for doing what I did and I think that the reasons go beyond poor market judgement.

I think that on some level by actively trading, I have become enamoured by how much money can be won (or lost) so quickly.

In a way I feel like I might be in conflict with the market. The market requires patience and it requires discipline and yet I feel beset on all sides by urges that demand instant gratification.

Primarily, I feel like I am starting to trade for excitement because excitement is just not something I am getting in my life right now.

My work always has been and probably always will be boring.

A snapshot of my life looks very similar to this: I get up at around 6am, I make my way into the City, I sit in front of a computer until around 4pm, when I leave work. I fall asleep on the bus home. I walk in the door, eat a small meal (usually ready made), suft the web for a few hours and am usually in bed around 10pm.

Repeat ad infinitum.

Yesterday, I sat there stripping text from Quark in order to paste it into our content management system and then in the next moment, I Alt-Tab, the screen changes and I am watching the Bund move and using my technical judgement to try and get one step ahead of the market and back my opinions up with real money.

It's no wonder I find it more stimulating.

It appeals to me on every level - it gives me the chance to prove my worth. To live and die by the sword rather than passing my life away doing what feels like menial work for someone else.

But rather than take it slowly and hone my skills, I am instead focusing on the fact that huge wins present great opportunities for financial independence. In short, I am trying to run before I have learnt to walk. And I think the main reason for that is that I am trying too hard to prove myself. Not only to the person that set me the challenge but to the friends and family that I have told about it - the people that continually tell me that trading is "gambling" and that I should give it up.

At this stage, I am starting to feel a little desperate and that is a red flag.

I keep thinking about what Splitlink wrote: "If you lose all your money because of large trading sizes, there is no going back---you are out. At least, if you lose the bet but end the year with 1,2, or 3 thousand, you will have learned enough to be a successful trader, which is a year well spent."

I feel that this is very good advice and now I must act on it rather than just nod my head and then go £6 up in the Bund again.

I guess what I am trying to say is: f*** the challenge. I want to learn to trade. And to hell with what everyone thinks of me and whether I can do it or not. I believe that money can be made in this market but its not going to be made overnight. The best traders take years to learn this. Why should I be any different?

As for the excitement: maybe I just need to get out more.

I hope I don't sound flippant in that last comment - I actually mean it quite seriously.

Finally, maybe there is also truth in what Lawrie Inman said when he spoke about trying another market first but finding out he was best suited to the Bund.

Maybe the Bund doesn't suit me.

Maybe I would be best suited to trading another market such as forex or equities. This question is starting to nag at me more and more lately.

I will conclude by saying that ultimately I don't think that I have given the Bund enough time. I have been trading just under three months and I have entered the market at an incredibly choppy time with no real trend.

I will continue with what I am doing but I will cut my size and if after more time I feel that I have the elements that I need to be a good trader but I still cannot make money in the Bund, I will re-evaluate and possibly look at other markets.

I just want to say once again: thank you for reading me. I think that keeping a journal is an invaluable exercise but it is also very reassuring to know you guys are interested.

Until next time...

 

[minx]

Placing £6 bets with £700 in your account isnt too sensible, unless you intend to top it up when the cash runs out.

Unfortunately the bund is very volatile intra-day at the moment. Its all over the place and yet its going nowhere. Losing money isnt difficult when its like this. Keep your powder dry and try to learn something from your losing trades.

 

[bond_trader1]

Maybe I am making excuses.

I mean, I feel like I might be trading to replace the excitement that my life lacks in other areas and I know I'm determined to prove myself. And these are areas I need to watch because they will (as they already have done) cause me to disregard good money management to the detriment of my equity and this challenge.

But the feeling that this market isn't right for me...maybe that's just because I am trading this at a very difficult time.

You're right Minx - it's all over the place and yet it's going nowhere.

I just hope when it finally does, I'm onboard.

 

[Hoggums]

Maybe I am making excuses.

I mean, I feel like I might be trading to replace the excitement that my life lacks in other areas and I know I'm determined to prove myself. And these are areas I need to watch because they will (as they already have done) cause me to disregard good money management to the detriment of my equity and this challenge.

But the feeling that this market isn't right for me...maybe that's just because I am trading this at a very difficult time.

You're right Minx - it's all over the place and yet it's going nowhere.

I just hope when it finally does, I'm onboard.

It's times like now that separate the 5-10% successful traders from the unsuccessful ones. It's easy for anyone to make money when the market is trending nicely - the challenge of trading is to hold on to those profits when it's not. You should not regard this last few days of choppyness a "quirk" in the market. It happens all the time - and not just in the bund.

Find a strategy that lets you hold on to most of the recent profits through those difficult periods and you're onto a winning strategy

 

[Splitlink]

It's times like now that separate the 5-10% successful traders from the unsuccessful ones. It's easy for anyone to make money when the market is trending nicely - the challenge of trading is to hold on to those profits when it's not. You should not regard this last few days of choppyness a "quirk" in the market. It happens all the time - and not just in the bund.

