I took today off and enjoyed a nice four day weekend. I'll be back at it tomorrow and will post some charts later in the week. In the meantime, here are a few more comments from readers in response to Michael B.'s excellent post that also came from comments.
From Flowtastical:
"Grove,
The key to consistent money is knowing what you do best and executing only what you do best. I spent a good 5 hours writing that in my journal yesterday and it was amazing how much time I spent on executing things that aren't my strengths. Make your own private blog and post your most profitable trades every single day. Over time it will add up.
If you spend today writing in excruciating detail what you do best and execute exactly what you do best next week, your numbers are going to improve.
I don't think most traders overcome odds. I think they overcome themselves.
Spend some time on traderfeed.blogspot.com. Specifically read all his posts on "solution focused" trading."
From Ken:
"Flowtastical makes some great points.
Grove Under, here is my shot:
1.) Being selective is easy once you break the habit of overtrading. Michael B. said as much in his comment when he talked about being conditioned to make a lot of trades. It is all about discipline...you have to develop it and maintain it. But it is easier to maintain when you are making money from being selective as opposed to losing money from overtrading, and trading even more to try and get it back.
2.) Slumps - I don't think X hits them with his win rate. It doesn't sound like Michael B. does either. For me, a slump is a few break-even days but I have not had a losing week since mid-2010. That is what being selective does for you. And I don't view myself in competition with the best and brightest. I trade setups that I know work. I don't know what other people are doing, and I don't really care. I see something, I execute, and I take profits...usually in a very short time period.
I think the slumps go away (or, are redefined) once you learn to focus. Again, a slump for me is a few b-e days...so it doesn't carry the same weight mentally.
3.) Turning the corner - I think you get the answer to this question every day on this site, and you certainly did from Michael B.'s comment. Focus. Be selective. Don't overtrade. Don't force trades. I think X posted once that his job was to eliminate the bad setups...once you look at it that way, you have won half the battle. Eliminate the bad, take the good regardless of when they happen, and at the end of the day you will be in the green."
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Mentoring: The Key to Developing as a Trader
5 days ago
14 comments:
Great comments by Flow and Ken, pretty much covers it...Anyone see MAKO today? I entered on the break of the 5 min, 8th bar high and wanted to see what others thought of it....
El Toro:
if i had seen MAKO, i would have done the same thing, i.e. entered on the 8th bar high.
And got stopped out!(sigh)
Why I would not have traded MAKO:
1.) The retrace from the high broke below the 50% retracement of the opening range. Twice.
2.) The 8th bar was not really any kind of candle signal - not a hammer, just a stronger green bar but in the context of the previous price action had no real significance.
The highest probability trades will bounce at the top of the retracement zone or at the 50%, and not break below those levels. When price breaks below those levels, odds are it won't get back to the previous high. And look for a valid candle setup...hammer, offsetting bar, etc.
Just my .02.
Jarrod
El Toro,
How does this trade compare with some the better trades that you made this month? In what ways are they similar or different?
For me I like the fact that it is making new highs with a gap up and it had a strong opening bar. What doesn't work for me is the subsequent bars that look like they are extremely whippy. When I am trading I like stocks that show some kind of linearity. If they don't that means my stop prices are not going to be meaningful. Judging by the up and down moves of the previous bars, I would have passed.
Thanks for the feedback everyone! Much appreciated. I also traded DANG 5 min 11th bar and SODA 5 min 4th bar. I think both of them fall more into what Jarrod and Flow mention in their comments. Thanks again
ElToro:
I initially thought I would NOT have taken MAKO on 4/25. But to keep myself honest, I adjusted my charts to see it at the time of setup.
MAKO 5 min setup perspective:
http://imgur.com/AMhGS.png
I'll be honest, if I was in a "only perfect setups" frame of mind, I would have passed for the reasons already mentioned by others. If I was in a "I need to get into a trade" mindset, I would have taken it, knowing it's higher risk (i.e. more of a gamble).
