Sandbox

[Niko 10]

SLA trades so far today:

 

Thanks, it was a really confusing day (my own fault), I overthought it too much, thinking about ranges. Even though as I said in my journal I could keep my cool, and I do not feel it was a total waste, that is no excuse to miss the good trades of the day.

 

Regarding what KP just asked, I would also like to hear more about this deal of trading at and through the mean.

[Niko 10]

Well, I am gonna finish my week and evaluate, to see if I need to go back a step and do more testing before continue moving forward with real money or if I am at a level where I can do both things in parallel.

[Gringo 10]

I would like to add that in advance we don't know whether a mean in real time is going to offer any opportunities or not. It's the same with S/R. We don't pay attention to their existence unless prices shows that traders are willing to exert some pressure around those levels. I would avoid too much of a congestion just to avoid all the confusion, but if one is willing then real time (SLA) might be more helpful than the fear of a mean lurking around somewhere.

 

Gringo

[DbPhoenix 42]

IOW, judge the market by its own action. The prep is necessary, but the market doesn't care about your prep. When the opening bell rings, only one of you can be right.

 

Given a pre-mkt range of 10-16, price appeared to reject the mean at the open and plunged through the lower limit to 7. It then rallied to the mean and rejected it again, dropping ten points. It did not cluster around the mean. Price then rallied directly to the top of this range and a short there would have been appropriate. But price moved too fast for the short to be filled and dropped all the way to the bottom of the range (which is after all only six points). It then bounced off that and headed straight for 20, passing right through the mean. This suggests that whatever use the mean may have had pre-mkt has expired. From at least that point forward, if not before, the SLA provides better ops than AMT.

[DbPhoenix 42]

This morning's SLA trades:

[Gringo 10]

IOW, judge the market by its own action.

 

:doh:. What a way to summarize.

 

Gringo

[k p 10]

Well, I am gonna finish my week and evaluate, to see if I need to go back a step and do more testing before continue moving forward with real money or if I am at a level where I can do both things in parallel.

 

I have been thinking about this post you made and wanted to add in my thoughts if I was in this situation, coming of course from my inexperienced perspective!

 

I have read a bit about these guys who build automated systems and they have all these ratios and values that the computer spits out to evaluate how well their system would perform. Perhaps the most important, besides profit and loss, were numbers related to their max drawdown and also how many times they might be wrong in a row.

 

Now we aren't trading mechanically of course, but a few bad trades in a row has to be assumed. Given this, this is how they arrive at how much money to be putting on the line for every trade.

 

The problem of not doing this mechanically is that you know you aren't taking every setup that you see, either because of fear going forward, or fear based on your last few trades. So in essence, your stats that you have thus far with live trading are I think incomplete. I think its too early to say if you are picking enough good winners to have an edge over all or not.

 

Trading 3 contracts though can very quickly put a dent in your account. Assume you had $10,000, each point is $60 for the 3 contracts, and lets say you have a stop loss of a max 3 points. Well that is $180 plus commission, so lets call is $200 you can lose on each trade. 5 bad trades and you are down $1000, which is 10% of your account. I think you know this as well, and this figure is what messes with your ability to take each trade as you should.

 

Furthermore, by not taking every trade, you miss on getting that one home run. I think every week there have been at least 2 opportunities where the market moved 40 points or more lets say in an easy cascade fashion, and perhaps even twice like this in even one session. Just one of these moves at 3 contracts would easily make up for all those scratches.

 

But since we haven't hit that move yet, things haven't been able to balance out. You haven't done 100 coin tosses yet to see that 50/50 is what toss a coin gives you. After 10 coin tosses, I'm sure there is a very real chance of getting only heads twice. Take 50 coin tosses, and getting only 10 heads (one fifth just like before) is way more unlikely. So what I'm saying is given your setups and the way you trade, after only a week, you might have a win ratio of only 30 percent, but over the long run, this ratio might actually be 60%, but you are just starting with the string of losses as opposed to the string of winners before it all balances out.

 

So I think that the 3 contracts is causing too much of a money loss before you can truly evaluate. Of course if you only go down to one and hit that big 40 point move you will be mad, but I think you need to figure out a way to go through way more trades with your account before you can truly evaluate.

 

Hopefully someone who knows more about this than me can amend anything I am getting wrong, but its how I see it. I'm sure you know its not about the money, its about trading well. Trading with money really shows us how we will in fact perform, so I think forward testing with real money is pertinent, but there is no need to do this with 3 contracts, survival is key first. After you have enough stats for yourself to know how you trade, then you can figure out if scaling out of 3 contracts is good for you, or perhaps scaling into 3 contracts based on how you trade is better. Since Db shares the scaling out approach, I'm sure this is better in the long run, but for us new guys, we are just looking for good entries, to test our skills, and hoping not to get crushed. We aren't into maximizing just yet.

