For those who wish to comment on this blog...

Thanks to ryannnn who took the time to comment on my most recent post. I chose not to publish it, however, because a web address promoting a forum was included at the end of the comment.
If anyone wants to offer comment on anything I put on the blog, it will be welcomed if it is not overtly negative. Further, I do not post any comments that advertise or promote other websites or pages that I do not know, appreciate, or patronize. Occasionally, there is something I personally find value in and I will link to it and/or repost here with careful attention that the source is properly presented. I do not endorse stocks or products, nor will I ever put advertising on this blog. For the record, no one has ever asked me to promote a product, nor do I ever anticipate I will be approached to do it.

Done for the day

I'm done for the day and have put up no other trades after that most recent blog post.

Today is Mrs. Bluecollar's and my 17th wedding anniversary and we are having an early dinner out to celebrate in Portland. That's THE Portland, founded in 1632 AD, not the one in Oregon :-).

I put the chart up to furhter emphasize what a great idea it would have been to reverse after my 1:39pm exit. Nice drop in GS in which I did not particpate.

today

On the bottom chart are three most recent of the seven trades in GS that I have taken today. According to plan, they are all stop outs. With the exception of the last one, that is. Like prior days, I had to take a quick bathroom break and didn't want to leave the trade unattended. As it turns out, my exit was a good one given the downturn in GS after I got out at 1:39 pm. Eventually, it is my goal to use the momo shifts to exit and reverse instead of exit and watch.

On the upper chart are the first three trades today in GS. The first was an entry long at 10:32am at waht appeared to be a bottoming in momentum. I was just a bit late getting long after the long red candle at 10:10am. Well, like yesterday and a couple days ago and Many Many times over the past couple years, I got "punked" into a stop out when price dipped quickly and retreated back up. I was stopped out at 123.14 and the candle that did it went as low as 123.09 before reversing and leaving a nice long tail as a reminder that this was a punk move by the MM's to trip stops of everyone who did not get in long at the very bottom (10:10 & 10:15 am candles). Price has been pretty much up all day since then. Stopped out by 5 cents and missed over a $3 trend. Once again, my read of momentum was good but my strategy was lacking in finesse.

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No matter, I have to adjust to these sly punk moves designed to stop out the less adept players. perhaps I should expect it and enter on the long candle wicks, eh?

End of Day (EOD)

The last chart I posted earlier turned out to be my last trade of the day. I spent much of the afternoon on the phone with Microsoft Technical Services. Actually, the man from MS was very helpful and solved my software issue, but it took nearly two hours. Anyway, I'm now going to take a moment to recap the day.

I sensed that momo was slowing when I went short at 2:15pm, and I was correct. TNA entered a consolidation area for 50 minutes before breaking out for the last leg of the afternoon trend. A trend that I should have been in all the way had I not tried to get "cute" in my third trade of the day by moving up my original stop as price rose after the 11:35 entry. That is the penalty for seeking protection from the larger stop loss that I had set. Basically, I cheated the mandate I had set for myself. I still took the loss but tried to mitigate it by moving the stop up with price. The problem is that price did not breakout of consolidation before I moved the stop up. I will try to remember that lesson. Don't move the stop until price breaks consolidation and enters trend. The more I think about it, the more I see it is an error of poor fundamentals more so than fear of taking the larger loss. As it turns out, that original stop was just a few pennies above the low of the day and would have not triggered the rest of the day. That also means that I would have had over a two-dollar gain! I assume I would have stuck to my mandate holding until the final 15 mins of the day as I did yesterday.

So close, yet so far away. A bad decision to move my stop and then getting punked on the next trade: stopped out at the low of the 12:35 candle... the one that was the start of the big afternoon move after 2 hours of consolidation. Two unfortunate events... but "almost" does not pay.

Looking at the bright side:

1. I stopped out each trade faithfully which is the whole point of this exercise I am involved in.

2. My stop outs were in areas where my read of trend/momentum change was pretty good. It needs refinement... maybe some patience. I also MUST trade with trend as my first impulse as opposed to trading for reversals. My first two stops of the day would have been avoided had I done this. This is a perenial problem of mine.

