The Trading Journey of Lurker

[Splitlink]

Rules
1) Before the day opens review the previous day and note lowest price of the previous day (=PDL) and the highest price of the previous day (=PDH)
2) In case price opens above the PDH (so not inside yesterday's range), then put in:
- a BUY limit order at the PDH
3) In case price opens below the PDL (so not inside yesterday's range), then put in:
- a SELL limit order at the lowest price of the previous day (PDH)
4) In case price opens within yesterday's range, then put in:
- a BUY limit order at the lowest price of the previous day (PDL) and
-a SELL limit order at the highest price of the previous day (PDH)

Your stop is 20 points, your target 40.
This is very basic, very easy, and you don't need to watch the screen during the day, only at the open. At the EOD you'll see if you made profit or not. No stress, no thinking, no second-guessing. Very straightforward, very easy.

I just made up this system and backtested it on the last two weeks and unless I've made an error on this nightly hour I've counted 4 profitable and 8 losing trades. Not deducting commissions that would mean 4 x 40 - 8 x 20 = 0 points. Basically no profit. But that's still better than what you are doing now, which is losing money, right?
Even with commissions from 12 trades in 2 weeks time you still would only be down about 50 USD.

I hope you get my point.

A very useful post. Not that I follow your rules, exactly, but that is not the point. The point is that one has to be consistent with what one does, until that plan has proved itself a failure. I would figure that to be at least ten trades.

I'm following your posts on the other thread about "exits". I'm not so worried about them, making correct entries is my immediate concern. I'm OK with what I have always done, which is position trading, but I keep coming back to something that fascinates me, daytrading Footsie. in the mornings (work in the afternoons).

Basically, my method (at present) consists of trying to find the high or low point for the the morning, at least, and I keep my stops short. This is not easy and I have to exit quickly and try again farther down (or up). The daily trend is no indication of what the morning trend is going to be, but I use it. That is, if the daily trend is up and strong, I try to find the low point of the morning.

This close stop method satisfied me last month, with a gain of 198 points, but this month I am still down 18 points. There was a great opportunity last Thursday that I missed, which shows that every signal should be followed or the plan will not work. Nevertheless, 18 points is a loss that I am comfortable with because I still have two months to eliminate it, but I am still unhappy with the loss of time.

Regards

Split

 

[lurkerlurker]

Being "in tune" is something that can happen from time to time. But as you've found out for yourself being "not in tune" will cause you much more pain (emotionally and financially) than being in tune. So why not stick to "the" (or "a") plan and forget about trying to understand let alone act on instinct.

I will do so. I am now following Atilla's YM position trading strategy, which traded once last week. I went short on Wednesday for +60 following the system to the letter. The system did not trade on Thursday, however I mistakenly reverted to my old ways trying a day trade. I lost, and stayed flat all day as the system did not give a signal. The system had given a long signal on Thursday, which I missed while being short. The system did not give a signal on Friday, and I did not trade on Friday.

Also, you started to make daily analysis, but you quit after 3?
"YM Paper Trading, 14 June 2007"
"YM Paper Trading, 21 June 2007"
"YM Paper Trading, 27 June 2007"
is all I can find of?

Yes, perhaps there is some discontinuity between what I have said here and my posts on the Dow thread. I have not seen fit to update this thread, but things are discussed in detail on the Dow thread. I have decided to stop paper trading (although I will do it for two weeks as you suggest) as it does not work for me. I understand that entering trades into a system, following your plan, and posting results will improve discipline, and I am willing to do this. However paper trading cannot replicate anything close to how I will behave with even £1pp risk.

The paper trading posts were no longer helping, so I stopped them.

Unless you make 20 consecutive posts from 20 consecutive days where you followed your plan to the letter, you will keep on going round without making progress.

Sorry to be blunt, but there's really no other way of putting it.

I definitely agree with this. For the next 20 days, I will be following 2 plans.

Plan A is Atilla's position trading system. These trades will be executed through my bucketshop when the system gives a signal, and reported on here. This system does not trade every day. This system will be traded until I state otherwise. If I do decide to stop trading this system, the reasons will be clearly stated and no other trades will be executed until a new system has been prepared and discussed. I may continue to trade Atilla's system on paper as it is mechanical and does not require emotions while in a trade. Results would be posted here.

