Here we go! A newbie trade and journey journal

Trading Discussion Trade Journals
91

It’s surprising just how much this string of bad luck is affecting me emotionally. At this point, I don’t know if the trades I took in my swing trade account (currently going 0/4) were bad decisions, or if I did everything right and just had some bad luck with the market.

There are a lot of questions going through my head right now.

First, the trading questions:

Is pure price action effective? Can I read it properly? Did I enter the trade properly? DId I screw up my analysis?

Next, the personal questions:

Can I really make money at this? Am I smart enough for this? Do I believe in myself enough to do this?

Intellectually, I know that I don’t have anywhere near enough data to even bother asking these questions. I had a few bad trades. I just need to suck it up, practice more, and learn more. Losing trades doesn’t make me a failure - quitting makes me a failure.

I can’t imagine how much worse this would be if I were trading real money.

92

The psychological toll is the hardest part. I can answer one of those questions for you, you are definitely smart enough to overcome this. I’m not kidding at all when I say I think you’re way beyond me in that department, and I’ve been able to make sense of Forex - so you should be able to do it as well.

I’ll take a look at your swing trade choices and give you some feedback about what I think happened. Finally, price action is absolutely effective when done right and with money management principles in place. But Forex is never 100% guaranteed - like my 2nd loss today, there was nothing wrong with that trade. It was textbook. There will be losses that we can’t control, we just have to eliminate the ones we can control.

1 Like
93

That’s the same trade I am in but I was in at 1.1725 and my stop is 1.1649 - You may want to re-look at that stop, it went lower a couple of times before bouncing. I am aware that my stop may well not be low enough and will re look at it if we get a re-test.

94

@jseymour84 THere is absoluty nothing to feel bad about, getting stopped out by THAT bar this morning (Morning to me anyhow). I was paper on a long at the time and ended up the day £701 up because of that bar. I did post about it real time “What ws that about”, if you want my take on it

[Edit - Keep at it mate you’re a bright lad and there’s some people here who actuall DO know what they’re doing, taking an interest in you ] :sunglasses:

95

I hope I am not intruding into your thread but I just wanted to say that I don’t think you should be too hard on yourself or doubt your abilities here.

This has been a tricky and demanding day in a tricky and uncertain period. But this is not surprising when you consider some of the major issues currently affecting the markets such as Brexit uncertainties and the recent retracement in the long trend in the USD that has been going since the beginning of the year.

But since we were seeing the first major retracement in the USD during Sept, it is not surprising that we are now witnessing major fluctuations and erratic movements as the markets sort out where to next. In general, the longer and larger the trend, the longer and more volatile is the period of consolidation and fluctuation that follows it.

In these times it is very demanding for a trader to choose whether to look for longer term positions or short term intraday moves.

By way of example, the weekly close is always a significant point and if we look at the EURUSD as it stands right now we see that this week has been an up week in an up trend - but the daily is finishing the day below some strong resistances (and included a failed strong intraday attempt at a rally) and closing with what is looking like a bearish pin bar. That is a confusing pair of situations to close the week on!

What I am saying is that this is a difficult period right now and you have too little results so far to really judge your performance - so stay optimistic and better times will certainly come forth! Have a great weekend and sorry for interrupting here…

EU 1013.png1361×647 25.6 KB

96

Look and Listen. You will be ok, just keep your wits about you and you will learn this , but you have to remember context. I will explain to today later at The Store.Here is a head start VIX at 5 - 6 Am EST

The Ever Observant VIPER

97

Thanks everyone for all the encouragement and kind words. I am judging from what I am reading that I am not the only one struggling. I did learn quite a few valuable things today:

  1. It is CRITICAL to size my positions properly. I am demo trading in a $2,000 account and a 1% risk level would be $20, yet I have one trade that is -$112.75 right now because I didn’t bother to calculate my position size.

  2. One cannot simply ignore fundamentals completely. If I had bothered to read up on this Brexit thing, I probably would have sat on my hands until things settled down.

  3. Taking swing trades on a Friday is probably not a good idea because the weekend is coming up, and I don’t want to be glued to my phone watching my trades all weekend.

