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Special ED

Special ED's special Journal

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Hello everyone,

 

While having a long discussion about trading with a colleague of mine a debate was sparked on the issue of capitalization. Specifically capitalization as it applies to new traders.

 

My position was that new traders no matter what will will face trouble due to lack of knowledge (types of days, strategies etc.), inexperience with money management or lack of rote learning trials (pattern recognition stores). Capitalization has little to do with anything (unless of course the capital is less than trading margin requirements).

 

His position was that even an experienced trader will have trouble without proper capitalization, due to inevitable draw down periods and flat trading. His stance was that without proper capitalization "no one can do much."

 

I seriously disagree, And I want to prove my point...

 

In my opinion a trader can build pattern recognition stores by reviewing static charts, using intra day replay, and practicing money management and execution tactics on simulators. None of these require one cent of capital!

 

I plan to detail a journal of an account that was setup with $10,000 through Tradestation (most would consider 10k under capitalized by day trader standards) and set a goal to double the account in 4 months by using proper management and strategy.

 

The whole goal here is to show newer traders that capitalization is not as much an issue as getting out there and cramming your mind with market exposure!

 

This journal will not be a "look at me" recording. This is meant to be inspiring to traders who may feel they are at a steep disadvantage without having 40,50,200k etc.

 

I will detail the journal with charts, explanations (to an extent) and P/L. Goal setting is extremely important so the $ to goal will be updated by the close of each day.

 

I hope this helps someone out there looking for encouragement to succeed.:)

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Journal Entry no. 1

 

To clarify some things, I will only be trading up to 2 contracts to avoid unnecessary leverage risks. The aim here is to produce a steady gain over the next 4 months not to make a million real quick.

 

The trade was taken after a support level was tested and exited after a failure of the upside momentum was confirmed. With stop in place two ticks below the entry low we wait for the bars to form and CLOSE No stop reverse, no scaling, just a simple entry on indication of strength and exit on indications of weakness.

 

Many unprofitable traders will try to trade every wiggle, every higher high etc. Slow and steady is boring yet powerful. As the days go by you'll see how keeping gains is as much as a strategy as entering and exiting trades.

 

One trade was all today, why? Because thats all we need to be successful (in this context)! We have profits and we are on goal...

 

Entry 773.40

 

Exit 776.20

 

Total points 2.8, P/L $280 % return 2.8%

 

$ to goal 9,720

SE_0814_long.thumb.jpg.3d80fc65cc47f63ffc73a647320f5c52.jpg

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Let me first say that I totally encourage this effort and think it's a great idea, however I also feel compelled to say that this won't really prove anything as how are we to know you aren't posting charts with trades in hindsight? Don't take this the wrong way as I'm not trying to be an ass, and again I think this is a great idea for a thread!

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Let me first say that I totally encourage this effort and think it's a great idea, however I also feel compelled to say that this won't really prove anything as how are we to know you aren't posting charts with trades in hindsight? Don't take this the wrong way as I'm not trying to be an ass, and again I think this is a great idea for a thread!

 

Nvesta81,

 

I see what you mean, It's tough to believe most people when they say they are actually making money consistently day in and day out, there are allot of people out there who like to pretend and not do! But I can personally vouch that the content provided here by special ED is genuine.

 

It may not be the best strategy enter here/exit there post, but the point may be to deliver in a holistic sense, what it is to have a trading goal, and strategically achieve it through learned skill sets.

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Let me first say that I totally encourage this effort and think it's a great idea, however I also feel compelled to say that this won't really prove anything as how are we to know you aren't posting charts with trades in hindsight? Don't take this the wrong way as I'm not trying to be an ass, and again I think this is a great idea for a thread!

 

I tend to agree with this post. Perhaps you can post charts of the actual instrument you're trading, such as ER207, ESU07, and YMU07. Since you're trading through TradeStation, your entries and exits will be automatically displayed on the chart. Although not foolproof, it should add a little more credibility, IMO. Either way, I will follow your journal with interest. Good Luck!

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Journal entry No. 2

 

Hey everyone,

 

This will be one of the rare times I will post intraday. Trading is complete for the money I manage and my personal account for the day, so I feel that it is okay to devote attention to this under the circumstances.

 

Great trade, poor management! That's what I said to myself after this trade.

 

Entered 2 contracts off a test of support at 769.50 (red arrow), trailed the stop to break even once price had pushed off. After a "test" or what I would consider a test my stop was carelessly place at the low ( dark blue arrow). That was improper considering that all stops should be placed at least 2 ticks below a low!

