jonbig04

No trading today. Thanks guys for the advice. I just bought Db's book. Obviously I need to work harder on developing a detailed plan with rules etc. Paper trading has been fun and I've learned a lot of lessons already, but I could be putting the information to better use by using it to trying to define a set of rules etc. From now on I will be paper trading to that end. There seem to be 2 parts to trading. Emotional Control and Method I have read a lot about PA, and VA, and most importantly supply and demand. I suppose thats the reason my trading hasnt been that bad (6 up days out of 7). Or maybe its just a fluke. I don't know. But like I said it doesnt matter if I cant use the information i obtain to develop a specific methodology. I just ordered DB's book and hopefully that will help get me on the right track. What I will be doing now: I'm reading all of Douglas' books ( I still believe the mental aspect is more important than anything else, so that will always be in the forefront of my mind). I will and do hold MYSELF accountable for all losses and gains, not the market, which is always right. I want to conquer my emotions to the point where my plan is all that matters. It will be well defined and rigorously tested so I will have no reservations in putting money on it when the time comes. When that happens nothing will be different. There is no difference in real money and paper money except for the difference I create and let affect me; which I don't plan on doing, and if it does affect me, I won't trade with real money. When I can trade with real money profitably and emotion free the amount of contracts will be arbitrary (except for the possibility of slippage which I will look into) whether its 1 or 50, it won't matter unless I let it matter. That's where I'm at right now.

No I haven't read "Zone" yet. I have it, and will read it when I'm finished with "The Disciplined Trader". I do not feel that I am being selected. I didn't take the quotes from above out of some random chapter in the middle of the book, but directly from the beginning section entitled "Why I Wrote this Book". In that section he says "There must be a difference between these two groups of traders (he's referring to the 95% that blow their accounts and the 5% that end up with that money)-the difference is that that traders who can make money consistently on a weekly, monthly, and yearly basis approach trading from a mental discipline. When asked for their secrets of success they categorically state that they didn't achieve any measure of consistency in accumulating any measure of wealth from trading until they learned self discipline, emotional control, and the ability to change their minds to flow with the market" he goes on to say (later in the page)...all traders experience confusion, frustration, anxiety, and the pain of failure. The few traders who pass through this phase to accumulate wealth are those who eventually confront and work through some very difficult psychological issues about what it means to be a trader..." I didn't start this thread just for the hell of it. I am new to trading, but I am not new to the dedication it requires to become disciplined and be successful at something. I started my first company 3 years ago. I have made and lost substantial amounts of money. I've experienced great success in starting my second company and have watched it build up around me in the form of friends, multiple houses, and pride. I've also watched everything I created evaporate into thin air. I've felt the anguish and frustration of gaining everything, only to lose it a couple years later. Its quite something to build and easily afford a house worth just under a million dollars, and less than 2 years later wonder where your next meal is going to come from all before the age of 21. I didn't say all this for you sympathy or praise, only to try to differentiate myself from the 21 year old who got off of his mom's couch yesterday from playing xbox and suddenly decided to day trade because it seemed lucrative. No. I am trying to dig through what trading is about to get to the very bottom. 95% of traders blow their account, I would guess their are a few more that make a decent living or break even. That's great, but it's not what I'm interested in. I am interested in the ones (since this is a zero sum game) who take the majority of the profits from the 95%. I'm sorry, but if you're making $100,000 a year, while that's a great accomplishment there is still something missing. I don't know the math, but I'm guessing (given the 95% rule) there is a ridiculous amount of money going out the door everyday in futures markets. There has to be. If you are taking full advantage of that (i.e. in the top 5%) you have to be raking it insane sums of money. Douglas himself says that. If you are not, then you are probably in the 95% or some other smaller percentage who break even or make a tiny fraction of what is really being made. You might say "oh making six figures in trading is almost impossible, if you think you can get to that or past it you are sorely mistaken". Maybe you are right. Maybe I never will. But I will tell you this: somebody is. I want to do, what THEY do. I want to trade how THEY trade. Having said that I think that just maybe Douglas had it right. Maybe most "successful" traders think they are disciplined when in fact they never fully addressed their mental set backs and because of that they are limited to breaking even or making 100k a year when there is far more than that to make. Maybe not. I don't know, but I'm trying to find out. I find it interesting that almost no one agrees with douglas, but if he's right how could they? If he is correct than 95% or more people won't agree with him. The people that would don't care to because they are off on their yacht drinking scotch (that was just at tempt to lighten the post). I've posted this question on other boards too and get even more disagreement. Of course I do realize that the fact that he is disagreed with doesn't make him right...but it is what would happen. I don't mean any disrespect to anyone, I am just trying to get tot he very very bottom of what this is all about, and I think that's important.