  4. I really like the fxTrade platform from OANDA. It’s not as good as NinjaTrader, but by far better than MetaTrader. I would go with NinjaTrader if OANDA offered it, but I am settled on OANDA as my broker because I am not locked into trading mini lots or standard lots, instead, I have better control over position sizing.

Thanks again everyone, and I hope you all stick around in this thread long enough to see me become consistently profitable with real money :slight_smile:

98

If it makes you feel any better, I blew my first $2000 live account years ago. Remember when I said, ‘now the real fun and heart ache begin’? I meant it! Even demo can be soul crushing - but it’s a really really important tool. Do you know how many of us blow our first live account? Almost ALL. My suggestion would be keep demo trading until you start to understand, really understand - and build confidence in whatever way you decide to trade.

As a price action trader, a good habit to get in is to review the charts after NY close each day (so after 5 eastern US). You said you are using Oanda right? That’s good because their charts are “NY close charts” meaning their daily candles end when the day closes in NY (not all broker’s daily candles end at the close of the NY session). Daily candles carry 24 hours worth of information. So, a rejection candle or a very strong dominant candle on a daily chart - means a lot more than the same candle on the 15 min chart. So, you can look at what happened for the day that just passed and make some decisions about what you think may happen next. You mentioned not ignoring the news entirely, well I think it’s okay to be aware of when news releases are going to occur - but I stay away from fundamentals and that’s a whole other story for another thread. I just believe that the candles tell you what you need to know. They are all encompassing. It’s weird to think that the candles hold the ‘mood’ and expectations of the cumulative market participants - but they do. If you can learn to really pay attention to them they can tell you a lot.

Now, I want to apologize a little here - because I think that I may have influenced you to get short in USDCAD because that was one of the trades that I was doing ‘well’ in (before yesterday anyway) - and in retrospect I should have waited to enter it myself. Here’s why: I was trying to figure out today why CAD was not behaving as I expected it to, and I looked back on my journal and my own top/down analysis…and I noticed that I started with the weekly chart. I should have started with the monthly. Here is the USDCAD monthly:

monthly.jpg1917×743 134 KB

This clearly shows that price was rejected hard last month from dropping below the level we are currently sitting at. There is actually a zone of support here that we are trying to drop through. So, when I had my trade ‘stair-stepping down’, I thought I had already broken through support and was in the clear and that it was about to drop, especially after I had that pin bar on the 4hr chart - that is usually a good signal. But now I see it differently. I still think that there is stronger bearish pressure, but I am stuck in the zone. See chart below:

zone.jpg1916×750 138 KB

So, the top yellow line is where I had my original resistance level (I think) and the bottom is where I see the end of the zone. Ideally we wouldn’t open a trade in a messy area like this because the price is too unpredictable since the bulls are bears are literally fighting it out. Think of this as the battle zone. Trying to decide which way the market will go. On Market open (Sunday night for me) I will probably get out of this trade, unless it opens with a huge bearish move and breaks down through that lower level.

Well, this post is getting long and I didn’t actually get to analyzing your trades as I had planned, but I am just thinking out loud. I will add more tomorrow regarding your trades.

2 Likes
99

CSC demonstrates here an excellent example of how we should treat losing trades (and winning trades come to that).

Our general aim is to be successful overall and not per trade. Therefore it is important to be analytical about losers and not emotional.

It is important to search though the analysis, the decision making, the applied entry/exit selection, and the market movements that led to the gain/loss and see what there is to be learnt and/or developed. This way we learn, develop and move on - and we also identify those losses that were simply market freak moves and _nothing to do with our own overall method._This just happens from time to time.

But, maybe, the overriding key issue is that our risk management also ensures that we have another day to trade!!!

1 Like
100

Yes our emotions are not at all tuned to accept “Win” & “Lose” with equal feelings - Behavioural Economics will explain that we will take far more “Risk” in trying to avoid a loss, than in trying to achieve a gain. Perfectly understandable in a hunter gatherer society when you may be protecting your meal, as opposed to catching another rabbit, but entirely inappropriate in our endeavour. Our psychology has just not caught up with society and is 20,000 years out of date.

I recommend you spend a few dollars on this book - it is a journal of “Buzzy’s” trading career and addresses the emotional part very well. You can feel the ups and downs with him. It may help you to understand where you are going to and hopefully to accept it.

