my journal

[Yamato]

Today I am home from work. I do not wish to discuss the medical reasons why I am home. I'd rather keep that to myself. It's got something to do with inflammation in the lower parts of the body, but I won't go any further.

Anyway, since I am home, I will now read more of that psycho-babble web site, which seemed good at 4 AM. I'll see now.

You don't realize what a potential for a rise the ZN, you're underestimating it. His brother, the GBL, has gone in a range for the past two weeks, whereas the ZN has done nothing but falling. Huge rise ahead in my opinion, despite the fact that it's close to Christmas or maybe because of the fact that we're close to Christmas. Anyway, the rationale for the handling of my trade was awful and will not have to be repeated, regardless of how this nightmare will end. I've written all about it in the last 50 posts.

Now back to the psycho-babble, after I'll take a pill for my inflammation...
[...taking the pill... and drinking milk with it...]

Now back to the psycho-babble:
http://www.tradingpsychologyedge.com/

Reading the articles in here and quoting them:
http://www.tradingpsychologyedge.com/9.html?sm=83738

 

[Yamato]

This is good stuff.

Trading Psychology: Top Ten Trading Psychology Myths
By Gary Dayton, Psy.D.

1. People are born traders. While it is true that certain personal characteristics make it easier to trade, no one is born a trader. One of the main themes of the Market Wizards books written by Jack Schwager is that almost none of the market wizards were successful from the start. They all worked hard at it.

2. You have to have a high IQ to trade. Just not true. In some ways, an above average IQ may be a hindrance. Trading is a human performance activity where strong intellectual abilities are unnecessary.

3. Top traders are successful because they have the “right trading personality”. There is no such thing as the ―right trading personality.‖ Researches have been unable to find a strong correlation between personality type and trading success. It is important, however, to understand your personal characteristics and how they may help and hinder your trading.

4. Trading is easy. It sure looks that way, doesn’t it? Just draw a few lines on the chart, watch your indicators, and follow the price bars. The truth is that trading is a difficult business to master. It involves different skill sets and abilities than what are needed in most other professions and careers. The trader must understand his or her personal strengths and limitations and develop specific skills to deal with the mental and emotional demands of trading. The later skills are the most difficult to develop and the most overlooked.

5. You must be tough, hard charging, and fearless to be successful. That’s more media hype than anything else. It glorifies a strong ego, which is a detriment in trading. The most successful traders I know quietly do their research, study the charts, and patiently wait for the right moment. They strive to keep their ego out of their trading.

6. You must trade without emotions. If you are human, that’s impossible. More importantly, when you understand your emotions you will realize they are assets, not liabilities. The real keys are: 1) to be aware of how your emotions interact with and influence your trading, and 2) to develop the skills needed to trade with them.

7. Top traders are usually right about the market. Top traders have many, many scratch and losing trades. Top traders are at the top because they exercise good risk control, limit the amount of loss from any given trade, and have developed a psychological edge that allows them to be unfazed by small loosing trades. Most of their trading consists of modest profits and very small losses. When conditions are right, they step up size and let the profitable trades run.

8. Paper trading is useless—it’s not a real trade without money behind it. If you aren’t paper trading, you are doing yourself a disservice. You should always be paper trading your trading ideas. Why limit your education and experience by the amount of capital you have? Paper trading keeps you sharp; you learn the conditions under which your trading ideas work best. Where else can you get such vital education at so little cost?

9. Master the technical skills and you will be successful. This is where most traders spend the vast majority of their time, but it’s only part of the picture. You also have to learn important performance skills. Traders should spend as much—if not more—time learning to develop their psychological edge as they do in developing their technical trading edge.

10. Trading is stressful. It certainly can be stressful, and it certainly is stressful for many. It doesn’t have to be. Successful traders have a certain mind-set. They put little importance on any given trade. Their focus is on the long haul. They know that if they attend to the aspects of trading that are within their control (i.e., trade selection, entry, risk control, and trade management) the profits will take care of themselves.

 

[Yamato]

Some comments about each point he makes:

1. Good to know that even a guy like me could somehow become profitable. But it is true that certain personalities are better for trading than others. It's not as hard for everyone.