This has turned into a great discussion. What I do find interesting is that I don't think anyone has agreed completely with Douglas who basically says, while edge IS essential, correcting your way of thinking is, to put it in his numbers, 80% of the battle to profitability and even someone with mediocre technical knowledge can succeed if he has mastered his emotions. It doesn't really matter. Either way I think we all can agree we that both are essential. I just thought it was interesting that no one just flat out agrees with him.

Today was a good learning day. Results: +3.5 points I didn't get to trade for a as long as I wanted to, had some other things to do..but that's ok. Entered a short position at 10:48 because it looked like buying was exhausted and maybe even like the buying that took place before @10:44 was short covering...I don't know. Anyways price took a pretty nice dump from there and I stuck with it until it looked like the selling was over. Turns out it wasn't quite over, but I captured most of the move (5 points) After that I was waiting for smart money to come in and buy, but as of right now I'm not seeing it. There was a nice spike, but it wasn't confirmed by enough volume and follow through for me to want to buy. Looks like I missed the boat at 11:22, but thats ok. Like I said it didn't have what I was looking for. So I waited for a time to short. I got impatient and tried to jump in before It was obvious(11:33). It cost me 3.25 points. The first attempt I cut my losses to 1 point, the second time price jumped and stopped me out so quickly I literally didn't have time to react. If I would have just waited until it was obvious, I could have saved myself those points. Stupid. Anyways eventually I did get in when it became obvious to me (11:37) and I was able to get 2 points out of it. I thought the buying was exhausted at 12:29. It wasn't and I took my losses and ran. Lost 1.5 points on that one, but I'm proud of myself for getting out then and not hitting my full stop of 2.5 points. Looked like a freight train going up, so I entered a long position. Oddly enough when I did, things started to change. I exited out for a .75 point loss and went short. The short was a success as it made 2 points, however just as I need to be able to not hit my full stop loss, I should have sold when I saw things changing instead of hitting my trailing stop. I would have nabbed another point in a half if I would have sold when I saw the situation changing. Today's lessons: Wait until the trade is OBVIOUS. Never be afraid of missing anything. Did decently well on not hitting my full stop, but I also need to work on not hitting my full trailing stop when I'm in the money.

The more I trade the more it seems like poker. Which is difficult to say because there are so many smart people who see trading just as they see any other profession, and would probably cringe at that comparison, but to me it's more like poker. You can become a great poker player by developing all kinds of skills and, more importantly, discipline. But in the end it's still about being mindful of the odds as opposed to trying to fight them I guess you could say. I'm a noob trader, but I'm a pretty good poker player and I really do see some similarities.

Great posts guys.

I thought that might be it, but I didn't want to say anything thinking that if I did all kinds of people would jump about all the great opportunities in the NQ today lol.

I feel you. I don't know...the NQ just seemed like chop today. It was nice in the beginning ( I always watch for a while before I start to trade) then it just kind of chopped around in a very small range. Until at one point it swung way up and the swung way down settling right where it began. it cleaned up towards the end of the day though...I just wasn't quick enough to spot any opportunities before they were gone.

Well I wanted to trade today. I just couldn't. I couldn't see anything worth pursuing. A couple times I thought I did. Then I would wait to see what else was going to happen and it just wouldn't make any sense. There was some decent stuff by the end of the day. Maybe I'm a failure. Anyways I will try again tomorrow. Hopefully the market will represent some opportunities that are easier for me to see.

Right. Like I said I'm not downplaying the importance of an edge and of screentime etc...I'm just emphasizing the fact that your mental state is also very important (if you believe Douglas, it's much more important) and deserves just as much if not more attention...yet traders rarely give it such. I'm not saying "either or" at all. But it seems almost everyone else is...they are just saying "edge" instead of "edge and mental control".

I should have been clearer, when I say "edge" I'm referring only to his trading methodology. In other words, using some sort of P/A analysis, Fibs, or whatever he has strategy that, when executed correctly, is right more than it is wrong in predicting market direction. However, for example, if this person lets his inevitable losses outweigh his winners by not being disciplined enough to cut his losses...he will lose money. Or if this person lets the fact that the last 5 traders we're losers affect how he executes the next trade he will probably lose money. I hope that clears it up a little.

