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

[wasp]

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...

Great stuff FW,

My plan said exit earlier on cable and its since risen another 20/25 pips. I'm not bothered in the slightest though as I still made money, had a good day, stuck to my plan and followed the rules. Certainly don't need every pip.

Those trades that do look great may well work out and will offer some profits but there are plenty that don't, and theres no statistical edge for them and you don't know if your better off or not till after. At least with the ones in the plan you know your edge/probabilities and that they are in your favour.

Mentally put the equivilant of 'that' trades loss to one side and then later, withdraw it from the bank and spend it on Stella down the pub! I hear they make a good batch your way!

 

[firewalker99]

Great stuff FW,

My plan said exit earlier on cable and its since risen another 20/25 pips. I'm not bothered in the slightest though as I still made money, had a good day, stuck to my plan and followed the rules. Certainly don't need every pip.

Those trades that do look great may well work out and will offer some profits but there are plenty that don't, and theres no statistical edge for them and you don't know if your better off or not till after. At least with the ones in the plan you know your edge/probabilities and that they are in your favour.

Very right, and I felt much more "insecure" (let's call it fear) after I was in the trade, compared to when I'm taking the trades in accordance with the plan. Fortunately I've already arrived at that point where I'm no longer crying out loud for missing the big moves. Yesterday I was up for the day but didn't saw the big upmove coming, nor had any signals. I didn't enter to chase the market (which in this case still would have been profitable), but I kept completely out of it. I actually felt quite good about it, because it wasn't part of the plan. A couple of weeks ago, I'm sure I would have jumped in. Not clapping myself on the chest too much, but it was a satisfactory day. Hmm... who said "I love it when a plan comes together"...

 

[firewalker99]

Journal update

I will start November with entering trade stats in my journal on a daily basis with comments on the trades (not technical, but more in the likes of "did I follow the plan, why did I took the trade"), and hope to improve my discipline in that way.

These posts will look like:

[Day x]
Trade 1: ... ...
Trade 2: .... ...

[Results of the day]
Number of trades:
Win/Loss:
Profit/Loss:

[Summary]
Number of trades:
Win/Loss:
Profit/Loss:

[Comments]
...

 

[rainman2]

Good Luck FW. I'll be looking and rooting for you.

If I may ask, did you manually backtest your plan?

 

[firewalker99]

Good Luck FW. I'll be looking and rooting for you.

If I may ask, did you manually backtest your plan?

Hi rainman, sorry for the delayed respons, I didn't get a message someone posted in my journal (strange!).

Anyway, what do you mean with "manually"?
After reviewing hundreds of charts, I backtested scrolling from left to right, then using replay. In a later stadium I started papertrading and forwardtesting everything. Results from backtesting do appear a bit optimistic on some occasions but things like slippage are difficult to take in account for. But I should have a reasonable margin to sustain that. Last months I've been trading live and experience some discipline issues, but apart from that if I review everything at the end of the day, results should be in line with what I came up from backtesting. So basically, the only issue is ME!

Not sure if this answers your question though...

 

[rainman2]

Hi rainman, sorry for the delayed respons, I didn't get a message someone posted in my journal (strange!).

Anyway, what do you mean with "manually"?
After reviewing hundreds of charts, I backtested scrolling from left to right, then using replay. In a later stadium I started papertrading and forwardtesting everything. Results from backtesting do appear a bit optimistic on some occasions but things like slippage are difficult to take in account for. But I should have a reasonable margin to sustain that. Last months I've been trading live and experience some discipline issues, but apart from that if I review everything at the end of the day, results should be in line with what I came up from backtesting. So basically, the only issue is ME!

Not sure if this answers your question though...

Hi fw,

It does. The reason I was asking was because your confidence level seems to have grown from earlier in your journal and I was wondering was that because you were able to code your setup and backtest a larger sample which would give greater confirmation.

I have finally settled on a setup and am manually backtesting but wish I had some programming skills. Time will tell, but I think I'm finally moving forward. Anyways, Good High Probability Trading to you.

 

[firewalker99]

Hi fw,

It does. The reason I was asking was because your confidence level seems to have grown from earlier in your journal and I was wondering was that because you were able to code your setup and backtest a larger sample which would give greater confirmation.