2. I have a high IQ and I've been losing for 12 years. So this seems to be right.

3. Well, here you say you don't see a common personality - which i think is the case - but at #5 you talk about certain personality features. Contradictory. Let's say that being arrogant is a personality trait, and that it doesn't work in the markets, so #3 is not a myth, but the truth.

4. Yeah... i agree. What looks easy is the technical analysis, and maybe it is easy. Yeah. I think it's easy: you could let a newbie look at the chart and he'll pick the most probable direction. But the hard part is not betting the farm on that prediction. If everyone could just have the guarantee of having a bracket order for every trade, everyone would start making money after just a few weeks of practice, but then maybe the markets would change.

5. Never heard of this stereotype.

6. Yeah, very good point. I am tired of hearing that you have to trade without emotions. Since it's impossible, stop trying to make me do it. Give me an easier target, like "trade with your emotions, but always use your bracket order like Ulysses ordered the sailors to tie him to the mast and not untie him when he heard the syrens and asked them to untie him".

7. Rarely heard of this, because the known top traders are often stressing how often they are wrong. Maybe it's the people on CNBC who say they're never wrong, but I don't listen to those people.

8. This is your best point. Very well explained. On the other hand, I can't paper trade (except for my automated systems - they do all the time), because I find it too boring (so that says a lot about my trading: partly maybe I trade for the thrill). But I realize it's not pointless.

9. This is very related to point #4. Yes, because the technical skills are intuitive. There's nothing to study, no terms to learn. The only hard part is, as I said, the bracket order. And the experience that makes you understand you always need to use one. "Bracket order" may seem a stupid and simplistic concept, but it summarizes everything: money management, and everything else. Yet, often I don't use it. Maybe I can't accept it psychologically. Or maybe I can tell you how you need to train to win the olympics, but I won't do it myself. Yeah, because it's boring to train for the olympics. And it's boring to wait for trades that allow you to use the bracket order: they only happen once or twice a day. The trades that work with martingale (the counter-trend trades) seem to be there all the time. Only problem: every once in a while you'll wipe out your account. So they don't work. They're exciting. Top and bottom picking excites me, but it blows out my accounts. What's going to happen to me? Hopefully I'll learn to be a bored trader, after this last reckless trade on the ZN. One would feel like saying that it won't happen because I've been doing this for 12 years, but there's always a first time, and even trends reverse. Even the longest rain is followed by some sun. But maybe I won't live long enough to see any sun. So far it's been the case.

10. Yeah, this is good. The more stressful trading is, the more it might mean that you are not doing it right. Or maybe you're just someone who's stressed all the time, which might be the case. And maybe you enjoyed being stressed and that's why you chose trading. I think that could be my case. Maybe if I found a profitable method, I wouldn't use it because it doesn't stress me out enough.

 

[Yamato]

See, I told you: the ZN is rising while the GBL is screwing around. The ZN is much more bullish because of how much it fell in the past 2 weeks.

My overall loss now is under 2000, and I'll go LONG 3 more contracts in about 2 hours.

If forex, ES and CL start falling, the picture will be perfect. I want bonds green, and everything else red.

 

[Yamato]

Do not miss his radio interviews, on the bottom of this page:
http://www.tradingpsychologyedge.com/9.html?sm=83738

The audio downloads are interviews of Dr. Gary on trading performance and trading psychology by Vince Rowe, President of the Online Trading Academy - Texas. These were conducted over Vince's radio show on Biz Radio network. They are in MP3 format and can be downloaded by clicking on each of the approximately 15-minute parts.

By the way his interview is with this guy, definitely a web site to check out in the future (an online radio just on trading):
http://www.vincerowe.com/

I will add it to my favorites. Even though it mixes music with serious trading stuff, which to me doesn't make any sense.

