Trading journal

I like to think that more work = more results. But I’ve learned that trading and investing doesn’t work that way at all. In the learning stage, yes. Study hard. That way, you can learn the basics and start trading sooner.

Studying charts etc. Sure. Study hard. It will help get to a clear understanding sooner.

I was planning all week to study my forward testing charts this weekend. I mark all my trades with arrows, so reviewing trades is very easy. I wanted to take a look, study hard, do my analysis, and crunch those numbers.

I wanted to work hard. I bought two bags of pork rinds, two bottles of coconut water, and I was ready to lock myself indoors for the weekend.

Well, it’s finally Saturday. I started with EUR/USD. I numbered each arrow for all my wrong trades, and also the trades I SHOULD have taken.

I took a screen shot and did the same thing for GBP/USD. They’re somewhat correlated, of course. After that I looked at some AUD crosses.

By the third chart I looked at, I realised that I’m not following my strategy at all. I’m not waiting long enough for the right signal. Each chart was basically the same mistake.

I’m gonna continue with my analysis but part of me wants to stop because I’ve already found a big problem. Why keep looking?

I want to keep analysing, filling up a spreadsheet and writing a document, blah blah blah.

I want to feel like I’m working hard. But I’ve already found a big problem. If I do more analysis, would I just be making my problem more complicated that it actually is?

I need to wait longer. Instead of doing more analysis, I should focus on how to wait longer for the right signal and how to manage my impulsive emotions.

I’m gonna keep analysis, just because there may be different types of trends that require a different approach. Maybe, maybe not.

I’m gonna take a look.

Well, those blue arrows were impulsive trades that I wanted to take but DIDN’T. I put those there just to show myself the outcome of impulsive trades.

But basically, my strategy is super simple.

  1. draw S/R
  2. trade only WITH the trend (unless wide retracements are expected)

It’s not rocket science. haha

I very often get mixed up with mini-trends within larger trends. There are signs, but I often rush and mix them up. Afterwards, I see that I was too jumpy and caused myself to doubt the real signs.

After losing two short trades, you think that the trend isn’t bearish afterall. Of course, I’ll see a bearish signal, but I’ll doubt it because the last two shorts were wrong, so I must be wrong.

Nope. The next signal was right, and price falls thru the floor. Again.

And that’s the cycle I’m in. Over and over.
hamster wheel

I take too many trades between S/R that I shouldn’t be taking. I get so scared of missing out, and then when I see a REAL signal, my brain is so flooded by fear that I doubt the real signal.

No one knows which signal will be a winner. We only have the game of probability. I have to keep in mind that some trades are not worth playing the probability game on.

Obviously, the ones near S/R have a higher probability. All I have to do is WAIT.

That’s why I’m thinking of abstaining for a week. Or perhaps limiting myself to 3 trades next week. I don’t know yet…

This is where I start getting dizzy. I see contradictory signals and I don’t know which way is up!

What’s so annoying is that I recently saw a trade that I KNEW which way it was gonna go. I even marked it with an extra large blue arrow. Basically, I froze. I was too scared of being wrong. It was a beautiful short signal. And price fell thru the floor. Without me.

What got me was when I wrote in the journal ¨well, at least I saw it.¨ I remember writing that at least two other times over the past year or so. I have had some decent wins, and I’m learning, but I can do much much better. I have some bad habits that I’m allowing to hold me back.

Now, I have to do something to change.

@SovoS How has your trading been?

So these were potential trades that “looked” promising but were not necessaily according to your strategy?
This is a somewhat difficult issue with discretionary methods because we know that no system is always correct and there will always be situations where the market action does not “obey” our rules! There is always the grey area where we know or feel that the signal is not right or that the move is obvious but premature to our signal - and we override the strategy. The question is, how often do these decisions work! That is something worth journalling (I do that and, for me, it is usually only about 50/50 compared with just following the rules!).

I think it is important to observe that the discretionary element in our decision-making should not be additional analysis of the chart and signal itself rather it should be concerned with external relevant factors. Personally, I think the strategy should be designed such that the signals themselves should be clear, precise and unambiguous.

A simple example would be a signal appearing late on a Friday evening. The signal is clear but the external factor is the weekend ahead which may suggest no action. Similarly, signals prior to major news events, or central bank meetings, or public holidays, etc.

