Then NT's customer support called about a bug I reported (live PnL calculations of on the 64-bit version of chart trader) and he took over my computer and did several arbitrary round trips to try and pin the problem down. I re-set the sim account after we were done (with about 30 minutes till lunch) and racked up another $100 on NFLX as it came off the bottom (one stop and one profit).
I was feeling like I could take money at will from the market by the time I was ready for a break.
I then proceeded to get tossed around for the afternoon session. I decided to only post my losing trades to take a closer look at things.
I want to say something here. I am becoming more and more convinced of it's importance. This analysis is not about the charts, price action, or even about what was happening to me in the market. It is about what had just happened and was happening in the market. I got taken for a ride on some range bound bottoms because I ignored some clear signals. And maybe I was feeling a little cocky...
But - would anyone care to distinguish between healthy confidence and 'pride goes before a fall' cockiness? I think healthy confidence stems from a realistic evaluation of one's own skill - and that is what I was doing - taking money from anyone that was willing to offer it (well... on paper at least). There is not a shred of doubt in my mind that I can do exactly what I did yesterday and this morning every day. That is, if I focus and pay attention to what is happening.
And I think that is key - this new chart setup was so different that it forced me to change my perspective. I spent the first few days trying to tweak the TA (and some part of me thought that it was fun) but I recognized what I was doing and realized (thanks to all the good stuff I have been reading on blogs and books) that it was a fruitless exercise. I had no 'patterns' to go by on these charts but I believed in the principal behind them (price only), so I stopped messing with the TA and whatever, and began to look at the charts for exactly what they where - people's reactions to whatever it is that they are believing. The charts go from fear of losing, to running out of fear (i.e., people that fear), to fear of losing out. Dynamic. Completely unpredictable and moment by moment. No chart pattern in the world can tell me how far a stock will run. I need to get in touch with and understand what is driving that run.
Anyhoo - after the analysis it is evident that I did the same thing every time on these entries. I will strive harder to pay better attention.
For what it's worth, I ran across an interesting thought on Douglas' video the other day - the idea that 'accepting the risk' is more than consciously accepting the potential monetary loss, 'accepting the risk' is about finding good reasons not to make an entry. I think I forgot some of this this afternoon.
Tomorrow is dissertation day, so no trading.
I am going live next week. I will be cutting down to 100 shares for awhile to condition myself. I am trying to recall why I was - and what it felt like - trading 1000 shares when I started this latest endeavor. It completely boggles my mind. Heh. I will try to update all the relevant pages this weekend... but it looks to be busy, so no promises.
I am sure I am in for a lot of surprises yet.
Trade well.
AMZN
I shorted on the 'new' low and let the stop run wild to see what would happen. Looking at it now, the 45, and the 15 for that matter, was showing some definite exhaustion.
BIDU
Assuming the same principal - nothing showed exhaustion to the topside on BIDU - I should not have been shorting. The 15 signalled exhaustion on the bottom side and I reversed properly.
CRM
I got hit several times on CRM. It had been trading lower all day and my first entry was on a new low. It continued more or less range bound - and again, turned right on my stops. I am still not sure how to avoid this. There was an exhaustion bar on the 45 just prior to my first entry which could of been a clue.
FFIV
Again... exhaustion showing up on the 45 on the new low.
FSLR
I had the right idea on FSLR - but early. Then I tried to short - frustration? Looks like it.
so i have been reading a few pages in the book. probably one of the best books i have read on trading. i have always wondered what was happening on the other side, but couldn't wrap my head around it. i haven't become enlightened yet, but hoping to get there.
ReplyDeletemy question is, you are using these price bars to show you what is happening behind the scenes. and you say good riddance to TA. okay, maybe i will allow that lol, but what about momo analysis? when you have large, wide green bars, isn't that saying buyers are in charge? as the bars are becoming less wide, doesn't it show that these early buyers are starting to become sellers to the late buyers. and then the doji, where there is an equilibrium between buyers and sellers, and thus a turning point?
whatever it is, it's working for you. so don't let me get in your head. i am trying to figure it all out. i think these price range charts are excellent for exiting, but it's very hard for me to see the entries without having a chance to watch these charts develop.
Lucas recommended reading his other book first (The Art of the Trade) - I wasn't as impressed with it, but it may have done more to set the stage for the second book then I realized. If the first reading doesn't quite cut it, you might want to try that route. The Art of the Trade is quite a bit cheaper and I think you can find it used.
ReplyDeleteI would suggest that the price range bars are still about momo analysis (if momo analysis is about people) - but with a different emphasis on the volume - you are able to see at exactly what price volume comes in and then how it bleeds out. I am using the 15 and 45 - 15 for timing, 45 for a bigger overall view.