Plan P is your paper trading challenge. This requires the entry of orders every day, even if these orders are not filled. Therefore there will be a daily report, even if only to say that 4 orders were placed (a buy limit, sell limit, and respective stops) and not filled. This will be done for the 10 trading days that you suggest below, and perhaps for the next 10 trading days as you suggest above. Let me know if/when I can stop doing this.

I will challenge you to do the following exercise: papertrade the YM for 2 weeks. 2 week onlys, by using the very simple rules below. Make daily stats of your win%, net points profit, etc as you did before. This isn't about the system, this is about you and the discipline.


Rules
1) Before the day opens review the previous day and note lowest price of the previous day (=PDL) and the highest price of the previous day (=PDH)
2) In case price opens above the PDH (so not inside yesterday's range), then put in:
- a BUY limit order at the PDH
3) In case price opens below the PDL (so not inside yesterday's range), then put in:
- a SELL limit order at the lowest price of the previous day (PDH)
4) In case price opens within yesterday's range, then put in:
- a BUY limit order at the lowest price of the previous day (PDL) and
-a SELL limit order at the highest price of the previous day (PDH)

Your stop is 20 points, your target 40.
This is very basic, very easy, and you don't need to watch the screen during the day, only at the open. At the EOD you'll see if you made profit or not. No stress, no thinking, no second-guessing. Very straightforward, very easy.

I just made up this system and backtested it on the last two weeks and unless I've made an error on this nightly hour I've counted 4 profitable and 8 losing trades. Not deducting commissions that would mean 4 x 40 - 8 x 20 = 0 points. Basically no profit. But that's still better than what you are doing now, which is losing money, right?
Even with commissions from 12 trades in 2 weeks time you still would only be down about 50 USD.

I hope you get my point.[/QUOTE]

I do. More waffling from me here won't do any good, but I do hope that you drop in to read my trading posts next week (both Atilla's system and your paper trades).

 

[lurkerlurker]

List of Tasks

A list of tasks I need to do within the next few weeks. Some of these are ongoing, and I will check them off when they are done.

Suggestions appreciated

1. Read and digest Elder Alexanders "Trading for a Living" and "Come in to my Trading Room"
2. Report my observations on these books to Rathcoole
3. Paper trade firewalkers system for 2 weeks, entering orders at the open and noting results at the close
4. Watch the markets for signals given by Atilla's system, and trade them
5. Keep an accurate record of all my trades on my journal as well as the Dow thread. Post statistics for the position trading.
6. Be mindful of my feelings when watching the markets, and keep a note of these. Share on T2W if appropriate or useful.
   [*]Rant some more about bucketshops. Accept that some of the trades may have been on bad price, and if so nobody in the market honours prices outside of time and sales. Learn to accept and be at peace with the debit. Be glad for the pips earned through insight, and be glad I was "right" even on the "bad price" trades. - Done!

 

[tune]

Suggestions appreciated...


How about going off hiking or something similar for a few days? Get away from it all. Clear your head, that sort of thing. It'll all still be here when you get back. My choice would be to walk a coastal path and take Mark Douglas along. I think most traders would agree that he would be worth the extra weight.

tune

 

[lurkerlurker]

Firewalker YM PaperTrades, 16 July

I will challenge you to do the following exercise: papertrade the YM for 2 weeks. 2 week onlys, by using the very simple rules below. Make daily stats of your win%, net points profit, etc as you did before. This isn't about the system, this is about you and the discipline.


Rules
1) Before the day opens review the previous day and note lowest price of the previous day (=PDL) and the highest price of the previous day (=PDH)
2) In case price opens above the PDH (so not inside yesterday's range), then put in:
- a BUY limit order at the PDH
3) In case price opens below the PDL (so not inside yesterday's range), then put in:
- a SELL limit order at the lowest price of the previous day (PDH)
4) In case price opens within yesterday's range, then put in:
- a BUY limit order at the lowest price of the previous day (PDL) and
-a SELL limit order at the highest price of the previous day (PDH)

Your stop is 20 points, your target 40.

I'm having problems with my OpenTick feed, so I am having to use the spreadbet price.

