The Trading Journey of Lurker

[counter_violent]

Here are a series of charts I posted in December 2006 showing the same instrument in different time frames.The charts clearly show that this market is in a parabolic blow off phase, North or South price moves btw, it makes no difference.

The Fifth chart is an up to date view of the same instrument...even after a 900 pip correction...the overiding trend is resumed after the exhaustion...a 1200 pip rise from the correction exhaustion bottom.

The Sixth chart shows a series of Exhaustion moves...the message is self explanatory
A set of points of reference drawn on the chart in real time can keep the trade going.....until you see a completed V Exhaustion.

Hope this helps

Chart sequence is out of order but you should be able to figure it

c v

 

[Dinos]

Morning, LL, I agree with FW post 10 entirely, short, simple, concise and basically covers what you need.

My advice fwiw, as you know I keep it simple, don't overcomplicate thing, I know an extremely successful trader, who only uses 3 indicators to determine his position.

Cash is king, if your not 100% happy, don't take the trade, if your going to close the trade because as you said, you become bored waiting, then I don't intend any offence, when I would question whether day trading is really for you and perhaps short term swing trading might suit you better.

LL, not sure if you can do it, but attach the trading chart you posted for general view to me via PM, I will identify where I would have taken the trades and an explantion why and I will post it back on the boards for general discussion.

Last point, you appear to be taking a rather risky stance taking £500 position on a £800 account (62.5%) of capital on one trade, if the market turns against very quickly which the dow can swing (20 -100) in a second on news release, you may be caught out. I hope you don't take offence on this comment

Robert

 

[lurkerlurker]

Hi all

Been rather busy today, so just taken a look at the markets and T2W now. I usually do this 12 hours a day, but I'm busy this week. I'll return to proper trading either Wednesday or Thursday.

OFFTOPIC: Who just caught that Dow movement? 13,360 to 13,340 in 5 mins. Nice!

I apologise if I have been slow to respond to some comments.

Will be back here later in the week.

Good trading all!

My advice fwiw, as you know I keep it simple, don't overcomplicate thing, I know an extremely successful trader, who only uses 3 indicators to determine his position.

Seems sound advice. I don't want to rely too much on indicators, or have a screen full of them saying different things.

Cash is king, if your not 100% happy, don't take the trade, if your going to close the trade because as you said, you become bored waiting, then I don't intend any offence, when I would question whether day trading is really for you and perhaps short term swing trading might suit you better.

The boredom thing has only been once or twice.

LL, not sure if you can do it, but attach the trading chart you posted for general view to me via PM, I will identify where I would have taken the trades and an explantion why and I will post it back on the boards for general discussion.

Generous offer, but not sure I know which chart you mean? Is it the one I was trying to apply Chartman's method to?

Last point, you appear to be taking a rather risky stance taking £500 position on a £800 account (62.5%) of capital on one trade, if the market turns against very quickly which the dow can swing (20 -100) in a second on news release, you may be caught out.

Yes, it was £5pp with a stoploss around 80 pips. That is a little to large for an account that size. I realise that now, and was only giving it as an example, I wasn't advocating stake sizes that large.

I hope you don't take offence on this comment

Everyone here has been very helpful, and I always appreciate comments and suggestions regarding trading. I know that people here seem to go to great lengths not to be offensive, but we are all adults here; there is no need to apologise for every observation, or fear that a perfectly reasonable comment is going to cause offence! In saying that though, I do appreciate that you are all going easy on the new guy.

Cheers again Dinos.

OFFTOPIC, as I type this, the Dow is hitting 13,330!


I'll be back here on Wednesday afternoon most likely.

 

[lurkerlurker]

Trading Summary, 16 May 2007

Instruments: DJIA, FTSE 100.
Platform: SpreadBetting (CMC)
Trades Executed:

FTSE 100
12:39:03 Sell 6,563
12:56:39 Buy 6,568

-5 pips.

DJIA
14:53:40 Sell 13,426
15:04:36 Buy 13,412
15:08:13 Buy 13,417
15:13:20 Sell 13,430
15:30:52 Buy 13,422
15:30:52 Sell 13,414
16:18:36 Sell 13,375
16:29:04 Buy 13,387
16:39:55 Sell 13,409
16:53:01 Buy 13,417
17:05:53 Buy 13,417
17:42:03 Sell 13,396

-22 pips

Net Total: -27 pips.
Net Loss: 5.7%

This is one of the nights that my trading is disrupting my sleep, so I thought that writing this here would clear my head.

