Daybreak Trading

[swansjr 10]

Day 8

 

Slight up day with three trades. Two winners. One loser.

 

Today was a day of missed opportunities. The morning started off with a losing trade. This is typical for me. I brushed off the loss, or so I thought but again I was unable to pull the trigger at critical times as I found myself over analysing my signals. It's been several days since I've traded and I did not practice over the long Memorial weekend. Maybe this played a part in my inability to tack action. I don't know. The chart below shows great shorting opportunities that I missed after my first losing trade.

 

 

The second chart shows were I entered long when it appeared the down trend was over. A double bottom formed (indicated by the horizontal line) and I saw a divergence on my MACD indicators (not shown). I decided to enter as price "wanted" to push higher. My entry was spot-on and my target was hit. After this successful trade my trading rules state I should next enter with two contracts. The first contract would have a hard target while the second contract would be a runner. The market provided an entry point (the first blue arrow around 7:25) and what did I do? I did not enter! The market provided a second entry (the second blue arrow) but I stood on the sidelines once again. This trade, if taken, would have developed into a nice runner. The market gave me another shot just before I was going to end for the day and I opened with two contracts - long (not shown). My first target was hit with little heat but my runner was taken out with a single tick of profit. I captured the top of the current move up. You snooze, you lose.

 

 

Very poor trading :doh: today as I failed to pull the trigger. This is a weakness for me as I often over analyze my charts. On the positive side I know what I'm doing wrong and I know what I need to work on. Furthermore, I did recognize the reverse in trend and did not have a problem switching form short to long. It seems fear of losing money is stopping g me from executing my trading plan. I'm very risk adverse.

 

 

P&L: $52

[sep34 10]

Day 8

 

It seems fear of losing money is stopping me from executing my trading plan. I'm very risk adverse.

 

 

This is normal, for anyone new to trading or if they have been trading for some time--yet they are trying new methods. Fear is not entirely a bad thing.

 

Off-course its not good to allow fear to dominate us to the point where we can not follow the plan, However it is what it is and what you state above is very normal..... the more you fight it the worse it gets.

It (fear of losing) will naturally evaporate once your confidence in your trading plan out powers the fear(very normal for 99%) of losing.

 

possibly...Accepting it and being aware of it (I dont want you to be in denial) However dont speak too much of it or give it too much of your attention..instead, singularly focus on what your plan is and everyday try to do it even better.

 

Regardless of any hesitations you had the previous day...leave it be and dont dwell on it, focus only on following your plan as best as possible.

[Bear Mtn. 10]

....I failed to pull the trigger. This is a weakness for me as I often over analyze my charts. On the positive side I know what I'm doing wrong and I know what I need to work on....

 

This has been my problem of late but, as of yesterday, I'm starting to get better at taking the lessons from it and moving forward. Keep it up Swan, it's really good to see your progress documented and I hope you're still finding it helpful to post here.

 

BM

[swansjr 10]

This is normal, for anyone new to trading or if they have been trading for some time--yet they are trying new methods. Fear is not entirely a bad thing.

 

Off-course its not good to allow fear to dominate us to the point where we can not follow the plan, However it is what it is and what you state above is very normal..... the more you fight it the worse it gets.

It (fear of losing) will naturally evaporate once your confidence in your trading plan out powers the fear(very normal for 99%) of losing.

 

possibly...Accepting it and being aware of it (I dont want you to be in denial) However dont speak too much of it or give it too much of your attention..instead, singularly focus on what your plan is and everyday try to do it even better.

 

Regardless of any hesitations you had the previous day...leave it be and dont dwell on it, focus only on following your plan as best as possible.

 

Thanks Pappo for the great words. I totally understand that fear is a natural emotion for novice traders and it’s not entirely bad. It becomes bad when you are unable to act when duty calls. Acknowledging my fear and moving on is what I’m trying to do when documenting my emotions and trades here. It’s part of my trading therapy. I really think this is helping. I do notice I take losses much better than 6-12 months ago. As for the confidence in my system, that will come with time. Like anything, you earn confidence by doing!

 

Thanks again for taking the time to write a great post.

[swansjr 10]

This has been my problem of late but, as of yesterday, I'm starting to get better at taking the lessons from it and moving forward. Keep it up Swan, it's really good to see your progress documented and I hope you're still finding it helpful to post here.