 

I think dropping down to one contract, not caring if you lose $100 a day and just putting on each trade that might work should keep you from second guessing more, and hence will show you if you are trading well that much more clearly.

[DbPhoenix 42]

Since Db shares the scaling out approach, I'm sure this is better in the long run, but for us new guys, we are just looking for good entries, to test our skills, and hoping not to get crushed. We aren't into maximizing just yet.

 

People in the mathematical-mechanical group rarely if ever post trades in advance, and they never post trading plans. Therefore, though the gullible often buy into all this in that gee-whillikers way that they have, and none of their claims can be investigated independently, they can be pretty much dismissed.

 

When deciding how many contracts to trade and whether to scale in or out, the market environment must be considered, and the environment over the last month -- ever since we got into this mean thing -- has been challenging. In such circumstances, it is wise either to reduce the number of contracts traded or scale in or both and strictly adhere to the rules rather than trade bunnies. If one reviews these days, he'll find that they are characterized by rapid moves up or down at the opening bell which settle into ever-tighter swings that form coils. But that is often as far as they go. The exits from the coils, if any, don't go anywhere, at least until the next session. So the trader arrives, all prepped-up, with no place to go. He tries to make the best of a poor situation by trying to make the most of what's available rather than sitting it out, and he finds, looking back over his trades of the past hour or so, that he's been trading inside a hinge.

 

This environment will not last. Nor will the trader who does not recognize it for what it is and adapt. It is up to him to be available to whatever the market is willing to give while avoiding the impulse to force the market into giving something it doesn't want to give. I strongly suggest that those who are not already doing so review the "patience" rules both during prep and during review. Embracing these will go a long way toward solving these problems.

[eminiman414 10]

Since we are moving down if we continue this movement at the open i'll look for a RET to get on board short. Since traders were not too interested in trading over 20 and we are now below 04 maybe they find trades at 3590,70 or 50. We'll see. If this down move breaks up at the open I'll take the RET long keeping an eye on 3610,20, 40, 57,67,80. I am aware of these levels as landmarks to help me gauge the movement of price.

 

Today I will focus more on the SLA. If we happen to move sideways or range I may just sit on my hands.

Edited May 14, 2014 by eminiman414

[Niko 10]

I have been thinking about this post you made and wanted to add in my thoughts if I was in this situation, coming of course from my inexperienced perspective!

 

I have read a bit about these guys who build automated systems and they have all these ratios and values that the computer spits out to evaluate how well their system would perform. Perhaps the most important, besides profit and loss, were numbers related to their max drawdown and also how many times they might be wrong in a row.

 

Now we aren't trading mechanically of course, but a few bad trades in a row has to be assumed. Given this, this is how they arrive at how much money to be putting on the line for every trade.

 

The problem of not doing this mechanically is that you know you aren't taking every setup that you see, either because of fear going forward, or fear based on your last few trades. So in essence, your stats that you have thus far with live trading are I think incomplete. I think its too early to say if you are picking enough good winners to have an edge over all or not.

 

Trading 3 contracts though can very quickly put a dent in your account. Assume you had $10,000, each point is $60 for the 3 contracts, and lets say you have a stop loss of a max 3 points. Well that is $180 plus commission, so lets call is $200 you can lose on each trade. 5 bad trades and you are down $1000, which is 10% of your account. I think you know this as well, and this figure is what messes with your ability to take each trade as you should.

 

Furthermore, by not taking every trade, you miss on getting that one home run. I think every week there have been at least 2 opportunities where the market moved 40 points or more lets say in an easy cascade fashion, and perhaps even twice like this in even one session. Just one of these moves at 3 contracts would easily make up for all those scratches.

 

But since we haven't hit that move yet, things haven't been able to balance out. You haven't done 100 coin tosses yet to see that 50/50 is what toss a coin gives you. After 10 coin tosses, I'm sure there is a very real chance of getting only heads twice. Take 50 coin tosses, and getting only 10 heads (one fifth just like before) is way more unlikely. So what I'm saying is given your setups and the way you trade, after only a week, you might have a win ratio of only 30 percent, but over the long run, this ratio might actually be 60%, but you are just starting with the string of losses as opposed to the string of winners before it all balances out.

 

So I think that the 3 contracts is causing too much of a money loss before you can truly evaluate. Of course if you only go down to one and hit that big 40 point move you will be mad, but I think you need to figure out a way to go through way more trades with your account before you can truly evaluate.

