FAS landed the big blow to me yesterday but I got in my own lick this morning. Picked up a $204 winner after getting stopped out just prior. Also called that big move down on FAS after the open but hesitated on pulling the trigger. One thing of note and which leaves me feeling sour is that big drop in FAS earlier, my trade from yesterday would have been "in the money" if I had held! Big moves always give a nice reverse eventually, the question is what is your appetite for pain in the interim? Am I disappointed at selling last night and thinking I SHOULD have held it overnight? Hell no! It was the prudent decision based on my account size. I SHOULDN'T have been in the trade to begin with. Lesson learned. One important detail that I don't remember posting about chasing yesterdays run up in FAS is that I had more $ in my account to chase it... I couldn't do it because FAS no longer had shares available to short on IB. No matter. It was right to get out. The markets could very easily have been up this morning and I could possibly be getting margin calls and forced selling (depending on how high it was hypothetically up)... I'll say again, a reversal can sometimes take a while to come to you.
UPDATE: I did continue trading but in my paper-trade account after this activity in my live account. The results were for a loss because of early difficulty with higher stop-losses than I wanted. I had to acclimate to the speed of FAS as it jumped through my stops. I finished the day paper-trading with a long string of winners trading in the PROPER way.
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1 for 2 winners, a 50% win rate. Gain of $114 in .75 hours of trading
Hey BCT, FNG here.You should stop trading immediately. You need to regroup and get back to basics or learn to trade your plan. I can see you are going to be revenge trading soon thinking the market owes you something.After that big loss yesterday you need to take time off and think deeply about your actions, mistakes and also motivations. Do you need to make money trading or can you support yourself by other means? No one should be under that kind of pressure so quit for a while. And unless blogging is some form of cleansing of the soul, quit that too until you can get on track.You owe nothing to anyone so don't feel obliged. Nothing in this game is more precious than the ability to think straight and trade your plan.From the comments you've left on my blog you seem to be an honest and forthright guy. Breaking a trading rule like adding to your losers for a silly reason is just like stealing and lying. You would never do that in normal everyday life. You can also never do that when trading. If you make your trading plan arbitrary, your trading career will be short lived.
ReplyDeleteIt takes a long time to learn to trade and there will always be opportunities when you are ready to take them . Don't feel that you have to jump in before you are ready.
I've recently discovered this book(free download) http://www.jogena.com/resources/concentration.pdf
It parallels exactly my philosophy on concentration and how you can achieve your goals.Written 100 yrs. ago but totally relevant.
Thanks for the advice, Scott. I will heed your advice and move to my paper-trading account for a while. I post this also for the benefit of others who read this blog in hopes that it will serve them as well as it will serve me.
ReplyDeleteI intend to practice more and live-trade much less. My goal is to be where you are now. It is a high standard but in pursuit of it, I will likely find some success even if I never master the art of "reading the tape."
I'll take the time over the week-end to check out the free book. If anyone else takes a look at it, come on back here and post some commentary. A good weekend to all!
what's up bluecollar, this is joshua from fearandgreed comment stream. i didn't even realize you went live, i thought you were still paper trading, congrats. i went live a few months ago and just have been slowly draining the account. one thing i think for both of us, is we want to get to where scott is but i don't think we can handle his share size. i know you say you only trade a 1/5 of a position (200 shares) but then looking through your trades you seem to be trading a lot more than that. slow down, take your lumps with little share size and little loses. i am trading 100 share lots and i get crazy when lose $15 bucks. we have to walk before we run. the greatest thing about the market is everyday is a new day. stay positive. i started following stock rookie's blog daily and now i am going to have to check here as well. i like seeing how everyone of the "newbie" traders (including myself) are doing. if you want, i started a blog as well, mainly for myself to see my trades and to reinforce the idea of a trading journal. sometimes i lose track of it, but i try to put all my orders and charts up when i get time. i can't really trade scott's style, although i would like to. everytime i try to catch the momo is doesn't work in my favor. for now i am concentrating on gap pullback to a fib level or previous day high/low (trader x,wall st warrior). i hope to add scotts momo ideas into that as well. check it out here fozzkingtrading.blogspot.com i am not trying to "pimp" the blog out, because honestly, i don't want that many people seeing what i am doing. it kinda of freaks me out. but, i think it is helpful for us newbies to see what each other is trading and how well we stick to our plans. be well. sorry for the long comment
ReplyDeleteNo problem with the length of comment, Joshua. In this world of soundbites, acronyms, and people saying, "like, you know" instead of expressing their thought with a complete sentence, it is refreshing to see someone put forth an effort to write out fully what is on their mind. Good writing is like good food, it nourishes as well as filling the space. I am still trying to master that, as well as trading!