 

BM

 

Yes, it is very helpful to post here. Not only does it provide a learning opportunity when others comment but also, there is an element of responsibility for posting my trading summary. In short, posting here keeps me honest to myself and consistent in documenting my trades and emotions.

[swansjr 10]

Day 9

 

Four trades today. Three winners and one loser.

 

Today started off with my first trade a loser. Now, this is getting downright silly. I mean really, it's not like I'm trying to pick a bad trade for my first trade of the day but once again, there it is. I've about reached the point where my first trade of the day will have a 1 tick stop. That way, I'll be taken out quickly with minimal damage so I can move on in confidence. Anyway…

 

While most of my trades were in the black (or green!) my trading was not executed to my liking. First off, I did become distracted from my screen and missed a clean entry into a new leg-up which would have produced a nice runner. :crap: Instead I had to enter later in the trend and my runner was stopped out with a one tick profit. Now get this. Just before I was going to stop trading for the day the EC market came alive and the price action was fast and smooth. Bingo! Another setup and I entered. But what's this! Two contracts? I forgot to reset my input to a single contract and now I found myself on the fourth wave up with two contracts. Dumb. In my haste to correct the problem I accidentally deleted my stop. :doh: The market was now moving down. I clicked the "Close All" button. Close call but out with a nice scalp profit on the two contracts.

 

Paying attention to the screen and to the details is key. Things like setting the correct number of contracts to buy needs to become automatic. I'm not there yet. Again, I feel one big skill set that separates the armatures from the pros is the fact pros make fewer mistakes. I made two mistakes today but came out ahead - this time. Mother market was in a forgiving mood today. Next time may be very different. Don't allow "next time" to happen.

 

P&L: $198

[swansjr 10]

Day 10

 

Two Trades. One winner. One Loser.

 

The EC market spent most of the evening and early morning climbing higher. I awoke to a tipsy looking chart, but entered on my first opportunity. Target hit. WOW! My first trade was not a loser. I immediately entered my second trade with two contracts and was promptly stopped out. Hummm…Naturally the market would push higher shortly after my stop out but I was a bit early in purchasing. These complex retraces within the trend often fool me. Anyway, so it goes. I decided to stop because today is the last trading day of the month and I had many lose ends to tie up in regards to record keeping and finances. More importantly, I was not feeling like risking any more time or money with EC this morning. So I spent my morning updating quicken and my spreadsheets.

 

While I lost money today, I feel I actually traded better than yesterday. However, I know my mind was not in the game after that single loss today. Yet I'm happy I ended today with a small loss. Looking forward to reviewing my performance this weekend and trading next week.

 

P&L: ($80)

[swansjr 10]

Week 3 Summary

 

Time to review the weekly resutlts which also happens to be a monthly review (my first monthly review). The image below is my bottom line for my thrid week and for the month. You may notice I adjusted my commission charges because I was not counting one half of the changes. So, now listed is a full round trip per contract. I should have noticed this sooner. Naturally this cuts into my profits and I may find myself bumping up a profit target to help offset this.

 

 

Take a look at the bite commissions take - 30% of my gross profits! Runners would help to reduce this and so would trading from a higher timeframe. This is the cost of being a scalper!

 

This was another week of me struggling to pull the trigger on all my setups. This has been a problem all month. Compunding my poor peformance this week was the fact I was unable to initiate an effective runner. I missed several opporutinites to have a runner and the ones I did have were all stoped out for a small profit. My runners is where the bulk of my money is made. No runners this week so, no great imporvement in my equity or system performance results.

 

 

Below is a list of my trades since starting this post. What does the green highlighted trades mean? Well, those trades represent live trades. Yes, I traded live this week. I wanted to test myself with some real money on the line and so I dedicated three consecutuve days to trade. My first impressions are that trading live had little impact on emotions and I hope to keep it this way. My first live trade was a loser. But I managed to follow that with 3 consecutive winners. My plan is to continue to trade live until I see myself struggling to push my equity curve higher. If I bring my current “gains” (see below) down by 50% I’ll go back to simulated trading.

