In the Zone

 

02-23-2017-eurusdm1
Holy sheeet.  Need days like this everyday.

Damn, I just crushed it yesterday.  I don’t know what got into me but I was what the Spanish call “in el zone.”

Attacking counter-trend pullbacks, getting in on trend continuations.  Cutting trades short when I needed to, letting them run.  Granted I did miss out on a few trades because I was walking my dog at one point.  But I was just so zoned in that I was like a sniper hopped up on Red Bull and Ritalin waiting for the next trade to pounce on.  Blue lines are winners, red lines are the losers.

7 for 9.  +35 or something pips.

I was also profitable the two days before this as well.  Like more than my usual pip or two profit – significantly profitable.  Not sure if I’m finally seeing the price action better after months of daily grind or if the past 3 days were just conducive to my style of trading.  I dunno.

Hope this continues on.  I’ll be riding my Lambo with my bishes.  Actually, no. No bishes. Wife would kill me.

Have a nice weekend everyone.  Yes I’m in a good mood.  I normally don’t wish any of you guys anything.  But since I’m all giddy from 3 straight (significant) green days of just ripping shit up, I’ll bode you all a nice weekend.

 

 

Stocks.

My trading journey started back in 2008 during the  real-estate bubble/crash.  I think most everyone knows the phrase “buy low, sell high.”  So when we had that big crash down, I was working a job that payed pretty well at the time.  I was 24 years old and I was single, car was payed off and rent was split between my roommate and I.  So I had some extra cash sitting around and I opened up a Scottrade account.  I placed my first few trades.

scott
$7 commissions are actually kind of high for day trading.  And their trade platform is complete shite.  I made money with them though, so can’t complain too much.

I remember it feeling very unnatural.  Seeing a chart or price down 100-200% of what it was just a few months earlier.  It was almost like catching a falling knife.  But I kept telling myself that this is where the smart people make money.  So I ponied up $3,000 and split it up between a handful of stocks.  The ticker symbols at the time were: PRU, JPM, C and GE.  All big companies that were (most likely) not going to fail.  So I divided up the money between each company equally so it was some weird numbers like 13 shares, 29 shares, 111 and 52.  My broker was probably like who is this tool bag putting out these whack ass orders?

I left it sit there and didn’t look at it for a few months – and surprisingly I caught the dead bottom of the crash.  I checked once a week for a few months then just let it go.  I actually went about a year at one point without looking at them.  Fast forward to 2015 and I login, checked the account and was like, holy shit.  My original $3000 was now up to around $7,200.  And probably more but ticker C at the time went through some stuff and they cashed me out, so a portion of my money was sitting in cash for those few years.

And that was my first real taste in trading.  After that I placed a few more orders in late 2015.  I bought FB, BABA and UA.  I only based trades off of the questions “is it a good company and is the price ‘cheap’ right now?”  I basically figured the first part out by looking at debt and overall public perception – a bit subjective and the second part off of the chart.  And without even knowing, I was actually buying into dips with loose stops and riding it until I felt upward momentum was slowing down – a decent longer term strategy.

So FB ended up a nice gainer.  I bought like 10 shares at $68 and cashed out when they hit the low $100s.  BABA was a huge stinker.  I bout at high $90s and sold at $60 something.  And that was a big hit to me at the time.  I was puzzled why it didn’t go to the moon like FB or the other stocks I bought on dips at the time.  Little did I know, the chart was actually pretty overextended for BABA and was due for a correction soon.  UA stayed stagnant and I actually just exited the position after the BABA loss to step back and make sure I knew what the hell I was doing.

I took some time to study the main books.  In July of 2016 I read the CANSLIM method, Buffet’s way of looking at stocks, read Market Wizards, etc.  Decided I want to take a stab into this trading thing more seriously so looked at shorter term swing trading.

Up and down, took some winners, took some losers.  Finally decided in October to give stocks a rest to pursue trading futures and forex.  Since that time I think I have developed a pretty good way to look at the markets.  I’ve always known that knowing your own personality needs to coincide with the market and time frames that you’re trading.