But honestly - I am guessing that the type of chart is arbitrary - a person should be looking for the same thing (i.e., participant behavior) no matter what kind of chart it is. I think key for me was switching when I did, then trying to fine tune the indicators, then realizing what I was doing and stopping, all while reading Jankovsky's book and understanding and trying to get at what is truly underlying the price action. The new chart style forced me to develop new habits - rather than falling back on old familiar habits. I was looking at something different and had nothing to 'fall back on'... if that makes any sense.
I would suggest just keeping an open mind - don't try to figure the charts out yet. Take Jankovsky's message to heart and then throw everything out that you have learned and try to see what is really happening.
Towards the end of the book he talks about charts - but personally I ended up using the 'generalities' rather than the strict interpretations - because I wanted to use range charts instead of time based charts. Again - I think the new charts kept me away from old tendencies.
Of course - I only have two weeks behind me, and I might blow up and sink in the near future... So... ya know...
But, more than anything else, I am confident and encouraged because this all sounds right; and it is my own talk - not simply parroting. I believe I understand it. I am not sure if the journey from bad trading to good trading is an epiphany, but here's hoping.
If you're going to trade next week, make sure you are good and ready emotionally, that you have a plan for all scenarios and nothing should surprise you.Evaluate your performance( and I don't mean how much $ you are up or down) and see if you followed your plan.
ReplyDeleteYou sim trade the big names(NFLX, FSLR etc) and big spread stocks-you should stay away from trading these for real as they can spank you silly before you know it. find some nice boring trendy plays with small spreads. Practice your craft. Work on self mastery.Slow down, don't be in a hurry to make money. It will come flying in your window on a regular basis when you are ready.
yeah buddy. i think i will finish the book before i ask more questions. it really is insightful. miles better than that last book by the turtle guy.
ReplyDeletei'm 2 coronas deep within a half hour of arriving at the fort worth stockyards, so i forgot my train of thought. keep up the good work, don't even think about blowing up and sinking. it's been an amazing progression for you. keep it up. take it slow.
oh, maybe now i remember. i can't believe that you are able to make that kind of money with 200 shares at a clip. it is honestly beautiful. it is amazing you were going 1000 shares deep before.
@Scott:
ReplyDeleteHow would you recommend setting up a plan? As in - on what level: entries/exits/stops? A plan if a stock behaves a certain way? A plan if I have 10 stops in a row? A plan if I begin to get too attached emotionally?
Maybe a plan for how to monitor myself and how I am responding?
Right now, with respect to well... everything, my plan is to remain completely open to the possibilities and to trade what I see happening. I think staying on that level is the key to a lot in this game - even the emotional aspects. That is difficult for me to quantify - and evaluate quantitatively, but, like with what happened Friday afternoon, it is relatively easy for me to see that I was trying to force something to happen rather than remaining open to the moment. Is that what you would call a plan?
I am all ears - you have done nothing but offer fantastic advice.
There is really not a shred of doubt in my mind that I can do this. That is, if I stick to what I know and understand - finding and then staying in tune with the crowd underlying all price action; observing what is happening and choosing when to participate - that I can do this. Call me arrogant, call me naive, call me crazy. I know exactly what to do. I am not the best at it yet, but I know what it is.
i'd be interested to see how you did with the big boys. i wonder if a loss will effect you differently when you go back live. scott poses some interesting ideas, but can you do the same with smaller spread stocks? from what i can see, your trading has also changed in the fact that you take multiple .50 winners, instead of trying to hold on for more. smaller spread stocks are going to take longer to make .50 moves. granted, it has only been a few weeks of great trading so like scott says, take it slow.
ReplyDeletefor some reason, i have a feeling that you are so tuned in right now, the spread won't matter. your timing seems spot on. you seemed to have found something in your trading that is working quite well. i hope for the best man. of course, all of us waiting for your results is only going to add to the pressure, lol! you shouldn't have announced it to the world.
@ josh:
ReplyDeleteIknorite? Announcing it to the world only adds to the drama. But there are worse things than looking like an idiot - and I want to just let this journey be exactly what it is - all the hopes, all the dreams, all the fears... and all the fears. Heh.
One thing that makes trading so great, it cuts all the excess and flamboyance away from the 'problem' rather quickly. That is, if a guy is willing to let it. You can think, believe, and postulate whatever you want to about the market but I can't think of any venue where what I think matters less to what is happening and where what is happening needs to matter more to what I think. Some of us run from the market's arrogance (or is it our own?) and the rest of us want to survive so much that we eventually learn to conform. I think back to how I have felt in the past with respect to having a good/bad day or going live - all the same emotions are there but they are strangely (incredibly) tempered by the reality underlying all stuff we call 'the market'.
Thanks for the good word. I agree with the $0.50 assessment - but it is hard telling how closely the sim trade executions resemble the 'real deal' on big spreads. I guess I will find out.
I can always go down in the number of shares I am trading. Douglas mentions that some traders have to go all the way back to 1...