my journal 2

[Yamato]

This is my favorite: Você e Eu, again by Carlos Lyra.

 

[Yamato]

Lyrics

 

[Yamato]

pretty good...

I think this is a new record in its kind: 27 stocks played and only a negative one. I've stopped as soon as it happened because i know it'd screw up my emotional balance and bring more losses.

http://www.chartgame.com/trackrecord.cgi?8634gd-130,27

 

[Yamato]

still looking for a consistently profitable method

I yet have to find a method that consistently makes money on the chart game. I am confident that if I try very hard I can consistently make money but what I am looking for is to identify the optimal method to follow so to trade in a relaxed way and make money even if I am tired or stressed out, with as many univocal rules as possible. Then I'd be able to use that same method on real trading.

I know that if I try hard I can make money, any time on the chart game. But the problem is that without a method I am unable to stay away from trading in those times when I am not trying hard. With a semi-univocal method, you always make money even when you don't try hard.

I guess that in order to do this, I need to establish some rules that will make the odds go my way in a definite way. I've been practicing for hundreds of games and thousands of trades by now (besides all the real trading), so I can definitely write down some profitable rules and quit switching from one method to the other.

1) stoploss beyond s/r level
2) ...

I'll stop at the first rule because so far that's the only one that makes sense. No percentage stoploss but a level stoploss.

The other rule of starting my trade immediately might be good for practicing but it's not a good idea to enter a trade immediately. You lose part of your edge by being forced to trade all the time.

I'll write down more later, as i play.

Here's more rules.

1) definitely the stoploss idea is good: stoploss based on levels rather than % terms or number of weeks
2) similar takeprofit, based on s/r levels, rather than % terms or number of weeks
3) not more than one trade per stock so you don't get stuck on hyper or revenge trading

Yes, this is it: levels of price rather than time-based or gain % based entries/exits. With this in mind, I've been able to bring 10k to 50k in just 11 trades on 8 stocks. I've never done this well before:

http://www.chartgame.com/trackrecord.cgi?8f862f-1,9

I'll even take a picture, for the occasion:



You basically say: "it will go from here to here, and if it goes beyond here it means I was wrong".

With those other methods i was using (entering immediately, exiting based on % of win/loss or based on the number of weeks), how long did it take me to get from 10k to 50k? Hundreds of trades. And by that time I'd be so tired that I'd blow out my account by making sloppy entries and eventually skipping a stoploss.

 

[Yamato]

Toots Thielemans

http://en.wikipedia.org/wiki/Toots_Thielemans

 

[Yamato]

http://en.wikipedia.org/wiki/John_wayne
http://en.wikipedia.org/wiki/Dean_Martin

 

[Yamato]

murder rates

http://en.wikipedia.org/wiki/Murder_rates

I find this link very interesting because it tells us which countries are most civilized and least dangerous. I can use it for my travels.

Overall the best country seems to be Norway, which doesn't even have a crime page. Japan is good but it's got the death penalty. The others are small or in Africa/Asia. I don't trust their statistics.

 

[chilltrader]

Re: murder rates

http://en.wikipedia.org/wiki/Murder_rates

I find this link very interesting because it tells us which countries are most civilized and least dangerous. I can use it for my travels.

coming out of the US, don't think you would have much difficulty in picking out such destinations anyway

 

[Yamato]

This is working all the time:
http://www.chartgame.com/trackrecord.cgi?8f862f-14,3

I am satisfied with the new method (see previous post for description). I just need to define more univocal rules.

Also, have been watching a very interesting movie:
http://www.letmewatchthis.com/watch-22847-49th-Parallel

Filmed in 1941 about the ongoing war (Canada was in the war, the US still wasn't).

Some links related to this film:
http://en.wikipedia.org/wiki/49th_Parallel_(film)
http://en.wikipedia.org/wiki/Hutterite

 

[sun_wants]

Re: 6 rational trades

Very wise. Thanks for sharing.

No worries. Not wise just a view and hopefully of some help to you. Been having a very busy weekend and just back ontoday. No trades so far. I'm happy to watch the market for a while - don't know why but I don't feel like I would be profitable if I were to trade today so I think I'll keep away from the charts and do some reading

Feel free to post anything you want. If anything, I should be the one thanking you for enriching my journal. But don't make any promises like "i'll do it once a week", because I know from experience that these commitments become a burden very quickly. You're likely to post more trades if you don't make a commitment, than if you say you'll do it regularly.