Now here I am in the beginning February of 2017.   I decided to take a few day trades in stocks based on the strategies I employ in forex and futures.  First week, up a few hundred bucks.  Second week, ditto.  Now the third week again, profitable.  This is trading pretty much the same stock day in and day out.  I only have 3 day trades per week so it might be a blessing in disguise.  Luck?  Time will tell.

I’m up more now than I have ever been trading forex or futures.  Maybe it’s time to go back to stocks?

 

 

Ignorance is Bliss. Seriously.

 

I mentioned in one of my earliest posts that I used to trade the ES (e-mini S&P futures). And how did I trade it? Well in the beginning I was using nobody’s strategy.  That’s right I didn’t use anybody’s strategy and I had the most profitable week I have ever had as a trader.  After reading a few books, I decided to take a stab at it.  I read over and over and over the following: Do not trade against the trend.  Always with trend entries.  You will lose money trading in traffic and you will lose money counter-trend trading.

So what did I do?  I said alright, easy enough.  So I pulled up a few charts of the ES and took a look at the movement.  I realized the best chances of profit were when you got a nice surge in one direction and then you get a pullback.  As long as the pullback wasn’t as big as the initial surge, stopped and momentum shifted back into the direction of the bigger leg, enter.  When I saw a lot of traffic or movement I couldn’t make sense of, I stayed out.  I set a standard 5 tick stop and an 8 tick target.   I didn’t know about fibonacci, risk management, or any of the other nuances most traders get into.

I literally sat at my desk, watched TV until I got a big surge of movement.  Any 1 point move here, 3 tick there, I didn’t even bat an eye at.  I sat at my desk just waiting for that nice pop for a chance to enter.

Here was my strategy for that week.  It was so simple and I’ve never traded as well as I did this week.

  1. Wait for a surge out of traffic or continuation of the trend.
  2. Wait for a clean pullback (it had to be mostly one color – if it was a combination of red and green on the pullback and wasn’t visually symmetrical, I stayed out. )
  3. Once the pullback stalled and we got an engulfing candle back into the direction of the trend, enter 1 or 2 ticks back into the engulfing candle as to get a slightly better price (this was at the risk that price would take off without me, which was OK).
  4. 5 tick stop and 8 tick target
  5. If it looks like something I’m not familiar with or movement that has me scratching my head, stay out. (I think this rule was what kept me profitable in the early stage)
es-09-16-2000-tick-9_2_2016
I knew what to do but had no real idea and it worked.

Look at this shit.  10 points on my first day sim trading the ES.  Look at it.  Beautiful.

Nice surge, clean pullback, I enter.  Even the last trade was against the dominant trend of the day (down).  Why did I take the trade?  Well, because I wasn’t polluted or biased to keep trading one way and I went by the textbook definition of a trend and when we got a higher high then prices stalled at a (potential) higher low and I got an engulfing candle, I entered long.  Piece of cake.  Just like the books said.

And then I had to go and pick up more books and more strategies.  I always wondered, if after that first week, I just stuck with this simple strategy and stayed out of the rangey stuff, if that is all I ever needed.  I think it would’ve worked as long as I refined my target and stop to account for those slower days where maybe 6 tick target was better.

es-09-16-2000-tick-9_8_2016
The 3rd and last trade were good trades to take, just got the timing wrong.

You can see here I tried to get fancier by adding trend lines and only using a 21 EMA like many of the price action guru’s tell you to do.  The day before I didn’t even notice the lines on my chart nor did I give two shits about trend lines or anything.  But you can still see I was waiting for a nice surge, and entering on clean pullbacks and although I missed the timing on a few, I had my head in the right place.

es-09-16-2000-tick-9_9_2016
I went out searching for more of …. I don’t know what.  Changed my targets (that were working just fine) and started tinkering.  Sheeeeiiit.

Look at this day.  4 winners.  1 point each – and I only changed my target from 2 points because one of the price action gurus said to go for 1.  I think each one of those trades would’ve made 2.  And all I did was wait for a little clean pop, pullback, and if I got an engulfing candle back into the direction of the initial surge, I would enter 1 or 2 ticks back into the engulfing candle to get a better price.