Overall, I am happy with today. I am not joyful like yesterday, but I met my goal of exiting only by hitting stops or getting out in the last 15 mins of the session.

--

I am noticing as I stay in stocks and don't exit from anxiety that I am paying closer attention to price action while engaged in the action. For some reason, the anxiety has not been present these past few days; I don't dwell on finding a place to exit with quick gains like I was before. For this reason alone I will continue with this plan.

stopped out

in short...

Thursday

Well, I got punked by the market again. Stopped out on the low of a candle just before the price reversed and put in the big move I was trying to capture. I do this quite a bit, as I've mentioned before. HFT's? Big players? In this case, they drove price down quickly in order to stop out traders and use the liquidity to fuel their intended upward move (in this particular case).

I had stopped out three straight trades before this happened, though in the third trade I would have taken profits instead of holding for a stop out had I not been following my loss-familiarizing exercise. For the record, I marked what would have been my exit with the orange dash at the top of the 11:40 candle.

Here's the kick in the pants: On that third stop out, I had moved my stop line up closer to my entry as the price climbed into what I considered a safety zone. My original stop is the short red line in the 11:30 candle. With this revised stop, I was forced out in the 11:50 candle when price retraced. In the next candle (11:55), price dipped a bit further before reversing upward as the choppy consolidation continued. Had I kept my original stop in place at what I thought was the bottom when I originally entered the trade, I would not have been stopped out at all during the entire consolidation phase and would have a very nice gain right now. I would not have been in the fourth trade (12:35 pm) in which I ended up being Punked; I would have been holding the thrid trade still!

This is a perfect example of the gamesmanship that is trading. It is a contest between experienced players (or their black boxes) who know trader habits and psychology and the prey on which they feed (like me, if I were trading live). All those traders who got long during that consolidation area got stopped out and punked just like me in under two minutes by one of the longest five-minute candles since the open. The moral of the story is that a good entry price leads to a good stop price, which leads to a safe trade when one tries to trade a reversal of trend. Notice also that when the price was pressed down quickly in the 12:35 candle I'm discussing, it was pushed just 3 or 4 cents beyond the trendline marked on the chart. The reason the stock snapped upward in reverse after this spot is because people like me had their stops just below the trendline thinking it would hold. Stops got tripped, the big players bought them up, and price snapped up.

For the record, the orange dash in the current candle on the chart is where I would have stopped this out, had I been in. The orange dashes on the 10:25 am and 10:35 am candles are trades I was contemplating but never entered. Both would have offered gains had I played them right, but I'll never know for sure.

And, here's the close.

The market closed on the afternoon trend high price for TNA. If I had stayed for the final four minutes of the candle I exited on, I would have met my goal as well as taken another 27 cents of gain. No matter, I had to leave.
I can't begin to write how great I feel right now. I fully embraced failure and it led to success. I am shocked at how little stress I felt the whole day. There were times I wanted to exit with some good gains (see the short orange lines mentioned in prior posts), but other than that, I was quite calm as compared to my history of practice-trading. I intend to continue with this exercise of discipline. I know that there will be days of failure ahead and relapse, but I like the general direction this is traveling.

The second screen shot is of the IB TradeLog, summarizing the days activity.

Now I am going to the basement to exercise... some resistence training then fast-walking on the treadmill.

Can't wait anymore...

I just can't wait another five mins to make my goal of only closing out a trade within the last fifteen mins of the day or stopping out. I have to get to a bathroom now. Too bad, the candle is rising...

I'm happy that my new higher stop has held the market retest of my entry area during the 3:35pm candle.

I closed out the trade with a 37 cent gain that easily offset the other two stop outs from earlier.

still in, but it looks weak...

I'm still in this stock but I have to visit the bathroom so badly that I'm begging for a stop-out. And now it is popping as I write this... damn. I don't want to hold this stock until market close...

Note that I have moved my stop line up from the original spot (where the short red line is).

