Best Thread Firewalker's Journey: A path of discovery in search for enlightenment

[firewalker99]

Checklist

• Determine the stop and target BEFORE entering the trade, do not adjust them while in a trade. Unless the market gives a clear signal that the target is not reasonable anymore, let your profits run.
  
• Stay focused on each trade and prepare each day by visualizing possible setups. In preparation of the next day, I'm envisioning several scenarios which make any thinking during the trading day unnecessary. Only acting.
  
• Discipline and patience. It's ok to wait for hours until a setup appears. Do not trade because of excitement or impatience. Do not rush into a setup unless the signal is very clear.
  
• Take the losses and move on. Do not rush off into another trade with the sole reason to gain the loss back as soon as possible otherwise a bad trade can turn into a bad day.
  
• Limit the exposed risk. Determine the maximum amount of money you're willing to lose per trade (2%)/per day (6%).
  
• Adjust the position size to the probability of the trade. Don't expose the same amount of money in low as in high probability setups.
  
• When running into a losing streak that is greater than the one in backtesting (4 in an row), stop trading immediately and analyze what it is you're doing wrong. I'm probably not following my system.
  
• Don't let myself be influenced by the last trade or the results of the last day (be aware for overconfidence and revenge trading).
  
• Have a clear reason for every trade and write it down in the journal. At the end of the day review the trade and see if it is a valid trade, conform the plan.
  
• Don't gamble, don't chase, don't act out of anything else than the plan.
  
• And last but not least, review everything what you did and should have done at the end of the day. Compare it, study it, learn from it.

 

[Porks]

Hi FW,

It's generally accepted that daytrading is more difficult than longer term trading.

Some say you shouldn't even attempt it until you're a successful/experienced trader.

Expert even.

What do you think now you've been at this a while ?

All the best,

Porks

 

[firewalker99]

Hi FW,

It's generally accepted that daytrading is more difficult than longer term trading.

Some say you shouldn't even attempt it until you're a successful/experienced trader.

Expert even.

What do you think now you've been at this a while ?

All the best,

Porks

Hi Porks, I'm not sure I'm the right person to answer that question. I have no experience in swing trading or buy and hold strategies for instance. I did hear similar reactions from other members, but each must determine for himself what he finds easier. In my opinion, daytrading requires more effort if you want to be succesful and it requires a lot more screen time.

Also patience can be an issue as not everyone can wait several hours and do nothing. I for one have experienced this to be difficult especially after a losing trade. But all that is more a matter of discipline and winning the mental game. If you're referring to the difficulty level on a technical basis than I'm not quite sure why intraday trading would be more difficult than any other term. According to the theory that markets are fractals really, the same patterns should appear on each time frame.

I'm definitely no expert on the matter, but in the last three months I think I've gone foreword much more than in the 6 months before that. I believe to be very close to realizing a consistently profitable strategy and actually trading it. I have let go most of the issues I struggled with and feel more open to receiving whatever the market has to offer. Anyway, in terms of trading experience, I only started reading and studying books in April this year (9 months ago). But since then I've been at it almost 10 hours a day.

I don't know at what point you find yourself in your quest or trading experience... But in my view, trading has a lot to do with hard work, the willingness to adopt and letting go of those predefined fixed thoughts and last but not least patience and discipline, discipline, discipline.
Daytrading offers more potential, but can be more risky. Whichever you chose, or chosen, I don't think there's an "easy" way. Just my thoughts... I'd welcome anyone who has something to add to this.

 

[SOCRATES]

But in my view, trading has a lot to do with hard work, the willingness to adopt and letting go of those predefined fixed thoughts and last but not least patience and discipline, discipline, discipline.
Daytrading offers more potential, but can be more risky. Whichever you chose, or chosen, I don't think there's an "easy" way. Just my thoughts... I'd welcome anyone who has something to add to this.

You are right.

 

[firewalker99]

The Discipline...

You are right.

Thank you Socrates.
I may be right, but this doesn't mean I've managed to get on top of all the necessary skills (yet), unfortunately.

As I've posted in the journal, discipline was one thing I was going to pay more attention to. After I've succesfully established a strategy which holds profit over time and has proven itself through extensive back- and forwardtesting, I've papertraded and traded it for real a while. I've come to the conclusion that I still lack the necessary patience but akwardly enough the problems seem to arise near the end of the day.