So my first week of sim trading the ES I only traded with 1 contract.  There was a day where I only had 1 trade and I think another day where I didn’t trade at all.  I wasn’t trying anything fancy, I wasn’t even going to attempt trading the rangey stuff – I was too scared because I was told that’s where you lose money.  So basically only taking trades 3 1/2 days I believe my net profit was something like $730.

Why can’t I just go back to that now? Well my mental game is all fucked up.  I’m thinking of second entries, if it’s a potential short trap, hesitating because some guru said this may be a range forming, the last low was only a percentage of the previous low, or the owl that hoots at midnight didn’t take a shit today.  You name it and all that pollution is in my head now.  Perhaps I can hire a hypnotist to get it all out?

My mind was so clean then.  So devoid of all the pollution out there in the trading world. Then doubts that money can’t be made on a strategy so “stupid” and “simple” started creeping into my head.  Rather than continue with it and gaining more confidence, I talked myself into fixing something that wasn’t broke.  And I wasn’t even afraid to lose then because I knew that if I entered enough trades with that method that it was a guaranteed money maker.

Here was the most important thing about it.  Although I did not have any rules on paper, I was very strict.  If I didn’t know what was going on, I didn’t enter.  I couldn’t because I was still so new to trading and only ever heard “trade with the trend.” I only entered if it was visually appealing (most symmetrical) and fit the simple rules of a trend (HH,HL or LH,LL).  If I was left wondering hmmmm, does this qualify? I didn’t take the trade because I knew I didn’t know enough about anything other than trend trading.  Now I think I know more than I do.  Oh, let me fade this high of day….. oh, let me try and catch this triangle breakout…. blah blah.  And I try to predict every little movement and if I get it wrong, I get upset.  I’ve read enough books.  I’ve watched enough video.  I should know everything, right?  Ugh. 

Then I went and complicated everything.  My whole mentality shifted.  Nothing was wrong.  Nothing was broke.  So I went off in search of indicators, more rules to follow, more ways to enter, how to trade the traffic that I had stayed out of for the most part, etc. and took 2 steps back.

Now 6 months later, after all the strategies, indicators, gurus, what is the essence of all of their strategies?  Entering in on the fucking pullback after an initial impulse wave or surge in anticipation of the continuation in the momentum.  Wow.  All that money.  All that time.  All that added complicated mess.  And what do I get?  More complicated ways to re-invent the wheel.

I’m not sure where I’d be now if I had just simply continued trading the way I initially did. I actually think pretty successful had I just stuck with those rules and stayed disciplined. But it’s just so hard to stay out of all the pollution out there with trading strategies, sites and Youtube.

I think now when I do start finding more consistent success, I’m going to shut myself off from the trading world and concentrate on doing what I do.  No forums, no watching other traders… just me.  And you won’t get to read my rants.  Well, maybe I’ll still rant.  Yeah I will still rant who am I fooling.

 

Sticking to Your Rules Means Missing a Lot of Trades – Derp.

I’m going to take a little break from posting charts for a little bit.  I’ve pretty much been grinding back and forth between profitability and loss.  So, nothing new or groundbreaking there.

I want to reflect on the importance of having strict rules to abide by before entering trades. I’ve written them down from time to time but never really gave them much thought. They’re sitting somewhere in “My Documents” folder on my PC in a sub-folder I don’t even know.  But it’s not in the “Untitled” folder, because that’s where I like to keep my porn.  So inconspicuous, right?  Untitled.  Nobody is going to look there.  Haha, wrong!  I bet you guys do the same shit, huh?  Or maybe you like to keep it in “New Folder.” Or “Misc.” or “Stuff.” Hah. Derp.

And it’s either that or you have the rules in your head.  But again, we all know that doesn’t work.  Oh yeah, sure, I’m only going to enter when this this and this occurs.  Oh, wait, this setup looks tempting….. lemme just do it one…. yeah, just one time.  Rrrrrrrrrright.

Usually, I develop an idea of how I want to trade and sample it out and see if it works. Putting down a strict set of rules was never on my radar though and now I am understanding how important it is.  Derp.  I like this word.  If you’re curious, here’s what a derp is.   http://www.urbandictionary.com/define.php?page=2&term=derp

So this week I have been developing a strict guideline for how I want to take trades.  This will allow me to stop chasing trades, stop wanting to get in when I see that I just missed a trade and also keep me from micro-managing a trade that I have no business touching.  Derp.

