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Football season has started and so has my active trading. I've been on hiatus for the summer but just got back into the saddle this week. The first thing I always do when I get back into trading is scour futures.io (formerly BMT) for other traders who are looking to accomplish the same goal. This site is a godsend full of great info, experiences, ideas, and support. If you're reading this, you know what I mean.
Can you help answer these questions from other members on NexusFi?
I've been scanning some of the other journals this week and it's fun to see others doing what I have done (not always good), doing what i'm working on currently and others yet who I have no idea what the hell they're doing because it's so advanced. I've been thinking a lot this summer about the differences between a great trader, a successful trader, and a drop out. Most of us all pay a tuition in the form of either blown up accounts or significant losses in the first few years, it's a right of passage of sorts. There's the usual progression of learning the fundamentals, then diving into technical analysis, price action, self-awareness, psychology and so on. One loss after another leads people to keep changing their strategy, keep changing time frames, indicators, stocks, futures, currencies, etc until after awhile you find yourself back right where you started.
I've done all the above. I've yet to really get into a profitable run of active trading. My biggest success comes from my inactivity where I simply buy and hold on a daily near long term support, set a stop and forget about it. If I was a patient person, or had a vast amount of capital to invest, that would probably be my primary trade. I'm very impatient, a hard core contrarian at heart, and I want to solve some riddles in the market. If making a few trades per month or quarter is easy, why can't making a few trades each day be just as easy?
I read a lot this summer, mostly about the markets. I started reading books about trade setups and analysis. Mastering the Trade (John Carter) was one of my favorites. After a couple though, I needed something else. I ended up with Liar's Poker and never looked back. The Big Short, Quants, Flashboys, Market Wizards, New Market Wizards and a few more. The thing I took away from the stories is that just about anyone can be a successful trader, and even the smartest people can get their accounts blown up. Success comes from perseverance. Some luck, some balls, and the sheer will to execute in the face of uncertainty is all that's required to get started.
More then anything, this got me thinking about my own success and the progression from beginner -> novice -> amateur -> intermediate -> consistent -> profitable -> millionaire with a mansion on the beach and a yacht for transportation. There's unique traits for each category, but starting backwards with the successful traders, which traits do they share?
Starting there, I've come up with a loose starting point for trading rules around which I'll build my strategies.
Fundamentals
Risk / Reward ratio of at least 1:2 on every trade. Aim higher, but
Take on small positions to start and increase with success
Strive for a flawless execution of the strategy
My thinking is this, if the strategy is bad, the fundamentals won't need to change and strategies are a dime a dozen. More to the point, these fundamentals are the things that successful traders are also really good at.
Played the overnight EUR/USD last night but didn't get much action. I'm using 4 charts to track price, two minute and two renko.
Charts:
5 min top left
20 tick renko with ticks at .00001 on top right
60 min bottom left
10 tick renko bottom right
I use the 20 tick renko as a variable renko chart meaning I'll adjust it to 40 or 50 sometimes to scale out get more of the landscape. The 60 min is used for longer term trends and 5 min for shorter term confirmation. The 10 tick in the bottom right is my trading chart and it's the most granular.
My entry support was a little off but close enough that it didn't stop out. I was in at 1.2929 with a stop at 1.29265. Luckily I didn't get stopped out but I didn't like the action and exited early for a small gain. This didn't hit my target reward, so I ended up taking on a lot more risk in proportion to my reward.
I messed up afterward. I made a slight adjustment to the support, which was inline with everything else and when price came back down I could have and should have entered again with the same targets. That one would have ended up being a nice winner. I failed in my execution in that account but had I not exited the first trade when I did I would have stopped out and that would have been worse.
Looking forward, 5 lots on forex isn't a lot to work with after commissions. I think i'm going to go with 10 lots next time and scale out of my exit. First target is 1:2 and I'll move my stop accordingly once that's hit. I'll let the rest ride out to resistance if it's against the trend or take a couple lots off if it's with the trend and look for another entry while the rest rides.
What a week. I've been bouncing between ES, NQ, EUR/USD & GBP/NZD and haven't made a single dollar. Every gain was met with an equal or worse loss. My worst enemy is and has always been myself, typically in the form of exiting winners too early and not cutting my losses quick enough.
I figured if I'm my worst enemy, just get out of the way. I decided if I enter a trade, pick the stop and pick the target and don't move them. It's either going to stop out or profit. The only exception is to move the stop up in a trend when another trade is taken with the trend. I'm keeping my stop tight to minimize risk and not entering until I see something worth at least 1:2 risk/reward. Simple / Stupid, can't beat that.
I took a stab at day trading some AAPL today using the setup and immediately felt better for some reason. Risk was accepted & manageable, reward was a waiting game but this time if felt there was no urgency to exit and I could continue looking for entries rather then contemplate exiting my winners because of this or that.
Unfortunately, I only traded sim. Figures the one great day is the off day. Good news, managing exits for me has always been the hardest part. But, I guess if I don't 'manage' exits, just make it an assumption it's going to win or lose, it should be the easiest part.