It’s been out a long time - you might get an earlier print for pennies !

https://www.amazon.co.uk/Pit-Bull-Lessons-Streets-Champion/dp/0887309569/ref=sr_1_1?s=books&ie=UTF8&qid=1507971040&sr=1-1&keywords=pit+bull+lessons+from+wall+street%27s+champion+trader

101

And I should probably add that those trades won’t be moving over the weekend as OANDA doesn’t trade after NY close on Friday.

Never apologize for influencing my trades :slight_smile: They are my trades and the responsibility for them lies with me.

I agree wholeheartedly. I am hoping that with more time and practice the emotional side of trading gets easier. Right now I am still learning and with any skill those initial mistakes are a lot harder to deal with emotionally than mistakes made after becoming proficient.

Thanks for the recommendation on the book. I am going to see if I can get a Kindle version of it. I am not a huge fan of physical books. I have a small home and they tend to take up a lot of space.

I am also going to be spending some time today breaking down daily charts and posting them to get some more practice reading price action.

102

So after taking a swing down to @TradeViper Store, I got to thinking about risk.

My plan coming into this trading business was to get good (win rate > 50% with 1:1 risk reward, or win rate > 40% with 2:1 risk reward) and then open a small live account. I planned to start with $2,000 but the more I think on it, the more I think starting with $100 or $500 might be better off. I can always add more money later, right?

With a $100, and allowable total risk capped at 2%, that gives me $2 to risk at any time. If I trade a $.10 pip value, that gives me 20 pips for risk. That is certainly not enough to withstand market retracements at any level, well, maybe trading on the 1 minute chart. The problem with the 1 minute chart is that the spreads kill you unless you are trading large positions.

Let’s say average move on the trades I would take is 10 pips (1:1 risk reward) either direction. Let’s say the spread is 1.4 pips and commission averages around to another pip. So that is 2.4 pips against me the second I open a trade. I don’t know if commissions are charged round trip, but let’s assume they are so I give up another pip to close the position. If I am trading $.10 pips that means on an average move I give up $0.34 cents per trade, leaving only $0.66 profit per trade. When I lose, I lose the whole $1.00 at risk.

This means that I should only take 2:1 trades. With a 2:1 trade in the above scenario, I would risk 10 pips to gain 20. 20 pips would be $2.00 gross profit - $0.34 trading costs = $1.66 net profit. A losing trade would be $1.00 loss.

Assuming I take 20 trades a month at this setup, and win 60% of the time, I would gain gross profit of $24, gross losses of $8.00 and total trading costs of $6.80. Net profit would be $17.20 or average of $0.86 per trade.

Since I know that I need a minimum of 2:1 risk reward now to be profitable at a 60% win rate after figuring in spread and commissions, is starting with a smaller account around $500 worth while? 2% risk limit would be $10 spread across all open positions. If I limit myself to 1 trade, then I get to risk 100 pips, whereas with 2 trades I would only get 50 pips, and 4 trades I would only get 25 pips.

100 pips would make it easier to swing trade, but 4 trades at 25 pips on the lower time frames might give me a better chance of being profitable because my win rate percentage would have a bigger impact.

Am I even thinking about this right or is something in my analysis flawed?

103

Personally, I think your figures are in the right ball park, except maybe your spread/commissions sound high, but better to work on a worst case scenario.

It is true that no one is going to get rich trading such a small account within the normal recommendation of 1-2% risk exposure - but I don’t think that should be your prime motivation at this stage.

In theory, the demo stage is where one experiments, learns and develops a suitable trading plan that is shown to work on “paper” as it were. But this lacks the psychological and emotional factors associated with putting one’s own, real, cash on the line. This belongs in the second stage with a small live account trading small positions. The objective here is not significant profits, but consistency and confidence and living the trading plan.

Once confidence and consistency are achieved in the small account then one can consider upping the stakes a bit.

