my journal 2

This is a discussion on my journal 2 within the Trading Journals forums, part of the Reception category; Ok, going without any method right now. Only s/r levels. And I've doubled it again. Now hopefully I won't get ...

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Old Jan 24, 2010, 12:17pm   #31
 
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practicing again: 20k

Yamato started this thread Ok, going without any method right now. Only s/r levels. And I've doubled it again.

Now hopefully I won't get bored and start gambling, by leaving unprofitable trades open and hoping for them to come back. Yes, because that's exactly what gambling to me is letting losers get away. Losing control of losers. And also not waiting for the right entry opportunity.

I enter as soon as it touches a s/r level. In case I enter a bit early I don't exit until the real s/r level has been violated. I sometimes anticipate because when price is highly overstretched, it is also likely to anticipate and i don't want to miss that trade. I use s/r levels when we're in a range. I use only support levels when we're beyond any resistance. And viceversa. At any time I am only considering 2 s/r level. One support and one resistance.

As an exit from my profitable trades, I use the color of candles: if I am long and I get a black candle, then I exit, and viceversa.

For non-profitable trades, I exit as soon as my level is violated and it doesn't bounce on it.

Right now it's going well. I'll keep you updated. I'll post these pictures of the account hopefully all the way to 100k. And then summarize my method again, in case it's changed from the above.

Never mind the 50 SMA. It's in the picture but I am not using it. I'll get rid of it now.

snap1.jpg

Last edited by Yamato; Jan 24, 2010 at 12:49pm.
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Old Jan 24, 2010, 12:58pm   #32
 
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re: my journal 2

Yamato started this thread I blew it again. I guess I got impatient, and with no univocal entry/exit rules, impatience got to my thinking and... got to zero again.

This seems to be the pattern in my real trading and in this simulated accelerated trading: I start by doing well, then after a few trades, my reasoning goes bad and i lose everything. That's why I should stick to the rule of making one trade per day in real trading, and only half an hour of practicing on this simulator. After a while in terms of trades/time, I start being less and less careful about picking my entries and exits.
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Old Jan 24, 2010, 1:35pm   #33
 
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re: my journal 2

Yamato started this thread Ok, one more try.

Now I'll automated this thing in a way that no matter how tired I get I'll still make money.

Now, since stocks usually go up more than down, I will only play LONG opportunities.

So I will be looking for support levels only.

I will look for the best support level in every chart I am given, and I will go long on that level as soon as it gets reached.

If profitable, I will stay long until a daily candle fails to make a new high.
If unprofitable, I will allow 3 days for my position to become profitable.

I will come back if I modify this.

The only discretionary thing is picking that support level, and only because I haven't figure out how to define it univocally (swing low, lowest low... that type of thing).
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Old Jan 24, 2010, 1:40pm   #34
 
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re: my journal 2

Yamato started this thread All right, first try: I blew it again and didn't follow my system, which i had written 5 minutes before.
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Old Jan 24, 2010, 1:50pm   #35
 
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re: my journal 2

Yamato started this thread http://en.wikipedia.org/wiki/Carlo_Maria_Cipolla
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Old Jan 24, 2010, 2:02pm   #36
 
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re: my journal 2

Yamato started this thread Ok, tried it again. I am allowing 5 candles against me in case it is not profitable.

First trade 4k profit.
Second: 2k
Third: 1k
300
1k
...
I'll tell you when i am done.
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Old Jan 24, 2010, 2:08pm   #37
 
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re: my journal 2

Yamato started this thread Nope. I got tired and I am stopping here at 17k. I can tell what gets me tired is the discretionary part. Constantly having to decide when to enter and when to exit. S/R is not univocally defined: I have to guess it each time. As a consequence, also entry is not defined. And then it ensues that also exits are not defined univocally. This constant guessing is what makes me tired, or maybe it has to do with the fear of being wrong. Both things.