Previous Days High for Friday 13 July: 14009
Previous Days Low for Friday 13 July: 13921
Inside yesterdays range, so:
OCO Buy YM at 13921 (IF DONE Sell at 13901 stoploss, Buy at 13961 TP), OR Sell YM at 14009 (IF DONE Buy at 14029 stoploss, Buy at 13969 TP)

15:10 Sold YM at 14009. Stoploss hit at 15:30. -20 pips.

I'll do the daily stat as requested for today, although there isn't much:

Trades:1
Wins: 0
Losses: 1
Win %: 0
Average Win: N/A
Average Loss: 20

Cheers

 

[firewalker99]

I'll do the daily stat as requested for today, although there isn't much:

Cheers

Excellent, this was actually a trade that could've turned out quite profitable if the DOW decided to reverse. So good entry and good stop. If you look on the chart you'll notice the stop is placed at a point where you can be pretty sure that if it gets hit, your analysis was wrong.

Now in this case, isn't there something you think about the trade? Is there something you think that you would or could've done differently?

 

[firewalker99]

Rules
1) Before the day opens review the previous day and note lowest price of the previous day (=PDL) and the highest price of the previous day (=PDH)
2) In case price opens above the PDH (so not inside yesterday's range), then put in:
- a BUY limit order at the PDH
3) In case price opens below the PDL (so not inside yesterday's range), then put in:
- a SELL limit order at the lowest price of the previous day (PDH)
4) In case price opens within yesterday's range, then put in:
- a BUY limit order at the lowest price of the previous day (PDL) and
-a SELL limit order at the highest price of the previous day (PDH)

I discovered a small typo:
- a SELL limit order at the lowest price of the previous day (PDH)

has to read PDL between brackets obviously.

 

[lurkerlurker]

No, I think that it was just wrong today. Stopping and reversing sould have brought me cloese enough to buying a high, and with a 40 pip target my long would have expired at +12, deduct 4 point spread from that and I would have +8. Against losses of -20.

Of course, what I would have done differently would have been not to trade againt the trend by selling the all time high. So, this is a mechanical system I am trading for reasons not related to making paper pips - had this been the market I wouldn't have traded at that price. I agree that I was wrong to be short at -20, and that is clear on the charts.

Furthermore, a target of 40 was too small. A rejection of a test of the all time highs would have been quite bearish, and perhaps would have seen the market fall as far as 13950 (+60) or even 13900.

Hope this is of some use.

 

[firewalker99]

No, I think that it was just wrong today. Stopping and reversing should have brought me close enough to buying a high, and with a 40 pip target my long would have expired at +12, deduct 4 point spread from that and I would have +8. Against losses of -20.

Of course, what I would have done differently would have been not to trade againt the trend by selling the all time high. So, this is a mechanical system I am trading for reasons not related to making paper pips - had this been the market I wouldn't have traded at that price. I agree that I was wrong to be short at -20, and that is clear on the charts.

Furthermore, a target of 40 was too small. A rejection of a test of the all time highs would have been quite bearish, and perhaps would have seen the market fall as far as 13950 (+60) or even 13900.

Hope this is of some use.

Yes a possible stop & reverse strategy is what I was hinting at.
If you did that a target of +40 was possible for that long.

However you say a target of +40 would've been small if the short turned out profitable. How do you know that and why do you think that? Those numbers you state (13900) are purely speculative. If you want to have a good idea about where to exit you need to have a good idea about how far your profitable trades travel on average. Sure, they'll be times where they go much further, but you'll be banging your head against the wall if you left 40 points on the table and see price reversing to your entry point.

But that's for another thread. First things first and today you papertraded the plan.

Suppose this trade was profitable would you have analyzed it in the same way as you did now? Would you have reacted in the same way by stating you would not have taken this trade for real? If so, then you are trading objectively and that's how it should be. If not, you'll know what to do.

 

[lurkerlurker]

Thanks firewalker. I wouldn't have taken this trade, profit or loss, because it is shorting a top against the trend. I am tired getting burned with that - it is just not good practice to try and pick tops. Stop and reverse would have put me long from 14029, which means the market would have to hit 14069 to get +40 - that is above the HOD as of 20:29 GMT.