ReplyDeleteI am actually quite new to live-trading, one week last month then full-time this month. I traded for a month last October but it wasn't REAL trading, it was following other people's calls in a chat room. Followed then byeight months of strictly paper-trading.
As far as transaction size, I can trade 1000 shares of stocks under $95 with the $35,000 in my account (with the help of margin). As you know, that is not the same as risking the full $35,000 or the $95k (with margin: 1000x$95). For this reason, it does not bother me to carry large dollar amounts on my trades. My loss of the other day was 10% of my account and stings, but I have funds available to replace that if I need to do so. At age 43, I have had time to put some money away other than what is now in my trading account. But, that is no reason to be cavalier about taking losses. Being able to afford to lose is no reason to suffer it gladly; stating the obvious!
I trade at 100 or 200 shares at a time in my live account (except for yesterday, where I was scalping with 500 shares at the open). The higher share amounts you have seen in my live account before yesterday are because of averaging in on losing trades; each entry at 100 or 200 shares but the total adding up to much more than that. It was clearly a mistake on my part, trying to make up for a bad entry by cost-averaging in pursuit of the share price. It is a failed strategy... nothing more to say about that. I posted a while ago about a now successful young trader who blew his entire account three times before coming to the realization that it is not a valid way to trade. So far it has cost me $3800 to REALLY understand it. I intend to re-post that young trader's story this week-end. I got it originally from Sykes' site. I don't have his source but he did credit the author, as I will again.
Thank you for the "stay positive" message. While I am not sanguine about the loss, I am realistic about it and see it as a wake-up call and perhaps in the end, a positive occurence in my development. Before Thursday, I had one losing day of -$47 and 18 winning days out of the 19 days since resuming my live trading last month. To that point, the only thing I remembered over that time span was the one losing day. So, I know what you mean about the power of losing even small amounts on one's psyche! Lest I appear to be bragging about my won/loss record, I now have a record of 19 of 21 winning days since getting back to real trading but am down $3675. I am not confused about which of those numbers count.
I'll check out your blog. As to pimping your blog, you should do it if you think you have something to offer others. They will vote on the value of it by returning or abstaining. I would only have a problem with you mentioning it here if you were peddling something there. I try not to advertise blogs which are "in business" for themselves.
I'm curious what you might think of the e-book Scott F. posted here prior. I looked it over briefly last night but haven't started reading it yet. If you read it (120+ pages), come back and post your thoughts.
Best to you, Joshua.
19 out of 21 winning is great from where i am standing. whether or not you had one bad day. i am down about 1800 since opening my account about two months ago. i am just slowly bleeding the money away. i would like to say that i had one bad day where i made some mistakes and that is why i am down, but it isn't the case. i just don't know how to time my entries correctly yet, or hold my winners. i only checked out the first page or so of the book scott suggested. i tried to save it to my computer, for reading anytime but i couldn't do it. it kept saying file i/o error and i don't know what that means. i am going to check the book out over the next few weeks and i will get back to you. i did read trading in the zone which scott suggested, it was good, but very very repetitive, which drove me nuts. i am actually trying to read it again right now. i also bought some "subconscious" training cd from ebay called "trading mind" from subconscious training corporation. i bought it because i believe the guy behind the cd is norman hallett from the disciplined trader even though it says jake berstein. (scott suggested taking the disciplined trader course but is $1100 bucks or so). the cd does seem to help me stay focused on my plan if i actually listen in to at night. i'll put the links up to that cd and a forum with some good psychology write ups on my blog. i would link them here but it doesn't let me.
ReplyDeleteYes, entry and exit timing. That is where the rubber meets the road, for sure.
ReplyDeleteI am a fan of the Douglas book as well. I have it on my bedstand right now. I highlighted it the first time through to emphasize the main points and now go back and read the highlights...I now get the benefit without the redundancy.
"Trading in the Zone" is a very good book but begins on the assumption that one has a trading plan which actually works. There's the rub! Managing my emotions cannot make a faulty trading plan into a good one, I've found. No amount of concentration or mental control could prevent the rare but inevitable devastating Bad Day which comes from averaging a cost-basis up or down by adding to a losing trade in order to capitalize on the eventual reversal of the trend being following. What I had read and seen reported about this being a faulty "edge," to use Mark Douglas' parlance, became abundantly clear in practice last Thursday. I was under the impression that I could "beat" these occasional bad days which I had experienced in my paper-trading; refining this "edge" by waiting patiently before beginning my scale-in trades and thus having a bigger reserve of capital for averaging in closer to the end of the trend. FAULTY METHOD! Some trends are so strong that an account will run dry before the end (reversal) comes. Other problems can also arise; the close of the day may come before the reversal, news reports may hit sending a jolt of energy into the markets throwing off your schedule of buy-ins, or as I experienced with FAS on Thursday, shares can become unavailable to short and stop the plan in place. In essence, control over the trade has been ceded to the market with this method! I no longer was deciding my own fate after I let the trade run past where a stop should have been set. I no longer was able to decide how much I could lose. FAULTY METHOD/EDGE!
Again, amount of controlling emotions could turn it into a winner. If it were possible, smarter and more experienced traders than I would have figured out how to do it long before now.
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Continued...
Continued, from above...
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So, like you, I am working on my method, trying to enter at high-probablity spots and exit at points where I can maximize gain on successful runs. What I have found also is that if I get out too early on a successful trade, I can have a high winning percentage of trades but still lose money because the value of the stop-losses will be too high in relation to the dollar value of more frequent but small winners. THAT IS a situation which can be corrected by the ideas in the Douglas book; a sound edge or method which needs refinement by sharpening technical skill and mental control. The point of this long-winded writing is that I have come to realize that even a terrific won/loss rate can mask something critically dangerous, just as paint and spackle can make a crack in a wall beautiful for a long time but eventually the weak foundation will cause the crack to come back. In many instances, much bigger and uglier. ...time to build a stronger foundation.
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I am going to start reading the E-Book today. I am hoping that concentration will help me to notice more advantageous entries and exits, whether it is the activity on my screens during the trading day or the charts on Scott's site.
Fortunately, I am not starting from square-one as I have what I feel are some high-probability indicators of reversal of trend. I simply need to focus on finding a different spot on the chart to take advantage of my good "clues." In other words, using what I already know to build a solid structure rather than an unsound one.
Once I have that quality method in place, I will really hone in on mind management with resources such as those you mentioned. I believe them to be of great benefit.
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You mentioned that cash has been draining from your acount, albeit slowly. Does your broker have a paper-trading platform? It is an invaluable tool to novice traders like us. I can't stress it enough. Don't believe those who say that you should have some money at risk in order to learn this craft. That is pure B.S. Honing your method does not require money on the line. Later, after you have used a simulated trading platform to practice and refine your entries and exits, then some money on the line will reveal the emotional, mental weaknesses you have. And you will be certain it IS mental because your highly-successful paper-trading will have established that you have a viable "edge." I saw an interview with Mark Douglas who stated this very idea.
i use lightspeed and it is possible to paper trade real time. when paper trading, the problem for me is i have no attachment to the trade and i am not really focused. although, having no attachment to the trade is probably the correct idea because you want to see if your method works correctly and the problem is just a mental one when real money is on the line. i also agree that the book "trading in the zone" builds off of having a solid trading plan and an edge. the problem is that yes, i have a plan, but i have no confidence. i know the plan works for other folks, but it has not worked for me yet. so, i have no confidence in any of my trades which causes me to hit out way too soon. on another note, it is freeing to get these ideas/thoughts out of my head and onto paper. thanks man.
ReplyDeleteNo problem. I love "talking shop!" Nothing will build confidence like successful paper-trading month after month. Just don't do what I did and practice paper-trading for months on a deeply flawed strategy. I have been really kicking myself for largely wasting all that time.
ReplyDeleteGood trading to you.