That's what makes automated systems so powerful. Even with a small edge, they can perform tirelessly, without feeling any of this stress, so that an automated system by making 10 pretty good trades per day can outperform a human, who can only make two very good trades per day, without feeling so much stress that he'll start giving all the money back.

Last edited by Yamato; Jan 24, 2010 at 2:14pm.
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Old Jan 24, 2010, 2:33pm   #38
 
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re: my journal 2

Yamato started this thread Ok, I think i got it. This has to be practiced as if you weren't playing money and if you weren't playing to win.

You just have to forget all rules and all parameters and keep on playing and playing, regardless of how much you lose, until you figure out how it works. That's what I'll do. I don't have to impress anyone. I just have to practice until I figure out how it works. S/R definitely work, price is not random... it can be figured out. Forget indicators or anything else. All I needed to know, I know. Now I'll just keep on playing it like any video game. Once I figure it out, basically I have become profitable. Then it can be done also on real trading.

The big difference is the speed though. Huge difference.
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Old Jan 24, 2010, 3:46pm   #39
 
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re: my journal 2

Yamato started this thread Getting closer... taking losses less personally... getting there...

snap1.jpg

Watching tv as I play it. It helps me not get too tired and not overtrade.
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Old Jan 24, 2010, 4:04pm   #40
 
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re: my journal 2

Quote:
Originally Posted by travis View Post
Hilarious. Just finished reading The Basic Laws of Human Stupidity. Great stuff. Many thanks.
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Old Jan 24, 2010, 4:10pm   #41
 
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re: my journal 2

Yamato started this thread Yup. I had to look it up to explain to be-positive why I am calling him an "idiot": he ruined my previous journal without any personal gain.
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Old Jan 24, 2010, 6:23pm   #42
 
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re: my journal 2

Yamato started this thread Ok, I figured it out. I can make any trades and be profitable, but I have to see it in terms of quality rather than quantity.

There's no way I am going to make a sequence of 50 good trades without losing track of what I am doing. I can only focus on making ten good trades at a time. Then I have to take a break. If I don't, losses start coming in.

So this is how I am going to play it, in this game, and in real trading. Only x number of trades without taking a break. In real trading, one trade per day should do it.

In this trading, I can pretty much be confident that if I only make 10 trades, the balance will be a positive one. If instead I start out with the plan to bring my account from 10k to 100k, it will not work out. Because I'll be in a rush, push my luck, and see opportunities where there aren't any. Right now I don't feel there's any need for indicators of any sort. The chart tells you enough. But maybe indicators are what I'd need to make more than 10 trades in a row: they're probably what's necessary to implement a semi-automated trading system (manually executed). The only problem is that I don't know yet what exactly I am doing in those ten trades that makes me profitable. I can't describe it univocally yet. What I do know is that each time I exceed that number of trades, I start losing money. In real trading, it's worse, and, as soon as I exceed the two trades per day, I start losing money.
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Old Jan 24, 2010, 6:38pm   #43
 
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re: my journal 2

Yamato started this thread Ok, I am done for a few hours. I've played about 5 (round-trip) trades, and managed to be profitable. Next time I'll play I'll try to do the same. Once I can make a rule out of this profitability on about a dozen of trades at a time, I might try to increase the number of trades. However, once it becomes the norm, I will develop some confidence in my (technical) analysis, and such confidence will also be there when I trade with real money, and, if that happens, I'll trade better, and finally, hopefully, become a profitable discretionary trader.

My trades and performance vs buy and hold. When it says "2" trades, it means one round-trip trade.
snap2.jpg

Comparing my results with others, and comparing buy and hold vs my results.
snap1.jpg

This trading simulator is a gift from heaven, because it's better than any other trading simulator. As it speeds up the charts, which is not achieved by IB's paper trading account. I believe this is the best single tool available for learning technical analysis, if you can only get yourself to use it long enough, without getting bored with it.

I never considered this before: being consistently profitable does not mean that you have to be able to constantly pick overall profitable trades. It obviously just means that the trades you pick are overall profitable. No one is forcing you to trade incessantly. One guy could be profitable by making 100 trades per day, and another guy could be profitable by only making one trade per day. Maybe the guy who can make 100 trades per day is slightly better. Maybe he has improved over time.