Which TF are you using? I do not use these personally, but they are clearly very popular and appear under a range of names like, zones, supply/demand, orders, etc. The main problem I see is that people see them and set them in different ways and in differing places. E.g. breakouts from previous consolidations, candlewick high/lows, candle body high/lows, line chart closes, and so on. The more TA traders see the same lines, the more precise are the signals. But when people set their lines on varying principles it broadens the range within which the price might reverse or break through. This makes it harder to evaluate appropriate entry/stop levels as price enters these areas.

So, like all things in trading, it is an art based on science! :slight_smile:

I am probably wrong but this suggests to me that you are anticipating where the price might reverse rather than waiting for a signal of some kind to show that the price has already started to reverse. It is almost impossible to judge precisely where a retracement momentum exhausts itself and buyers become sellers, etc. RSI is a good example of this. 25/75 lines are considered OS/OB indicators, but a market can continue beyond these lines for a long time and taking out a lot of contrarian positions on the way…

But hte deeper question here is “why?” Why anticipate the turn rather than wait for the confirmation that it has started? I would suggest it is an example of FOMO. Not wanting to miss out on move. And this is a realistic fear because resumption of a trend after a retracement can often be fast and furious.

So the dilemma remains as the choice between being stopped out from premature anticipation of the retracement peak and missing out on a significant chunk of the reversal as the trend resumes…

The answer, I think, is based on remembering that (as you rightly say) we are trading probabilities, not emotions, and our strategy should be based on a probability structure not emotions or intuitional reactions.

And it is very common and it is very hard to disconnect the processes causing it. This is especially the case where actual trade entries and exits are heavily influenced by emotional input rather than systematic adherence to a strategy. Pre-empting a signal is a typical example. We see the market (re)acting in a certain way and assume that it will soon cause an entry signal and we jump in so that we enter at a better level - only to see the price movement turn round and show that we should, in fact, have entered in the opposite direction! And just rub salt in the wound, we see it clearly on the left of the chart as the next few candles evolve! :grimacing:

As you say, these are emotion entries rather than strategy entries. Anticipating the possible future move rather than waiting for confirmation of it. Even when these entries eventually come right, they are still poor entries with a reduced optimisation of profit. And maximising profits on trades is very important in terms of paying for the fakes and still leaving a profit in the account.

Two important issues here. Firstly, yes, probabilities is what it is all about and we need to focus on two things: maximising the proportion of correct trades (the strategy edge) and managing the profit/loss proportions (risk/money management). It is pretty much what every business does in various ways.

Secondly, as mentioned earlier, what external conditions affect our decision to act, or not, in spite of the signals.

Patience, is indeed, an incredibly important element in successful trading - and you have already seen that! :slight_smile: One possible solution here (where one genuinely thinks that a level might not be reached) is to split the total position into smaller portions and staircase the overall entry.

In any trend there are always contradictory events and movements and it leaves us wondering whether they are reversals or opportunities to continue in the same direction.
This is where I think multiple TFs are a benefit because you can evaluate the shorter time picture within the overall scope of the longer term overall move.

From what I have read here, I think the only change you might need to focus more on is complying with your actual strategy and relying on your risk/money management rules to provide the pverall profitability and consistency … and eliminating the emotional elements that you mention. :slight_smile:

I’ll come back to this, don’t want to mix too much in one post :smiley:

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This is quite a subjective issue really. How do we define good, bad and mediocre…
It all depends on one’s initial objectives. For example, if you aim for 50 pips and you get 50 pips, is that good? Yes, I think so. But if the market then continued for another 250 pips was it still “good”? :smiley:

I trade a very simple method and I only use EMA’s, which is a very unpopular method nowadays since everyone sneers at MA’s as lagging indicators, as if that is a bad thing. But what if the lagging characteristic is actually what one uses in one’s method?

My trading is based on catching the initial momentum behind a move while all the traders are gradually getting into the move. There are so many trading strategies and timescales that a new move can attract new attention over even a period of days depending on market participants’ perceptions.

But I have found this year so far to be frustrating and confuscated with uncertainty over some major issues relating to energy, inflation, interest rate policies, recession fears, and politics. Most of this uncertainty directly relate to the situation in Ukraine. Last Thursday we even saw a major new event in the US banking sector with the takeover of the Silicon Valley Bank. Immediate fears arise concerning whether this is the first of many banks in trouble and memories turn back to the banking problems in 2008…

This has resulted so far this year in a market that has tended to jump from NFP to CPI to Retail Sales to FOMC, etc resulting in a quick step up/down at each point followed by a drift to the next event. This is a difficult environment for my kind of strategy and results in taking trades off lower timeframes with tighter targets. But the stop levels remain the same.