I've had a couple of days where I didn't take a trade after 3 of 4 hours and never lost patience. On other hand (I've been writing down a lot my feelings and thoughts), it seems I get more emotional and less disciplined when the last trades were losers OR I'm up on my account significantly (overconfidence probably). The closer to the end of the day, the more my urge comes up to want to take a trade for either a quick profit or a last shot at ending the day in the black. This is something that for sure won't do my trading any good as it has almost always led me into trouble.

I know I need to keep "busy" when there is no signal and especially when I've had a losing trade, I need to remind myself of the results from backtesting. Even if two, or three trades in a row are losers, I know the end result will be positive. The patience is must acquire is a letting go. I must not feel it as a commitment, it must become something natural. I must not allow myself to fall into the "now trap".

Results must happen now, results must come soon, rather today than tomorrow. I realize this is causing me pain. I have lost signficantly and now that I've finally come to terms with it and are confident I can regain it all over time, it seems I want to get it back all too eagerly. This will not happen if I cannot control myself.

The next time I feel this way, I will walk away from the screen (even if only for minutes), read a magazine, look around at t2w psychology thread, or do something other equally useful.

I have to remind myself: "Time opens every door to him who waits" (Chinese proverb).

 

[firewalker99]

Better have stops in place

News about the plane crash in NY

 

[andycan]

in terms of trading experience, I only started reading and studying books in April this year (9 months ago). But since then I've been at it almost 10 hours a day.

Firewalker
you are taking the riotous path to knowledge it takes time nothing good comes easy.
one aspect of trading you have to learn to eliminate is the monetary value, when you start thinking in terms of Dollars/Euros etc you are setting yourself up for a painful trade. Try and think in terms of points it helps,
also once you have determined your trade if you have a mental or a physical stop then you also know what you COULD lose
all this does not help because you know all this yet it does not help the frustration inside.
you mentioned you are at it 10hrs a day well at you present level of experience i would back off a bit rational thinking comes in the quite moments not in front of a screen looking and trying to anticipate what happens next
you will burn yourself out i was in front of a screen 12-16 hours a day analysing and trading(emotions raging, a recipe for disaster) for more than 3 years and i payed the price.
it took me several months before i could get back in front of a screen
now when i get hyped i walk away when i start thinking how much i can win or lose i walk away when im in front of a screen bored S***less thats when i do my best work
in time trading becomes less of an effort when that happens you will start to see a change in your approach and in your trading account
i have not read all your journal but diversify on the products you trade you may do that already there are times when some markets are not a good bet
i trade the es occasionally mainly as a scalper sometimes as a swing trader though short term i would like to see es or dow drop i suspect it has a long way up to go probably beyond the 1400 range cash basis

good luck

 

[bracke]

News about the plane crash in NY

Just a thought but would a stop have been gapped unless it was a guaranteed one (and the guarantees are not usually absolute).

Regards

bracke

 

[firewalker99]

Just a thought but would a stop have been gapped unless it was a guaranteed one (and the guarantees are not usually absolute).

Regards

bracke

Well if I were in a trade, my stop (at the line) would have been hit without much slippage. These are 1 min bars so you can see it's not all down in just a sec, although I'm pretty sure you'd suffer slippage if you had you're stop anywhere around 1690...

 

[bracke]

Well if I were in a trade, my stop (at the line) would have been hit without much slippage. These are 1 min bars so you can see it's not all down in just a sec, although I'm pretty sure you'd suffer slippage if you had you're stop anywhere around 1690...

firewalker99

Your 1 minute chart is a good example of the frustration of stops. The stop is hit for a few seconds and then price reverses and goes on its merry way. But of course we have no way of knowing that is what is going to happen. Might one say that stops are a necessary evil or the more experienced might say that it is not the stop that counts but the placing of it.

Regards

bracke

 

[firewalker99]

in terms of trading experience, I only started reading and studying books in April this year (9 months ago). But since then I've been at it almost 10 hours a day.