I guess I will get slapped by many others here for saying this, but I don’t really think one needs to be overly rigid with these risk percentages on a small account provided one is aware of what risk is actually involved. I mean, what are we talking about in real terms - $10-20? This is really peanuts and if this amount is a serious worry for a trader then they certainly should not be trading at all! If you drop $50 on a bad trade so you top your account up and put it down to the educational costs of learning. It is all down to what works for you and how much you are willing to risk. But I think if it is a choice between affording realistic stops on a trade and keeping them (too) dangerously tight just to fit some risk formula, then I would rather choose the more realistic stop level and higher risk even though it might cost a smallish fistful of dollars more! :slight_smile:

The aim is to learn and achieve. If a too tight risk policy on ultra small accounts destroys that learning process through limiting proper trading scenarios then it is defeating the object of the whole exercise. But one has to know what one’s risk is and whether it is acceptable but that does not exclude trades exceeding 2% risk at these absolute levels in dollars.

Having said that, it is important that demo and small size live trading should be based on the same principles that will eventually be applied on a larger account.

Just a personal view…:smiley:

104

Hey J, the question is, does the current market in the majors lend it’s self for swinging?

The Ever Inertial VIPER

105

Each person has to decide for themselves what style is the best fit for them. Again, I don’t want to tell anyone what to do - but I would feel guilty if I didn’t at least explain why I think price action/swing trading is the way to go as opposed to scalping/day trading.

First of all, the art of reading price action applies to all charts (currencies, commodities, indices) so doing it well is in my opinion what makes a trader good.

A true master of price action can look at a bare chart and read it like they are reading a book. It’s their language and they understand what the charts are telling them. So, naturally it gives the trader an advantage in trading.

There will always be an element of unpredictability to trading because humans can be unpredictable. But there are also many patterns that repeat over and over again, so we can harness that by learning them and learning what they mean.

It gives us a statistical edge over the person who is just relying on delayed indicators to tell them when to get in and out / go up or down, etc.

The way that I have been taught to trade discourages using the lower time frames because the candles and patterns do not mean as much. A lot of it is just “noise”. The back and forth tug and pull of price - not very meaningful in the big picture.

When trading in a scalping style, you are in and out quickly with many trades per day…it encourages a type of recklessness because you are not giving each trade much thought and analysis, plus the risk/reward ratio is low. This is bad for money management over time.

My understanding of scalping is you’re trying to skim some pips off of volume moves, and I know that some people must be successful at it - but I have sure seen a lot crash and burn as well. Most traders (including myself) go through different methods of trading when trying to find their “fit” - there’s no harm in trying out your various options on demo. Scalping can be fun, thrilling even, the high’s and low’s offer a constant adrenaline surge, and it’s almost addicting if you’re one who enjoys being in front of the screen all day.

But if you’re a person with limited time on your hands, it’s my opinion that analyzing your end of day data and setting up some trades and letting them play out, is the way to go. You can learn from your mistakes and change the plan accordingly.

1 Like
106

As long as there’s a trend somewhere - there’s a market for swing trading =)

107

OK, but which of the Majors merits buying and holding overnight, or even for 16 hrs.

The Ever focused VIPER

108

Not 100% sure that I am getting where you’re going with that question, but I’ll take a stab at it… Do you mean Asia session isn’t worth trading due to it’s low volume and typical retracement activity?

109

But the way someone else is taught to trade might very well encourage & advocate the use of lower time frames, or no time frames at all, because the information or noise as you describe it, makes perfect sense.

[quote=“cndlstckchic, post:105, topic:116275”]When trading in a scalping style, you are in and out quickly with many trades per day…it encourages a type of recklessness because you are not giving each trade much thought and analysis and the risk/reward ratio is low. This is bad for money management over time.
[/quote]
Try telling the programmers who design, develop & manage high frequency algorithm based execution models they’re reckless & risk negative.

It used to be the sole domain of the institutional crowd, but high quality automated models are now within the scope of well capitalised individuals with the capabilities to exploit & profit from repetitive situations offering just the type of opportunities you prefer to avoid.

The market is a coat of many colours.

110

I agree there are many ways to make money out of the market. But I can only teach the method that I know and understand. I don’t have access to high frequency algorithms and execution models, nor am I well capitalized (yet). The retail traders who I have witnessed scalping do not have any special tools at hand either; they are basically gambling with their money while guessing on entries and exits trying to ride the bull, and while it may be exciting - it’s not usually lucrative.