 

Hopefully someone who knows more about this than me can amend anything I am getting wrong, but its how I see it. I'm sure you know its not about the money, its about trading well. Trading with money really shows us how we will in fact perform, so I think forward testing with real money is pertinent, but there is no need to do this with 3 contracts, survival is key first. After you have enough stats for yourself to know how you trade, then you can figure out if scaling out of 3 contracts is good for you, or perhaps scaling into 3 contracts based on how you trade is better. Since Db shares the scaling out approach, I'm sure this is better in the long run, but for us new guys, we are just looking for good entries, to test our skills, and hoping not to get crushed. We aren't into maximizing just yet.

 

I think dropping down to one contract, not caring if you lose $100 a day and just putting on each trade that might work should keep you from second guessing more, and hence will show you if you are trading well that much more clearly.

 

Kp, thanks for your advice.

 

I gave myself initially 2 weeks of live testing in order to get more information on my own psychological response to something that had turned much easier in demo, so far I realized some of my baggage is still there driving me to inaction or excess of action, I realize that I still feel bad about losing trades (irrespective of size) and that I did not rehearse enough on REVs and BOs therefore I feel insecure about taking them.

 

I have a financial goal for the end of this week, if I meet it I will continue next week, if I dont I will take a step back and train more.

 

All this is irrespective of the number of contracts, 3 is just a multiple, it could be 3 or 6 or 9 or 30, the thing is that I am currently exiting in up to 3 steps when conditions are met, and I cant test that if I dont do it with at least 3.

 

Thanks anyhow for your concerns.

[Niko 10]

People in the mathematical-mechanical group rarely if ever post trades in advance, and they never post trading plans. Therefore, though the gullible often buy into all this in that gee-whillikers way that they have, and none of their claims can be investigated independently, they can be pretty much dismissed.

 

When deciding how many contracts to trade and whether to scale in or out, the market environment must be considered, and the environment over the last month -- ever since we got into this mean thing -- has been challenging. In such circumstances, it is wise either to reduce the number of contracts traded or scale in or both and strictly adhere to the rules rather than trade bunnies. If one reviews these days, he'll find that they are characterized by rapid moves up or down at the opening bell which settle into ever-tighter swings that form coils. But that is often as far as they go. The exits from the coils, if any, don't go anywhere, at least until the next session. So the trader arrives, all prepped-up, with no place to go. He tries to make the best of a poor situation by trying to make the most of what's available rather than sitting it out, and he finds, looking back over his trades of the past hour or so, that he's been trading inside a hinge.

 

This environment will not last. Nor will the trader who does not recognize it for what it is and adapt. It is up to him to be available to whatever the market is willing to give while avoiding the impulse to force the market into giving something it doesn't want to give. I strongly suggest that those who are not already doing so review the "patience" rules both during prep and during review. Embracing these will go a long way toward solving these problems.

 

Thank you, sitting it out is still a challenge, I will re-read the pearls.

[Niko 10]

Prepwork 051414

 

So after struggling all day yesterday into a giant hinge, buyers tested interest again around the midpoint of the day (14) and found that there was no much interest so gave up and sold, joining the rest of the bears and starting a downtrend in which we still are so far.

 

Looking down, the last point were buyers step up to halt selling presure was 94, if we can break 94 with ease it could be a very interesting ride all the way to 55.

 

There are trades between those levels, but they are from before the parabolic rise, so I will only pay attention to those in case price starts to REV "in the middle of nowhere"-

 

If, on the other hand 94 holds and price breaks its downtrend this could just be sellers testing interest out of a hinge and they then should look back towards the mean again.

[Niko 10]

Seems like 96 was a good deal and buyers rushed in, but so far it has not been enough the change the stride of the trend. Perhaps they will wait for the open, so far there is no selling below 96 and no buying above 600. The MP of this is 98.

[DbPhoenix 42]

I gave myself initially 2 weeks of live testing in order to get more information on my own psychological response to something that had turned much easier in demo,

 

I have a financial goal for the end of this week, if I meet it I will continue next week, if I dont I will take a step back and train more.

 

All this is irrespective of the number of contracts, 3 is just a multiple, it could be 3 or 6 or 9 or 30, the thing is that I am currently exiting in up to 3 steps when conditions are met, and I cant test that if I dont do it with at least 3.

 

You have three objectives here, and they are not necessarily compatible.

 

To begin with, are the market conditions now the same as they were when you were simtrading?

[Niko 10]

BTW and looking at the bigger picture in the daily this could just be a RET after the breakout of the huge hinge from the 24th, so if could rally as easily as it can plunge.

 

We can also just get choppy so beware of that after the open, you dont wanna get chopped into poverty.

[Niko 10]

You have three objectives here, and they are not necessarily compatible.

 

To begin with, are the market conditions now the same as they were when you were simtrading?

 

Actually market conditions are far worst than they were back in the sim days as for my different objectives, thanks for pointing it out.

