End of Day Journal (8-25-10)

Summary:

Finished the day at -$188.50 (same gig):

So - finished at -$0.94 per share.

Here is the EOD application:

Off by something just under $2.80 per share. Un-believe-able.

Honestly, I am sitting here trying to figure this out. To re-cap, here is how the EOD is applied:

1. I take out the rules.
2. I mark S/R on the Q's.
3. I flag matching entry criteria on the Q's.
4. I enter stop locations on TNA: the respective H/L either on the signal candle or just before.
5. I place triggered stops on TNA.
6. I calculate entry prices by using the opening price on the candle after the signal.
7. I move to the next trade flag on the Q's or until TNA triggers a stop (if the stop is less than $0.10 from the entry price, I move the stop to $0.11 from entry).
8. I use the opening price on the candle just after the signal or the stop to determine the close price.
9. Repeat.

Seems as straight forward and as unbiased as can be. I make a special effort to 'fudge' the criteria as well - e.g., this seems close enough - I probably would of entered; even though I see the stop 2 candles away. Yet the difference between what I did when I am in the moment and invested in what is happeneing, and the EOD chart application is ridiculous.

I am telling you folks - bizzaro world.

And incredibly revealing. And incredibly encouraging!

I am go into detail on all the trades below, perhaps cumbersome, but if you want to help me figure it out give it a read. I feel that a reconciliation between what I expect and what I implement is crucial to my growth/progress as a trader. This is where its at: If I can bring these two approaches together then I feel like I can begin to hone that all powerful trader's intuition. I feel like the stark reality of what I try to do - and tell myself that I am doing - as compared to what I actually do,  is perhaps one of the most helpful and humiliating things I have tried to do. I am getting a true perspective of the problem.

And I am convinced that this is where everything comes together - the fragile emotional balance, bolstered by (eventual) confidence in my ability to apply my plan. The plan works - I can trade it on static emotionless EOD charts all day. I just need to train myself to do it while in the moment.

Emotionally... this morning was tough - I brought a lot of expectation (weakness in the market), which I managed to trade thru, but you can see the results for yourselves. Interestingly enough, I forgot about both the mantra and the trading rules after the first read, thinking that I 'knew' what they said - to my chagrin on both accounts.

Trade well!

Details:

After avoiding this type of in depth analysis for some time, I have decided to do it again. The difference between 'now' and 'then' is that now I feel I understand the true nature of the problem. Earlier I had some sense of where I needed to eventually be, but really no clue as to what my problems were - I thought it was a matter of super duper chart reading skills. Truth is, all the skill I need to have to make money I use on every EOD application. I could teach my sons how to do it in about 10 minutes and they would probably do just as well as I can.

The problem is the disconnect - as we were nearing the market close today, I thought that I had traded as well as I possibly could to the plan. I remember thinking that the EOD application was sure to lose money today. Pffft.

The way I see it, it can only be one of two things: either I am unconsciously biased with the EOD charts in front of me or I am unconsciously biased when I am emotionally invested in what is happening.

Here are the charts - you decide:

Blow-by-blow:

The first was on the 10:00 'good as it gets' doji. the candle changed and I was poised to enter the trade (long) and everything dropped like a rock (TNA dropped $0.41 in the first second), I saw this and I froze - I couldn't place the order:

Part of the hesitancy was due to the $0.34 stop and I was thinking along the lines of 'Ok - buy when it comes within $0.30 of the stop'; but I didn't stand a chance. After the volatility settled down, I looked at the candle and wasn't sure what to make of it. It was the longest bar of the day, spanning almost the entire breadth of the day's movement and I could see it doing anything (heh - go figure), so I decided to short. The plan strategy would of been to go long (long wick on the support side).


The second 'pertinent' decision came on the 10:40 'doji'. The candle formed with a longer lower wick then body and I recall thinking that this might be a good exit - but I attributed the 'might' to hesitancy and gave it a 'not sure means no' decision:

On the EOD application, I see this as a clear turn around spot and signal the trade. Josh did too. And comparing the candle to other signals that I marked, it is is well within tolerances. Why didn't I think so live? I can tell you why: I was hoping that it would continue to go down and seeing what I wanted rather than seeing what was actually happening.