I have to work on moving towards "only perfect setups" mindset, but that's a different topic...
My justification would have been that the 3rd bar went below the retracement zone (not good), but it was hammer like with a bullish lower wick. When it tried to go back down on bars 6-7, it once again found support in the 3rd bar's lower wick area, showing strength a second time. And the entry was above the RZ, entering on a strong green bar. Come to think of it, this is how I would have spun the story if this ended up being successful!
Seeing the 15 min setup would have produced more red/higher risk flags (big upper wick on 1st bar):
http://imgur.com/q3gUw.png
I recall a similar setup mentioned here earlier this month -- PBY on 4/5 that was successful.
http://imgur.com/5wmUa.png
Flowtastical mentioned looking for linearity -- there was more of it in the PBY setup vs MAKO. This PBY setup had some wicks, but overall, it was a much cleaner setup. Less need to justify the reasons to enter the trade. And that sentence probably means a lot.
There is a great flow of questions and answers going on here, and again, thanks to X for hosting this little party.
A couple of the recent comments were of particular interest to me:
@Flow,
I really liked your comment to Grove about having a private blog journal. I did exactly that about a week ago, but decided to make it public - not because I have anything particularly valuable to share, but if it weren't for the sharing of other traders, I wouldn't have learned as much as I have.
And using Blogger was the best solution I've found for putting my notes and charts together in an organized way that I can go back and review easily.
During the session I make notes in a Word document and then I copy and paste those notes to a blog post for that day, along with my charts so I can see what I did and why I did it. It's as much for getting what I did "in front of my eyes" as it is for being able to go back and review. I'm sure it's not as detailed as you described, but just getting started and doing it is a good first step.
If anyone else decides to do this I'd love to know about it. Some of my favorite blogs have been the ones where traders shared their "daily grind." I guess there are some limitations to making it public, but it probably wouldn't be much different than if you had to explain your actions to a trading mentor or prop-shop boss. You need to have a bit of a thick skin to put up stuff that makes you look stupid, but it can also be worth it. Doing this I'm already finding that I'm seeing recurring things in the market and with myself.
A successful trader has told me that "the market gives very poor feedback." In other words you can do the right thing and lose, and you can do the wrong thing and win. So it's important to keep track, over time, of what you did and what the results were. It's only after a string, or series, of trades that the true effectiveness of a particular setup can be determined. Mark Douglas calls it taking a "sample size."
I think keeping a blog or journal also, at least in part, helps to avoid the issues X describes in his Chasing Success post.
And I don't think that I'm going to discover a magic setup that no one knows about, so I'm not too worried about giving away any "secrets."
@Ken,
Your reply to Grove (who seems to be asking a lot of questions - which is great!) about the competitive aspect of trading rings very true with me. In fact this past weekend I was describing to someone (a non-trader) what trading is like to me when compared to other "careers," and although it's probably closest to being a pro athlete or entertainer, it's really not even like those either. I'm sure different perspectives work for different people, but where's the "competition?" The market moves and you either get in and out at appropriate times, or you don't. There's no one to "beat," except yourself!
In fact I still have this "splinter in my mind" regarding the idea that it should be more difficult to have winning trades than losing trades. But I'll save that for another time...
Lots of great stuff everyone. Thanks,
-AT
Attitude Trader,
I like your blog. I'll share something I did that gave me explosive numbers. It requires a ton of work but anyone who cares to put in the time will reap benefits.
I see you have listed out your trades which is a great idea. Now, go back to a trade log where you had an ideal trading day. Factors that made you enter your best trades. Factors that kept you calm in the heat of battle. Factors that made you exit at your ideal profit target. Use that log to write a visualization exercise and write everything in excruciating detail. The smallest detail counts. Every morning for a week read that "ideal trading log" before you trade. Visualize yourself taking those setups. Visualize them working. Your brain is going to have muscle memory. It will begin to reject all the shitty trades that cost you money and make you want to slap yourself. At the end of the day compare your trading to your "ideal trading". What were the differences. I guarantee you are going to see a huge difference between what you intend to execute and what you actually executed.
