my journal

[Yamato]

In many ways price with pivots behaves like a bus interacts with bus stops.

During the day, if the day is up, let's say, the bus goes forward in its route, from one stop to the next. When it leaves the bus stop and goes towards the next one, you know it's going to reach it most likely.

During the night (after 9 PM CET), the bus turns around and does the same exact thing but with the opposite itinerary.

If I could start seeing it like a bus and bus stops, then maybe i could stop fighting the trend and getting run over by the bus.

At around 9 PM the bus gets to the terminus and turns around. But tonight it's late. Yet, you look at it, and you can tell that it's obviously at the terminus.

 

[Yamato]

Last night I dreamed of my former sweetheart. She never even dated me for one day, but we had a thing going... platonic thing, or little more than that. I don't remember much now, also because it was a nightmare. I looked at her, and I saw some guy next to her, who touched her arm and then moved her away from my sight, as if he said to her "let's get away from him". That sucked. I guess it's because I fear that it could be the reality. But the dream left... the nightmare left me with a good feeling. I have a good feeling because I am glad that after over a year of not talking to her I still remember her. She's a whore, slut and all that. But the memory of her is a nice feeling. The memory of loving someone is good. I don't care if the object of my love is a worthless slut.

 

[Yamato]

Despite everything I said from the start against psychology being the key to trading, in my case, the problem may be entirely psychological.

It has to do with my urge to go against the trend essentially. There's people who are profitable after just a year of trading. I definitely know enough about how the markets move after looking at them for 12 years. Definitely enough to be profitable. Let's go over the questions about what might be stopping me:

1) I enjoy predicting a turn in the markets
2) I enjoy losing money
3) I am afraid of making too much money

I think we can rule out 2. Maybe #3 is true, but not when I only have 10k. I am not afraid of having 20k. So we rule out #3 as well. All guesses of course, despite my apparently confident tone.

That leaves us with #1: I enjoy predicting a turn. Let's talk about this.

I always feel that the market has risen too much to rise more. Even though I know and have seen how often I have been wrong about this, I keep on feeling: "no way, I am not going long when it's been rising all day". I can only go long if it just started to rise.

But after realizing that I have a wrong perception of this sense of overbought/oversold why can't I correct it? It's as if you were shooting at something, and were always aiming too much to the right, but never tried to aim a bit more to the left. Like... i never ever went WITH the trend too much. Always against it. That's like always shooting too much to the right of a target. It just never happens. You try to the left, and then get closer and closer to the center, even if you rarely shoot the perfect center. But in my case... so what is wrong? Why don't I try to go WITH the trend at the risk of doing it too much?

So far a mystery. I may have a bath tub intuition one of these days.

 

[CFry87]

Last night I dreamed of my former sweetheart. She never even dated me for one day, but we had a thing going... platonic thing, or little more than that. I don't remember much now, also because it was a nightmare. I looked at her, and I saw some guy next to her, who touched her arm and then moved her away from my sight, as if he said to her "let's get away from him". That sucked. I guess it's because I fear that it could be the reality. But the dream left... the nightmare left me with a good feeling. I have a good feeling because I am glad that after over a year of not talking to her I still remember her. She's a whore, slut and all that. But the memory of her is a nice feeling. The memory of loving someone is good. I don't care if the object of my love is a worthless slut.

um... i think i know the source of your dream... i am also one of those poor guys thats girlfriends drug to that new Twilight movie... Your dream is similar to that movie... maybe pick a comedy next time lol jk

 

[Yamato]

I am glad you can relate to me but I have to admit that I don't know what you are talking about - because I don't watch movies unless they came out like over 10 years ago - i don't want to be influenced by the media telling me it's a great movie. Remember: i always go against the trend, so if they say it's a great movie, I won't watch it.

Speaking of trend. The EUR bus is reversing. I told you it was at the terminus at around 9 PM, didn't I? Too bad I bet all my money on it being there a few hours earlier. There's a different person within me investing. One person reasoning, and another person operating the keyboard and the mouse.

Anyway, the bus stopped at the terminus for a while, then reversed its route and now the next stop will be at R2. You know what I mean? I don't have any doubts.

Tomorrow morning I'll be at 6k. And then I'll need to really start doing what I said I'd do. Following the bus in its itinerary from stop to stop.

 

[Yamato]

Forced break

Wow. Forced to take a break from the markets, as thanksgiving and day after thanksgiving are a holiday on the CME. Pretty bad. I said I would catch up and it's a holiday. Yeah, thanksgiving... pretty ironic. Thanks a lot. You're welcome. So tomorrow my position will be open, let's see if they let me close it tomorrow or not... i can't close it now because I'd be wasting risk-free profits.

 

[wprins]

Hi again Travis,

Glad to see you're still here and hope you're making progress towards becoming a better trader. Must admit while I've briefly scanned some of the posts since my last post I've not nearly read all of them (50+ pages ) My sympathy with what appears to have been some setbacks (?). But congrats on having made apparent progress on various other topics. (As a small confession... I'm managed to get myself in a bit of a bind - experimental carry trade gone bad. Decided to load up on a carry more and watcha know, it goes and breaks out and puts me under water. Yes, I know, stupid stupid stupid. Currently considering my options. Drawdown around 33-38%... What would you do? Close the loss and try to trade back up? Is this a case where I'm letting my loser run and not willing to close it? Hmmm... Anyway, I suppose this is how you learn eh. The school of hard knocks. And things were going so well...)