The plan was to trade EMA 100 crosses, confirmed by direction in oscillators. A modified Chartman strategy was to be applied, as I forecast significant intra-day trending movements and did not want to be caught on the wrong side.

The plan was not followed. A mixture of impatience and fear of missing opportunities caused reckless discretionary trading on what looked like signals. The first few trades were sober and reasoned, and caught small swings. At 1600 I left the quote screen and took a break to prevent myself from trading because of fear of missing the big swing.

Referring to the chart, I had failed to take short indicators between 1535 and 1545, due to greedily waiting for a better price, which was 2 pips above the market. As I had missed a large swing by 1600, I took a break to avoid impulsive trading and selling the bottom.

I returned 15 minutes later, traded impulsively, and sold a bottom. In the time I was absent from the screens, some very clear long signals were given, I did not take adequate notice of this. The bottom at around 1610 was clearly marked with oversold RSI and CCI, a change in price direction and loss of momentum. Before waiting for bearish confirmation, I took a short on what I believed to be a pullback in a downtrend. Retrospectively I can find no indicators in support of this, and have no note of the ones used at the time.

As a result, not only did I lose pips while being short twice, but I missed profits which could have accrued for noticing the long signals. When I finally did go long, I was shaken out with a tight stop at the end of the false bear flag around 1745. I noticed similar price action to the false bull flag at the beginning of the session. I was expecting a substantial upside breakout around the height of the downside breakout earlier, but failed to set an appropriately wide stop. Was becoming risk adverse and less confident in positions. These trades are marked on the chart.

My discretionary system overtraded, and traded on unconfirmed signals.

The 100 EMA system I had stated my intention to use on the Dow thread at the beginning would have generated 2 trades, both of which would have been rather profitable. I would have exited my second trade (long) prematurely because of the head and shoulders pattern which ultimately failed to reverse, This is also shown on the chart.

Overall, a pretty bad day. Will post follow up tomorrow as it is a rather odd time and I should be back in bed.

 

[firewalker99]

From the DOW 2007 thread

Well I've just given back 80% of my profits today in a single trade. Lost 20 from +25.

I think that illustrates - sorry if this sounds patronizing, it's definitely not meant that way - that you perhaps need to rethink your risk/reward... you are taking profits pretty quickly (I would even call it scalping) but you are letting your losing trades take much bigger hits... either you will be needing something like an 80-90% win ratio or you will want to adopt a slightly different strategy... anyway this probably belongs in your journal

 

[jacinto]

Lurker,

First of all, congratulations on opening your journal. It should be an interesting journey that I hope will turn out into what you expect.

I dont want to overflow the already good advice given here before, because I would only be repeating things.

I do think a good reading and meditation of the psychology of trading would be of use. It always is.

Trading in the zone, is the book for that if you ask me. Will PM with details.

all the best.

j

 

[lurkerlurker]

Lurker,

First of all, congratulations on opening your journal. It should be an interesting journey that I hope will turn out into what you expect.

I dont want to overflow the already good advice given here before, because I would only be repeating things.

I do think a good reading and meditation of the psychology of trading would be of use. It always is.

Trading in the zone, is the book for that if you ask me. Will PM with details.

all the best.

j

Trading in the Zone (Douglas) is my designated reading material for the weekend. I have a copy. I've also quoted it once on these very boards. Great minds think alike - cheers. Can I ask your opinion on whether to read it before or after The Disciplined Trader.

 

[jacinto]

Trading in the Zone (Douglas) is my designated reading material for the weekend. I have a copy. I've also quoted it once on these very boards. Great minds think alike - cheers. Can I ask your opinion on whether to read it before or after The Disciplined Trader.

sorry, havent read that one, so no clue. really up to you there, I guess.

all the best

jacinto

 

[lurkerlurker]

Trading Summary, 17 May 2007

Instruments: DJIA.
Platform: SpreadBetting (CMC)
Trades Executed:

DJIA
2:31:18 Buy 13,470
2:34:10 Sell 13,461
2:53:09 Buy 13,455
3:11:31 Sell 13,471
3:51:37 Buy 13,471
4:13:54 Sell 13,476
4:46:57 Sell 13,487
5:02:25 Buy 13,474
5:11:00 Buy 13,470
5:36:18 Sell 13,450 //Entry on a weak signal. Stop too wide. Shouldn't have let that happen.
5:51:20 Buy 13,458
6:00:22 Sell 13,450
6:06:07 Buy 13,458
6:40:03 Sell 13,464 //Exit on a tight trailing stop - don't know what caused the retracement, but was wanting out for the day anyways.