3 rd trade of the day

Third of the day, here is where my gut tells me to exit... where the candle touches the orange horizontal line, up about 45 cents. Lets see how this plays out...

few mintues later

Here's a screen shot about 15 mins later. I'm stopped out of the trade. Looks like my read of momentum shift was correct. However, as I watch the candles and type this, price has bounced again in the candle following the current one shown that washed me out. The down spike was enough to stop me out but did not reach my original stop (short red line) at approx $62.01. That's interesting.

The orange line would have been the logical spot to take profits and go short.

Today, later...

I have another long trade on after what appeared to be a bottom for the day.

I've had a nice gain at times with my original stop only threatened once (in the candle following my entry).

I had two opportunities to exit over $62.70 so far which would have netted over 42 cents. I haven't exited yet but wanted to post that my gut tells me that the short orange line on the current candle would be a good exit. Consolidation feels like it is stalling and momo might be turning against me. Of course, I intend to hold until stop out or the last 15 mins of the day. The short red line under my entry candle is my original stop. The long red line is where I moved it after price moved up a satisfactory amount.

Today, so far

So far, so good. I am trying to focus hard on entering trades with the intent of winning so to counter my concerns expressed in my last post. I entered long at $64.26 (9:54 am) and waited. Price dipped to within four or five cents of my stop line, then suddenly for a fraction of a second touched my stop line then retreateed just as quickly. I couldn't react fast enough to stop out. From that moment, price climbed in a 10 minute trend to peak at $65.06. Couple things:

One, it is clear that my selected stop area was wrong. I've blogged about this before, but the big market forces (HFT's perhaps?) will drive price to an extreme point in a flash to trip stops and generate the liquidity (and lower price) for them to engage their positions. This was clearly what happened here. They know where unseasoned traders like me put stops and in this case sent price to that area, in literally a fraction of a second. If I had placed an official stop-loss order with my broker, I would have been "punked" out of my well-chosen trade idea by only a few pennies beyond my stop line before reversing. So much of this activity is about "Trading the Trader," to use Quint Tatro's book title and premise. Black boxes and seasoned big players will trade, in part, based on the other players in the market and not only what they believe is a good trade idea. There's nothing wrong with that... if it were easy, everyone would do it and it wouldn't pay for shit. But, I have to pay attention to my stop price selection.

Secondly, I put the orange mark where my impulse would be to sell if I had not placed restrictions on my exit points. I felt great when I was still holding the trade when it rose another 40 cents! I must admit I wished then I could have sold to take an eighty point winner. To my recollection, it would have been my biggest gain ever on a practice trade that didn't involve the dubious practice of averaging a better price by doubling up a losing position. This was a clean trade and the best gain I ever remembered having. But, I remained resolute and stuck to the plan. While writing this post and roughly 20 mins. after taking the screen shot above, price has come back down, as it is want to do, and touched my stop line. I have clicked and exited. The one thing I did do earlier was move my stop line up closer to my entry after the trade was sufficiently in the black. I figured this is what I would normally do if real money were on the line. Correction, I would normally move my stop to breakeven then trail it to preserve a gain, but in this case it would violate my rules of the game. I willingly have taken a small loss.

I really have a good opinion of this exercise for now. I'll continue to look for good entries as I normally would and I'll stick to my training rules. One day at a time, one trade at a time. I may now take an hour to think quietly/meditate over this successful trade, eat lunch, then come back to the screen for the afternoon session.

Yesterday

I picked the right time of the day to work with TNA considering my goal to put up losing trades in order to learn to accept losses . I was attempting to place trades during a tight consolidation range of roughly 35 cents. This range continued for about four hours from 10:15 through 2:15 pm. Oddly, I felt very much at ease when my goal was not to win, but rather to lose. I can't help but wonder if that feeling is because I may have designed an exercise that really didn't test my fear because there was no expectation of winning when I placed the trade. That's how wierd it felt to have a trade on and not feel anxious about the outcome. It bears repeating: I'm not sure if the test was helpful or not because I am not sure I cared enough about trying to win! I have to continue this exercise for a number of days to see if I have found a way to trade without emotional discomfort or if I have set up a test where lack of concern about the eventual goal of winning trades has been abandoned. All I know is that it was a joy to click the mouse , stop out for small losses and react to it with the same concern as putting on a belt or walking through the frozen foods section at the supermarket.

