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.