Firewalker
you are taking the riotous path to knowledge it takes time nothing good comes easy.
one aspect of trading you have to learn to eliminate is the monetary value, when you start thinking in terms of Dollars/Euros etc you are setting yourself up for a painful trade. Try and think in terms of points it helps,
also once you have determined your trade if you have a mental or a physical stop then you also know what you COULD lose
all this does not help because you know all this yet it does not help the frustration inside.
you mentioned you are at it 10hrs a day well at you present level of experience i would back off a bit rational thinking comes in the quite moments not in front of a screen looking and trying to anticipate what happens next
you will burn yourself out i was in front of a screen 12-16 hours a day analysing and trading(emotions raging, a recipe for disaster) for more than 3 years and i payed the price.
it took me several months before i could get back in front of a screen
now when i get hyped i walk away when i start thinking how much i can win or lose i walk away when im in front of a screen bored S***less thats when i do my best work
in time trading becomes less of an effort when that happens you will start to see a change in your approach and in your trading account
i have not read all your journal but diversify on the products you trade you may do that already there are times when some markets are not a good bet
i trade the es occasionally mainly as a scalper sometimes as a swing trader though short term i would like to see es or dow drop i suspect it has a long way up to go probably beyond the 1400 range cash basis

good luck

Thanks for the post andycan.
You're probably right that perhaps I'm still focusing on price and the monetary value of a trade too much, instead of the potential of the market to move in my direction, based on it's behaviour.

What I meant was with 10 hours a day, not purely screen time, but also looking and trying to learn to see price move and why it does in that way. I've actually 'felt' more on occasion which direction price was going to travel and it turned out to be that way, but that's by no means a reason to take a trade of course.

I do have a question, you mention you were at it 12-16 hours a day for over 3 years, but you say in amount of trading experience you've only had about 9 months. What do you consider that 3 years time period then?

 

[andycan]

firewalker
Those 3 years i was borderline obsessive literally,
i attempted to suck in every possible bit of knowledge without following the learning curve.
it eventually burned me out and took me several month to get back but when i did get back i did not want to follow my destructive path
so i made rules, rules that would keep me trading but without the obsessive approach
i have been at it longer than 3 years and 9 month
and i consider that early part of my learning very important but i would not like to go through that again because knowing better now then it was all emotion and losing money now emotionally speaking its boring and profitable

 

[firewalker99]

firewalker
Those 3 years i was borderline obsessive literally,
i attempted to suck in every possible bit of knowledge without following the learning curve.
it eventually burned me out and took me several month to get back but when i did get back i did not want to follow my destructive path
so i made rules, rules that would keep me trading but without the obsessive approach
i have been at it longer than 3 years and 9 month
and i consider that early part of my learning very important but i would not like to go through that again because knowing better now then it was all emotion and losing money now emotionally speaking its boring and profitable

Thanks for the input.

I agree, but I think I've past that stage where it's all emotionless trading without a plan. Although I must admit emotions still get the better of me at some times and I still need to work on discipline and patience a lot, I find pleasure in studying or analyzing things. Even in the dull boring periods when nothing seems to happen and the setup doesn't appear I can keep busy without wanting to "push the button" just to be in the market. My problem is that I've still need to learn myself to refrain from jumping in immediately after a losing trade, or after a couple of very profitable ones. Those are two situations that I still haven't got under control.

I recognize your situation when you say you were very obsessive and got burned out in some way. But I don't think it's going to happen to me, because I've taken some steps backwards before moving forward again (a while ago). Now I just want to "absorb" and "experience" trading. I'm looking for better "timeframes" to see where the high probability trades of my setup appear, so I can back off a bit. I know people say your trading will benefit once you feel it's getting boring to death, but I don't mind sitting behind the screen(s) if I can keep busy.

 

[wasp]

Hi FW,

What do you mean when you say you have a problem jumping in immediately after losing/winning trades? Are you reversing on the premise you had reason to exit so ergo, it should go the other way or something completely different?

 

[firewalker99]

Hi FW,

What do you mean when you say you have a problem jumping in immediately after losing/winning trades? Are you reversing on the premise you had reason to exit so ergo, it should go the other way or something completely different?

No sorry, perhaps I wasn't quite clear on that...

After I have a losing trade (especially if it's the first one of the day) I tend to want to trade something that's not according to plan. I want to put up a trade just to get some of the loss back, even if I know that's not something I should do. I should only trade when I see the signals I am looking for. Stil, it seems easier said than done.

Another thing that caused me to end the day breakeven or even worse, with a loss, is overtrading. After I'm in the black reasonable well, I tend to want to trade (with slightly less position) and take on a position based on "intuition" although I know I'm still miles away from trading based on intuition. Sometimes I get lucky, but other times it causes me to lose out. Losing out than in return makes me want to take on another trade, then SAR, and well... at that point I have lost self-control and am no longer trading the plan.

