my journal

[Yamato]

ok, done with the "past week" filter

I implemented the "past week must be positive" filter for all systems except those that don't have a reason to behave like the EUR: ZN and GBL systems, SHORT-only JPY systems, and "1st hour bounce" systems, since they go both LONG and SHORT and their trades have nothing to do with where the markets are heading.

The final excel function for my filter is this one:
=VLOOKUP(WEEKNUM(TODAY())-1,pw,2,FALSE)>0

Ok, from now on just movies for the rest of the weekend or monday it will be shooting rampage.

 

[Yamato]

This coming week.

Capital 7500. Hoping to bring it to 8500.

AUTOMATED SYSTEMS
1) Automated systems are all taken care of, and trading will now be extra safe, with the newly implemented "past week" filter. I could let them run for a whole week without checking on them.
2) Other than the "past week" filter, they are safe because the max loss per system is 5% of capital, which means the systems allowed to trade 1 contract must not have incurred a max loss higher than 7500/20=375.
3) Also,I am only trading systems with very positive results in terms of return on account.

According to the rules mentioned, out of the 42 systems running (which are still all forward-tested of course), those allowed to trade are as follows, rule by rule:
1) the past week rule alone lets only 13 out of 42 systems trade.
2) the 5% max loss rule lets only 11 systems trade.
3) the ROA money management ratio allows 7 systems to trade.

The combination of all rules allows only 6 systems to trade next week, and they're totally safe. From automated systems next week I am expecting to make 1500 at the most, and to lose nothing at the worst, because they should balance each other. Realistically, I am expecting to make 500 dollars.

DISCRETIONARY SYSTEMS
There's going to be about 5 trades, and if I don't lose control (if I do, I could lose 2000), I should get about 4 wins out of 5 trades. My usual % wins with the system has been 80%. That means I am counting on about 750 dollars.

All in all, I am hoping to bring my capital to 9000, but I will be happy with bringing it to 8500. And satisfied with 8000.

GAMBLING DANGER
If I gamble, I could bring it to as low as 5000, a very familiar experience. But if I follow all rules I wrote down, I should be able to increase my capital in all safety.

Here are the latest discretionary rules (in red the rules to keep me from gambling):

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
RULES
ENTRIES (one contract) can be made if:
1) you haven't lost > 270 dollars for the day
2) you sense trend (high volume/range, no news wait, touched >= 2 pivot lines, correlated all above/below their mas)
3) time is 15.00 to 20.00 CET
4) your entry and your take profit are > 10 ticks away from any pivot lines or any 0.0100s levels if beyond S2 or R2
5) you're checking "correlated" chart for exact timing of entry
6) the 225-period ma is in favor by > 10 ticks
7) 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
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.

 

[Yamato]

What's always screwed me is that I wanted to make a great return every day. If I could just ask of myself less than what I can get from the market, then things will be fine. I always tend to overdo everything.

The doubling mania is what screwed me, always expecting to double my capital, every month, and why not even every week, and if that's possible, why not every day, pushing my limits relentlessly, just like my father taught me - never being satisfied, Until I finally bring my risk too far and kill my account. (Just like my dad pushed me too much to study, and I went from being the top in my class to quitting studying and skipping classes).

Yeah, because if you're building a wall, you can be a workaholic and the wall will get built faster. The same with typing on a journal, the more you write the bigger it gets.

But with trading it's different, and quality is more required than quantity. It's not like the more you trade, the more you make money. Here beyond a given quantity you will start hurting quality to the point of being unprofitable. It's as if you were actually removing bricks from your wall. That's what losses are: your way of removing bricks from the wall of capital because you were rushing too much in building that wall.

So this shows that building up your capital with trading is not like building a wall with bricks. You can't just work harder and faster and count on raising your wall faster. Building your capital is closer to surgery than to building a wall. Every little move you make could cause damage.

So, I was about to get my notebook and start writing my doubling dreams again, like so many times in the past years. I was going to get my notebook and write:
7500, next week I'll have 9000. Then 11000... every week 20% more, and that will be doubling every month... in six months a million dollars...

Instead I came to journal to witness my madness. At least I share it with others, to get opinions or to warn them, or describe the same problem they have. Yeah, because I suppose many of the things I describe are common to others.

