Trading journal

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887

I haven’t traded at all last week. Nothing in the market, actually. I was just really just studying and practicing.

I have a practice chart and I realized that even though I practiced the same chart 5 times, I didn’t do exactly the same thing every time.

There are some trades that are valid, but aren’t included in your strategy. In one trade, my strategy said to hold and take the loss. But if I take that bullish candle, I could get some nice profits.

Is it better to be right according to your strategy, or make money?

Perhaps it’s better to follow the strategy. Following the strategy is time-tested. And in the long run, following your strategy and making money should be the same thing, even though there are some times (in the short-term) when they are not.

888

I’m analyzing my trades and I decided to analyze and tally contradictory signals.

I’m trying to understand contradictory signals. You see a signal to go short, then the next candle looks bullish. Do you close or hold?

Well, I’m trying to understand it and the trouble I had on a particular trade. Well, I zoomed out and saw that I shouldn’t really be paying attention to those kinds of signals. Some losses are just inevitable, possibly even necessary.

Bending the strategy to avoid those painful losses negates the strategy as a whole. That’s very unfortunate because who wants to take losses? No one, of course.

I think this is where I’m lying to myself. I have a strategy, but I want to catch some of these little trades that are quite profitable.

It should be better to reverse my position, catch this little trade, and recover from my losses. But unfortunately, that’s not how my strategy works. The hard truth is that there’s no room for those small non-strategy trades. Sure, they could be profitable, but they’re not strategic. These small trades are where I’ve accrued tons of losses.

Basically, I zoomed out of a trade and realized I was in between support and resistance. Price had bounced support and I’m taking all these little trades while I should be focusing on the big fish: when it bounces resistance.

Sometimes, very clean swings will develop in between support and resistance. That’s a different thing. But sometimes it turns into a wall of death in a mosh pit. And there’s no way to trade that successfully while following my strategy–the signals are completely different.

So, I’m doing these tallies, and I’m realizing that maybe I’m bending my strategy to catch these little profits. What’s very unpleasant about this strategy is that you can enter at resistance, have some nice profits even though price is still near resistance, then watch your profits shrink as price returns to resistance, your original entry point.

Why would I be ok with that? The problem is that the strategy requires it. And price could retrace back to your original entry, then go in your favor. Sure, you move your SL to BE, but then you could be compromising your proper entry.

That’s the difficult part: eating those necessary losses.

Just imagine you’re at R:R 1:3, and your strategy requires you to watch your profit turn to $0. That hurts.

But here’s the trick. What if you watch price return to your entry, you get stopped out, and the next signal you’re supposed to take is the big fish with R:R 1:20 over three weeks? That one loss now seems like not such a big deal.

889

I’m still kicking around the idea that I shouldn’t concern myself with contradictory signals.
I’m gonna look at a few more charts and see if it’s valid.

I took a quick look at AUD/CAD and I noticed that when I look at the entry and exit signals in backtests, I don’t actually concern myself with anything else. So, I should do the same when trading live.

The only reason contradictory signals have come into play because I misread the conditions in live trading, I go long and then price goes down and I don’t know why. I attribute it to a contradictory candle, but I’ve been misattributing the signs to the wrong candles.

When I jump in at a non-ideal time, sure I could make some money, but my entry won’t be able to withstand pullbacks.

That’s when I get stopped out and I’m trying to figure out why. I look at the previous two candles instead of zooming out and looking at the whole trend.

There are losses. There’s no avoiding that. And apparently, trying to avoid those losses only sabotages me.

I’m gonna have to make some adjustments to my strategy, yet again. But this time, I’m eliminating the idea of contradictory signals, and I have to include the notion of being more patient.

890

Haha just found it!!! This is what I was I was talking about before in an earlier post. This is a great way to put it. A random walk between buy point and TP.

891

I’m thinking about writing my strategy from scratch. I think there are many elements I can get rid of, and many I can keep. I didn’t delete anything–I’m just starting a new file and seeing what happens.