In the first mp3 file of his first interview with Rowe, Gary Dayton mentions this guy:
http://en.wikipedia.org/wiki/Richard_Wyckoff

Then he makes this point I want to write down: there's no innate qualities for trading, but being anxious and depressed will hurt your trading. Well, once again, it seems contradictory, but it proves my point: I am anxious and depressed, and have no life. So maybe that's what's kept me from being profitable. I was waiting for trading to give me money, and get me out of depression, anxiety and give me a life, but maybe it's the other way around. But I will still try to achieve it this way. Why? Because only if I become profitable despite depression and anxiety I will know that I'll stay profitable in the worst situation. I can't count on being in a good mood to keep me profitable. So I won't look for distractions to have a life and then become profitable, even though I do remember how my best automated period was when I was hanging out with this hyperactive friend of mine, who on the other made me waste a lot of my gains.

Part 3.
He says: in a way you are a factory worker, trading your setups.
He says we need to focus on anticipation rather than prediction and ask ourselves: what am i going to do if it doesn't go in the direction I expect?

Part 4.
He says: stay in the moment. Don't think about the past losses or the past wins. Stay in the present.

MY IMPROVEMENTS IN THE PAST 3 MONTHS
3 months ago I didn't know what I had to do and I didn't do it. Now I know what I have to do, even though sometimes I still don't do it. There's a big difference.

I know exactly what I should do because all the psychology people confirm it. Everything I say has been said by one of these people: Steenbarger, Elder, Dayton and the other two or three people I mentioned in the past 1000 posts.

My favorite two coaches right now are Dayton and Steenbarger. Quick and to the point and dense in meaning.

Anyway, now that all these coaches are saying exactly what I've been saying and confirm to me that I have understood enough to be teaching courses, now all I need to do is do what I say. Simply implement these rules I wrote down:

HOTKEYS
"B" for "buy 1 at market" with 20 ticks bracket order
"S" for "sell 1 at market" with 20 ticks bracket order
"C" for "close position"
----------------------
CHARTS
SET UP THESE CHARTS ON IB'S TWS:
1 DAY OF 1-minute ES, CL, GBP "line" mode with their 225-period slow moving averages
2 DAYS OF EUR.USD@IDEALPRO 15-minutes CANDLES WITH PIVOTS
4 HOURS OF EUR.USD@IDEALPRO 1-MINUTE CANDLES WITH 15-periods and 210-periods moving averages
----------------------
PRO-TREND DISCRETIONARY SYSTEM with daily change < 200 ticks
RULES
ENTRIES (one contract) can be made if:
1) you haven't lost > 270 dollars for the day
2) time is 15.00 to 20.00 CET
3) daily change < 200 ticks
4) you sense trend (high volume/range, no news wait, touched >= 2 pivot lines, correlated all above/below their mas)
5) your entry and your take profit are > 10 ticks away from any pivot lines or any 0.0100s levels if beyond S2 or R2
6) you're checking "correlated" chart for exact timing of entry
7) the 225-period ma is in favor by > 10 ticks
8) the 15-period ma gets crossed by price (in favor) after being on the other side >= 4 minutes
EXITS
Bracket order of 20 ticks.
Early exit if you feel your move has either failed or exhausted its momentum before reaching takeprofit.
----------------------
COUNTER-TREND DISCRETIONARY SYSTEM with daily change > 200 ticks
RULES
ENTRIES (one contract) can be made if:
1) you haven't lost > 270 dollars for the day
2) time is > 17.30 CET
3) daily change > 200 ticks
4) Price is < S2 or > R2
5) Price crosses above/below fast ma above/below any 0.0100s level that hasn't been violated by more than 10 ticks.
EXITS
Bracket order of 20 ticks.
Early exit if you feel your move has either failed or exhausted its momentum before reaching takeprofit.
----------------------
ANY TRADES OUTSIDE OF THE SYSTEMS ABOVE
Any discretionary trades can be made outside of the system provided that you respect your predetermined maximum loss for that trade and have a stoploss in place (regardless of how wide, even 1000 dollars).
No matter what you do, you cannot add to a losing position, whether automated or discretionary trade.
Any discretionary trade (by any of the systems here) must be recorded on the trades log.