So my methodology has continued profitably so far this year but on a lower level than normal and I find I am more uncertain and stressed over trades than usual. But nothing serious, there is little new in trading and it is just a stage passing through! :smiley:

So, in the light of the above, I would say that trading has been good given the conditions, but mediocre in terms of the money result. But I am content with that.

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Right. These are impulsive, spontaneous trades. But sometimes, they’re valid signals. The problem is that I sometimes have trouble telling the difference because of fear.

I recently had a signal that I waited over a month for. Price started to lose momentum, and I recognised it. I told myself to wait for the signal. The next day, I saw my signal and without hesitation, I took it. Then price turned bearish. I read the chart correctly, and it did exactly what I thought it would.

Not all trades are like that, but there are scenarios that are very easy for me to recognise. Well, they should be. That’s the level I’m trying to get to. I want to understand what the chart is trying to tell me. I should understand that price is bearish and it’s consolidating at the moment. I should understand that it’s bullish, but it’s gonna reverse before hitting resistance.

The charts speak, and I want to understand their language.

Right, and that’s ok. It’s ok to take a risk. That’s the probability game. I just want to avoid the obvious ¨why did I do that¨ trades.

D1, baby! haha.

Yes, these are very vague terms, but very clear in my strategy, however.

No you’re not wrong. I set zones that I expect price to pass, but I’m also aware that price can reverse before that. Price will often go on random walks between S/R.

But there are always clues. However, the clues can be confusing, and the clues can also retest the entry. This is where I have to decide to hold or reverse my position. I’m working on figuring that now. The conservative way is to hold and wait to see if my SL gets hit, which requires watching my sweet beautiful profits go to $0. Painful, but usually worth it in the end.

The aggressive way is to reverse my position and try to get back in later. This can be like trying to catch a falling knife.

For me, right now, higher TFs aren’t very helpful because W1 doesn’t tell me what’s happening between Tuesday and Thursday. Anything can happen. Unfortunately, my D1 signals aren’t always the same signals I could look for on W1.

My problem is waiting. My goal this week is to focus on patience. I was thinking about abstaining, but I think I’m going to trade yet FOCUS on patience.

Thanks for all your answers. I appreciate it, really! :slight_smile:

Regards the multiple (or dual) timeframes, I fully agree that the weekly chart would not be of any real benefit in your situation. I would be more inclined to add a one-hour chart alongside a daily. In that way, when you see something you like building on the daily chart you can turn to the hourly to tell you when it is starting (if at all! :slight_smile: ).

An hourly chart could even be constructed on an entirely different structure since S/R is less trustworthy on lower TF’s (just in my opinion, that is!)

The usual problem with this kind of combination is that one tends to turn to the hourly and forget the daily!!! :smiley:
But with discipline it is possible to keep the hourly chart hidden until a trade set-up appears and only then turn to it to fine-tune your entry timing.

Once again, just an idea1 :slight_smile:

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This is a good way to go, I think. I like it!!

Sure, PA is the fastest but with improper use it’s just a way to lose earlier than everyone else. On the contrary, with lagging indicators you have more confirmation, which provides more certainty.

Lose fast or win slow, pick one. haha

But it all depends on the trader. We all know that. Just keep working on your method!

Funny, but not funny. There was a USD cross that I shorted since December. I shorted and lost 5 times! However, I didn’t trade the next signal; and that was the correct signal!

I got so scared by the losses that I was too frightened to take the right signal. With that signal, I would have profited nicely. But I’m seeing my problem now.

I’m doing my trading now and I’m giving special attention to waiting. I’m trying to use more discretion. I placed an order over the weekend, and it got blasted through, but I’m not jumping back in.

I’m doing the buy, sell, buy, sell dance today. Hopefully, not tomorrow or the day after.

I also remembered to label charts as an in-my-face reminder of what to wait/look for.

I resisted some trades. This week, that’ll be my focus. The hard part is knowing when to trade. Of course, some trades seem less favorable than others.

There was one such trade today, but instead of taking the trade, I just placed an order in case price pulls back.

This issue of lagging is really quite interesting and maybe misleading in many cases.
Sure, a moving ave is always backwards looking and only giving an average price that has already gone, but that is also a comparative number with respect to the current price.

I see no difference between comparing current price with the ave over the last x periods and comparing current price with a previous high/low/close/zone from a week/month/year etc ago.