 

The stop was hit at 770.70 ( light blue arrow), giving us profit but stopping out the profit potential AT THE LOW!

 

This trade was like making a loaf of bread, we got all the ingredients, mixed em popped it in the oven, baked it but forgot to add salt. It was edible, but didn't taste too well.

 

You may be wondering why I didn't get back in, well I typically will because that is the smart thing to do. But in this context, for this goal I need to be constantly aware of my P/L for risk purposes, this does not allow me to make snap decisions like I would if I was trading this account for income or for an investor. It's all about risk and all about your GOAL.

 

Let's look at something now. My goal is to create a 100% return on 10,000 in four months time. That means I need to make $125/day average for 80 trading days. And more importantly I need to preserve a $125/day average if I succeed this number! This is where so many hard working, intelligent traders get chopped up. Let's work to protect our goals!

 

So far I am well ahead of schedule, at $520 after two days the average is currently $260/day. We'll need some consistent daily numbers like this to protect the option expiration days, the flat days, and the losing days from eating away at our daily average. That measn if I wantto take another trade today I'll not to not risk any more than what? $115 bucks. Thats 1 ER2 contract with a 1 point stop. The trades gonna have to scream at me for those kind of numbers right?!

 

All in all, we traded 2 contracts (2 because we're WITH the trend) for a 1.2 point profit.

 

1.2 points/ profit $240/ % return 2.3%

 

$ to goal 9,480

 

 

As far as the "post your blotter/returns/trades" questions are concerned I may post a quarterly blotter, I may not. In the era of Photoshop anyone could fabricate some fictitious numbers on a sheet. Like I said before tis isn't about "how much I can make" or " look at me". It's about proving a point and helping to inspire. Yes this is real money, yes these are real trades.

SE_Long_0815.thumb.jpg.adcb61cbeae737d45a83eb6f463a736d.jpg

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Guest cooter
Journal entry No. 2

 

My goal is to create a 100% return on 10,000 in four months time. That means I need to make $125/day average for 80 trading days. And more importantly I need to preserve a $125/day average if I succeed this number! This is where so many hard working, intelligent traders get chopped up. Let's work to protect our goals!

 

So far I am well ahead of schedule, at $520 after two days the average is currently $260/day. We'll need some consistent daily numbers like this to protect the option expiration days, the flat days, and the losing days from eating away at our daily average. That measn if I wantto take another trade today I'll not to not risk any more than what? $115 bucks. Thats 1 ER2 contract with a 1 point stop. The trades gonna have to scream at me for those kind of numbers right?!

 

Guess you've recognized one of the hardest parts of trading is not so much making the $$$, but actually keeping it and not giving it away on the next trade or next session.

 

Of course, there are those who say you must take every trade that fits your setup, regardless of how much you've made or lost on the previous trade. Do you agree with this, ED?

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Guess you've recognized one of the hardest parts of trading is not so much making the $$$, but actually keeping it and not giving it away on the next trade or next session.

 

Of course, there are those who say you must take every trade that fits your setup, regardless of how much you've made or lost on the previous trade. Do you agree with this, ED?

 

Hey Cooter,

 

Firstly, I would say that keeping profits IS the most difficult aspect of trading.

 

Secondly, I disagree with people that would say something to that effect. In my experience so many novice trader tips/guidelines become meshed with absolute trading truths and then turn into outdated solutions to current situations.

 

Case in point, lets say Trader A is told to take his "setup" consistently no matter what the trade outcome because trading is a probabilities game and he needs to experience that to understand the true nature of the trading game. This is okay, it's not harmful IN THIS CONTEXT. But, it is generalized and non-productive from the standpoint of creating strategy.

 

If Trader A is taking every setup no matter what happens to learn about probabilities that is one thing. If he is taking every single one after he has a sizable profit on the day and continues to take them until he grinds his profit for the day into the red then that's not very wise is it?

 

It's all about strategy, it's all about goals! What do you want from trading? What exactly do you need to accomplish? How will you do it? These are the first thing every new and even seasoned trader needs to ask himself on a weekly/monthly/quarterly and yearly basis.

 

We must never forget though that successful discretionary trading is the product of constant rote learning.

 

Have a great day!

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Interesting thread, correct me if I'm wrong but there isn't a pattern day trader rule for futures right? So I could trade however many times I wanted without my account being frozen?