Thats a good point - Ok If I see anything I think is worth posting i'll add it as and when it comes up.



You're totally right, but as i said:

1) I feel uncomfortable opening an account with a spreadbetting company (the stories i read, even on this forum)

You know you've got me thinking now. Some of the trades made over the years that didn't work out because my stock was traken out, which then turned out to be the high or the low of the day before going on to move in the direction thought for what would have been a very prfitable trade. Not saying it was the SB firm but the more reading I'm doing the more I need to think I need to use a different type of account - especially if I'm going to make this work as my main source of income.

Please send me your google email via a private message and i'll invite you to my secret blog. There's only one other person so far, and the other person who's in it is AWOL, as I said, so we'll be three (all from t2w).

I'll do that, look forward to reading and contributing..


Well, if you had 100k, then of course you can size your risk at best with futures and risk less than 1% of your account on each trade. But with 3k like i have, things are different. If you do futures, my advice is to use InteractiveBrokers.

I'll give them a look

No, actually life is not good at all. I work at a bank and I just live at home with my dad, ah ah. So I don't have to pay the rent. Half of my psychological problems come from my relationship with my dad, by the way.

Sorry to hear that mate - hopefully it will work out for you in the long term



Yes, futures are the reason. Good point. How can you take a look at them if I didn't post them anywhere? Oh, by the way, the whole automation relies on interactivebrokers so i can't bring the same automated stuff on any other broker (instrument yes, but always with IB).[/QUOTE]

Sorry its the way I wrote it - you made reference to some earlier threads that were focused on your system - what I meant that was I would defeintely give them a read (all this reading - when is a man to get any trading done !

Sure that's true - SB firms really don't help out in this game do they other than the obligitory charting package.

 

[Yamato]

the "invisible exams" that a trader has to pass

Yeah, all very reasonable.

What I could add is this: my knowledge on brokers and instruments could benefit you, and your capability of being profitable could benefit me. Just because someone is not profitable, like me, it doesn't make them worthless. Even though to my own eyes I am worthless because the end result is losing money.

But I know it's not true at all. The reason is similar to the one I explain to people, when they say to me: "hey, you've been saying you'll make money for years, and you still haven't, so I don't believe you any more". Yes, they may have a point, apparently, but I'll tell you why they may not have a point.

If you want to become a doctor, you have a bunch of exams, that will require your studies to continue for almost 10 years. No one will come up to you on the sixth year and tell you "hey, you told me you were going to become a doctor 5 years, you still aren't, so I don't believe you ever will be one". Same for a lawyer, even a lawyer who keeps on failing the bar exam. No one will go to him and say "you'll never become a lawyer". In a sense I am like a lawyer who keeps on failing the bar exam. I know a lot of stuff, but I still don't know enough to pass that exam, the profitability exam. Who knows, maybe I don't have enough capital, maybe I don't have an edge, or maybe I am incapable of using the stoploss. I think these two are most likely the case: low capital which leads to poor money management, which leads to not being capable of using a stoploss (because I am losing so much that I can't take it psychologically). In this sense, spreadbetting could be the answer, as it allows good money management even if you have a low capital (via microlots and such).

You see, I should only risk 2% on each trade, and have a target profit of at least 4%, and try to have a majority of wins. That way I would really play it safely and probably I'd be profitable. We'll see. The chart game is helping a whole lot.

Anyway, to get back to my "invisible exams" analogy, I'd like to compare my endeavour to a more similar activity where you either succeed or fail, and do so all at once. I mean trading is like those places where you either succeed or fail, but don't gradually show your improvement, even if there is improvement. That's why we could speak of "invisible exams", that I have to pass before becoming profitable.

Let's look at some fields where it's "all or none" and others where it's gradual. Trading is definitely "profitable" or "unprofitable".

ALL OR NONE
1) Getting a girl (she wants you or she rejects you)
2) Getting a job (you're either hired or not hired)
3) Being a profitable trader (you either make money, or lose money)
4) Being alive (you're either alive or dead: it's very rarely debated)

GRADUAL
1) Being an employee at the bank (you could suck but still not be fired)
2) Building a house (it could suck but still stand and be called a "house")
3) Being a student (you could be anywhere from a poor student to an excellent student, but you still would be a student)

I cannot think of a good comparison right now, but I believe trading is an area where you could be working for years (like a nobel prize) without achieving anything and stay unprofitable, amassing amounts of knowledge, but if one ingredient is wrong, you won't make money, and then, all of a sudden, very quickly, you find the right ingredient and everything works out. It seems close to being a scientist who works on a formula or similar. His years of work could be worthless or he could win the nobel prize. He never knows when he starts. That's how trading seems to me. The secret of profitability still escapes me, but the day - if it happens - that i'll find out the missing ingredient(s), I am confident that I'll be extremely profitable, because I've been improving greatly in all other related fields.