If anyone decides to do this exercise, please give me feedback on how it has worked for you. I'm working on something that I want to share with traders. Its a process of Strengths Based Trading intended to cut the learning curve by leaps and bounds. Thanks.
I am interested in anything you have on the Strength Based approach Flow. For me personally I take screen shots of good trades that I see whether I take them or not. That gives me a database of charts that I use a flash cards every night. It also creates muscle mem as you mention. Your approach takes in the whole experience. Very solid idea....
@Flow
Your suggestions are excellent. I've just recently begun (again) doing a variation of what you've described except that my visualization is based mostly on imagination rather than an "ideal trading day," since I really haven't had one I would consider ideal.
But the objective (and I think your point) is to "train your brain" to see what a winning trade looks like and to take it rather than the mediocre and bad trades.
You call it "muscle memory," and I think that's a fair description. However, I think it even goes beyond that - again, a topic for another day.
Thanks for your ideas. I'll keep you posted about my experiences with this, either here or on my blog.
Bankrobber (formerly Fear and Greed Daytrader) is a huge proponent of visualization and has numerous posts about it as well as guided visualization recordings on his blog if you haven't already found them.
-AT
Attitude Trader,
If you don't have an ideal scenario then take one trade that you made at any point in your career. If it was more recent then it would be more helpful. The purpose of this is you already have the ability to make great trades. This is the case even for those who are not profitable and it takes them 3 or 4 trades to make one profitable one. Since you are taking an example of a time you made a profitable trade, constantly visualizing yourself taking that particular setup and reinforcing the idea that you are capable of great trades is going to maximize your strengths.
If you don't know how to visualize then google traderfeed and visualization. Make sure you visualizations are detailed meaning you're visualizing how your mouse feels, how you're sitting, what color pants you're wearing when you're trading well etc.
Training yourself in this method constantly will make you improve upon your method and eventually all you do is make good trades.
The point is that most traders, profitable or not, can't understand that they already know how to trade. They just keep focusing on the negative aspects rather than pointing out what they do well and keep on doing it. Even with a 30% winrate you can visualize the 3 out of 10 trades you did well.
El Toro,
Same idea for you. Except take screenshots of trades you made that were good. Then paste it on your wall and stare at it often. Ideally you blog privately or publicly about it. Also try the exercise I mentioned and give me feedback.
Great comments and ideas from everyone. I forget how I found Attitude Traders blog but that was the one that led me to Trader X's blog and Bankrobbers blog and as he stated there is some great visulation ideas in Bankrobbers blog.Thanks to Attitude trader for that.
I struggle with the same as most and over trade or just dont wait for the best of the best set-ups. It seems so crystal clear at the end of the day when going over the days charts that I didnt have "all the ducks in a row" before I took a position.
I havent learned the art of finding gappers and being able to follow a couple or three at a time to find one that unfolds with a good set-up. My platform allows me the use of fibs with extensions but I have to manually plot them. I find that many times I think something else is better and switch back and forth too much. I like the 5 minute and 15 minute charts and perhaps need to focus on just one time frame. I can say that one thing that has helped me is no CNBC on when trading and also no looking at e-mails or phone calls during trading,,,,,I need to focus. Thanks to all for ideas and comments.
Tom
@ Flow
Thanks for the kick in the butt.
Your comment, "The point is that most traders, profitable or not, can't understand that they already know how to trade. They just keep focusing on the negative aspects rather than pointing out what they do well and keep on doing it," is an empowering perspective - I like it.
Also, if you haven't already seen it, here's a short video that I think you'll find very interesting.
-AT
AT,
Nice link. Really interesting if you replace the word playing with trading!
It's amazing how nobody believes the secret to success is looking in the mirror. If people actually did these exercises hardcore their numbers would go insane. Mine did; I just had my best days and week ever and I'm spending this Sunday visualizing how I could have traded with larger size.
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