That leaves us with #1: I enjoy predicting a turn. Let's talk about this. I always feel that the market has risen too much to rise more. Even though I know and have seen how often I have been wrong about this, I keep on feeling: "no way, I am not going long when it's been rising all day". I can only go long if it just started to rise.

This is one of my problems as well, though it's getting better. You should simply however be able to externalize a rule that dicates to you what direction you're allowed to trade.

Someone said (w.r.t. trend following) that trading is not so much about buying low and selling high, as it is about buying high and selling higher (or selling low and buying lower.) As paradoxical as that may sound at first glance, there's a lot of wisdom to it. For one, we can't predict the future, so you don't in reality know when the market will turn. And once a price is trending down, chances are it will continue down, rather than turn at any particular moment out of a continuum of developing numbers you happen to pick. Similarly for a price trending up. You really can only really follow the markets. We know that markets trend 30-35% of the time. We know that trends come to an end eventually. We know that sideways markets come to an end eventually and a trend resumes or a new trend starts. So the trick is to get in when the trend is starting or resuming and get out when it may be ending. The hard thing to take psychologically with trend following systems is relatively large number of entries that will fall back. Nevertheless, if you catch the beginning of the trend, the reward:risk makes it more than worth it. (As you can probably tell, I've got trend-following leanings.)

So anyway, determine yout bias (long or short) and don't trade against the trend. If you absolutely must do a counter trend trade, then reduce your position size drastically and only enter when a conservative reward:risk warrants it. I know you probably know all this already so please feel free to ignore all my prattle! (And, I'm very much lecturing myself as well here... )

 

[Yamato]

I agree on everything you said (I wrote this after I finished reading it). I will reply as I read, as usual.

What would I do to get out of a losing trade? It depends. If it's discretionary, I would keep it open until I blow out my account. If it's automated, it gets closed by the system. If you want, we could talk about it on msn (private message me your contact). I am an expert on these situations, of hail mary trades. That's all I've been doing for 12 years. In the past few days I've lost over 50% of my capital, in case you didn't notice.

This is one of my problems as well, though it's getting better. You should simply however be able to externalize a rule that dicates to you what direction you're allowed to trade.

Yes, my systems can do it, whereas I can't. They can trade with the trend and make money. Sometimes I come home and see their pro-trend trades open and i feel like closing them.

Someone said (w.r.t. trend following) that trading is not so much about buying low and selling high, as it is about buying high and selling higher.

Wow, very very smart. It applies exactly to our case I guess. The feeling of wanting to buy low makes you anticipate and buy while it's still falling.

On the many other things you said, especially about trend-following, I know them of course. Yet I can't put them into practice. Hopefully my latest system will make me do it in a way that I can carry out.

Once again:

WITH TREND METHOD (between 4 PM and 9 PM CET)
ENTRIES
GO LONG/SHORT if day's green/red and price goes through pivot levels

EXITS
bracket order of 40 ticks


AGAINST TREND METHOD (between 9 PM and 11 PM CET)
ENTRIES
GO LONG/SHORT if price >150 ticks lower/higher than previous top/bottom and we touch a pivot line

EXITS
1) Stoploss at half a pivot level away
2) Close position at 8 AM

 

[Yamato]

UPDATE ON:

WITH TREND METHOD (between 4 PM and 9 PM CET)
ENTRIES
GO LONG/SHORT if the day is green/red and price goes through pivot levels

EXITS
bracket order of half a pivot level away (whichever level is closer)


AGAINST TREND METHOD (between 9 PM and 11 PM CET)
ENTRIES
GO LONG/SHORT if price >150 ticks lower/higher than previous top/bottom and we touch a pivot line

EXITS
1) Stoploss at half a pivot level away
2) Close position at 8 AM

 

[Yamato]

If I were home all day, what would I do now according to the systems above?

Price is below yesterday's close, so we are "red". Time is intraday so we have to use "with trend" method. Now we would have to wait until we go through pivot line P, to go short, and we would enter a bracket order half a pivot level away (the closer one, which is P to S1). I'll automated that right now, the bracket order.

 

[Yamato]

NEW VERSION

(SET UP EUR HOURLY FOREX CHART WITH PIVOTS ON IB'S TWS)

WITH TREND METHOD (between 4 PM and 7 PM CET)
ENTRIES
GO LONG/SHORT if the day is green/red and price goes through pivot levels

EXITS
bracket order of half a pivot level away (whichever level is closer)


AGAINST TREND METHOD (between 7 PM and 11 PM CET)
ENTRIES
GO LONG/SHORT if price >150 ticks lower/higher than previous top/bottom and we touch a pivot line (if there's no pivot line you can't trade)

EXITS
1) Stoploss at half a pivot level away
2) Close position at 8 AM

 

[Yamato]

Oh wow, I forgot. The systems would still be short for 5 minutes. Then, after 8 AM CET I would close the SHORT AGAINST TREND position and would go SHORT (because we're red, defined earlier) upon breaking of pivot line P, with a 30 ticks take profit and stoploss.