I have finally settled on a setup and am manually backtesting but wish I had some programming skills. Time will tell, but I think I'm finally moving forward. Anyways, Good High Probability Trading to you.

I have some programming skills actually, but I believe the experience of backtesting manually will give you more confidence then if you let algorithms run it over. The algorithm will never have second-doubts but in real life you will and in real trading you will sometimes want to outsmart your system or do some self-sabotage because you think you've seen this situation and want to act in this or that way.

Obviously, manually backtesting takes a lot longer, but I think it's more rewarding. You could also start with doing it manually and once you've accumulated enough data to boost your confidence, and give you reliable numbers, you could automate it to check on another batch or another time frame. Good luck and I hope your progress will be rewarding!

 

[firewalker99]

November Review

November 1
Trading 2 lots, max risk per trade: 2%

Stats for the day
Number of trades: 3
W/L: 2/1
P/L: 45/9

Theoretical Results* *= if I followed the plan to the letter
3 trades
W/L: 2/1
P/L: 45/9

Practical Results
7 trades
W/L: 2/5
P/L: 38/18


Comments
Trade 1: I headed off the day pretty well and nailed the entry. I could enter at the best possible price with both contracts. I watched price move in the anticipated direction and it hit my first target. According to plan I should have moved my stop to BE, but I didn't just yet as price moved further straight away and scrubbed my second target but missed it by 0.50. Suddenly price reversed and I felt like losing those nice profits and exited my position and reversed immediately. Evidently not part of the plan. I then exited my reversal as price did continue upwards and passed my second target. Instead of gaining over 20pts these trades offered me only 5 points.

Next setup : I followed the plan, had a less then perfect entry, but I managed to catch a nice part of the big and fast upmove and as I was putting my limit orders in place, I was lucky to sell it at an even higher price than according to plan.

Conclusion
Not following the plan cost me again and although it only happened once today, once is enough to ruin a perfectly fine opportunity. Reversing a position just because I was scared of losing the unrealized profits and having to reverse it again later only makes my broker rich. Again, the results in theory are excellent, the EOD results in my account are still profitable but not what they should have been. Tomorrow is another today.

================================================================

November 2
Trading 2 lots, max risk per trade: 2%

Stats for the day
3 trades
W/L: 1/2
P/L: 22.50/18

Theoretical Results
3 trades
W/L: 1/2
P/L: 22.50/18

Real Results = Theoretical

I had a lot of patient today and didn't trade "the big move" as there was a 50-point downfall after US news release at 1430. I didn't risk trading this, although I used to be tempted but wisely kept away and traded only what I should do. This resulted not in a very good day as far as results are concerned (only small profit) but a good day as far as discipline is concerned. I know that if I stick to the plan rigourously discipline and patience will eventually pay off.


================================================================

November 3
Trading 2 lots, max risk per trade: 2%

Stats for the day
2 trades
W/L: 0/2
P/L: 0/18

Theoretical Results
4 trades
W/L: 2/2
P/L: 45/18

Real Results = Theoretical

I did follow the plan, but had several issues with my broker (incorrect net liquidation, unrounded numbers, no market data,...) I couldn't take all trades. Unfortunately, those I missed were the best opportunities of the day... typical :|

================================================================

November 6
Trading 2 lots, max risk per trade: 2%

Stats for the day
W/L: 2/0
P/L: 48/0

Real Results = Theoretical

A typically trending day where I usually don't get the most out of it. There is still some room for improvement as far as the exit strategy is concerned, but once I start trading a third lot I will be able to "let my profits run" until the market gives me a signal to get out. For now, I have fixed targets (based on ATR), which make me feel more comfortable because my testing has shown me a positive expectancy if I take my targets at those points. I'm aware that the market is offering me more than I'm taking but we will take this up on a later time. Discipline and patience went very well today.

================================================================

November 7
Stats
W/L: 3/0
P/L: 54/0

Real Results = Theoretical

Exceptional day, both in results as in discipline, I had clean signals and I followed them. A really satisfactory day after the troubles of last Friday.