As I write this, I wonder if what I experienced yesterday is analogous to when some beginning traders don't believe they are learning to trade when on a simulated trading platform. I've read often of beginners, or experienced traders refering back to their beginning days, expressing that there is no way to learn without real money on the line because they didn't feel the pressure of trading with real money. Personally, I have always been able to "feel" the anxiety of trading while on a simulator. I experience wins and losses as if real money is on the line. I know this because I traded a number of weeks using high five-figure real money positions and it felt no different to win or lose with them as it does with simulated positions; everyone has a different emotional makeup, I suppose. But back to my point... it was wierd to put on trades yesterday without any stress and I am trying to figure it out.

As to the two winners yesterday that ran counter to my goal of exiting only on stops outs or close of the market: the first one was because of the arrival of our niece after her cross-country drive from Idaho. I exited the trade to welcome her for an hour or so then got back to the computer. Later while I was in a trade, it was decided that we would take our visitor for the traditional rite of arrival in Maine: the lobster dinner! So, that was the reason for an early exit on what turned out to be my last trade of the day. This last trade would have eventually been a stop out, given later price action. I left the market before the best trend of the day, the drop that occured from 2:15 pm through EOD.

Takeaway:

I must continue with this expect-to-lose exercise until I can get my head around the odd (lack of) feelings it generated yesterday. I have to figure out if my lack of concern is a breakthrough as to how to mentally approach live trading or if the absence of anxiety is more about being emotionally removed from the trades I'm placing such that it is only about clicking a mouse and not placing and managing actual risk. I think time will yield the explanation.

For today...

For today, I am going to enter my practice trades as usual. But, I am only going to exit them under two circumstances. 1) Stop loss..... 2) Less than 15 minutes to market close. That's it.
I had a lousy day of execution yesterday. I ended with a $159 gain in sim-trading but that is not the point. I had some good entries but exited early because of failure anxiety, leaving much gain on the table. Then, I entered my last trade of the day and instead of hitting my stop when it went against me, I held the losing trade. Unacceptable.
As mentioned previously many times, I have a fear of loss. I don't like the way failure feels. What a strange irony this is, that losing small with stop-outs is the key to success. After all this time, I still have difficulty getting my head around this concept. Intellectually, it is clear to me but emotionally, I can't deal with it. Fear of failure has driven my life since I was a child. It's hard to reprogram over 45 years of life in a few months. But, I will try and then try again. The one thing I hate worse than failure is quitting.
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If it is failure I fear, then it is failure I will embrace. Mike Tyson said that "Everyone has a plan... 'til they get punched in the mouth." Well, this is where I see how much I can take while working my plan. Two ways to exit, stop outs and end of day. My goal is to put losses up on the board, even if there are obvious spots to exit for nice gains. This isn't about winning trades, it is about a search for and embrace of failure in hopes I can be familiar with and comfortable around it.
I will post the results end of day. Accountability might help my resolve.

-----------------
Update: 12:55pm. Ok, I had to exit one trade when Mrs. Bluecollar's niece arrived here at the house. She just arrived at noon after driving cross-country. I didn't want to leave the trade on while welcoming her. I'm back at the computer now ready to put up losing trades :-).

Saw it, Liked it, Reposting it here...

Leigh Drogan has a terrific post on his blog dated January 13, 2012 and I thought I'd repost it here as well as provide the link to the original. Having started, owned, and after 21 years sold a small business and now trying to master the art of trading, the way Leigh touches on both really connects with me. Success in trading, as explained by a competent trader, is once again linked to one's emotional state; the acknowledgement, monitoring, and management of thoughts and feelings.

Original post:
http://www.leighdrogen.com/keep-your-eyes-on-the-line-and-your-heart-in-the-flow/

His content:

Keep Your Eyes On The Line And Your Heart In The Flow
Posted by Leigh Drogenon January 13th, 2012
Building an innovative business under pressure is hard, it’s real hard, it’s the hardest thing I’ve ever done. We have many untested or undertested assumptions, and never enough time or resources.