When I see a trade take off, my first thought it “Oh, shit balls, I should’ve taken that trade.”  I hate getting left out, don’t you?  But what I fail to see is that the trade didn’t fit my guidelines for entering a trade.  Then the next trade that shows up resembling the last one, which isn’t even part of my rules, I try and enter, expecting the same results.  Derp.  Shit, so much for having rules.

And having strict guidelines for entering a trade also leaves you with no trades to take on many days.  I know my rules will give me winners 60% of the time but if I only take 5 day trades a week, I ain’t gon’ make no money.  So I think.  But what’s better?  Taking 5 day trades, 3 winners and 2 losers for let’s say +14 pips or taking 12 trades where I may have 5 winners and 7 losers giving me a total of -1 or maybe +2 or 3 pips (that’s what I’m doing right now).  Taking +14 pips, depending on how many lots your trading, can be very lucrative.  So the volume of trades is not as important here.  And my trading rules should give about 3-4 trades a day, unless it’s just one of those shit show kind of announcement days where the chart looks like dog shit.  Derp.

So, I know my rules *should* give me at least 2-3 trades a day.  If I stay strict to them, and not let the trades that rocket off without me affect my mental game and improve the process from there, I’ll be driving Lambos and wearing gold grills up to the gills.  Derp.

Alright.  Going forward:

  1. Stay strict to the rules you’ve developed over the past 3 months.  You put in the work and know that it will be profitable in the long run.
  2. If I miss out on a trade that didn’t fit my rules, don’t get my panties in a bunch
  3. If I don’t take a trade that does fit my rules, slap myself in the balls
  4. After a few weeks, if I’m still having issues with the actual rules not being profitable, revise them to address what issues I’m coming across to make them (potentially) more profitable.
  5. Don’t get ADHD and try other new shit out thinking yours doesn’t work anymore
  6. Don’t get ADHD and try other new shit out
  7. I repeat, as much as you love to *SQUIRREL!!!!*…..
  8. Sorry, I have ADHD
  9. When you are tempted to quit your rules and try other new shit, I REPEAT DON’T FUCKING DO IT.  STICK TO YOUR ORIGINAL RULES. DERP
  10. When you come back to read this thinking “ah my shit strategy and rules don’t work,” KEEP DOING IT.  STOP YOUR ADHD SHIT!
  11. Derp.

 

 

Stop Hunting – They’re Smart Fuckers

I’ve been having the frustratingly, hair-pulling, profanity-inducing problem of having my stops “tapped” and taking off so frequently in the past few weeks that I wanted to make a post on it.  This blog is pretty new so nobody is even reading except for myself but I need to get this off my chest.   I’ve added a few charts that are only from the past 2 days.  I could attach days worth of these.  No lie.  And before you call me a pansy, or that I’m such an amateur, I’d like to tell you to eat a turd.

I’ve traded futures, I currently swing trade stocks and now I day trade Forex with real money.  Never have I experienced this kind of frustration over having my stop hit and take off.  Trading the ES, usually my stop losses were good stops.  When they were hit, it saved my back or at least was broken by a few more ticks before maybe going back in my intended direction.  Fair enough.  When I swing trade stocks, usually when my stops are hit, they’re pretty good indicators at telling me I made a wrong read of the market.  Once in a while, it’ll be a sort of stop hunt but I think more coincidence.  With Forex, it’s a whole different story.

stop-hunt-3
Beautiful.  It’s almost creeping up just hunting each and every retail stop order.  Stopped out exactly at the top of this pullback before it takes the fuck off.

I have kept track of and calculated my trades over the past month – wins, losses and losses where the stop was hit within 1 pip and ended up hitting my original target.

Wait until you hear this.  

So for the previous month I have made a tiny profit with 50% winning trades.  14 wins.  14 losses.  5 scratch trades (less than 2 pips profit).  Here it comes…. wait for it…. wait for it…..

7 of those losses were stop taps and go.  Let me say that again.  Of my 14 losing trades, half of them, 50%, had the stops hit within 1 pip of where I set them and took off in my originally intended direction and hit my target.  WOW.