On the other hand, patience waiting for the first setup of the day has been quite good. Basically, emotions kick in after I've experienced a losing day. Next day you want to make it up too fast, you make mistakes, you tend to take less then perfect entries... I've been writing everything down on paper but this doesn't make it go away of course.

I suppose it's a good thing I know what I have to work on, now it's just a matter of knowing how to tackle the issues and confront them with reason rather then emotion... I know you did pretty well after you had the proof you needed.

 

[firewalker99]

Issues...

Perhaps my strategy isn't giving me enough proof yet. The results I've acquired in realtime aren't that good as in backtesting. I know markets change over time, but I haven't had the best of confidence in my trading system because it already passed the maximum successive losses found in backtesting, five compared to four... :|

There are two options, but either way something needs to be adjusted. One is that I'm not following the plan correctly, second is that the backtesting is invalid. The latter is less probably, as the data I've tested on consists of over a thousand trades and encompasses lot's of different days with changing volatility and going through different stages of the market cycle. To be honest, I think my system is perhaps too discretionary to be truly objective. As you know I don't use indicators and S/R and trendlines, which are drawn manually. Compared to MA crossovers you don't really have a say at, they are there no doubt about it. But identifying S/R zones is something I have to do for myself and if that's done incorrectly well than the whole plan tumbles down because that's one of the main building blocks...

 

[wasp]

One of the things that helps me on a daily basis is a spreadsheet printed out of last few months trades and in the ongoing increase/decrease/ decrease/increase/increase/increase etc (you get the picture) of the month on whole, and once I have any other problems you say about I look at that sheet and remind myself that, despite having an overall losing day here, and a bad run there, overall on the month I still made what I wanted. Its all part of the plan and intra/end of day doesn't require me to be up. Just end of month.

The other thing I do is have a second account with essentially 'play' money in it and when I see a setup not in my plan, or if bored etc, I take it using that, that way the urge is gone and I've not messed up the mportant account and let off a bit of stress...

Just an idea or 2

 

[firewalker99]

One of the things that helps me on a daily basis is a spreadsheet printed out of last few months trades and in the ongoing increase/decrease/ decrease/increase/increase/increase etc (you get the picture) of the month on whole, and once I have any other problems you say about I look at that sheet and remind myself that, despite having an overall losing day here, and a bad run there, overall on the month I still made what I wanted. Its all part of the plan and intra/end of day doesn't require me to be up. Just end of month.

The other thing I do is have a second account with essentially 'play' money in it and when I see a setup not in my plan, or if bored etc, I take it using that, that way the urge is gone and I've not messed up the mportant account and let off a bit of stress...

Just an idea or 2

Thanks for the ideas, the second sounds actually very familiar! Not that I'm doing it, but someone else told me something very similar.... or perhaps I read it in your journal some time ago Perhaps I'll have a go it a second papertrading account, just to check if I've got the discipline to do that. Then at the end of the week I'll be able to confront myself with the bare facts - at least that should be the case - the papertrading account down and the other one up big time.

About that spreadsheet, well I haven't been trading real time for that long, so unfortunately I don't yet have those numbers, I've only got backtesting and forwardtesting which shows very promising, but unfortunately realtime hasn't been that good. I know most of it is due to myself not following the plan. Sometimes frustration just kicks in. I've been trading with one contract only to get some confidence building. It's just hard when you miss an entry with a tick because your limit order wasn't hit or you get out because you've only got one contract and need to take profits according to plan. Backtesting of course was done with 2 contracts, and always scaling in and out... which is one of the reasons I've been trading NQ next to DAX (much less margin needed). I don't want to risk too much money again before really having the confidence and discipline to do what it takes.

I think I'll be ok after I have a month that shows up profitable. But the first month is apparently the most difficult one!

 

[wasp]

I think I'll be ok after I have a month that shows up profitable. But the first month is apparently the most difficult one!

I'm afraid it is when it comes to this but some times in life you just got to say **** it and do it, and do it right or you will never know...

 

[firewalker99]

I'm afraid it is when it comes to this but some times in life you just got to say **** it and do it, and do it right or you will never know...

Well it seems to be rolling the last couple of days.
This week have all been very profitable days, I've still let discipline slip however on more than one occasion, primarily for taking trades which aren't in the plan, but "looked good". Now I think I'm heading in the right way, I'm lowering my position on those trades to the absolute minimum, until I can get to the point and really say "skip it, it's not worth it". On the other hand from time to time these do offer profits...