But that’s life, and if I’ve learned anything over the past six months, it’s that no one else has a damn clue what they are doing either, except for Steve Jobs, he was the last one who did. Everyone else is making assumptions, testing them, and in between trying their hardest to get everyone else to believe in their assumptions and not call bullshit on the fact that they themselves don’t really have a clue either.

That’s why you should never be intimidated by anyone, underneath they are just as clueless as you, in different ways yes, but just as clueless.

Internalizing the fact that you really don’t have a damn clue can do one of two things. It can crush you, or set you free to make mistakes, fail, fail again, and then succeed. It’s all about how you handle that truth, do you embrace it, or ignore it.

Having a set of core beliefs is not something you can fake, and it’s not something you should ever be in doubt about. Doubt the details, build, measure, and learn, but don’t ever waiver on your core vision and beliefs.

Your core vision should be represented by a straight line that goes from the lower left to the upper right of a chart. The x axis representing time, and the y axis representing success. Keep your eyes focused straight ahead on that line at all times. The values on that line are represented by your goals along the way. Set tough goals, then go crush them.

But know that as an entrepreneur doing innovative things in a stressful environment, not many days are going to fall right on that line. Most days are going to feel like you’re either way above or way below, elation and depression, every week is a roller coaster. I’ve been through two whole cycles in just two weeks, where I’ve been high as a kite, and low as death valley.

One amazing thing that trading taught me is how to read my own emotions, and take my own pulse. When I had minimal exposure to the market and it was running away from me, I would eventually feel this really sick feeling in the pit of my stomach, the feeling of being left out, it’s a very powerful emotion. And just when I started to feel that fear, the market would pull back as it should and let me in. I knew how to read myself so well, and not get caught buying up for the sake of getting in. As a momentum trader, that was tough to learn.


I’m just starting to learn how to read myself when it comes to executing on this vision. Understanding how far above or below that line I really am, and when I’ve hit the top or bottom of those cycles. It’s the ebb and flow, and while you need to keep your eyes fixated on that line, you need your heart in the flow. You need to feel elated and crushed, all in the same week, and know that if you’re doing the right things you’ll always mean revert back to that line.

But in the end, it’s the farthest point in the very upper right hand corner of that graph that you need to keep your eye on, and to know all of the points on the line that get you there.

Happy

I had a losing day today in sim-trading. Down $-241 on twelve trades. Only had 4 winners. The reason I'm happy is that all 8 losing trades were stop-outs. I didn't let a single one exceed the stop. In fact, between 2:30 and 4:00 pm, I had six out of eight practice trades end with stop losses. I closed the day with 4 straight losses.
In most of the losing trades, I had opportunities to scalp gains, one of them for 20 cents. But I am trying to hang in on my trades for bigger gains. Next to me on the wall is taped a sign that says, "Focus on Process, Not Results." I posted a photo of it on the blog not long ago. What doesn't show in the photo is what is written below it... "Exit only on Stop Outs, Volume spikes in winning trades, or at the Market Close." And that has been where I am trying to put my efforts. For now, I am trying to avoid using my intuition for exiting a stock. This has frequently been at my own peril, as it was today. Many times I had a feeling that I was on the wrong path... but I held firm and didn't exit. I'm focusing on process, not wins and losses. It's training to combat anxieties associated with Relief-Exiting and avoiding stop losses. And it's working to some degree... as the number of stop out losses mounted, I was silently coaching myself to relax, focus on process, stay in the moment; no worries about what came before and don't anticipate the future. Only think about my stop line, the one thing I can control. And it was working... In the 3 years I've been messing with the market, I've never taken more than 3 stops in a row before my resolve weakened. Before last week, I had only done two in a row before folding up and letting my stops lapse. I am getting stronger through my losses. I am always in danger of relapse, that's my personality. For now, I just get in the trade and say, "One Trade at a Time."