Find a strategy that lets you hold on to most of the recent profits through those difficult periods and you're onto a winning strategy

Why would anyone want challenges? It sounds very much like "chairmanspeak", I can imagine him smacking his lips after that and setting the port glass back on the table.

When I was chief officer in tankers I was flown home from the Gulf and sent down to a "challenging" situation which consisted of a tanker with a serious pipeline problem and several grades of oil in the cargo that had to be discharged without contamination. After that experience, my ears went on full alert when I heard any expression with "challenge" in it!

I think that the best way to hold ones gains in a challenging market is to find a nice beach, somewhere.

Split

 

[fibonelli]

Hi BT1,

Firstly, sorry to hear that your trading is going too well.

A couple of points from a newbie
1. You must get your excitement outside of trading.
2. £6/pt on the Bund is a position of £66,000. See Hoggums thread on backtesting strategies using different money management techniques.
3. The Bobl seems to be more orderly than the Bund.
4. Don't chase your trades. Watch the 14/07/07 video at http://www.livewithoscar.com

Good luck

Fibonelli

 

[bond_trader1]

And we're off...

Yesterday saw the price close outside the descending trend line and also form an inside bar in which the daily range was the lowest since the double bottom.

Meanwhile the lows of the day still held at the ascending trendline which has been in place since the double bottom.

As a result, the price broke sharply upwards today...

 

[bond_trader1]

I actually caught this breakout with an order at 111.15 and a stop at 110.90 but only at £2 a tick.

I was out of the office today and away from the computer so I didn't see the good opportunity to double up on either the pin that retested the breakout or the pin that pulled back to the 10ema.

Looking at the daily chart, I think this is going higher but having some large losses lately as a result of the volatility in this market, I decided to exit at 110.55 as the hourly pin bar was forming.

The result was £80 profit which brings me back to £601.

 

[bond_trader1]

Musings...

 

[bond_trader1]

This is not looking particularly good for longs as we head into the close...

As I've discussed earlier in this thread, this chart is merely E*Trade's "window" for viewing price action and todays pin bar is a result of the fact that their charts fill in gaps.

Over at adblue.com, the daily bar has a much shorter nose (because of the higher open).

I hope this doesn't confuse anyone but it's the best I can explain it.

At any rate, I am looking to go short tomorrow if we see a break below today's low, with an aim to cover around the 111.50 area which is the 50ema on the hourly and the horizontal channel high - both of which would make it a nice area to see some support.

 

[bond_trader1]

I have a mental short order at 111.76 although at the moment the market is drifting more or less sideways...

 

[fibonelli]

Hi BT1,
My *analysis suggests an overbought situation wrt the current ascending trendline channel, short period Bollies and short period Slo Stochs. There's also multiple resistance around 112.

Cheers

Fibonelli

*multiple timeframe analysis

 

[bond_trader1]

Another mistake

I traded again earlier today and lost.

Fortunately I was only on at £1 a tick so it only cost me £14.

Although I would almost certainly have ended up short this market anyway, the reason for my actual entry point was irrational.

To put it simply - I wanted to trade. The first three months of the challenge are gone and I have to admit that I had this in my mind.

The setup I saw was minor support (bar lows on the 30m chart) and I acted impatiently and went straight in.

I put my stop over the 30m entry bar (circled).

I have to confess I didn't even look at the chart properly because just a few minutes after I was in, I saw the pivot point area just beneath (black line) and realised that I had literally just sold short into significant support.

As it happened, it hit this and made a two bar low, right on the 50ema and then broke to the downside which means I probably would have gone short anyway but with a marginally smaller stop of 11 ticks.

At any rate, the market rallied at this point and I was stopped out for the loss.

 

[bond_trader1]

9 months of the challenge remaining.

Starting balance: £1,000

Target: £10,000

Current balance: £587

A quarter of the time I have to win this challenge is gone and I've lost over 40% of my starting capital. I don't know whether to laugh or cry!

I would say the market has certainly done a good job of humbling me.

 

[bond_trader1]

Quarterly performance chart

I made this graph in Excel so I can keep a track of my performance at each quarter.

Each point on the graph (bottom axis) is my account equity at the end of each week.

 

[bond_trader1]

It's testament to how hard it is to trade for profit when you consider that I have been right consistently in the calls I have made on the Bund but have still lost over 40% of my account.

I'm not going to flatter my own ego by regurgitating old posts - I have nothing to boast about, since I have lost money.

But if you look back through this forum and pull up a chart of the price, you will see that most of the time, the market went exactly where I thought it might.

Maybe it's because I have been trying to be clever and trade it intraday rather than sitting back and position trading based on the bigger picture.

 

[bond_trader1]

Scroll up and look at post #152.

You can also see it here: http://www.trade2win.com/boards/showpost.php?p=347386&postcount=152

Now take a look at this...