 

[Prawnsandwich]

Hey, you haven't been reading the 1500 posts of the journal... Obviously what's wrong is, rather than something related to my money management, my compulsive gambling, that caused me losses of 2000 dollars or even more (10% of my capital or more) on a couple of days per month, in the past 6 months.

Now that it's history, you will see how my account will grow.

My point was that you dont seem to enjoy trading with proper money management because in your mind you do not make big enough returns...you seem to continuosly refer back to when you gambled and were able to make large gains....and probably this is the reason why you revert back to gambling - the memory of those large gains...but the point is that they were not really large gains because you ended up losing it again anyway....which is a typical gambling delusion..remembering the winners but forgetting the bigger losers.

Following on from that I was trying to say that good money management does not necessarily mean very small regular gains...and if this is all you are getting then maybe the problem is with your system....if you are getting better gains using good management then this may help you give up the gambling side of it...

Maybe you should read some of Elders books which equate gambling losses to alchoholism, and he even goes so far as to suggest that the AA ten point plan can work for gambling also......very good stuff from a psychological view point.

 

[Yamato]

Point taken. Thanks for taking the time to explain it again.

Yeah, I've read (and quoted here) that Elder's comparison of compulsive gambling to alcoholism, and his stress on the concept of "predetermined maximum loss", in chapter one. I even quote him in my profile.

 

[Splitlink]

Point taken. Thanks for taking the time to explain it again.

Yeah, I've read (and quoted here) that Elder's comparison of compulsive gambling to alcoholism, and his stress on the concept of "predetermined maximum loss", in chapter one. I even quote him in my profile.

Are you quite sure that you've got the message? Because, after 200 odd pages I'm begining to think we're wasting our time.

 

[Yamato]

That's why I am here. Maybe the pressure from you guys will force me to get the point. Maybe if everyone abandons the journal and I feel like an idiot, maybe then the point will get across to me. Repetita juvant.

For sure I will not stop writing the journal before I've turned profitable, and I mean it "long term", in a non-gambling way. Which is the only way possible, because when I gamble I lose everything again within the next two weeks.

So far my capital says it all: on september 5th, when I started the journal, I had about 7000 and now I have 7500. I will be able to say that I've turned profitable and stopped gambling when I'll be back at 20k. In July I was at 20k, which to me is a dream now, but back then I was frustrated because I wasn't at 30k yet. This continuous drive to make more is dangerous... I've talked about it plenty of times, quoting other blogs as well, while discussing my sniper analogy to cure overtrading.

I haven't cured my compulsive tendencies, not just in my trading but in my life in general, but this should not lead you to think that I've done nothing in the past three months, and it's all documented on the journal. My discretionary trading and my awareness of myself and my problems is better than ever, thanks to the journal and to the readers. And automated trading is better than ever as far as money management thanks mainly to forward-testing, and as far as automated systems, thanks to my hard work and help from the readers: in September I had 24 systems and now I have 42.

Turning profitable to me is indeed rocket science, and they didn't land man on the moon overnight.

 

[Yamato]

My target for next week is... increasing capital

Instead of expecting to make 1000, I should have a target of... making money. That way I won't have any extra pressure to trade, but that presumes that I don't spend more money than I make from my job, or else it'll put pressure on me to make a weekly profit target big enough to cover those extra expenses. So, no restaurants from now on.

With a combination of automated and discretionary I should make at least 500 per week anyway, which is more than what I get paid at the bank.

Without a pressure to make a target, I'll make 2000 per month, whereas, with a pressure to make a given target, I will lose 2000 per month.

I will start reporting all my trades on the journal as before, because I found that I am less prone to gambling when I do so.

I will report even the gambling trades, should they happen.

New systems, with changes in red.

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.

 

[Yamato]

Christmas truce

Christmas truce

Joyeux Noël
Watch "Joyeux Noël"

Pipes of Peace

 

[Yamato]

Hey, this is very good, not the usual psycho-babble:

Got it from here:
http://www.trade2win.com/boards/videos/?do=viewuser&userid=4131&username=ek1

 

[Yamato]

Ok... no wonder he made a lot of sense to me: it's the same guy who came up with my same "sniper analogy" on his blog, that I already mentioned here:
http://www.trade2win.com/boards/trading-journals/72598-my-journal-116.html#post998442

What a coincidence. This guy is called Steenbarger, and he sees eye to eye with me, and he was also quoted by wprins somewhere else on my journal.