Great post. With the stats being so overwhelming, success in trading almost has to have to do with something few people realize, or work on...e.g. themselves.

First off I would like to say thanks for all the great info you provide, and I will be buying your e-book whenever paypal get their stuff straight. Anyways, I just don't think I can agree with you. There are SO many people out there trying to trade. Sure some of them are dopes who thought it would be an easy way to make money from home, but it's also true that many of them are very bright people. People that, to me, can formulate an edge. They study everything they can get their hands on and they come up with some complex and effective strategies...but they still don't make money. The stats, to me, just don't add up. The vast majority of traders lose...yet every trader I've met is trying only to refine their edge. What does that mean? To me, with so many people focusing only on their edge, it can't be the lack of an edge that impedes almost all of them being profitable...it seems like more than 5% would have something consistent figured out. I hope that makes some kind of sense.

Oops sorry, I typed Michael instead of Mark...but you get the idea haha

Interesting. Thanks guys. More to the point, from Douglas: "...I sincerely feel that success in trading is 80% psychological and 20% one's own methodology, be it fundamental or technical. For example, you can have a mediocre knowledge of fundamental and technical information, and if you are in psychological control, you can make money. Conversely, you may have a great system, one that you have tested and has performed well for a long period of time, yet if psychological control isn't there, you will be the loser" This makes me think....hard.

According to Michael Douglas (author of Trading in the Zone, and The Disciplined Trader) trading is 80% mental and 20% your edge. If this is true, or even if its 50-50, isn't it strange that the vast majority of threads, books, and everything else related to trading is about refining your edge? Don't get me wrong, I know having an edge is very important...I am not discounting its importance at all...but should more we focus more on, or at least as much, on our mental state while trading? 95% of futures traders blow their account in the first year...could this be because 95% of people focus only, or mostly, on an edge rather than their mentality?

No trading today. Other things took up my concentration. No point in trading without 100% focus right? Will be back on tomorrow.

I guess my answer is C. :\

Hmmm now I'm confused. The commish rates I looked at were per round turn. I assumed that meant that the costs were $4.30 per round turn if you trade 1, or 10 contracts....did I miss that up? Is it PER contract? In sim I've been using limit orders. It seems to me that if you use limit you may not get filled, and if you use market there will be slippage. I suppose its up to me to decide the lesser of the two evils for my particular trading...

So it looks like I've racked up around $330 in commissions so far. Ouch. Depending on how many contracts I was trading, that takes a decent or insanely large chunk of profit. Here's the break down depending on contracts traded minus commish: Profit for week 1 Trading 1 contract= $80 Trading 2 contracts= $479 Trading 3 contracts= $910 Trading 4 contracts=$1,325 Trading 5 contracts=$1,740 This isn't entirely accurate as there are of course multiple tiers of commish costs, but it just to give me an idea. Either way from now on my trading will be further limited to 10 trades per day...another great lesson learned from fake money trading. This also gets me thinking about how many contracts I should trade whenever I do go live....only 1 is very expensive on a commission per tic basis. I also need to find out what ninja costs per month, anyone happen to know of the top of their head? Hope you all are having a fun week end. I will be at home with NQ charts...:missy:

I don't think specs are driving the price of oil at all...just basic supply and demand. Unless there is someone hording barrels of oil in their homes and offices.

EDIT: declining volume in the context of all the other price/volume action*

I see what you mean. From what I was seeing today, price was messing around a bit, but declining volume told me that that demand was declining. The break happened just a few seconds later. I like what you said about getting out for a few ticks and coming back in. That would have been the best move for me today as i would have made a few extra and been out for the slight up move at 10:38. I have considered doing that before. Now I will try to put it into action. Thanks again for the advice.

That makes a lot of sense..but I'm confused on how to apply it. For example, should I have gotten out at 10:35? It took me a couple minute to be proved right..so I guess what I'm asking is how long to we wait to be proved right?

Thanks. I am holding for longer. I was looking at my last charts and very often I was getting out too early. I had my on one 4-10 point moves, but was only getting .5-1 points of profit. Then I would see the move that I missed and try to make up for what I missed by trading when I shouldnt have. I made my time frame (for my chart) longer and I moved my stop up a little (it was 3, but i changed it to 2.5) I should know by then that I am wrong and to get out. I sold at a pretty good spot today, all that high volume at 10:53 turned out to be accumulation.