+3 pips

Net Total: +3 pips.
Net Profit: 0.6%

Today I have been trading more mechanically, relying mostly on EMA crossovers for entry, and RSI/CCI divergences and chart patterns for exits.

No emotional problems during trades. Made the mistake of trading too close to the open, mostly through impatience and fear of missing out on a move. That cost me 9 pips in 3 minutes, but I recovered and started to trade correctly from then on in.

Lost 20 pips in a single trade, and as firewalker has already pointed out this shows bad risk / reward. I have been exiting trades too soon and taking scalping level profits. This trade was allowed too much latitude.
New Motto: Cut losses, let profits run. (I've done the opposite today to my cost)

Goals
Improve on exits - exit closer to the end of a trend, perhaps at the beginning of a reversal. Premature exits have reduced profits.
Improve on risk / reward. Trades should have tighter stops, and not be allowed to run into the red.
Trade longer - tomorrow I wish to do 9am-8pm on FTSE and Dow. Tonight I stopped early and left plenty of pips on the table.
Be more disciplined when applying indicators - write down more specific, detailed rules - rely less on discretion.

Comments welcome.

Cheers

~LL

 

[fibonelli]

Hi LL

Out of curiosity, are you placing OCO trades or "If Done" orders?

In other words, are you placing your stops and target at the same time as the entry?

Best wishes

Fibonelli

 

[barjon]

....................Overtrading - limit to three trades per day, looking to trade for at least an hour at a time unless an exit is necessary, sit through some minor pullbacks but use a trailing stop to lock in profits and not let a profit become a loss. If three successful trades in a row, continue trading. If losing, limit to three trades per day............

.

hi, lurker

wot happened to your overtrading rules

cheers

jon

 

[firewalker99]

Trading in the Zone (Douglas) is my designated reading material for the weekend. I have a copy. I've also quoted it once on these very boards. Great minds think alike - cheers. Can I ask your opinion on whether to read it before or after The Disciplined Trader.

I have read both and in my opinion Trading in the Zone is definitely the better one to have.

There are a couple of pages I like to read over and over again and it helps me that I keep reminding myself of it, those are 97-100 (hope it's the same in your copy), it starts with the title of the paragraph "HOW THE FUNDAMENTAL TRUTHS RELATE TO THE SKILLS":

1. Anything can happen.
2. You don’t need to know what is going to happen next in order to make money.
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.

 

[firewalker99]

hi, lurker

wot happened to your overtrading rules

cheers

jon

Good point... I'll add to that:

Lurker I understand you are trading from a rather short timeframe, but you seem to be getting buy and sell signals very close to eachother. For example:
3:11:31 Sell 13,471
3:51:37 Buy 13,471

You made 14 trades, half of them shorts, half of them longs. I also recall you said you were going to look for trades with the trend, rather then agains them. So that would leave you with only 7 longs right? How many of those would have been profitable and how far did each of those trades travel in the right direction? Compare that to where you took profits (or loss) and I think you will find out that the sum of those trades would be a lot more than +3...

Another suggestion, if you are keeping a journal and listing your trades, it might be interesting to count the number of winning and losing trades. I think it will be more relevant than the % you won or lost that particular day.

 

[lurkerlurker]

Hi LL

Out of curiosity, are you placing OCO trades or "If Done" orders?

In other words, are you placing your stops and target at the same time as the entry?

Best wishes

Fibonelli

I place a limit order to enter. Then I place an OCO with a stop and limit. I usually place the stop and target OCO just after I place the entry limit, before anything is filled.

 

[lurkerlurker]

hi, lurker

wot happened to your overtrading rules

cheers

jon

I'm not making very good trades at the moment, and am getting very small profits. Today, for example, I made a bad trade against my system at the open. That left me two trades to take. I wasn't about to finish at ten past four because I had closed my third trade.