 

 

 

Net P&L For May: $499

[swansjr 10]

Day 11

 

The first day of the week I was getting conflicting signals on my different timeframes. Trading was tricky. I managed to get one trade it for a win.

 

P&L: $82

[swansjr 10]

Day 12

 

Two losers in a row and I’m done for the day.

 

This was a short session. I was in the market for only about 20 minutes before I totally screwed up. Today should have been an easy day as the market was trending. All timeframes were looking good, but what do I do? Make horrible entries and I start to get spooked. So I raised my stop way too soon. This took me out both times only to see the market move without me. If I had been a little more patient I would have done just fine.

 

Traded horrible today. It’s tempting to continue trading but obviously my mind is not in the game and my rules dictate that I'm done. So be it!

 

P&L ($124)

[jimbob42 10]

What are your views on the Watts System?

Thanks

[swansjr 10]

What are your views on the Watts System?

Thanks

 

I think it’s a solid system. Great for scalping and capturing intermediate intraday trends. The potential for low risk entries and high R returns are very possible. I’m sure it’s like any other system – some people will find more value in it than others. However, Ryan Watts sells it for a very reasonable price and provides a trading room. I found Ryan Watts very helpful and people in the trading room friendly. I've purchased two other discretionary systems and I have to say, this system is the one that clicked with me. It's also the one I've ever made any money from.

 

I’ve been studying Ryan’s technique for months so you do have to put effort into it. But again, that’s like anything.

 

You can find other positive comments here.

 

Hope that helps.

[jimbob42 10]

Thanks

 

I enjoy his commentary and might try it for the trading room, especially in light of the reasonable price

[swansjr 10]

Day 13

 

Two trades. Two winners.

 

First the good news. Today was a rather picture perfect day in terms of entry. My first trade for the day was long and hit my target within seconds. This trade happened right near a "major" turning point so my next trade was on the short side. I had no problem with switching from long to short as I saw the market dynamic change. My short trade reached it's profit target rather quickly as well.

 

Now for the bad news. Because I've been trading so poorly (see yesterday) I decided early on I was only going to trade one contract today. Ok, that kind of discretion is fine. However, what I failed to do was implement my "runner" rule. My original rules are to utilize a runner after I have a winning trade. I knew this when I was putting on my second trade. I repeated it to myself yet, instead I exited on my scalp parameter. My feeling during the live trade was something like this: I did not want this trade to turn into a loser or break even. I wanted my money!

 

What would have happened if I kept on my runner like I originally planned? Well, notice the wonderful trend on the image below. See my entry? Nice, huh? But look at all that profit left on the table. Very unfortunate. Over $300 per contact was left on the table because I did not follow my rules 100%.

 

 

I was sloppy on my entries Tuesday. Today my entries were spot-on but my exit rules were neglected. In either case I either lost money or lost potential profits. I'm clearly working-out the wrinkles in my trading psychology.

 

On the bright side, I continue to grind out profit with this scalping method. I'm also doing much better with handling a loss. I'm stepping away from the screen when needed and I don't appear to be over trading. If anything, I'm being overly cautious and could easily take advantage of more opportunities.

 

P&L: $198

[swansjr 10]

Thanks

 

I enjoy his commentary and might try it for the trading room, especially in light of the reasonable price

 

Good luck. It's worth a try for the price, that's for sure.

[swansjr 10]

Day 14

 

Two trades. Two winners.

 

My entries were a little sloppy today but I did take them instead of sitting on my hands waiting for the "perfect" signal. My first trade was a short as EC appeared to be trending downward. My target was hit quickly. You know you're on the right side of a strong market when your target is hit quickly! On the next opportunity I entered with a single contract with the full intent to exit this contract with runner parameters. The market quickly went through my scalp target and I held on. The downward trend looked intact on my larger timeframes and I was determined to get a few more points. Down and down the market went. Boy does that feel good! I exited when it looked like the bears were exhausted and I could not have been more spot-on on the exit. While I did not exit when price retraced to my upper Keltner band, I was pleased because I did not sell at my scalp level. Obviously I need a lot of work yet but this added some encouragement that I can do it.

 

This chart below shows both trades for today:

 

 

In short, I'm very please I was able to execute a runner. I saw the market was in a trending mode and I was able to take advantage of it. I did stop trading after this, but the opportunities were ripe. Today looks like one of those days where money would flow into my account if I would just keep trading. It felt easy. A period similar to this happened in April for several days, if I remember correctly. Anyway… "Let's take things slow. Let's not get greedy." were the words I said to myself. Besides, I had some non-trading obligations to take care of. I was done for the day.

 

Looking at the charts now I was right. Multiple signals were clearly apparent that provided great opportunity. That's ok. There will be many more days like this. In light of what I have learned over the past several weeks, I will be reviewing my rules and making slight modification to my entry and exit rules.

 

 

P&L: $370

[swansjr 10]

Day 15

 

One trade. One loser.

 

Quick update today. The EC market was choppy and when the unemployment news hit pre market, Wow! I tried to take a signal which was probably stupid since the market was behaving so strangely. Sometimes fundamental news does weird and wild things to market participants and it's best to step aside. Anyway, I decided to play. I was stopped out rather quickly and I called it a day.

 

 

P&L ($100)

[brownsfan019 17]

Day 15

 

One trade. One loser.

 

Quick update today. The EC market was choppy and when the unemployment news hit pre market, Wow! I tried to take a signal which was probably stupid since the market was behaving so strangely. Sometimes fundamental news does weird and wild things to market participants and it's best to step aside. Anyway, I decided to play. I was stopped out rather quickly and I called it a day.

 

 

P&L ($100)

 

Good job being quick on that exit swans. I know what you were referring to and I was actually long through there but I wasn't going to mess around - it was either this worked quickly or it did not.

 

If you aren't already, make sure you are aware of 830am EST news that will move the EC. You don't want to be caught off guard when that news is released. In case you do forget something is going on, the dom will alert you quickly - you will all of a sudden see very few buyers/sellers (almost like everyone went home all of a sudden) and then bam, move takes place. But that 30 seconds or so of basically no buyers/sellers is a big hint that something is coming soon.

[swansjr 10]

Good job being quick on that exit swans. I know what you were referring to and I was actually long through there but I wasn't going to mess around - it was either this worked quickly or it did not.

 

If you aren't already, make sure you are aware of 830am EST news that will move the EC. You don't want to be caught off guard when that news is released. In case you do forget something is going on, the dom will alert you quickly - you will all of a sudden see very few buyers/sellers (almost like everyone went home all of a sudden) and then bam, move takes place. But that 30 seconds or so of basically no buyers/sellers is a big hint that something is coming soon.

 

Ah, good point. Thanks.

[swansjr 10]

Week 4 Summary

 

Overall it was another week of substandard trading. My money management rules along with some ability in actually halting my trading activity when things are not going well is what keeps me from killing my account. While I’ve managed to make money this week, my execution is lacking. I’m often not taking trades when I get a signal, or I make dumb entries. It’s class not following the rules and/or acting emotional. I also feel I should be taking advantage of a runner more effectively. I still have to think about this aspect. Right now, I’m more worried about my entry and actually taking signals when they appear before me.

 

I separated my live trades from my simulated trades. The results are in the images below.

 

First are my trading results from my live trades:

 

 

Next are my trading results from my simulated trades:

 

 

 

Both the live trading and the simulated trading have about the same number of trades. But it looks like the live trading has a better overall profile. This is because of 1) the great runner I had last week and 2) A slight change to my system.

 

Most notably I have bumped up my target profit from 6 ticks to 8 ticks. I did this because it seemed 8 ticks was often hit just as likely after my entry. I also wanted to squeeze more profit per contract and help reduce the effects of commissions and fees.

 

My next adjustment to my trading setup came with the removal of the two contracts. When I opened a postion with two contracts I would keep a very tight stop because I’m trying to normalize my risk across all my trades. At times this was not very practical and I felt uncomfortable with it. Furthermore, when I was re-reading Van Tharp material I ran across his opinion that scaling out often produces poorer results when compared to a single exit method. I have done some testing of this over the year and it does seem that in many cases you will get better trading results without a scaling out rule.

 

That’s it for now.

[swansjr 10]

Revised Trading Rules:

 

Trading Times: 5:00am - 830am central.

 

Screens:

2225t long-term trend screen. 445t intermediate-trend screen and a 89t chart to pin-point entry and exit.

 

Position Size:

I only trade one contract per trade.

 

Hard Target:

First target is 8 ticks from entry.

 

Runner Target:

If I perceive the market as "trending" I will not exit on my Hard Target. Insead I use an opposite Keltner channel as a trailing exit.

 

Risk Per Trade:

The maximum to risk is 12 ticks (12 ticks * $12.50 per tick = $150). Many of the setups will risk far less per trade.

 

When to Stop Trading:

 

After two consecutive losing trades, stop trading for the day.

After two consecutive winning trades, stop trading for the day.

 

Maximum Day Loss:

$300.

[swansjr 10]

Day 16

 

Quick update today. Most of the EC downward trend was complete by the time I was up in the morning. Price action was against the major trend and was a little choppy. I did manage to make one trade, which I scalped for my 8 ticks. The entry and exit were fine. But opportunity was slim.

 

P&L: $100

[swansjr 10]

Day 17

 

Today was a miserable day as mother market pole-axed my account. My first trade was idiotic right out of the gate. I did not follow my rules at all. :doh: I took a counter trend setup that I thought was setting up. Watts does have a counter trend setup but I’ve never practiced it – so like an idiot I try it with real money. Lost that one for about 8 ticks.

 

OK, I can move on.

 

All my time frames are aligned for my next trade. I enter long on a minor pull back. My screen does not update for ½ a second or so and then wham! About 10 bars are painted instantly and I’m taken out with about a massive 10 ticks of slippage. Price marches on in my original direction.

 

This really sucks. That last trade cost be big time erasing a lot of gain. I feel beaten down and cheated. I’m still positive since starting this with my real money so that’s one good thing. Of course I have a lot of time on my side. I’ll be back to do it again – but following my rules.

 

P&L: ($330)

Edited June 9, 2009 by swansjr

[swansjr 10]

Day 18

 

I'm a day late for this post. This post is for Wednesday, June 10th.

 

One trade. One loser.

 

The gods don't want me to trade today. I awoke eager to make a comeback from yesterday's debacle. I was determined to trade well. Turning on my computer monitor I see I have no internet connection. To make a long story short, I regained my connection about an hour later and right in front of my face was a long setup forming. I think I was a little excited as I entered long but was stopped out as the pullback was deeper than expected. Damn! That hurts. The market would then move on without me. Ouch! even more pain. This is my third losing trade in a row and I know it's affecting my psychology. If I was trading with a clear mind, I would reenter on the next signal because such a signal is just as valid and it would have been profitable in retrospect. But I'm still licking my wounds and I stand aside.

 

I seem to recall my last drawdown period a couple of months ago which was similar to what's going one now. I was sim trading and it seemed like I hit a wall. Some of this difficulty may have been the behavior of the price. The EC moves, like all markets, in waves and during "clean" advances or declines (as seen on the daily chart). Making money is relatively easy then. Consolidation is a bit more difficult - I take a few losses and my fear ramps up.

 

I'm determined to dig myself out of this hole (I'm a bit harsh on myself since I'm still positive since starting my live trading). I'm determined to take advantage of runners as well. Handling loss and letting runners win seem to be major issues for me. Let me make a list of my issues.

 

1. Letting losing trades affect my trading skills. Pure psychology is at work here as I view a losing trade as "bad." I do not fully trust myself or my trading system that over a series of trade there will be some losers but in the end I have a profitable edge.

 

2. Not taking every valid setup. This is a fear of being wrong and looking for the perfect setup so I can be right.

 

3. Not holding on to winners. Hate to see all that money on the table just sitting there!

 

P&L: ($100).

[swansjr 10]

Day 19 - June 11, 2009

 

No trades today.

 

What a week this has been so far. My weekend review showed positive numbers and I was feeling good about my discipline at not over trading and taking my losses quickly. I came in Monday looking for opportunity. I only found one trade which worked out. I'm certainly not over trading like many other people do! All was well. Then Tuesday really hammered me psychologically.

 

Today I was getting conflicting signals on my timeframes and I was not about to jump in without a solid looking entry. So I watched the market as it danced around my Keltner Channel and moving averages. Strictly speaking, there were several valid setups that would have worked out. However, I'm in ultra conservative mode until I see a cleaner, decisive move on EC.

 

One more day this week.