What this simulator has taught me very clearly is that the same person (me) can be profitable in his first 20 trades and unprofitable in his second 20 trades. And this happens constantly. It has taught me that my judgement gets worse over time. It has taught me that I have little patience and a short attention span, and that I can only make 10 good trades at a time, but nonetheless it has taught me that I can be profitable, if I trade at my own pace. And even that I can take my losses, once I know that I am capable of wins as well.

I will now have to practice a lot more to see if this is really true and I can have a sequence of 10 overall profitable trades at any time, on any chart I am given. Once I develop total confidence in that, it will just be a matter of adapting my skills from the customizable speed of the simulator to the constant speed of the markets (if that can be done): obviously the real market does not go forward when i click a button (like on the simulator). It goes faster and slower, depending on the timeframes, but never at the optimal speed for me. If I wanted to see an acceptable speed from the real markets I'd probably have to trade 1 minute candles, but that may be too fast and then I would not have enough time to detect s/r levels, and commissions and spread costs would kill me.

The one thing that spoils me in this simulator is that you can make it go forward exactly when you're ready for it. It would be like playing tennis with someone and be able to freeze the other player for a few mintues, to take a break. It would as if you were boxing and were able to freeze the opponent to evaluate him and then avoid getting punched by him. The real market keeps on moving, and by the time you appraise it, it might have punched you with a move against you, and, without a preset stoploss, that will hurt so much that you won't be able to react, and keep him from punching you further.

With this option to freeze the other player (price, your opponent), this simulator takes all anxiety away from trading (also for the fact that you're not investing real money). However it is a very good tool, the best trading tool I've ever found. Better than any book, manual or similar.

Last edited by Yamato; Jan 24, 2010 at 7:13pm.
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Old Jan 24, 2010, 9:22pm   #44
 
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re: my journal 2

Yamato started this thread To concisely describe what seems to work, I'd say: you look at the chart, and if it goes up, you look for long trades, if it goes down you look for short trades, and if it goes sideways, you look for counter-trend trades. In all situations, you go against the smaller timeframe. If it goes up, you go down and viceversa on the shorter timeframe. On the larger timeframe, if it goes sideways you can pick both directions. If it goes up you can only pick long trades, and if it goes down, only short trades. This is like my previous weather comparison: if it's raining you bet on more rain, if it's sunny, you bet on more sun. The range comparison is not available as far as weather.

Another important thing is that you play s/r levels mostly in range situations, whereas they're much harder to use when you have a trend.

Another thing to say is that in these 3 situations:
1) uptrend
2) downtrend
3) range

Things could change, and if price suddenly breaks out of the range, this turns the chart into an uptrend. All things said over and over again in forums and text books but you never care about it unless you see for yourself, and actually hearing it repeated over and over again has kept me from understanding it, since I perceived it as the usual crap that everyone talks about. I mean you hear on tv people praising madonna and britney spears, saying they're great artists, and similar stuff, so pretty soon you automatically assume that if everyone says something, that thing is bull****. The same applies to horoscopes, religion... everything. So that's what I assumed about trading facts as well. Cnbc? Crap, since everyone is watching it. S/R? Crap. But maybe in trading things everyone talks about are actually important simply for the fact that everyone talks about them. In this sense, it might be a great idea to start listening to cnbc as well. A clear example of this is the 7.30 CST news, which drive the markets crazy, and which I would have wrongfully dismissed according to the theory that if everyone talks about it, it's crap. I realize that for intraday trading, it's hard to ignore the 7.30 CST news, at least by staying out of the market.

Last edited by Yamato; Jan 24, 2010 at 9:57pm.
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Old Jan 24, 2010, 10:21pm   #45
 
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re: my journal 2

That chart trading software is pretty cool. More than anything else it highlights how much randomness there is short term. The only way I was able to do well was by looking at 4-year chart patterns
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