 

[Yamato]

Actually it broke it already and I am short. So here's how my position will evolve. I will set a take profit at 30 ticks lower. The stoploss I won't do because today I am too desperate. I can't afford losing 30 ticks.

So, 1.5080-1.5013=67 ticks

67/2=33

I'll put a take profit at 1.5080-33=1.5047

If it works out, I'll be at almost 6k, as I had hoped yesterday. Now I'll shut everything down and go to work. Hopefully my take profit will be reached.

 

[wprins]

In the past few days I've lost over 50% of my capital, in case you didn't notice.

Well if it's any consolation, I've now joined the club. Marge called this morning. Have about 50% left from where I started before this whole sorry trade. Really should've cut this one loose a looong time ago, but no. Thought this is different, a long term carry etc. (Not at that margin/leverage it ain't son!) Really kicking myself now for allowing it to get this far. Well predictably I've got this incredible urge to go and revenge trade now to make it all back quickly... but that virtually never works so is a no-no. Hence I resolve I'm not going to do it. I'm going to instead sit on my hands and do nothing for a few days at least, analyse what's happened and get over the event first, go back to the drawing board a bit, work on my trading system etc...

(This experience just again goes to show the importance of discipline -- I was essentially slack and poorly disciplined in this trade, with no clear stop losses, no clear targets, basically just a random discretionary trade based on a new idea without a proper plan of how I intended to manage it etc, so hence I didn't know when I was going to and indeed didn't act when neccesary (as I should've) and managed to turn what was at one point a 20% winner (!!) into a 50% loser... I also did the classic mistake of averaging into a loser... If I'd left my *original* position alone and didn't add to it, I'd have been at least not margin called yet and might've had some further room to maneouver (or just close the damn trade out at a lesser loss.) Seems I just became a demonstration of my first signature quote, how humiliating/humbling... )

 

[Yamato]

I am honored that you've been a member for over a year, wrote only 14 posts and most of them on my journal. That's like my highest achievement so far, as far as the journal goes. It's like the best compliment I could ever receive from anyone.

I am sorry you joined the club. We have very similar problems. Everything you say applies to me (not clear entries nor exits, etc.). What do you think of my last system (above)? Don't you think we could work on it together? Or do you trade different markets? Do you have any objections? Does it suck so badly that you won't even reply to my proposal?

It seems to have very clear as far as entries and exits. I wonder if it'll really take me to 10k from 5k I am at right now.



Today I had a take profit at 1.5047, and it got down to 1.5052. It sucks. I hope it will hit my take profit in the near future.

I don't know about you but my whole problem until now has been that I don't want to go with the trend, but only against the trend, and that I don't use stoplosses. I have enough knowledge to be profitable. 12 years of observing the markets is enough.

No, I don't have enough knowledge until I'll be profitable. I want to be profitable, and if I am not, it's because there's something that i've been missing until now. Maybe knowledge of myself.

 

[Yamato]

NEW VERSION

(SET UP EUR HOURLY FOREX CHART WITH PIVOTS ON IB'S TWS)

WITH TREND METHOD (between 8 AM and 7 PM CET)
ENTRIES
GO LONG/SHORT if the day is green/red and price goes through pivot levels

EXITS
bracket order of one third of a pivot level away (whichever level is closer)


AGAINST TREND METHOD (between 7 PM and 11 PM CET)
ENTRIES
GO LONG/SHORT if price >150 ticks lower/higher than previous top/bottom and we touch a pivot line
(if there's no pivot line on IB's chart, you can't trade)

EXITS
1) Stoploss at half a pivot level away
2) Close position at 8 AM

 

[Yamato]

Ok, guys, pivots worked today as well. Just look at this picture. I don't need to waste any words:

 

[Yamato]

Ok, i am about to change my system all over again. I just seized a good opportunity with a long trade and that obviously didn't respect my system, because according to it I should only go short from here, since we're red today.

But there's great potential to the upside. Obviously so, by looking at the highly correlated ES and CL (to the EUR), and even the GBP is way too oversold to keep on falling. Falling the downtrend now would be stupid. Besides, we've been falling for longer than 12 hours, so that was my old definition of overstretched.

There's bullish patterns on the ES and CL. No sense in wasting a LONG entry.

 

[Yamato]

I'm going to reason it all out before I post any more versions of my discretionary system. From now on, no written rules. But reasoning yes. Once I'll figure out what I am doing that works, I'll write it down. Certainly I've got to go more WITH the trend and take quicker profits. And also look more at pivots.

 

[Yamato]

One needs to learn to enter and exit quickly from positions without believing firmly in one or the other position, like i've been doing. Also, I need the 1-minute chart to evaluate the oversold-overbought state when i am entering. I can't just enter what the 1-hour candle looks good. But I can't ignore that candle either.