The next trade was following up on this one - I added prior to my short position. Things looked good. BUT the candle had 10 seconds left - I entered and wow did the chart look different by the time the candle finished:

And of course after the candle was finished I had no place to move the stop to, so I left it where it was - for a total loss of $0.48 per share on 400 shares.

Another trade was shortly after this - big candle on the 11:00:

In the moment, I thought that the market had no clear direction, so high (exhaustion) volume didn't apply. EOD of course I see market strength for the rest of the day and don't flag an entry until the following candle. But - it could be argued that strength was apparent: Q's broke new highs on the candle. I could go either way - but I will try to consider that in the future.

I missed the next two signals (long on the 11:45 and short on the 12:15), I was short the entire time - after getting stopped out twice:

EOD I get stopped out once but get back in on the long signal. I will avoid 'getting back in' from now on, at least until I get some consistency between the live and EOD application.

I nailed the next entry. But - then I exited on the very next doji:

The exit is not on the EOD because it was not in plan: the long wick was away from S/R... strict application versus 'I don't know what the hell I am doing' application.

I did go long on the next 'doji' with long side S/R, but missed the EOD exit:

This could be a matter of EOD bias, but a trading friend of mine (Fozz) saw the short signal as a get out while live - and my EOD application did not hesitate at all. This didn't have a drastic affect on the PnL differences though, the EOD goes short and gets stopped out. What did hurt was the fact that I took the long top wick as a signal to go short - which was completely out of plan. I do get a point here for trying - it had slipped my mind that I needed the S/R support on the long wick. In fact - I recall thinking 'This looks like it is going to go up, I am crazy to short it', but I countered with 'Gotta follow the plan'. Too bad it was the wrong plan.

In all fairness, the first EOD application missed the next two entries (this has happened every time after I give a close review and I have always corrected the EOD application). I actually nailed the first one live, but missed the following (the 14:30 long, I tried to go long on the 14:20 which was out of plan - the wick offers no definition of direction (see note at the end of the blog where I pick it apart)). The highlighted is the signal, the red is the false, and the green is another signal. Granted - the green circle is a tough call, but here is how it is (and what I intend on following from now on) - the candle is very close to S/R (that line could be moved down in light of the 12:05 and 12:10) and the lower wick is just as long or longer than the body. It doesn't matter a lot, but I figured that since I was picking apart the prior signals, I may as well decide something here as well:

This improved the EOD application significantly (meaning my live performance is even worse... pffft), but later additions to the EOD canceled it out and then some.

My next entry was based on the 'big green' and botched. Not enough volume and more than enough strength to see in the market. Plus I waited and let the candle turn red before making up my mind (thus shorting at almost the low):

I missed the next two signals also on the first EOD pass, and for the sake of consistency went ahead and added them. I missed the first one while live (even split on the wick/body and the strength of the day) but traded the second:

The next two trades are in line with the EOD application, and I came in late on the next trade. There is no S/R here until the bottom side doji forms, so the prices on EOD are a little generous. This finishes up the day:

Note:

Ok - after much deliberation, beating it to death, and wondering all along if all this is very helpful and good for the 'go by your gut' discretionary trader that I want to be... I decided it was and got something figured out.

(And for those of you who didn't read the blow-by-blow above, this has to do with the signal on the 14:20 and why it 'matters'.)

Here is the trade (circled in red); a similar - but distinguishable - signal is circled in green (red == no signal; green == signal):

Both of these have the doji with the long tail 'bouncing' off the S/R. the difference is the candle prior and suggested price direction. The green signal is pushing off of nearby resistance with the end of the wick coming close to (i.e. exceeding the prior H/L). This makes it valid in my opinion. The red signal is pushing off nearby support, but the low wick is no where close to (i.e., exceeding the prior H/L). In my opinion, this makes it invalid.

Now - this probably has nothing to do with anything, and perhaps neither represent a higher probability trade, but I had to decide something so I know what to do next time. In my opinion this decision makes some sense and is the most consistent with what I have chosen to define as my edge.