First, I went for a small walk outside yesterday to clear my head a little and brainstorm. I’m making a list of what should be included in the strategy.

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892

Zoom out. Zoom out. I’m making sample charts for my new diagram, and I’m doing what I’ve been talking about: zoom out and see the bigger picture.

I just did a split screen and took a look at the W1.

This is exactly what I was doing a while ago, maybe over a year ago…Looking at W1 for reference.

It used to be part of my weekly routine. During the weekend it was my routine to check W1 charts. I stopped, not on purpose, but my strategy just evolved to not needing it. I started to focus more on D1. Now, here I am checking W1 again.

Good or bad, I don’t know. But it’s funny to come full circle. It makes you wonder if you changed or everything around you?

For example, I saw a video about a young man who was designing greenhouses. He grew up on the farm, and all he wanted to ever do was get away from the farm. (around 11:10)

He went to college and studied business, and he got ideas about greenhouses. After that, he was super excited to get back to the farm and start working on his ideas.

Did the farm change or just him? When your view changes drastically, the difference is so extensive that it makes you wonder if the world had changed. You see something in a different light, and you ask yourself if the thing is even the same.

Something could be so unattractive to you, but then in a different light it becomes beautiful. How could that be?

I’m digressing. But, I’m coming back to W1 possibly. It’s strange.

893

I used to think that my strategy is too complicated to list all the steps; there are so many variables in the market that I can’t design a COMPLETE strategy.

No two trades are exactly the same, hence the discretion factor is very high. There’s more art than science in the strategy.

In reality, those were just excuses. They’re the same excuses I’m using now while I’m trying to re-write my strategy.

When I look at a backtest, it is the most simple strategy. Yet, when I try to write it out, I get lost. So, I started making up the excuse that the art portion of the strategy can’t be written in finite terms–it must be learned.

Nope. Just an excuse. I’m feeling a little lost as I’m writing this strategy. But that’s not because there are infinite variations. It’s really just because I’m having trouble putting my thoughts into a step-by-step order. That’s all.

No need to get my feathers ruffled. Just take my time, think it through.

894

My new strategy is coming along. This time, I actually have TP zones. Of course, price may not go all the way, but it’s been a while since I’ve even thought about TP.

But, I’m only halfway in the TP process. I have to identify the signs that price isn’t going all the way and is gonna reverse.

There are always clues. I have them in mind already, but I’d like to have concrete samples and definitions, rather than being too fluid and flexible.

895

I’m working on my new strategy, well, updating it. It’s focused more on long-term trades, anywhere from days to months.

A problem I’m having is that it makes many elements from my previous strategy irrelevant. Some of them, it debunks.

I’m gonna take my time and figure out what elements to keep and which to leave out.

896

I was collecting chart samples for my new diagram, and I started to run out of charts to look for. I mean, I pretty much had sample charts to demonstrate what I needed in my new diagram.

Eric Thomas said you can’t keep studying forever; at some point you can’t keep praying; at some point you can’t keep singing. You can’t keep doing quizzes. At some point you have to get tested.

So, for right now it’s time to practice some trades. I’m making some practice charts for myself. Next, I want to organize my trade entry/exit signals, and finish this version of my diagram. It’s much shorter than previous versions, which is good.

I feel like exit signals are more specific. And I added something that I didn’t know how to add before. I didn’t know how to define where to look for trade clues suggesting which way price MIGHT go. I had ideas but there were contradicting and confusing.

Now, I added a small step saying to ¨pay attention to clues that can happen at unexpected levels¨. This may seem like a no-brainer, but it’s a very important step for me. It’s a reminder to expect the unexpected. I used to force a lot of trades.

Just because price is bouncing and trending, it doesn’t mean it’s a signal and I have to jump in. So, this simple reminder tells me to wait for clues that can happen in unexpected places; but I have to WAIT.

897

Another thing…I’ve got red lines on one side of my eye. It turns out that I’m spending too much time in front of the screen, as per the doctor.