 

[Yamato]

This Vince Rowe radio host is or was connected with this company:
http://www.tradingacademy.com/

 

[Splitlink]

Don't miss Father Christmas, Travis, have a good time.

Split

 

[Yamato]

I don't think I'll meet this Father Christmas you're mentioning, because I am not going anywhere, staying in my room and keeping my laptop on my stomach throughout Christmas. Thanks, merry christmas to you as well.

 

[Yamato]

Ok, this is awesome. Everything is red. And this can't go on for too long, because the futures are inversely correlated. So I believe the guys who were green in the past few days will finally turn red, very red. And the guys who were red (GBL and ZN) will soon turn green, very green. And I also hope for that to happen.

Another thing I am noticing is that the ZN is very very bullish, because the GBL fell 20 ticks in the meanwhile, and the ZN at the same time did not fall at all.

I will now look at today's economic calendar:
http://www.dailyfx.com/calendar/

No big news coming up in an hour, so I should be seeing a rise anytime. Oh, and in one hour I will go long 2 or 3 more contracts as I've been saying all day.

Ok, I'll try to detach the laptop from my stomach for the next 90 minutes or so, and see if I can go for a bath or similar.

On a side note, my ass is feeling a lot better now. I guess I've been sitting too much. I gotta get in shape. Too much sitting has ruined my body. Too much abuse has gone on for too long. From now on there will be 50 pushups each morning, 50 pullups. There will be no more pills, no more bad food, no more destroyers of my body. From now on will be total organization. Every muscle must be tight.

 

[Glenn]

"Probably because I've been making myself right in every other area of my life.

When I go to work after taking two days off and tell my boss "if you want, you can fire me". That's a way of forcing others by the double or nothing method. The martingale blackmail method. You either kill me or you let me have my way.

That's the method I apply elsewhere in my life."

This is one source of your problems. Many intelligent people who have been in control of their lives, work, and much else, come to the markets thinking that they can exercise that control over them because that's what they are good at.
That is the reason they fail. The markets will do as they please, no matter what you or anyone else thinks.
Until you let go if this notion of wanting to control the markets, you will not begin to succeed.

Glenn

 

[Yamato]

Good one, thanks for the feedback.

 

[Yamato]

Having made the premise that this was my last gambling trade hopefully, I have to congratulate myself for having forced the market to go my way ultimately. Aha! I told you so!

Oh yes... yes, yes, yes!!!!

I feel like I am Jesse Livermore... oh yes!!!

Father Christmas listened to my prayers, made the ZN go my way, and didn't wipe out my account. Thanks, thanks, thanks.

 

[Yamato]

Now ZN and GBL go up for another few hours, like six at least, and please ES YM CL and forex guys all go down to make everything reasonable. Yes, thanks. Now it all works out. You go up, and you guys go down. It's a direct order. Acknowledge.

 

[be-positive]

Merry xmas glen ,
Looks like you last parcel of knowledge has ended up in the bin

 

[Yamato]

So... here we are at 15.30 CET and as usual... something will happen. Like 14.30, 15.30 is where the action happens.

Now of course I am hoping for forex and correlated guys to go down, and ZN and GBL to go up. Let's see.

 

[Yamato]

Ok, the first 5 minute leg, that goes from 15.30 to 15.35 CET has ended, and it was mixed. Now we'll see where the next leg will go, from 15.35 to 15.50sh.

I'd say this past 5 minute leg has gone up for the ES mostly and down for the GBL-ZN mostly. So the next one should go the other way. We'll see.

 

[Yamato]

No, ok, it's still going down. So this means it's a long leg and it will run until 15.40, and it's going against me. Then the next leg should go all the way to 16.00 and it should be in favor, and the ES should go down, starting in about 2 minutes.

 

[be-positive]

travis , you need to change the pills you are on mate (lol)

 

[Yamato]

Ok, ES and GBL have been behaving according to the prediction above. Not yet the others: CL, forex and ZN.

 

[Yamato]

ES still following predictions, but not the CL yet. I need a big fall from the CL now. EUR coming down. It's all coming together, as I wanted this morning: all forex, CL, ES down, and the bonds up.