Current price is what it is regardless of timeframes, indicators, lines, zones or whatever. Given only a current price of 123.45 tells you absolutely nothing. It is always a case of current price compared with “something” that is then extrapolated forward in a potential direction for an estimated distance.

Whatever that “something” might be, it is always historic.

That is why I feel that the key here is not in the system structure itself, but in the quality and nature of the discretionary assessment incl/excl emotional input.

In my case, it is not the method that needed working on, it is the current complexity of forming the righ discretionary analysis to overlay it with given the changing structures in price behaviour.

For me, a typical difficult issue is long candles. There is often a pull-back, but not always. Do you take the risk of being stopped out or miss a potential big move! This year has seen a lot of examples of a big candle reaction to news and then just a sideways drift towards the next news release.

Why do you think this happened? Were your stops too tight and not allowing sufficient “breathing space” with respect to the timeframe? Or was it a trend that didn’t get going and continued in a wide range for a longer time than expected?

Five stops on the same set-up is quite a lot! I would have felt really upset about that!

That’s a great point.

In my strategy, there are times it may require being stopped out 4 or 5 times. But, in this case, I think I jumped the gun twice. But the remaining signals were valid and I don’t know which one will be THE ONE. So, I have to take them all. And the one that I skipped was THE ONE. But if I took it, I would have recovered my losses and more very quickly.

Yup. I’ve seen it on so many charts that it’s upsetting. Of course, it’s not 100%, but when it works, it’s well worth it and the pay off is big.

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I’m about to start my trading, and I stopped for a moment to remind myself what my mindset should be.

draw my S/R
wait for a sign


This week is my chance to practice patience.

I just realised something. I have two strategies.

trading major trends with reversal signs
trading retracements (often don’t have signs)

But how can I trade a retracement, if I’m already trading the trend?

mind blown

This contradiction creates a jumping-in-and-out style. Jumping out based on the wrong signs makes getting back in very difficult.

To clear up this contradiction, I should focus on entering and exiting based on my strategy’s signals. This requires practicing more patience.

The only time to focus on retracements is if I exit erroneously based on a bad signal, and I’m trying to get back in. (not ideal trading)

Or I can focus on retracements when I’m trying to pyramid. (ideal trading)

I currently trade GBP/USD, EUR/USD, USD/CZK, and USD/SEK. I noticed that I feel a bit uneasy trading 4 USD pairs. I’m thinking of eliminating one of the two crosses, then my roster will have a little less USD exposure. Actually, ditching GBP/USD might not be a bad idea. IG recently upped the margin requirement for GBP pairs.

Maybe over the weekend I’ll think about it.

Of course, less pairs means less risk, but also less profit. Once I can be more patient and become more profitable, then I can take on more pairs again. For now, less is more.

I’m tired of doing analysis. At the moment, the only thing really left for me is trading the market to see how well I do.

Right now, doing more analysis will only give me more of what I’ve already seen. I’ve been preparing more practice charts, and that’s kinda the only thing I feel like doing.

Even that, I don’t feel like doing. But I should because I’m not consistently profitable yet. So, practicing trading is something that I should do just because it could help me keep my mind focused on how I should be trading.

I’m at a point that more information, and more trading books won’t help me. I just have to face the market and myself.

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I’m just about done trading. It took about 30 minutes so far. I selected a few pairs that I should take a second look.

I kinda don’t know what to do with myself. I mean, I’m supposed to be waiting for very obvious signals, right? That’s what I’ve been talking about before. I’ve said it so many times that the signals in my strategy are so easy to spot. Yet, I didn’t see any such signals today. I saw a couple signs that I would be jumping onto a price that’s trending already.

That can be dangerous also. But, I’ve seen pullbacks with clear signals offering safe entry, and those are the ones I should wait for.

I’ve seen some trends that require being wrong 4-5 times in order to get into. That approach looks great in a backtest, but forward testing that can be dangerous because if you keep taking losses going long, you might find out that price is reversing and you should have gone short.

It depends on the trend of course. Some get pretty choppy. And that’s kinda what I saw today. I didn’t see anything that resembles the setups I see in my practice charts. So, all I should be doing is waiting…not trying to figure out the best way to trade something that isn’t tradeable (for my strategy).

A falling knife has no handle. When price starts doing its random walk, that’s the equivalent to a falling knife. I should wait until what I’m seeing makes sense, and I see a signal. If not, I should wait. No position, IS a position!

So, I’m done, and part of me doesn’t know what to do. I have other things to study, and I have practice charts. I’m actually sleepy already, and I’d like to get some rest.