However, lets look at that: first three trades were - -9, +16, +5.
That would have left me with +12. I ended the day with +3, and more money wasted on spreads. Perhaps I should tighten up on the overtrading.

That is one rule I am having problems sticking to. I am not convinced to what extent it is beneficial to restrict my trades to three. It was a target I set as an ideal whereby I could catch longer moves, trade less, pay less spreads, and improve my results.

 

[firewalker99]

I am not convinced to what extent it is beneficial to restrict my trades to three. It was a target I set as an ideal whereby I could catch longer moves, trade less, pay less spreads, and improve my results.

Trading less means less stress and less commission/spread costs.

But more importantly, by restricting yourself to say 3 or 5 trades a day, you are making yourself (or at least that is the objective) take only the higher probability trades and skip the small scalps counter-trend.

I mean, there aren't 14 good signals a day... unless you want to catch every small swing up and down on a 1 or 2-minute timeframe and scalp for ticks. I've noticed when you exit a trade you like to take another one straight after that in the opposite direction. The market hardly reverses that many times a day for a decent enough profit in that direction. Ok, I'll shut up now and let the others give you some advice too

 

[lurkerlurker]

I have read both and in my opinion Trading in the Zone is definitely the better one to have.

There are a couple of pages I like to read over and over again and it helps me that I keep reminding myself of it, those are 97-100 (hope it's the same in your copy), it starts with the title of the paragraph "HOW THE FUNDAMENTAL TRUTHS RELATE TO THE SKILLS":

1. Anything can happen.
2. You don’t need to know what is going to happen next in order to make money.
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.

Nice summary. Took awhile to find that section in my copy. I think you must have a first edition or something. However, Google is your friend, and I was able to find that it is on page 130 of my copy.

I'll give that a read in full over the weekend. (the book) I've just read the section, and it seems helpful. I think I have a faulty attitude sometimes.

You made 14 trades, half of them shorts, half of them longs. I also recall you said you were going to look for trades with the trend, rather then agains them. So that would leave you with only 7 longs right? How many of those would have been profitable and how far did each of those trades travel in the right direction? Compare that to where you took profits (or loss) and I think you will find out that the sum of those trades would be a lot more than +3...

Can you please clarify your point about holding the longs being more profitable than +3?

They all would have gone in the right direction eventually. This is not always ideal. Consider my last trade:

6:06:07 Buy 13,458
6:40:03 Sell 13,464

If I had caught the H&S exit (I won't even talk about catching the top) at ........

EDIT; **** - I've just realised that I had two tabs open - one with the reply to your book comment and one with a very long reply to your other comment which I have just mistakenly closed. Since, even in the interests of clarity, I cannot be bothered typing all of that at half one in the morning, here is how it is.

I made one short out of six trades. It was a good short. Against the main trend yes, but profitable. I stuck to my plan to trade the trend 6/7ths of the time. 3 were losses. Each long would have been profitable if held until the end of the H&S / -div on MACD / RSI / resistance break at around 13490 they would have all been in healthy profit.

Over +150 tics or thereabouts. This would also involve me carrying a position 6x too big! Are you suggesting that I should give more time to my winners, or that I should pyramid a position?

If you could clarify this I would appreciate it. They would have turned out well in the end, but I had no reliable indication of that at the time. Consider my last trade, closed at 6:40 (at which time I ceased trading for the day and left the screen).

6:06:07 Buy 13,458
6:40:03 Sell 13,464

That made 6 pips (exit on trailing stop). It would have made +32 pips if I had left it to the end of the H&S / divergence at 20:22. However I would have had to sit through a dip to 452.....okay, point taken. I'm exiting trades too quickly. However, to stay in that trade until near highs, I would have had to let a profit become a loss, and at the time I wouldn't have known the loss would only have been 8 tics maximum.

Forgive the rather jumbled nature of this post - the one I lost was better and I am getting tired. What would your advice be regarding this. Carrying a position 6x the usual size in the absence of indicators to suggest such a rise by EOD isn't acceptable, and I'm fairly sure this isn't what you are suggesting. How can I avoid exiting trades too soon in this way. If you look at the charts, can you see an indicator favouring a hold rather than a sell at the points I sold at.

