Wednesday, July 29, 2009

Another Par Day

Not quite sure how it happened as typically i'm up or down with a couple of trades but there was only one trade I got into and it was a par. There were other "signals" but they all kind of blew away so I passed on them.

I'm really trying to work on taking the best opportunities rather than every opportunity and I think its helping a lot in my trading.

However, today brought our 1 week experiment to a close. I think the results are very realistic (and they certainly represent the actual trades offered up the past week). Was everyday a huge winner? Nope. Was any day a huge loser? Nope. Some days were better than others, losses occurred, wins made up for them, and pars were scattered in between. But overall the method remained consistent.

Did it produce 10 points a day? No - but it wasn't designed to. It takes whats offered in the most consistent and probable manner and with a heavy focus on low risk situations and getting to par in a very conservative manner.

The end results were this:

Wednesday, +340/per
Thursday, +90/per
Friday, +70/per
Monday, +210/per
Tuesday, +0/per
Wednesday, +0/per

This represents a 3550.00 increase on the $25,000 account in 1 week or a 14.2% increase. Our win rate was well north of 70% and all of the trades were done using relatively small initial risk factors on purely intraday trades and small timeframes.

Is it perfect? No. But it represents the best method i've ever come up with.


Tuesday, July 28, 2009

Worst Day So Far

Took a -100/per trade in the morning, a couple pars mid-day then caught a small +70/per in the mid afternoon and took +30/per out of a trade to the downside into the close at the end of the day. That last trade only got to par and was coming back up when I exited at the close of the day. Net +0.00 before commissions.

I'm just glad I could come back from a fairly healthy loss in the A.M. and not end up down that much by the end of the day. Alls well that ends well ya know?


Monday, July 27, 2009

Another day anotha dolla...

Another relativly straightforward day in the TF. Three trades, an early scalp for +70/per, a midday par, and an afternoon rocket for +140/per. Total outcome was +210/per contract or +1050.00 on the 25k account trading 5 lots.

I'm trying not to be too encouraged and keep my head on right. There is a long way to go and after all, this is only sim. After that winning trade on Friday morning their would've been a losing trade for -80.00 to take me to +70 net on the day had I traded out the afternoon. Still - not horrible results here and its positive equity growth every day thus far.

I've got enough money together to refund my futures account and start trading the NQ to get my feet wet again in a live fashion. Hopefully i'll be able to use that account as a learning and demonstration account in the future to show results. However, for some reason my TradeManager analysis window won't pull up orders input throughout the day so i'm going to have to figure out some other way to present real trade results from this experiment on the website. I'm thinking maybe just a page showing the trades in the order and fashion that they came along and the potential for them if they were managed correctly. (Obviously i'd love to have an order statement to show... but TradeManager seems to do this to me every once in awhile where it decides it doesn't like me and won't show me my trades. Hopefully it corrects itself magically in the next couple of days!)

Anyhow - I'm planning on getting back to live in the NQ next week hopefully and i'll be sharing the live results on this blog with you all. Thanks for checking in and I hope you all are doing well with your trading!

Friday, July 24, 2009

I'm Not Dead

Website is planned to launch end of August so I can be out of town for my sisters wedding and not have to worry about customer support and fixing little bugs, etc. during the little vacation.

This week i've been focusing on getting some results of the software traded in real time. So i'm trading this on just the TF everyday and trying to get some baseline results on a 25k sim account. I'm trading 5 lots so it would average out to 1 contract per 5K which I think is very conservative and realistic leverage. I'd still like to have (and will have) some live results as well but I think the CFTC disclaimer states that I must show hypothetical results in my advertisements so for the time being i'm sticking with my little sim account.

I am making a big effort to get realistic fills and take EVERY trade that comes down the pipe. Its fun to be back in the trading chair, and even more fun to actually be making money (even if its on sim for the moment). Its a feeling I haven't had in years. Anyway, the results so far are pretty good. I started on Wed. and made 340/contract on 4 trades, and yesterday walked out with 90/contract after a few pars, a loss, and a couple wins. Today i'm up 150/per contract on one trade. Overall though in two and a half days i'm up 580/contract or 2900.00 on the account.

Not great maybe, but i'm really just trying to show consistency and not getting beat down even when the market doesn't give much opportunity with runaway trend moves like yesterday. It still shows 11.6% account growth inside of two and a half days thus far and I think that's not too shabby. This, and only 1 losing trade so far.

I'm just going to trade the morning today (like usual on Fridays) and then take off for a movie and lunch with the fam. Enjoy your weekend folks!

Thursday, July 16, 2009

The Trend is a Lie.

You all saw it coming with my last post... I think that the trend is a lie, or at least not helpful to most traders. So whats the big problem with the trend?

First, the trend is BY DEFINITION LAGGING INFORMATION. For there to be a trend it has to have already occurred before you can define it yes? Then you are chasing lagging information, and typically doing so using more lagging information (i.e. moving averages, momentum oscillators, etc). This compounds an already huge problem even more. Whats the other issue?

The trend requires YOU to define it. You can give 100 traders an identical chart and each one of them will define the trend on the chart differently. Some will use market structure, others MACD on X setting, some using MACD on Y setting, and almost all using some combination of X, Y, and Z moving averages. So now not only are you trying to define lagging information, but you're trying to do it in a manner where your opinion is supposed to be the one the market respects. Guess what? The market could give a shit about you. Cold hard truth I suppose but nevertheless true information.

Would you agree that most traders focus on the 20/50/100/200 ema's because they figure most other traders watch these same moving averages? Which means what they are really trying to do is fix the problem of having them define the trend for themselves (because they recognize the futility of this) and figure out what the market (or at least the greatest majority of players in the market) is using to define the trend. But this isn't the biggest problem.

Then you have those trend traders who do great on the runaway trends but get NAILED as soon as sideways consolidation happens. Most cop out by running to another indicator in an attempt to filter bad trades. Others run to the "define the type of day" defense as if its possible to figure out what type of day (trend or range bound) will follow after the first X amount of time passes in the market. Seriously? I think most of us who have traded a while understand that at any point in time ANYTHING is possible. The worst chop in the morning can turn into a massive trend day, and the best trend day can stop and coil sideways for hours. To suggest that we can accurately define something that BY DEFINITION has to have already occurred to be defined ahead of time is bullshit.

Can anyone tell me what the rarest type of day is in the S&P 500? You win an e-high five if you answered "Straight trend day". Most days are range bound most of the time. We all know in the back of our minds that a straight trend day is an exception rather than the rule. As traders we should really try to identify the rule rather than the exception... but most don't.

But the problems continue when we start to look at the actual mechanics of entering a trade based on lagging information. If the trend must have already occurred (at least partially) to get confirmation to enter the trade (MA crossover, stochastic flip, etc) then price is typically already a pretty far distance away from where it was when the actual trend started. This leaves us entering into the market at an area where price is usually already at another decision point in the market. The difference being that by entering now we are going into battle with a much larger amount of risk (we have to put our stops down where the trend started if we don't want to get stopped out) but whats worse is we are going into battle at a turning point in the market with open risk on our position. The smart traders are able to get in where the trend actually started and go into this same turning point battle with their stops at par. Which would you prefer?

Then there is the simple logistics of what you are asking the market to do for you. Lets say you're a smart and savvy trader that knows they need to achieve 2X their initial risk or better on a trade to make their account grow. Good idea. Problem is that the larger your initial risk, the larger the move you need the market to achieve. So if you are entering with your larger initial risk based off your lagging trend information you have to ask the market to go much further in favor to get a needed outcome. By contrast if you were able to get in where the trend started you could use so much less risk that the market has to achieve relatively small goals to get you out of your trade with 2X the risk or greater. And the truth is it is much more probable for a market to move a smaller distance than a large distance.

And most traders can't figure out why they lose money? Most traders look to identify the trend and get trapped into this vicious catch 22 where the odds literally are stacked against them. The trend may or may not exist but the point traders need to realize is that whether it does or does not exist, it isn't profitable to try and define it.

Still want a moving average on your chart?

Tuesday, July 14, 2009

Is the "Trend" is a Lie?

This blog has become freakin' boring hasn't it? Its all my fault I know. But i'm working diligently to get things done and i'm back trading everyday. I'm starting my Project400 experiment next Monday. Until then, i'm on sim with MB Trading trying to get used to their order platform again and all the quirks of their different orders. In new website news i've put the roll-out on hold for the time being. The website is done, 110% functional, and the content is ready to go for the most part, though its not fully rendered yet (i've got 60+ hours of video rendering to get through). But i'm not going to rush a course out into the real world with people spending real money on it if I can't be sure I can offer them something of value.

I think I can of course but I want to make sure so i've been in contact with various traders getting feedback and we all basically come up with the same conclusion. Results are needed and I couldn't agree more. Project400 should help somewhat but I am not pushing the roll out forward until I have personally been getting consistent results for at least a month. In the mean time, i'll post up my day-to-day outcomes on this blog for you guys to read about.

Onto the provocative question of the day. Think about it today, and i'll give you my opinion tomorrow. Is the "Trend" a lie? We all have heard "the trend is your friend until the end" but is it really true? How many successful "trend" traders do you know? What are the potential problems with trend signals? How would you define you're risk? How would you get out?

I have a sneaking suspicion the idea of trend is a false catch 22 that wipes out thousands of traders accounts each year. What do you think?

Tuesday, July 7, 2009

Sorry for lack of updates!

A ton of stuff going on guys! I've been building the new website and its coming together great. But i'm such an anal retentive freak everything has to work just perfect and look just right so its taking longer than it probably should've. Right now the entire site is built and functional with content, galleries, newsletters, blogs, etc but I just started the actual members video content today and am only about half way through.

In other news i'm also migrating accounts back over to MBT. I'm starting a little thing for the website called "Project 400". I'm going to see how quickly I can double a 400.00 account on 10k lot sizing. So i'm not actively trading this week as the funds get pushed around from account to account.

I figure a lot of traders don't want to use a ton of capital to start trading and building a small account like that with relatively tame leverage and margin would be something worth showing.

Hope you all are still trading great! I can't wait to get back to the charts... way to many tasty moves in everything right now!


Thursday, July 2, 2009

Way More Available Than I Took

This morning was just a lot harder to trade than yesterday. The movement just wasn't there. Don't get me wrong - there was plenty for the taking, but in comparison to yesterday it wasn't quite as good. I actually only took two trades today, 1 par, and 1 win. There was a couple great trades in the EURUSD after I quit but I finally got my domain name and hosting set up last night so i'm swamped with development right now and am taking the rest of the day to work on that before I go to the Country Club.

In other news, yesterday was my first day back at my old job. And I gotta be honest... I had a blast. I got paid to bullshit with some nice gentleman, drive around in golf carts on a beautiful evening and hang out with some of my best friends. It got me out of the house and doing something social. A good thing any way you slice it.

Trade Results:

Forex: +15 Pips

Wednesday, July 1, 2009

2 Hours, 76 Pips, Done Deal

Today I was by no means infallible. I took losses, pars, and wins over the 10 trades I placed from 8:50 CST to 11:00 CST. But it was an excellent day to trade and I feel gave very real world results. Days like today really cement home the need for proper risk:reward. So this is how the trades broke down: 5 Wins, 2 Pars, 3 Losses, or a 70% win rate. But here is the really cool part, my losses were: -5, -6, and -7 pips respectively. In some cases, they were simply the spread minus my entry price. My wins on the other hand went like this: +12, +16, +17, +19, +30. As you can see the wins are clearly much much larger than the losses i'm taking. Its the kind of stats that make you feel all warm and fuzzy inside.

Here are some of the trades... I tried to include the charts with the most trades (wins and losses) on them.

Now i'm off to eat some lunch, watch some Wimbledon, and then go to work. Cheers!

Trade Results:

Forex: +76 Pips