Before going to bed, I used to surf the net on my phone to relax my brain. The phone was dimmed to lowest setting, but still really close to my face. Maybe that was part of it.

Anyway, I’m being more careful and I’m pushing my laptop as far away as possible on my table to give my eyes a rest.

I also will take a moment occasionally to look at something far away to rest my near-sighted muscles.

898

About a week or so ago I was practicing the same chart over and over. I noticed that I never traded the chart the same way. Sure, there are little trades I could decide to take or not take, but I don’t think that my strategy should vary so much. It shouldn’t be so flexible.

Such flexibility creates a lot of room for discretion. I want to limit discretion as much as possible. That’s been my downfall in the past. I’d prefer to be more mechanical and predictable.

899

Working on some charts and enjoying this song.

900

working to this tune

901

I’m back trading the live market in demo today. I didn’t have much time to trade, so I only took three trades. I have to get better at trusting my strategy.

Let’s go!!!

902

I just checked my trades from this morning, and none of them have been stopped out yet.

So, I don’t have any losses to review. I’m a little unsure what I should do…

I think I’m gonna practice some more charts. I’m not gonna just use an excuse to do nothing. I need to keep sharpening my skills. Until my demo account is recovered, I’m not taking any days off.

903

I’m practicing with a CAD/CHF chart and I keep having trouble.

I realized that when I practice these charts, I’m zooming in, and I can only see the trade in front of me–I can’t see the bigger picture. So now I include a picture that’s zoomed out.

But another thing I noticed again is that there are some trades that price is starting to go in my favor, and I’ve got a decent little profit rolling, then bam. Price pushes slightly passed my SL. According to my strategy, I have to take the loss because I never know if price will will just retest my entry or go passed it.

That’s not a good feeling. Imagine having profits in a trade that’s enough to buy groceries for two weeks, then to watch it shrink to nothing. Ouch.

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904

I don’t think you’re alone on this one, I definitely recognise this trait.

My frustrations with myself prompted me to put distance between me and the charts with a simple spreadsheet table in Excel. I have the forex pairs down the left-hand side plus indices and commodities of interest. Across are columns for various TA features. The key with these is that they are pre-selected based on the strategy rules. I look at charts only to find and note these features, I don’t even look for any other features.

They are also binary, which means there is no subjective interpretation involved - one EMA is either above another or it is below, price is either above it or below, EMA’s are either in sequence or they are not, the swing highs and lows are either bullish or they are bearish. Once the majority of features are lined up, the set-up is good for a trade.

As a refinement you can allocate points to different features according to whether they have more or less weight in your decision-making. But the decision-making is done before you open the chart if you see what I mean.

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905

Right. I get it what you’re saying. Either it is, or it isn’t. I’m kinda struggling with that. I have a strategy for trading swings from their beginning (ideally), and I also have a strategy for jumping in after a retracement.

Essentially, either you’re gonna pyramid your trades or just leave it alone. If you pyramid, you run the risk of ruining your entry. There’s more to it than that, but that’s something to consider when the opportunity arrives.

But what if I don’t have a position open already? Price is consolidating a bit, you’re waiting for a bullish signal, but you see a bearish signal and you might be able to make some money on the way down while waiting for a bullish signal.

So, do you ignore the bearish signal, or take the trade and make some money? It’s a personal choice, but this is the problem of having more than one strategy.

Your minor trend strategy could contradict your major trend strategy.

Perhaps it doesn’t have to be a black-or-white situation. It could be based on the situation.

Taking that short trade doesn’t contradict the major trend strategy, it’s just a short-term trade to take until the more important signal presents itself.

906

I only use one time-frame for trade entry, exit and SL etc. decisions. I have one trend-following strategy and one break-out strategy. Of course, a strategy can use multiple entry signals, that being the least important TA feature of the strategy.

If you want to enter with a major trend you will guaranteed be able to find an entry point on a shorter time-frame, at any point in time along the trend, so do you really need to bother searching additional random time-frames to find it? How much will that really improve the outcome?

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