================================================================

November 8
Stats
W/L: 0/4
P/L: 0/30

Real results: W/L: 1/3, P/L: 6/20

I lost two trades where I got stopped out but didn't get a nice entry. If I entered on the best price, I would not have got out. So there is still room for improvement on the entry technique as both trades did work as anticipated. I could have re-entered but I didn't. I didn't trade the evening session (another losing trade) so the results for today are better than they should have been according to plan. I also exited one part of a trade prematurely (+6) because I felt like it wasn't going to budge anymore. I was right on this occasion, but I'm aware that "feelings" or intuition can get me into trouble.

================================================================

November 9
Stats
W/L: 3/1
P/L: 54/9

Real results: no trades, 0 P/L problems with net con and logging on.
Some very clear signals today but I could only login to my paper trading account!
Another disappointment, especially is this would have clearly been a profitable day.

================================================================

November 10
Stats
W/L: 1/1
P/L: 24/10

Had to wait very long for the first trade and frustration was really building up as I couldn't trade yesterday. I've kept emotions under control, but I really wanted to "end the week" on a profit. I was really aware of how this "urge" started to get the better of me. Fortunately I kept it together and sat it out (quite painstaking) until a better signal appeared. Only two trades, but with all systems back online I'll welcome next week!

================================================================

 

[Joey]

Presume you are paper trading Dax or is it Nasdaq. Are you getting any help from the great Db or has he retired)))

May have some suggestions if you can post some charts

 

[firewalker99]

Presume you are paper trading Dax or is it Nasdaq. Are you getting any help from the great Db or has he retired)))

May have some suggestions if you can post some charts

Both actually, but what you're seeing here is DAX. I'm keeping track of my NQ trades also, but my own private journal, otherwise this would get a bit messy putting it all up here. I'm adding all the trades to one post, this thread already has hundreds of posts and I'm thinking of regrouping some

 

[firewalker99]

May have some suggestions if you can post some charts

Here you go.
-Green = long
-Red = short
-Stop = 5pt,
-First target = 10pt, second = 15pt
-Stop is moved to breakeven after first target is hit.
-Horizontal lines are zones where I identified support/resistance from before.


First chart
- S 6321, stop @ 6326 = -10
- S 6314, target 1 @ 6304, target 2 @ 6294 (market order slippage) = +30
- L 6280, stop @ 6275 = -10
- L 6272, target 1 @ 6282, target 2 @ 6287 = +25
- S 6299, stop @ 6304 = -10
- L 6276, stop @ 6271 = -10
Net result: +15

Second chart
- S 6295, stop @ 6300 = -10
- L 6295, target 1 @ 6305, target 2 @ 6310 = +25
- S 6338, target 1 @ 6328, target 2 @ 6323 = +25
- L 6314, stop @ 6309 = -10
- L 6296, stop @ 6291 = -10
Net result: +20


Third chart
- Short 6195, Target 1 @ 6185, Target 2 @ BE = +10
- Short 6201, Target 1 @ 6191, Target 2 @ BE = +10
- Long 6217, Target not hit, Stop @ 6212 = -10
- Long 6214, Target not hit, Stop @ 6209 = -10
- Short 6214, Target not hit but market on close 6206 = +16
Net result: +16

 

[Joey]

Well you obviously have a strategy/setup that you are able to execute with discipline and the results are net positive so far. It would be easy to say in hindsight why you took that trade and not this etc but in realtime it is not the same as we all know,)) so at this stage would not like to distract your progress except to point out the importance of marking out levels of S/R on 15/30min charts looking back a few days including highs and lows of those days plus the overall trend. I realise these are general statements but it works for me, if you are employing some sort of reversal setups then say for example you take a long trade at a significant support level and your stop loss is triggered then that failure of support is even more significant. Before I use to freeze up after a loss, now I can change and reverse, it does improve your trading enormously, belng available as Douglas would put it.