I should analysis winning trades in the same way, and if tomorrows paper trade wins I will do this.

Note that in the real market today I stayed flat.

 

[neil]

Experience

have just come across this thread:


http://www.forexfactory.com/showthread.php?t=27286



Excellent trading advice and perspectives for all traders.

 

[lurkerlurker]

Firewalker YM PaperTrades, 17 July

Market opened within range, sell order at PDH of 14065 was triggered with a SL of 20 and a target of +40. Stoploss hit at 14085 (which looks to be the HOD currently), leaving me with net -20.

So far, the stats are

Trades: 2
Wins: 0
Losses: 2
Win %: 0
Average Win: N/A
Average Loss: 20
Net P/L: -40 (and commissions had I traded those prices)

As far as my real trading has gone today, Price and DEMA crossovers with MACD support has not given a signal, so I have stayed flat on position trades. My discretionary system for news made a profit of +22 net of spread (actual trade through SB).

I've done firewalkers paper trades, executed on my news system, and as the last 4h bar for the day is almost upon is I do not see me entering a position trade today.

 

[firewalker99]

Just reporting the trade is obviously the easy part

Now, to add an extra dimension and purpose to the assignment, do the following:
After each trade (be it a winner or loser) note the maximum target you could've reached before price headed back towards to your entry point. Also write down how wide or close your stop had to be in case you wanted the trade to be profitable. For instance:

YM short 14000 stopped out 14020
-> Suppose price went to 14030 then to 13920, then swing up to 13950 and then back down to 13900.

Then a stop of 31 points would've kept you in the trade and a target of 80 points was the furthest price traveled before reversing.

Do this for each trade and in the end you should have some useful statistics.

 

[lurkerlurker]

Just reporting the trade is obviously the easy part

Now, to add an extra dimension and purpose to the assignment, do the following:
After each trade (be it a winner or loser) note the maximum target you could've reached before price headed back towards to your entry point. Also write down how wide or close your stop had to be in case you wanted the trade to be profitable. For instance:

YM short 14000 stopped out 14020
-> Suppose price went to 14030 then to 13920, then swing up to 13950 and then back down to 13900.

Then a stop of 31 points would've kept you in the trade and a target of 80 points was the furthest price traveled before reversing.

Do this for each trade and in the end you should have some useful statistics.

A good suggestion. I will do this for the trade I executed in the market today, which was going short at 14000. I used a stoploss of 30 which was quickly blown, but within 15 points of the high. Perhaps I should use wider stops for position trades. Being risk adverse cost me money in this trade. A stoploss of 50 set at 14050 would have been sufficient, and strength above that level would show that bearish sentiment was incorrect. So far the trade has moved a maximum of 52 points in my favour, down to 13950.

 

[firewalker99]

Reciprocity

The system I proposed is not just something I randomly came up with. If you are interested in studying price, you should look deeper into the things I said in my system and have a look at the following post:

http://www.trade2win.com/boards/showpost.php?p=264705&postcount=5

I've outlined some rough rules in my system, but the foundation is there. You've got all you need to make this work. But you won't succeed unless you continue trading the market live and not planning ahead before the day happens. You need to have a plan. You need to know "if the market does this, then I will do that".

 

[lurkerlurker]

YM Trading, 20 June 2007

Position Trading

I followed the system and took a short entry at 14020. I was a little risk adverse today, and let my emotions interfere. I moved stop to BE at +10 instead of +20, and was stopped out BE. I re-entered the trade 24 points lower when I established that the new trade with the same profit target still had > 2:1 reward to risk. I held until my target for +46.

Paper Trading

I am still mechanically trading firewalkers system, and am pleased to report +40 on a short for that today. A new addition to this system is moving stop to BE at +20, and I will trade the system like this in the future.

That is me finished until Monday. Good trading all.

 

[lurkerlurker]

Problems with the Bucket Shops, Illness

My apologies to firewalker and others for not doing my paper trades yesterday. I guess I've failed my 2 week paper trading challenge. I wasn't too well yesterday, and didn't place any trades or even look at the markets.

I am also currently in a dispute with a bucket shop. Depending on the outcome etc, I may decide to make the media and traders here aware of the risks.

bucket shop​

NOUN: 1. A fraudulent brokerage operation in which orders to buy and sell are accepted but no executions take place. Instead, the operators expect to profit when customers close out their positions at a loss.