How do I know they were stop hunts?  Because after finding a pocket of buy/sell orders, the prices SURGE.  I mean take the fuck off.  It’s not like my stops are hit and prices dilly dally upwards/downwards for a few minutes and oscillate around and make a smooth transition until my target is hit.  I’m saying these fuckheads find the pockets of liquidity, run prices down or up to them, hit the stops and then just dump their orders in creating a huge surge.

stop-hunt-2
Far right edge of the screen (red line).  Stopped out at the peak of the pullback before it… you guessed it.  Takes the fuck off.

I’d be a very profitable trader right now if it weren’t for those stop hunts.  But rather than feel sorry for myself, I’ve got to come up with a way to trade with it.  It’s the biggest wall I’m facing right now to becoming a consistently profitable trader.

stop-hunt-1
Going long now. I thought that bar to the left of my entry was the stop hunting one.  Nope.  I I enter.  It stops me out to the fucking pip, and?  TAKES THE FUCK OFF.

Does that not raise any eyebrows?  Is this a coincidence that prices just seem to tap my stop and have a huge surge right after?  I think absofuckinglutely not.  So I did some digging.

Here is a video that makes a lot of sense.

If anyone is reading, please give it a watch.

So, I need to formulate entries or something to ride these big surges.  I’m tired of getting bent over by these dildos working at the banks and funds.  I know the type too because I used to work at one.  “I drive a beemer, bro.  See this?  Tag Heuer Carerra.  And my dad’s having us over this weekend for a bbq so we can wear polo shirts tucked into our Banana Republic douche-a-roonie shorts and drink shitty European beer.” Yeah if you’re sitting there reading this asking yourself “what’s wrong with driving a Beemer? Or Banana Republic…. He’s just jealous.”  Yeah you’re a circle jerker.  Fuck.

Feb 3, 2017 – Don’t call it a comeback

After voicing my displeasure over the angry midget who likes to stop tap me and make price barely whiff on my target, I made a nice recovery – although that damn midget still keeps sticking around.

I’m still working on how to determine whether to let a trade keep running or to close it all and take what I have.  It’s tough when price is hovering 1 pip above your target.  Do you just close it and take what you have?  But it’s sooo close.  And so much more satisfying when price actually goes through your tareget.  Or do prices have a chance to go just one more single pip?

My experience so far has been that it always likes mess with your mind and oscillate around, triggering stops and entries and have people second guess themselves.  So I need to determine a better, more concrete way to take profits or let the trade ride.

And if it does oscillate around a bit, it might make more sense to increase my target a few more pips?  Because if it does break out of the small consolidation, it’s not just going to do it by 1 or 2 pips, it is generally a few more either as a pullback of the main wave or a continuation of the main wave.

02-03-217-eurusdm1

The chart looks nice because I have 3 winning trades in a row (well actually the second one is kind of a wash.  But you can (on the second trade)see how it surged down, consolidated for 2 minutes and shot back up.  Do you take profits at the bottom of that consolidation and get in the next pullback or just sit on it?  It’s tough.  And I have to be more decisive about it instead of shitting around hoping it’ll do what I want it to.

First and third trades were nice.  The third trade I actually was front-running that bigger triangle pattern you can see – Lower highs and bottom resistance was being hit.  I was willing to bet that resistance would be more likely to break than a higher high being made.  And again after the big surge down, it consolidated.  I closed it manually as I didn’t want to sit through another oscillating up and down, stop hunting bullshit shit.

I’m beginning to think the best way to go about trading is as a spy in enemy territory.  Don’t overstay your welcome.  Get in and get out.  Take what you can get. The market will definitely F you over any chance it can get.  Still a learning process so hoping to learn some good shit on the way.  I need some Yoda skills.

 

 

Feb 2, 2017 – Dis is Booshit

Told you I’d bring you s’more booshit.  This is the evil midget that likes to mess with me in full effect.  Barely missing targets, stops tapped and reversing… you name it, he is out for me today.

Look at this.  Entry.  Nice movement down.  Misses target by .2 pips.  Not 2 pips. 0.2 f’n pips.  Reverses and stops me out.  Greeeaaaaat.