For example, on this cover - 3:11:31 Sell 13,471

There was quite some time before a bid of substantially greater than 471 hit the market. Where should I have closed that, and what indicators would have had me hold it?

Thanks for the feedback, and thanks in anticipation of your clarification. I'll read "Trading in the Zone" over the weekend, and post thoughts / revised strategy here.

Thanks again for your feedback. I note you caught some +30's and +20's today - well played!

PS - I've just re read my post in preview, and if you can make sense of it great - because I am beginning to doubt how effective it is at communicating my Q&A here. I don't want to start all over again, I need to go to bed, but I will throw this out here in the hope that all of you, and firewalker in particular can decipher it.

FW, sorry if you don't feel I have given your comments thorough consideration. I did try to understand your point. Thanks for the feedback. Also, is your nickname a reference to the Fire-Walkers mentioned in The Disciplined Trader? (pg 16 in my copy)

 

[lurkerlurker]

Trading less means less stress and less commission/spread costs.

But more importantly, by restricting yourself to say 3 or 5 trades a day, you are making yourself (or at least that is the objective) take only the higher probability trades and skip the small scalps counter-trend.

I mean, there aren't 14 good signals a day... unless you want to catch every small swing up and down on a 1 or 2-minute timeframe and scalp for ticks. I've noticed when you exit a trade you like to take another one straight after that in the opposite direction. The market hardly reverses that many times a day for a decent enough profit in that direction. Ok, I'll shut up now and let the others give you some advice too

In fairness, that kind of stop and reversal trading stopped before today. Regarding today, I took 6 longs and one short. The short was profitable, and to be fair the market was heading down at that point, and I made a fair profit. The rest were longs, with the primary trend.

But yes, I would like to hold trades longer. On the indices, I would like to work up to holding swing positions for a few days to catch some of the bigger swings.

Objectives for tomorrow:

1. Trade between 3-5 trades only
2. Small contract size, no increasing stake
3. Trade with the trend
4. Stay in the trade long enough to catch the bigger moves
5. Make sure TA is confirmed on multiple timescales
6. Stop enriching my broker /bookie by paying too many spreads
7. Understand firewalkers comments
8. Don't exasperate other traders who are trying to help me

Okay, as a postscript, can I add "Do better than +3" ?

Come to think of it, I'll add a zeroth condition:

0. Get enough sleep to have a clear head to trade.

Good morning!

 

[firewalker99]

Hi lurker, it's okay it was rather late night for myself :-0

Ok, let me clarify some things:

Can you please clarify your point about holding the longs being more profitable than +3?

I meant that if you held on to your longs the net total profit of the day would've been more than just +3.

This would also involve me carrying a position 6x too big! Are you suggesting that I should give more time to my winners, or that I should pyramid a position?

No, I only suggested you left those winners to run. If you get another signal to go long when you are already long, then it's up to you to decide if you should add to your position or not. In the beginning I wouldn't do this. Just keep the risk on each trade minimal, then explore if your strategy would work better when pyramiding.

It would have made +32 pips if I had left it to the end of the H&S / divergence at 20:22. However I would have had to sit through a dip to 452.....okay, point taken. I'm exiting trades too quickly. However, to stay in that trade until near highs, I would have had to let a profit become a loss, and at the time I wouldn't have known the loss would only have been 8 tics maximum.

I don't know if your stop is arbitrary, but suppose you have a stop of 10 tics then you would still be in if price goes against you by 8 tics. I've read somewhere that most traders have a strategy where price might go slightly against them first, before going in the right direction. You've got to give the trade some room.

FW, sorry if you don't feel I have given your comments thorough consideration. I did try to understand your point. Thanks for the feedback. Also, is your nickname a reference to the Fire-Walkers mentioned in The Disciplined Trader? (pg 16 in my copy)

No, it's actually a reference to an episode of The X-Files

 

[fibonelli]

I place a limit order to enter. Then I place an OCO with a stop and limit. I usually place the stop and target OCO just after I place the entry limit, before anything is filled.

Hi LL

yikes!

have you seen this thread I started about the pros and cons of placing stops first
http://www.trade2win.com/boards/showthread.php?t=24352

Fibonelli