Ok Journal. This is what’s been going on.
We’re pretty much at the end of our class. This up coming week is the final week. I’m sad. Well…not really. In a sense, I’m excited. I do want to be over with it. And that’s because of all of the material I’ve been given, I must go back and refine a lot. It’s just impossible to keep up with this pace. This is normal. I mean, he as even said, like, ‘I know I gave you guys a lot of information to process and work through’… This is an on going thing. Everybody has their own pace.
It’s time to build.
I have a road map.
I have a tool chest.
I have building blocks to put together.
I have a vision, with goals, and a journey ahead of me, to accomplish them.
I have a foundation in which my structure is being built. (And that foundation will always be worked on)
Lately I’ve been struggling with my methodology. This has taken me back to where I left off, of trading. I thought I had a good idea. I’m talking about the approach. How am I going to approach the market? In what fashion? Ok, I thought the best way was by ‘the trend’. I’ll have the different states of a trend compartmentalized. You know, like, it will be either trending strongly, retracing, ranging, or reversing from the trend. So then, whatever the state is, I should have something down on what to do in that situation. I should have levels drawn on where I could be in, take profit at, stop losses at, etc…
So yeah, that’s an approach. Right? But…then it gets too complicated for me, when I look at the chart and try to figure out where all those lines should be. So, then, I get frustrated. Then, this past week, I had a great idea. (Actually, thanks to Pipsychology, his write ups always gets me thinking) How about approaching a trade by ‘probabilities’? I’m talking like, looking at any kind of entry and destination, on the chart, and put down all of the pro’s and con’s about it. This would definitely make me more objective about a trade. How about an open ended trade where the market would tell me it’s done moving that way. And come up with a probability on it. Basically, that was an idea. But when you think about it, it’s complicated, and hard. Surely a lot of work needed. So, I’ve been trying to find what approach I want to take. I’m getting frustrated. Not feeling good about anything.
Then…me and Terry talk on Friday. I wanted this to be front and center of our one-on-one meeting.
I showed him all the mind maps on these ideas. Told him, bottom line, I’m not satisfied and don’t know what to do.
He says…let’s make a new mind map. So, I did. Got it all ready to go.
He asks me one little question.
"Mike, out of the 2 possibilities, long or short, which way do you prefer to trade? "
I’m like…uh…hmm…well…man…never thought about that.
“Do you like trading going long, or do you like going short?” NOTHING ELSE, BUT THAT.
And then I remember a book that I read that posed characteristics of when the market goes north, than the market going south. Going north is like pulling teeth, as opposed to going south. Man…when the market wants to short, boy, it does, without hesitation. More farther and longer! Bad news really can bring out fear in people. But, when there’s good news, there will always seem to be a hesitation sentiment with it, at some time.
So, this was shooting through my mind when he asked me that question.
I said ‘short’. That’s what I pick. Out of the 2 possibilities.
He says, “Ok Mike…bring up your charts.”
"What time frame do you want to trade? "
So, I did. And brought up my one favorite pair. AUD/JPY. On the daily chart.
He then immediately guided me and had me draw out some lines on it. (I’ll show you a pic of what we did)
Oh, I remember, he then asked me if I knew what an ABC trade is. Or a 123 trade. Well, I didn’t. He says that I should research about that. But, he told it to me and showed me the basics of it, on my chart.
Well, I guess he seen it there, and showed me the outcome of when there’s ‘a high, then a low, a high again, and then the breakout low’. Man!! I was shocked. I don’t know. I guess I was shocked of how much he can read what’s going on in the market. And also how actually the market does obey some principles.
But, getting back to simplicity sake. He shows me that all I want to do is find the level of where I will go short. (It happens to be at a strong resistance level) He says this…"We’re traders. We don’t know what’s going to happen. And we’re not going to guess. But, at this area, you know you’re going to go short at. You have a stop loss in place. So, your prepared to take the loss, or your prepared to take it on down. "
It’s that simple.
And you can see there all of the opportunities that the resistance area was respected. The idea is to ride it on down, put in a trailing stop or just take profit when it consolidates.
I don’t know. It’s like I’m looking at the market for the first time. Honestly…I guess I don’t know that much. Look…I don’t care. What is is what is. And I don’t care what anyone thinks. I’m just amazed, that’s all.
I am looking too much into it. This is a simple way. You know, I’ve always have heard that you should not make it too complicated. I mean, I’ve known this! But, here I am, making it just too complicated!
And this is precisely what I told him. “This is why I need you!” I needed to see this, hear this, from someone who just knows about the market. You know, he doesn’t even trade the forex market. I remember him saying he tried all of the different ones, long ago, and this is just not his cup of tea. I guess it just goes to show that a chart is a chart. Principles are principles that stem across many financial markets.
So, we’re going back and forth from that chart to my new mind map. And this is what we developed together.
I’m not too sure why he had me put ‘draft #1’ in there. I think it’s because this is incomplete. Eventually he wants me to branch out. Like at different levels. Time frames. Etc…But I must get the basics down pat.
He kept saying to me, at the end, “Mike, concentrate! Stay focused! On this, and nothing else! Don’t spread yourself out but realize what you got here.”
You know what…I know how to obey. And that, I will.
I am, and have been, given the keys to know how to trade. AND in becoming a trader.
Do you think I’m gonna stray?
Nope.
It’s only a matter of time.
Mike