ETYMOLOGY: From bucket shop, a saloon selling small amounts of liquor in buckets, from its resemblance to the forerunner of such brokerage operations, which dealt in small units of stocks and commodities.

Source​

I think we can all agree that with spreadbetting no executions (for the clients) take place. They have a best execution waiver, and lets not get started on conjecture about what or how much they hedge.

The fraudulent part...when a bucketshop takes money from your account balance when there are no open positions without further reference to you, is that fraudulent? I have no idea. I do feel it is immoral though. Whether it is legal or not is best left to the FSA and the Courts.

Notwithstanding the above, I am pleased to report that should my trading continue as it has in the last few weeks, I may be going direct access before the end of the year. Just me and the market!

I will most likely trade today, naturally using one of my other bucketshops. I will also paper trade firewalkers system. I will investigate and write up the trade for yesterday as the system is totally mechanical so I don't really need to trade it in real time, but would have done so was it not for the above.

 

[firewalker99]

My apologies to firewalker and others for not doing my paper trades yesterday. I guess I've failed my 2 week paper trading challenge. I wasn't too well yesterday, and didn't place any trades or even look at the markets.

No worries, just update the statistics whenever you feel like it or have time for it and review all of the trades after those two weeks. You should get a better view of your stop & target placement and re-evaluate the numbers using the tweaked system. Obviously a 2-week time period is much too short to have anything decent to build on, but you have to start somewhere and if you want to build your own system you'll already have a decent hypothesis and departure point.

 

[lurkerlurker]

YMU7 Trades, 26 July 2007

Trades: 16
Wins: 11
Losses: 5 (including one BE)
Win %: 55
Average Win: 10 pips
Average Loss: 8.4 pips
Net P/L: +68
Spread paid - 64 pips

I'll do the paper trading for firewalker (today and yesterday) later. I need a break from the markets. I've had to do a lot of those trades by telephone, which is quite disadvantageous, so I am fairly happy with my performance under these circumstances.

My first trade was a £2pp short on the unemployment at 13747. A sell and hold would have fared better than my scalping, but I followed my plan to the letter, was disciplined about stops and targets, and traded in the zone.

The last 3 losing trades were sloppy fills, and I should have had a +20, a +10, and a +15 but they gave me crap about bad price (ie the price was valid when I placed the order but the market had moved in the 40+ seconds it took to for them to confirm). They are having IT problems, so perhaps forgivable. Interesting that they waited for a trade to go +10 in my favour and then a good -20 against me before filling it though.

All short trades, except 1 loser which was long and wrong!

Recent performance:


Friday: +46
Monday: +10
Tuesday: -2
Tuesday night: +10 on a forex trade
Wednesday: Nothing done
Thursday: +68

Nothing stellar, but I think I've done pretty well. Paper trading up to Tuesday also showing a profit.

Good trading all, that is me for the day!

 

[firewalker99]

Statistics

Two weeks have passed since I put you up to the challenge Lurker and my first impression is that you've improved and have seen that even with some very simple basic rules a lot is possible. Also from the PM's I have been getting about my "system" it seems like I got a lot of people interested :cheesy:

Anyway, I'm looking forward to seeing the actual results. If they are breakeven at least, you'll already have something with potential on your hands. Obviously we've seen rather changing market circumstances lately, especially in terms of volatility and a good system must adjust to the ever changing market situations.

So with a little tweaks for the stops & targets and the stop moving up to breakeven (as you yourself suggested), I hope this has been an educational and joyful experience and I hope you can continue to make progress by the way you have.

The only thing you need to work on still (in my view) is discipline to stick to those exits. Don't panic exit. Don't rush for the door when you feel the market is about the turn (unless you have solid reasons that are defined before you enter a trade).

Good luck on your journey and I am glad to have been part of it.

(Un?)fortunately you won't be seeing much of me the next couple of months (probably till October) as I will be working on a project in August and am taking a couple of weeks of holiday in September. I might pop in to see how things are going but if you manage to stay calm and stick to the plan, I think there's potential inside of you to become a decent trader. Good luck!