 

Correct James, you can churn it till the cows come home.

 

:p

 

Just kiddin. No PDT in futures.

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Hey Cooter,

 

Firstly, I would say that keeping profits IS the most difficult aspect of trading.

 

Secondly, I disagree with people that would say something to that effect. In my experience so many novice trader tips/guidelines become meshed with absolute trading truths and then turn into outdated solutions to current situations.

 

Case in point, lets say Trader A is told to take his "setup" consistently no matter what the trade outcome because trading is a probabilities game and he needs to experience that to understand the true nature of the trading game. This is okay, it's not harmful IN THIS CONTEXT. But, it is generalized and non-productive from the standpoint of creating strategy.

 

If Trader A is taking every setup no matter what happens to learn about probabilities that is one thing. If he is taking every single one after he has a sizable profit on the day and continues to take them until he grinds his profit for the day into the red then that's not very wise is it?

 

It's all about strategy, it's all about goals! What do you want from trading? What exactly do you need to accomplish? How will you do it? These are the first thing every new and even seasoned trader needs to ask himself on a weekly/monthly/quarterly and yearly basis.

 

We must never forget though that successful discretionary trading is the product of constant rote learning.

 

Have a great day!

 

And the other side of that coin Ed is that if Trader A starts the day in the red and gives up and would have come out ahead if he just stuck with his plan.

 

That's not very wise is it? ;)

 

So I completely disagree. If you KNOW your setups make money, you take every single one of them. Why? B/c some days you will cash in BIG time and you NEED those to offset the days where it is just not happening.

 

I think it's common practice among new traders to cap their gains and maybe cap their losses. Seems awfully backwards to me, but it's the result of fear - fear of 'giving money back' as you've illustrated here and fear of losing more. That is why most new traders will never see a monster PLUS day and will routinely see monster MINUS days.

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Ed, as Ant said -- why don't you just use Tradestations feature of turning on the orders. Its under the drop down menu:

Format

Account Orders & Positions

 

Just 1 Check and you don't have to worry about drawing the arrows ever again -- tradestation will show the entry and the exit.. See my attachment (I put asterisks over the # of contracts in this case).

5aa70df249dd1_YMTradeAug2007.thumb.png.0de9e30b43aa5e0b314d74fc119a54e3.png

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Ed, as Ant said -- why don't you just use Tradestations feature of turning on the orders. Its under the drop down menu:

Format

Account Orders & Positions

 

Just 1 Check and you don't have to worry about drawing the arrows ever again -- tradestation will show the entry and the exit.. See my attachment (I put asterisks over the # of contracts in this case).

 

Dogpile,

 

I'm gonna take a stab in the wind here and guess that the reason that ED hasn't bothered to check show trades option is either:

 

To frustrate the requests of people who keep asking.

 

Because he feels the arrows display the point more effectively.

 

It's more fun to draw arrows.

 

He's clearing through someone other than Tradestation on some trades?

 

For the same reason you were able to doctor/hide your contract #'s he could just photoshop trade entries/exits either way.

 

Under the circumstances I'm much more interested in the perspective on goal setting and attitude anyway!

:)

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And the other side of that coin Ed is that if Trader A starts the day in the red and gives up and would have come out ahead if he just stuck with his plan.

 

That's not very wise is it? ;)

 

So I completely disagree. If you KNOW your setups make money, you take every single one of them. Why? B/c some days you will cash in BIG time and you NEED those to offset the days where it is just not happening.

 

I think it's common practice among new traders to cap their gains and maybe cap their losses. Seems awfully backwards to me, but it's the result of fear - fear of 'giving money back' as you've illustrated here and fear of losing more. That is why most new traders will never see a monster PLUS day and will routinely see monster MINUS days.

 

That's a good point BrownsFan...

 

I guess it all depends on what your strategy is like and what your capital base is. I would have to agree with both sides here and say that there are allot of traders out there who make a mint in the morning and trade it away in the afternoon. The extent of those losses is what is important (going back to the money management/strategy thing)

 

I personally use a trailing stop for my earned profits on that day. It's worked quite well for me. I don't hit too many homeruns, But I rarely have big drawdowns so I'm obscenely consistent. And that is exactly the strategy I seek.

 

Good posts!

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I think I'm capping my losses well but I'm working on uncapping my profitable days and get more aggressive and go for more. Greed is good... with style and emotionless, of course. Good point, brown.

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