 

[firewalker99]

Well you obviously have a strategy/setup that you are able to execute with discipline and the results are net positive so far. It would be easy to say in hindsight why you took that trade and not this etc but in realtime it is not the same as we all know,)) so at this stage would not like to distract your progress except to point out the importance of marking out levels of S/R on 15/30min charts looking back a few days including highs and lows of those days plus the overall trend. I realise these are general statements but it works for me, if you are employing some sort of reversal setups then say for example you take a long trade at a significant support level and your stop loss is triggered then that failure of support is even more significant. Before I use to freeze up after a loss, now I can change and reverse, it does improve your trading enormously, belng available as Douglas would put it.

To be honest, I'm not confident enough to use a SAR strategy. Not only because I haven't backtested it thoroughly, but because of my experiences in the past it got me whipsawed on more than one occasion, and one can lose money very quickly this way... I've applied a basic SAR (with same stops/targets) on the charts I provided and these are the results. The net results are about the same (except for the first), but the psychological results would be much more negative I think. Not only would I be in a trade much more of the time, wondering if it's going to go the right direction, but I would get frustrated after I see it go in the initial direction after I just done a SAR. If you have any feedback or tips on this matter they would be greatly appreciated. I remember dbphoenix saying I could think of a SAR (in the very beginning of this journal) but at that time I was not at all ready to think of something let alone implement it.

I agree that you need to make yourself available to whatever the market offers you and take advantage of the opportunities and means you have available, but SAR in a ranging market will surely cause you to suffer heavily?

First chart
- S 6321, stop @ 6326 = -10
Reverse L @ 6326, stop @ 6321 = -10
- S 6314, target 1 @ 6304, target 2 @ 6294 (market order slippage) = +30
- L 6280, stop @ 6275 = -10
Reverse S @ 6275, target 1 @ 6265, target 2 @ 6220 = +25
- L 6272, target 1 @ 6282, target 2 @ 6287 = +25
- S 6299, stop @ 6304 = -10
Reverse L @ 6304, stop @ 6299 = -10
- L 6276, stop @ 6271 = -10
No more time for reversal.
Net result: +25

Second chart
- S 6295, stop @ 6300 = -10
Reverse L 6300, target just missed at 6310 so stopped out @ 6295 = -10
- L 6295, target 1 @ 6305, target 2 @ 6310 = +25
- S 6338, target 1 @ 6328, target 2 @ 6323 = +25
- L 6314, stop @ 6309 = -10
Reverse S 6309, stop @ 6314 = -10
- L 6296, stop @ 6291 = -10
Reverse S @ 6291, target 1 @ 6281, target 2 MOC 6281 = +20
Net result: +20

Third chart
- Short 6195, Target 1 @ 6185, Target 2 @ BE = +10
- Short 6201, Target 1 @ 6191, Target 2 @ BE = +10
- Long 6217, Target not hit, Stop @ 6212 = -10
Reverse S @ 6212, stop @ 6217 = -10
- Long 6214, Target not hit, Stop @ 6209 = -10
Reverse S 6209, target 1 @ 6199, target 2 @ BE = +10
- Short 6214, Target not hit but market on close 6206 = +16
Net result: +16

 

[firewalker99]

Adjustments to the plan

The process of testing discipline and patience has been put on a hold.

I've discovered several (small) issues in my plan that leave room for further improvement. These issues are related to where I put my stop and how I determine a target. It is obvious I don't wish to rewrite the plan at this point as it has been working fine, but a couple of very little tweaks might be just what I need in order to get even more confident and disciplined. Looking into this means I'll have to go over a whole number of trades again and see if the results add up. Journalizing will have to take a break for that reason, but when I get back I intend to focus 200% on trading the plan and developing that much needed discipline.

 

[firewalker99]

The exiting of a trade

While I've been relatively succesful at implementing my trading strategy in real time, I've often had to leave profits on the table. Finding an entry for a trade is only one part of the system, and tuning the exit is really what I should have been looking at better. I don't need to improve my win ratio even if it's only around 60%, if I can cleary see that the majority of my trades offer at least 10 points more profits than what I'm taking right now.

I have become much more relaxed and calm, sitting in front of the screen and doing nothing when your setup doesn't appear. If anything, wasp's journal has really clearly shown that all you need to do is trade the system and it will prove itself, after you've backtested and papertraded it for a while. Now that I have gained more confidence I my system it seems to have a positive feedback on my trading. In fact I seem to gain market understanding ("feeling") each day. This doesn't result immediately in better results, but I know it is a very valuable experience.