I'll read a book by him any time. This guy is much better than Elder.

 

[Yamato]

From the same EK1 list of videos, posted two posts above, here's another great video, that only today I can fully understand. I could have watched it two months ago, and woul have thought I understood it without fully understanding it. In the video, Doug, among the other things, talks about having a plan: a predetermined takeprofit and stoploss. About focusing on one trade at a time (sniper approach, as usual, except he uses the golf analogy... but it's the same concept that keeps on coming up). And he says something funny and very meaningful: when you start hoping wishing and praying, it means it's time to get out of the trade. Ah, and, just like Steenbarger, he says "look at the market" and not at your account. Don't handle a trade according to how much money you want from the market but on what you think the market will be doing. And he says about trading only when you have a large edge there, basically not because you have to trade. I fully understand doug and steenbarger. We'll have to see if I can apply what I understand tomorrow, without letting my emotions affect my trading.

 

[Yamato]

I like this video as well, but it's not half as useful and complete as the other videos. Once you get rid of the phone, your bills and other things not related to trading, you still may not have an edge, a plan, and still have all the other interferences that are inside your mind, which are the heaviest burden on your trading.

 

[Yamato]

This is is good, too (that's why I find writing useful). Even though this guy is doling out information in dribs and drabs.

 

[Yamato]

This is not trading video, but it provides yet another analogy: when there's everyone around them panicking (like on 9/11 for example), there'll be traders seizing great opportunities.

 

[Yamato]

New change to system (addition, in red):

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 SYSTEM
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).

Also, watching this movie right now (the protagonist is a great actor: watch him in "I love you man"):
http://www.letmewatchthis.com/watch-298-Forgetting-Sarah-Marshall

 

[Yamato]

From now on, before making a trade, I will have to answer on this journal the following questions:
date and time
discretionary balance for the day
ticks difference relative to yesterday
position relative to pivots or 0.0100s
position relative to slow moving average
GBP position relative to slow ma
ES position relative to slow ma
CL position relative to slow ma

 

[Yamato]

I have spent all day calling the branches to get the documents missing from the suspicious transaction reports they've sent to us. Every report they send, there's something missing. Initially it was stressful to call these colleagues and I'd get into arguments, but I am starting to get confident with my phone calls, almost friendly to the fellows in the branches, and it's becoming almost fun to call them.

 

[wprins]

Hey Travis,

I read this interesting article comparing Black Jack to trading here, as opposed to Poker which trading is more commonly compared to.

What I found interesting and relevant to your journal is the idea that, as in a Blackjack game, there are in fact a finite number of "good hands" in a day and generally speaking, it is therefore perhaps a good idea to (like you do in your system earlier on) have a daily target of one or maybe a few) trades a day etc. I quote:

To summarize, intraday trading sessions have limited opportunity for price movement = profit as restricted by time. Of course there are periods of higher volatility that offer more profit potential than usual, but the concern of any serious trader is focused on all market behavior through all phases of low to high volatility range. Poker players have a "new day" each time the cards get shuffled. The same statistical odds for probability exist each time, seamlessly and endlessly. Not true with financial markets. There is a decreasing opportunity for profit from the first price swing higher or lower onwards. Some sessions offer no more than one... while others offer more. That is the fundamental difference between playing poker and trading stock markets from 9:30am EST through 4:15pm EST side by side.

Interesting, no?

 

[Yamato]

Hey Travis,

I read this interesting article comparing Black Jack to trading here, as opposed to Poker which trading is more commonly compared to.

What I found interesting and relevant to your journal is the idea that, as in a Blackjack game, there are in fact a finite number of "good hands" in a day and generally speaking, it is therefore perhaps a good idea to (like you do in your system earlier on) have a daily target of one or maybe a few) trades a day etc. I quote:


Interesting, no?

Thank you for the post. I will read it in detail and answer later, after seizing the finite number of today's opportunities, or at least checking if there's any.