 

This process of going back to live, has been very interesting, all the emotional responses still there, sometimes they are so strong as to cloud my judgement completely.

 

So far it seems like a no go for next week live trading, today has been a particular mess, as will be seen in my review, but it has served a purpose, I was waiting for this day, in the past there has always been a day when I cracked, and messed up big time (wipe out my account), it is impatience mainly during bad days that lead to a day when I just start making stupidities.

 

That added up with fear and early exits on good days make a perfect combination for under performance and screwing up.

 

For now I am done for the day.

[DbPhoenix 42]

 

This process of going back to live, has been very interesting, all the emotional responses still there, sometimes they are so strong as to cloud my judgement completely.

 

This is largely or entirely due to the fact that your objectives are incompatible. You're trying to trade the SLA under different conditions while also trying to juggle multiple contracts.

 

Before going live, regardless of the number of contracts, you must be able to trade the SLA emotionlessly, without hesitation. If you can't do that, then trading multiple contracts will only set you back. You are no doubt aware of one member who appeared to be ready to go live but fell apart due to overthinking and overtinkering, like Victor Frankenstein. This is not uncommon, but each must make his own mistakes and find his own way.

[Niko 10]

My day

 

Not proud of the results, but in a way happy that I managed to adhere my max daily loss rule (this is the kind of day in the past where I fell into desperation and very bad things happened).

 

1. Tried to trade the failure to go above, got scratched twice.

2. As they proved they did not want it below I took the upside, but also got scratched.

3.Once again a failure to go down and tried the REV got scratched as well.

4. and 5. They finally made a HH so i decided to take the first RET, got SCR twice.

6. LH and break of DL took the RET and got SCR

7. Re-entry and got SCR as well.

8. Broke out of the hinge and took the RET but got SCR as well.

 

I know I am doing it all wrong, so I will have to go back to sim, until how db says I am able to make it emotionless.

 

As someone said, "fear fog" due to lack of testing is the problem, not the system nor much less lack of explanation from the creator.

 

Thanks for all your help Db.

Edited May 14, 2014 by Niko

[eminiman414 10]

Trade 1: After we move from 96 took the first RET long which failed. The green box represents a price of 07 that I considered going long but did not because of "thinking" a hing was beginning to form. I need to let the market show me a hinge has formed and not anticipate it. From the open after the move from 96 price makes a higher high and a higher low if that CWS trade fails then we could have been forming a hinge. Had I made that trade the day would have been profitable.

 

Trade 2: Would not have happened if the first was taken. Also, these second entries have not panned out well for me yet I still take them. Trading right into 14 may have/was foolish also.

 

Trade 3: Re-entry. Given that price did not trade over 14 I suppose it was a mistake in attempting a to re-enter but this trade was stopped and reversed relatively quickly. We failed to break the swing high and every long trade either failed or did not go very far.

 

Trade 4: the SAR from trade 3. An SLA "signal" to short began to form and given the failure of previous trades SAR was in order. Was the trade of the day.

 

Given what I consider the poor entry/the same mistake I keep making on trade 2 the total for the day was only -1.75. If the green box was taken as opposed to trade 2 the day would have been +4ish. Obviously that is nothing special but given the type of day I would say not horrible.

[Hooti 10]

.....each must make his own mistakes and find his own way.

 

I did that so often... back to sim and in a day or two I'd be nailing it without emotion or hesitation. Then after awhile I'd go back live and after a loss or two or three... right back to hesitation and gut clinch.

 

After that happened often enough, it seemed to me the emotions were a different issue than one I could work on in sim. Complete waste of my time.

 

But the sim did teach me that the technical part of what I was doing was not the problem.

 

I guess the advice to basically do one thing (like only retraces and not reversals), and only one lot of contracts, etc, and do that right without over thinking, etc. ...gives you the best chance to work out whatever you need to find your own way. Wish I'd done that sooner, and probably still need more so to let that kind of process clarify my emotions.

 

edit: I do use sim on weekends to drill and test things, including thinking about my emotions when I 'relive in sim' some of the trades I took during the week.

Edited May 14, 2014 by Hooti

[DbPhoenix 42]

 

As someone said, "fear fog" due to lack of testing is the problem, not the system nor much less lack of explanation from the creator.

 

It's not so much lack of testing as lack of practice along with the fact that you're trying to do too much all at once. But you had to figure that out for yourself.

[DbPhoenix 42]

SLA trades for this morning:

[eminiman414 10]

With the double bottom, do you just take it or do you look at a smaller interval for a RET?

[DbPhoenix 42]

With the double bottom, do you just take it or do you look at a smaller interval for a RET?

 

A DT/DB is a retracement.

[DbPhoenix 42]

This morning's SLA trades: