Friday, July 9, 2010

The Month Update - New Ideas, Computers, & Success?

Just a quick update here. First off I finally finished my new trading (& gaming hehe) rig yesterday. What can I say... ATI Eyefinity kicks ass. I'm going to get a LOT of use out of this new system. Its so nice to have something that nice and snappy, runs flawless, has 69" of HD screen space, and monitors that don't flicker on and off at will.

On the job front i've been applying at multiple prop firms in the greater Chicago area trying to land a "Junior Trader" or "Assistant Trader" position at a firm. Anyway I slice it i'm in a rut here in Omaha. Professionally, personally, financially - I need a drastic change. If anyone knows of firms looking to hire or job opportunities out there give me a shout!

On the subject of trading. Awais has been yelling at me for years about just trading off S/R and simplification. I'm making a concerted effort to do just that. I trade with 1 line on the charts these days and nothing else. The only reason I use that one line is to gauge momentum of a trend (i'm looking for steep fast trends to trade in). Beyond that my trades are bare bones simple - support coming resistance and vice versa. The result? Solid on sim (aren't they all?).

But the honest to god truth is once I started looking for this stuff something clicked and I have started to "see" this happening everywhere. I honestly think my ability to read price action has gone up about 1000% in the past two weeks. And that's in no small part to having no distractions on my charts. My only concern is that my risk:reward is a bit better than 1:1. However my win rate is above 75-80% thus far. We'll just have to see how it develops.

Anyhow, thanks for checking in and your continued interest in seeing i'm not dead, down, & out just yet.


Friday, June 11, 2010

Baby Steps to Context

My good buddy Awais ( sent me an email this week containing a blog comment by an excellent trader, Ziad. Ziad, among other things quintupled his trading account in a year and banked six figures last year. And i've heard hes cleared tens of thousands in profits on a single day this year so its someone I would heed advice from. If you'd like to read it (and I suggest you do) check it out here.

The point of his comment was that most traders endlessly (and fruitlessly) hunt "setups" to trade. More importantly they hunt setups with no pause or consideration to the context within which those setups are applied. I think he rightly points out this inherent characteristic in most of us and our seeming inability to take a step back and recognize this. So i've decided to make a concerted effort to add more context into my setup. However, I need to apply that context in a way that suits me.

If you've been following my progress (or lack thereof) for any amount of time you'll know that I like a solid trade plan and a rule set for my setups. I'm not the type of trader that thrives on just clicking orders in to the market off of feel and read and managing the outcome. However, I recognize that this attribute has also been a detriment to my trading success in some instances. For now I want to compromise with Ziad's assertions and my own personality and meet somewhere in the middle. This means adding context, but in a way that I can quantify, even if in some basic and rudimentary way.

The one setup i've been working on is nothing more than a minor pullback in a major trend. That statement alone requires more context in the setup than i've ever traded with before. It means I need to identify a MAJOR TREND. Not just any wiggle, not a range bound market, not some oscillator extreme. I need a logical read on the market that identifies only a major, almost spastic trend to jump on. For now if that means using 1 moving average on my chart to help my eyes see not only momentum but the strength of that momentum (how far price is pulling away from that moving average or falling back towards) then that is a layer of context, albeit basic and rudimentary context, that I can use in my favor.

That small bit of context is also something I have never applied to any of my trades. A trade was a trade was a trade and it didn't matter where on the chart it occurred, I didn't even look at how defined a trend was, or how much strength there was in a trend. While i'm sure many (probably including Awais & Ziad) wouldn't see this measure as the true extent of Ziads post it remains a start.

Baby steps folks... baby steps.

Sunday, June 6, 2010


Well i've been on "vacation" for almost a week now and i've still got a good week and a half left spending time with friends and family. Its been nice to take the pressure off and clear my head while I re-load for my next trading attempt.

I have a rough sketch of my entry (yes that's singular because for the first time pretty much ever I will trade ONE and only ONE setup). And yes... I think that is a pig you just saw fly by your window.

I'm also putting together a new trading rig (3 23" 1080p monitors via ATI 5870 Eyefinity technology, i7 cpu, 6GB ram) little Matt is going to be in charting heaven by the time the week is over! No more trading off of a single 15" laptop screen!

I will try and post some of my daily results this week if I get an hour or two to trade but don't hold me to it. As I mentioned before i'm still up in the air as to whether or not trading a set time period everyday or to a set dollar amount everyday is best. But in sim mode i'll be trading every setup along the way to get experience with the new trigger.

And since this blog is as much about my journey as it is about trying to help other aspiring traders get a leg up I thought I would share with you 4 threads that have been a big source of inspiration getting myself back up and ready for round 83 of this trading journey.

Here they are, these are my favorite threads from Walterw on TradersLabratory.
I think all of the above threads have a lot of sound logic and glimmers of simple genius sprinkled throughout. Some of them are 30ish pages but there is a lot of good information in them and they are worth the time! I think there is a clear structure provided for a simple and profitable trading system in each one of them.

Looks like its about happy hour here so this is going to be my view from here on out.


Monday, May 24, 2010

Still Alive...

Just dropping a quick note to say i'm still working at my trading, albeit in a slightly more kicked back sort of way. I needed a little mental va-cay and to get away from the screens for a bit. In fact i'm going on vacation for two weeks the first of June to spend some well deserved time away from everything to re-charge the batteries.

In the mean time i'm working on one simple trade using almost nothing on the charts. I still think less is more and am trying to capitalize on that. The other thing is on the management side of things, both on the individual trade targets and possibly some daily goal targets. If 8-9 ticks is an easy target then why not take it? Why try and manage for huge runners each time if they never quite work and that +9 turns into a par or worse?

Also on the daily profit target... I need to make just 200.00 a day on average each day to match a 40k/year salary. That's 8 ticks in the 6E/J/S on two contracts. When you put it like that, why the hell do we all try and walk in a nail 80 ticks each day? So basically i'm trying to revisit and reevaluate everything in my trade plan and see if there are changes that might need to be made. You don't know unless you question it!

Wednesday, May 12, 2010

Dear Range Bars - We're Over

I've been really getting back to basics... deconstructing my rule sets and allowing the idea of flexibility back into my trading. One of the things I have been focusing heavily on is risk reduction. Which brings me to range bars. I really like the logic behind them but i've found that the reality of trading with them can be less idealistic than the portrait usually portrayed. If you listen to providers like EOTPro (nothing against them!) range bars are going to usher in a new wave of consistency and reliability for retail traders because its "new technology". But I have a few complaints.

Straight up - my entries surround an engulfing pattern of some kind. I want to see price close higher or lower than the previous candle. At the most basic fundamental level I see this simple interaction as an indicator of buyers and sellers shifting power. Not perfect, but I dare you to find a shift from buyers to sellers or vice versa where this doesn't happen - not to spoil it for you, but you can't because this has to occur for price to reverse. This in no way means that the pit isn't going to try and f**k with you or that your just getting faked in too early, but this pattern HAS to occur so i've chosen to focus on it as a baseline.

Now the tricky part is getting a shift at a "good price" where you can have a reduced risk profile. By definition a range bar is almost always going to get you in later because your requiring the market to move X amount of bars in favor before you get a confirmed close and a new bar. My hypothesis is that by getting in at the range bar price you're already too late to the party. It typically occurs after the move is already well established and doesn't have a lot left in it before it stops and backfills either to reverse or continue on. Either way its much harder to hold for gold when a position is against you than when you've got a stop at par. Period. End of story.

One of the blogs I follow continually is The Deucalion Viewpoint. What always amazes me about Sandy's performance is that he can walk in and nail 20 ticks like its nothing. And when you deconstruct his entries a bit you can see one of the key reasons he can do this is because his entries aren't late - they aren't after the move is already established its always right around the tipping point. He has small risk, and thus he can take her +15-20 easily out of a swing. Moreover, when things look like they are going to get nasty for you by being in "earlier" you are taking a minimal loss of a tick or two bailing on a position rather than a -7 tick loss.

Again, this is only theory but today in practice it paid dividends. I only traded two markets *GASP* (I know right?) the 6E and the 6B, was in and out with less risk on every trade than 1 normal trade off my range bar charts and got almost 2:1 on every trade. Now its just sim, and this is like trader 101 stuff, divergences and not fighting the trend too much with crisp entries and I can already tell you I think i'm done with range bars for good.

So moving forward i'm going to try and keep everything BARE BONES SIMPLE. A little divergence, some simple patterns and some logical management combined with a much better chance of getting more than I risk sounds like a fairly good recipe for now.


Monday, May 10, 2010

Bread & Butter

Today was the start of re-focusing on the "Bread & Butter" trade. The one that's supposed to be there and perform throughout it all. In all of my testing and trading there has really only been one setup that I find to hold up through it all and that's what I was focused on executing today.

And our baseline was like this:

NQ: +0, -9
YM: +13, -9, +18
6S: +3
6J: N/A
6E: +16
6C: -9, +11, -1
6B: +3, -1
6A: -9

Net Ticks: +26

Ummm yea. I've never been so underwhelmed by +26 ticks before. I think it needs work. 4 Losers and 4 Wins in a day isn't exactly what i'm going for. But I will say this - the new relaxed management is the ONLY reason some of the winning trades are approaching 2:1.

In a sidenote - the long anticipated trading documentary "Floored" started getting released in 10 minute increment episodes today. Check it out at

Sunday, May 9, 2010

A Game Plan

Last night I had a long talk with Awais on all things trading... and came up with some "Ah Hah" moments during the conversation that spurred me onwards. Lets not forget that I had been legitimately making money on my live account until this past few weeks when I went off the deep end. I have one setup (my original pullback setup) that just works. So i'm going to just trade that and only that.

The "Ah Hah" moment was thanks to Awais who said he had changed his trade management. Awais never gets to par. At least not in the way most of us do. He will use a hard safety stop and then mentally observe price action and watch for ques that say it might be a good time to sacrifice the position. I get tons of pars, a lot of times on moves that tend to work and work well. But I don't participate because I remove myself from the signal after a measly 3-4 tick move in my favor. Frankly, that's noise in most markets.

I can't tell you how many times i've written in this very blog that I was "high ticked out" or "it kicked me out at par by a tick then went +20 in favor". So i'm going to be simming my one setup this coming week but relaxing the management HEAVILY. Not just on the pars, but on the exits as well. I need my setups to get greater than 2:1 and for that they have to be allowed to run big. My fear all along has been taking losses. Even the idea of -1 tick was revolting to me. But that has distracted me from getting wins, let along any big wins. I'll be much richer if I have a few 3-4 tick losses here and there rather than a bunch of pars if I can replace those pars with 15-30 tick winners.

So this week i'll be on sim trying to relax that management and see how it plays out. Depending on how it goes i'll go back to live next week.