02-02-2017-usdjpym1-wtf

I even set a reasonable target and eventually tightened up my stop.  So I took a -2 pip or so loss on this one.

Hold on though, it gets better.  So on my next trade I told myself I would limit in the top of the consolidation as to get a better price and not have the evil midget stop tap me or if he did that it would at least be a good stop and just blast off in the other direction.  I thought I would be one step ahead of the guy.

02-02-2017-usdjpym1-fml

Nope, the midget told me to grab my ankles and get ready.  Here I was thinking by limiting in the top here I was being clever and you can see with the dotted line where I got stopped out.  Literally to the decimal of a pip, it stopped me out, and reversed into my target.  F YOU EVIL MIDGET.  Couldn’t outsmart him here.  So I called it a day after this one.  I was in no mental shape to continue or I would just be revenge trading. -6 pips, -2 pips earlier for -8 pips total so far.

So, took a break, had some dinner and opened up again during the overlap session.

Next entry I asked myself, “where would I usually enter, but get stop tapped by this evil midget?”  So instead of taking the first entry that I normally would, I stayed patient.

02-02-2017-eurusdm1-overlap

You can see by the white check box where I would’ve normally looked to get in first time.  I stayed patient and let it pass and on the next pullback it began to consolidate sideways.  So I limited in again here near the bottom of the sideways movement, false move down and shot up to my target in 2 minutes.  Gotcha, ya little evil bastard. +9 pips.  Just like that I’m back in the green +1 pip.

With my confidence back I decided to get into one more trade.  We had strong momentum downward and a pullback.  I didn’t get in the first attempt to go back down but waited again.  Saw upward momentum stalling and entered a market order on a strong move down.

02-02-2017-eurusdm1-overlap-2

I had the evil midget’s number, but he still got me back in a way.  After the strong move down, it barely, just barely missed my target again.  I’m talking less than a pip.  What the shit, right?  Again?  So remembering the first trade of the day go against me all the way for a loss, I just hit “close all” button and exited with +5.3 pips.  Didn’t want that evil midget getting in the last laugh of the day.

So ended up the day a little over +6 pips.  Good day to learn.  I’m glad I called it quits after sensing my frustration and being able to get back on it.

Another big lesson I learned is to not always enter on the first chance.  Most days will have complex pullbacks or the market will be there to hunt your stops.  Of course I don’t believe there is some evil midget or some person stop hunting.  But the smart money knows where people have their stops.  They know where they can get pockets of liquidity to take prices to where they want.  I’ll be keeping a closer eye out now.

You have to admit, it is fun to picture a little evil Santa’s helper looking dwarf stop hunting people though.  Bet he’s a blast to get drunk with.

Feb 1, 2017 – Round and a round

I’ve been having some good trades and been pretty focused each day of trading.  Now today was the first time in a while I got pretty frustrated and the frustration continued into the next day (you’ll see what I mean in the next day’s trades).  What is frustration?  Well getting a little irked is normal.  But actually yelling at the monitor, “go ahead, tap the f’n stop and go. I bet that’s exactly what you’re gonna do…. go ahead do it…. tap it again you f*^&*,” that my friend, is frustration in all its glory.  My poor monitor.

See, I’ve been having this issue that I call “tap and go,” where it seems like some market force or evil midget behind a screen is having price reach my stop, tap it, then go off into the direction I originally intended for.  So today I made my first trade and it was solid. BUT, the evil midget struck again.  Not only does he sit in his evil stop tap lair, but he also makes it so that prices barely miss your target – which I like to call “wiff and go.”

So here you have the first trade of the day.  Literally .3 pips from target, wiff and go back.  I closed it for +5.3 pips.  Second trade, I’m in.  Pulls back, taps my stop and bye bye.  It takes off.  WTF. Literally tapped my stop for a millisecond and took the fuck off.  -6 pips.

02-01-2017-usdjpym1

Last trade of the day, yeah that was me taking a risky trade, but a new pivot high was made so I thought it was just as likely to switch to the upside as it was to continue to the downside.  Was a good trade, no stop and go tap bullshit so can’t complain.

Just wait until you see the next day’s trades though. FML.