Ideas for increasing trader performance

I wanted to post this link that I think drives home a very valuable message to traders.

If some of you play poker you may find the hand more interesting than others but even if you don't you can get the gist of what is going on from the commentary.

In particular, I think the whole video is worth watching for the final interview.

Tom Dwan (arguably one of the best poker players in the world), loses a $500,000 pot in a single hand and although he does look physically sick the point is...

- He know he has an edge over time

- He plays his edge fearlessly

- He loses this particular hand

Bear in mind this is real money on the line and it's the players own money.

Check out the interview with him at the end.

His attitude is excellent and what he says is 100% relevant to trading.

To add to the excellent post above, would suggest that retail traders unfamiliar with poker take a look at durrr's (tom dwan's screen-name online) career... I'm sure TD will agree with me that many will find inspiration and ideas in that...

TDs post about poker reminded me of this:
(scroll down to bottom of page, and select
"Poker pro Howard Lederer on poker & trading the markets.")

http://www.trendfollowing.com/

USD/JPY

Here is a trade I made today. This is a 1 hr. chart and had been in a sideways channel for a while. It broke upwards today and broke hard. I figured I'd wait for a retrace and go long. When it looked to be running out of steam I saw this setup and decided to go short with the target being the top of the channel it just broke (about 200 pips). Here is why I took this trade.

1. Pin Bar (though not perfect, the shadow on the bar to the left is tall)
2. Nose of pin bar touched a S/R pivot drawn from the daily chart
3. Price had also just crossed over a longer term trendline

I followed the rules and shorted 1 tick below pin with stop 1 pip above top of pin bar. I got stopped out and as of now the trade is well on it's way in the direction I expected. My question is this: Is this a "good loss"...one that just happens with a good setup. Or is this not a good setup? If so what did I miss? All I can see is that it is against the trend which TD does and that the pin bar isn't ideal.

Thanks

usd/jpy daily chart

here is the daily chart showing a birdeye view.

My personal opinion is that this is not a good setup. Taking the top down approach, the market had just experienced a significant breakout.

Considering the sharpness of this breakout, I would not have expected a pullback to retest previous resistance so soon.

After such a run up, any signs of the move running out of steam is likely to lead to more of a pause for breath rather than an outright reversal.

Combine this with the fact that you will have every amateur that witnessed the move but missed getting in will be looking for any pullback to get long for the next leg up, makes this a no go for me.

I don't trade breakouts and I don't fade them once they've broken hard. The only high probability trade here is, in my opinion, to buy 90.80 if and when it gets back there, depending on the PA.

The pin, even though it was located at a position where the chance of getting a runner was slim to none, did what it was supposed to do, i.e. retest the resistance created by the previous few candles (see white line @ chart).

Upon reaching that area, it would have been prudent to move your stop to breakeven and/or take some or total profit, especially considering you were fading a strong breakout that many people were anticipating over the last couple of days (i.e., lots of orders in place, so that when it did break out of its range, the momentum behind it was going to be huge).

However, the best thing to do in cases like this is to stay on the side if you've missed the initial breakout, or wait for a pullback to enter in the direction of the prevailing momentum. Don't try to catch a falling knife, especially with small pins like that. On the other hand, had the pin been 4 times larger, it would have been a different story...

Thanks TD and DHB,

I too had been waiting for a breakout, but I was watching for a break then a retracement to the 90.80 but when I saw the pin I thought it was a good setup. I had read early where TD had said after a big candle is a good place for retracement with the right signal. I guess this one was too big. As far as moving my s/l to BE it only moved 5 pips and that was on the entry for a very short period. Of course it did retrace a little later.

edit: I guess the other ameteurs got it right by jumping on board. It might be wise for me to concentrate primarily on trading with the trend for a while. Most of my losses seem to be against it. Or a least a more gradual trend reversal.

Thanks for the analysis that really helps.