Concretely, we could say that probably what I am missing is money management, but I have become pretty good at accuracy. I know how the markets move, but I don't know how to exploit my predictions. That's how close I can get to explaining my problem. If I could explain it any better, it wouldn't be a problem, because I'd be able to solve it.

 

[Yamato]

s/r bracket order method with reward/risk > 2 and % wins about 50%

Pretty good:
http://www.chartgame.com/trackrecord.cgi?8f862f-34,6



Followed the latest method: support and resistance and stoploss. Risk to reward of always at least 1 to 2, and expecting a majority of wins. It really seems the fastest way to make money. What is hard about is that the trades are not very regular in gains and frequency. Sometimes a whole chart goes by without any opportunities.

It's not random and I wasn't lucky, but it's still hard to keep rational if I lose. After a couple of losses, I lose my mind and skip a stoploss. However, with this method, I can quickly double up my capital, usually within less than 10 stocks.

 

[Yamato]

Very interesting movie on parachuting, made in 1941:

http://video.google.com/videoplay?docid=3722372055382116309&hl=en#

 

[Yamato]

the future for me

Ok, I've finally found a future that has the perfect characteristics for me: the DX future.

I learned about it from my studies on the possible causes of unprofitability of my systems. It turns out it can also be traded, on the NYBOT, and that it's got a spread of usually 1 tick, which is only worth 5 dollars. It's perfect for me. Low margin required. Every day it moves about 120 ticks on average, which is 600 dollars.

http://futuresource.quote.com/charts/charts.jsp?s=DX&o=&a=D&z=800x550&d=LOW&b=CANDLE&st=

So, if I am totally wrong and don't use any stoploss except by closing at the end of the day, I'll end up losing about 600 dollars, which is ok and it doesn't scare me into irrational behaviours. In a similar worst-case scenario, on the EUR I could lose 2000, and on the GBP 1000.

Other good futures for me and my small capital could have been the ZN and the GBL, except that they don't move much and have a much larger spread (and tick value): 15 dollars on both (depending on the exchange rate of the euro).

Therefore I am planning to make my trades on the DX. Hopefully with the chart game I will learn to define my risk/reward once and for all. I am still unsure whether I should go for reward to risk of 1, 2, 3, or more. If I looked for trades that have a reward to risk of 5, which do exist, I either try very very hard (but it's not advisable to trade like that, because you're increasing your own stress too much), or I am not going to have a majority of wins. My kind of relaxed trading is closer to a reward/risk ratio of 2, with a wide stop, trying to pick tops and bottoms. With this kind of stop I should be able to pick at least 50% of wins, but I hope for about 66%, so to have this sequence of trades: +2, +2, -1.

 

[Yamato]

 

[Yamato]

 

[Yamato]

This is quite good:

http://www.letmewatchthis.com/watch-4191-A-Matter-of-Life-and-Death

Interesting historically as well.

 

[Yamato]

It works! It works!

I'm being profitable as a discretionary trader with the chart game! I brought capital from 10k to 55k, even though I later (this morning) resumed that same game and screwed it up big time, without following any rules.

I do these 4 strategies (see pictures below), using a 10% stoploss and 20% takeprofit. I know it contradicts what I said in my latest posts but it's the most practical way to keep track of the stoploss, which is the most important thing. If I keep my eyes on the chart I lose control of the situation. I must look at the % increase and decrease in order to play it correctly. As soon as I look at the chart i start hoping for price to get here or fearing for price to get there... and I lose control of the maximum loss and target profit. The ideal would be to automate the stoploss and target profit, but the chart game doesn't allow it.

Here's the link to those good trades:
http://www.chartgame.com/trackrecord.cgi?8hgd2b-4,30

Here's the 4 examples that summarize my strategy:

LONG above RESISTANCE


SHORT below RESISTANCE


LONG above SUPPORT


SHORT below SUPPORT

 

[Yamato]

This is good, too. Color film and made in 1943:

 

[Adamus]

I'm interested to see what you're going to do now. you know you've got to get a grip, but how are you going to do that? Getting a grip isn't something you can just decide to do. It's something you have to practice.