Where else do I need improvement based on today and virtually every other day I've done this? 11 of the 12 trades I attempted were counter-trend trades (reversal trades). This has been my bias since I began trying to learn this craft. The one trade I attempted in the direction of the overall upward trend of the day was a winner. On range days, I am in my comfort zone and my momentum reads are highly accurate. On trend days, I get slammed; punished by the uni-directional market. When reversal trades don't materialize for me, I cannot seem to surrender to the market, exit, and re-enter in the direction of the momentum. I am stubborn in my intent to be correct and it shows on days like today. It is just another way for my personality to not accept losing, just like my difficulties with taking stop losses.

I have a long way to go before I am ready to trade my live account again. But for today, I am happy with my discipline; the focus on process instead of results. Tomorrow is a new day. One trade at a time. One day at a time.

Missed it by THAT much...

Those of you who are from the USA and are around my age (47) or older remember the old 1960's TV show, "Get Smart." The oafish character Maxwell Smart would often say when he failed, "I missed it by THAT much!"



Well, I have been feeling like Max a lot over the past week or two. I have had my sim-trades stopped out by only a few pennies far too often recently. While it is encouraging that I am so close to the turn with my entryies, I am also frustrated by these repeated near-misses. The above chart of TNA is the most recent, from about 35 minutes ago.

It is clear from this that I am still not in the same mode of thinking as the professional traders who are capable of moving price with the size they trade. These pros know exactly where smaller operators put their stops and push price just beyond in order to generate liquidity by tripping stop-losses and enhancing profits as a result of their lower entry. My goal is to overcome this... not by widening my stop but by timing my entry later, after the turn has taken place. My greed associated with early picking of bottoms/tops in a stock will be exploited by savvy market veterans. If I can train myself to wait until the stock has run out of momo then begun its retracement, I will turn my good interpretations of direction change into gains.


UPDATE: After posting this, I noticed that the chart is not legible as it appears above. I haven't posted a chart in quite some time so maybe this is a format change by Blogger, not really sure. The chart is clear and easy to read if you click on it for the large version. As before when I once posted charts regularly, the slanted green line is my entry which tilts in the direction of the trade. In this case, UP to touch the candle at the entry price for a long. The slanted red line points to my exit spot and the short vertical line that connects them is colored green for a gain or red for a loss (as is the case here). The horizontal red line indicates my stop placement. I exited this trade at the dead bottom price on the chart, $60.27.

UPDATE 2: After the market closed, I went back to this post to correct the many typos and to note that the spot I chose to enter for the reversal was the eventual low of the day. Stopped out on the very lowest print of the day. Bummer!
So, this means that I entered short earlier in the session a few pennies from the top and entered long (unsuccessfully as noted above) at the lowest price of the day. In full disclosure, I was stopped out three times in a row at the top between 9:40 am and 10:00am before eventually being rewarded with a 60 cent winner on the fourth short attempt. I exited far, far too early on that trade. My short entry was eight cents down from, and just after the high of the day was printed. My practice trading needs a great deal of refinement, but I am hastened along toward my goal by reasonably good timing.

An important thought...

From Robert Deel's book "The Strategic Electronic Day Trader," I offer this quote from page 167, bottom paragraph. "The market is not physical-- it is mental. Each tick that appears in a real-time chart had its origin in the mind of a trader..."

Taped to the wall next to me...

Moving some serious volume...

This morning when I pulled up my charting program, I noticed on the Raw Data feed/Time & Sales window for TNA that a serious amount of volume transacted between 4:01 pm and 6:27pm. Exponentially more volume than I've seen on the raw data feed for TNA since I've been monitoring it (3 months).
There were 410 trades of 22,295,253 shares equaling 9.141 billion shares of TNA. Dollar value of same is over $515 Billion! With 410 trades, it is difficult to quickly pin down the average share price... I used $57.80 after glancing at the entire transaction.

That is some SERIOUS weight... I wonder what that means for the market overall? Clearly a big player thinks we are at a turning point and is putting money where their mouth is. Remember that TNA is a 3x mover, so with that 300% multiplier effect coupled with half a trillion dollars... Need I write any more?