The next step I'm taking is to try and add some kind of filter to my system to exit the position. Some statistics: about 90% of my trades hit my first target, 73% hit my second target but as I'm only trading two lots a lot of the potential profits are up for grabs! About 40% of my trades even travel double as far. This journey is far from over, but with each step it has given me more insight and a new perspective to work towards.

Before I started I used to want to "make money" as quickly as possible. Now I know I have to be patient, develop my system, optimize it (but be careful not to curve fit it) and simply trade it. As dbphoenix once said "the chart will show you where to exit", and that is what I will be trying to do now. Looking to exit at the next S/R level is one possibility, but it will need to be one where I keep locking in profits. As there are many different possibilities here (price itself, trailing stops, perhaps even indicators), this will take some time sorting out.

As someone once posted in my journal, the rewards are not only financially and he couldn't be more right. I am growing towards a new stage in my life and I feel there is much more to come.

---
Edit: perhaps I need to add that thing I left behind some time ago... volume :?:

 

[firewalker99]

The beginning and the end

As some have probably noticed, I've recently changed my avatar to an Ouroboros. There is a symbolic meaning to this symbol, presenting a snake which eats of it's own tail. It presents the idea of cyclicality but it's also a vicious circle. When I first started this journal, I felt I was trapped in a vicious circle, hoping Trade2Win and it's members could help me move forward and stop me from losing money in the markets.

The journey, now 6 months under way, has given me plenty of food for thought and reflection. I've enjoyed those discussions and exchanges of feelings, knowledge and ideas greatly. With the new year approaching, I feel it's therefore appropriate that I thank all those that have contributed in so many ways (more than they probably realize), not only to my development process in the trading arena, but also to the process of finding oneself. I have become much more aware of myself and others and have come to question a great deal of things. For me, trading isn't only about making money (although it's obviously the purpose), it's about doing something you enjoy doing and enjoying the freedom that comes with it.

In my first post I stated that the purpose of the journal was to learn stuff. And I have. A lot. And I still have a lot to learn, that's where the idea of cyclicality returns. No matter how much I learn, I will always need to keep alert to changes (in the market) that require me to adjust my plan. I'll encounter winning streaks as we will unfortunately also encounter losing streaks, but during this time it is imperative that I stick to the plan and not get too greedy or anxious about what is happening.

Last couple of weeks I've acquired the confidence that I needed to stick to the plan and have it tested in real time market situations to check if I was doing ok. And finally the relief came that the plan is ok, it's working fine. It could do with some tweaking yes, but I've got plenty of time to improve it or develop a second plan based on another setup. This journey will probably never end, but that's a good thing as I'm really starting to enjoy myself out there. And more importantly, I've had some very special 'encounters' lately where I actually felt I was "riding the waves" of price. I could intuitively feel if price was going to travel up or down... I've yet to experience this feeling and trust it, but it sure feels as if something new is developing inside me, something I never imagined would be possible.

There have been times at which this journal was a dialogue or a group discussion but lately it's been more of a monologue. I therefore feel the time has come to end the first part of my journal here, it's had over 550 posts and I still look back at times on what has been told and said over the last couple of months. I sincerely hope that others will benefit from the experiences and the process described in my journal. I hope they can realize their aspirations of becoming a consistently profitable trader and wish them all the best.

Last but not least, I would like to thank all those that have contributed to my journal, some only on occasion, others quite frequently. They have put time and effort in replying to my posts and are worth my gratitude. I wish them all the best of luck in their life and trading careers. I've listed them in alphabetical order:

andycan
barjon
bracke
BroadSword
Charlton
dbphoenix
dc2000
FX_Cowboy
Grey1
Joey
JillyB
ljyoung
passive
porks
rainman2
rols
Sima
socrates
Splitlink
superfly
timsk
trendie
Tubbs
wasp
ymonly
ZDO

Thanks everybody and a very happy, and profitable New Year 2007!

PS: In case someone feels I forgot them, PM me!
(djeez... this actually sounds like a speech... )