Friday, March 18, 2011

Trade 3/18 & RANT

I was amused by a friend who wrote to tell me about his friend's winning (a couple of thousand bucks) in crude oil yesterday. The end of the note cracked me up - "WEEP", he wrote.

I didn't trade at all after I got out from my long yesterday. Experience told me it was going to be one of those uptrending days that I haven't the proficiency to trade. I watched price climb laboriously from the level where I had chosen to close my trade (at 97.58 - I was definitely DYING for 98 for a nice 1k profit, but the plan was NOT to trade through Europe open, so I got out when CL gave me what I initially planned for ie. a breakout that went a certain distance) to 102, and then from 102 to 103.6 during Sydney open, without ever wanting to get in for a piece of the action.

The thing is, days like yesterday are simply not my department. I totally love a downtrending day, but I simply can't trade a day that keeps going up, because the way that market goes up (the kind that you know will never really reverse at the end of the day) is entirely different from the way it goes down. 

In any case, I'm always interested only in the first and last leg of a move whether it's an up day or a down day. I am totally aware that it sounds stupid, since we know for a fact (a fact according to EW practioners that is) that wave 3 is never the shortest wave. So my choosing to avoid a wave 3 effectively puts me in a situation where I'm always trading the shorter/shortest legs, which I'm totally fine with. As far as I'm concerned, the best trades are the ones that I am most familiar with. I am simply much better at feeling the start and exhaustion of a trend, and am hopeless at trading a pullback. 

So that takes care of trending days. My personal favorite is a day that U-turns at least 3 times . I love broadening channels, simply because the move up to the ceiling or base is just not as backbreaking as that of a breakout trade that covers similar mileage,  AND I don't have to refer to days, weeks , MONTHS before to gauge a realistic target. When it comes to profit taking, I look at the session I choose to trade, and the time of the session that I can trade, and set my targets accordingly - the factors that I take into consideration are mainly volatility (varies across all 3 sessions) and chart patterns (also explains the reason why I like late day trades - patterns take time to complete). 

And that is everything that I want to say about why I frequently leave too much on the table. I don't know why I am explaining. It's HIGHLY likely that I'm starting to feel A LITTLE irritated by CONVENTIONAL WISDOM. If I've never complained about not having taken at least one-eighth of what market offered, then no one should feel sorry for me. And if I like to trade just one contract regardless of my account size, that's also entirely my business. I am learning to trade well, and I can't possibly do that with size right at the onset. And not forgetting of course, that starting with 1 contract allows me to average down to the point that I bust my account.

NOW, I am happy.

Today's trade and this week's PnL:
Hourly - Click to Enlarge
5min - Click to Enlarge


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7 comments:

Soullfire said...

I'm willing to bet that these "backseat traders" critiquing your methods aren't as consistent as you are in churning out profits day after day- your trade log speaks for itself.=)

With a trade size of just 1 contract, you're doing the correct thing, IMO. You have to take your initial target price rather than wait to see if the move extends. As we all know, the market can reverse in a heartbeat and waiting can mean the difference between profit and loss. The alternative is to set a stop and risk the market backtracking just enough to trigger it and take your profit right along with it. Of course I learned these things the hard way. =)

Jules said...

:-) Soulfire..
Yes, the objective is to take consistent profits. I am not the kind that can take losses for 5 days while waiting for that home-run...I was just reading a review of this book where the author talks about how winning rate is not the key to being profitable. I closed the link immediately. I know traders who have very few to no losing days, and they are profitable...But of course everyone's entitled to his or her own opinion - so if I don't like what's being said, I simply stop listening/reading. :-)

Lord Tedders said...

Jules,

Conventional wisdom would hold that since 95% of all traders lose money in the long run, then the best way to trade is to do what 95% of traders won't.

Also you can make a lot of money trading 1 crude contract. This week you made $2k on 1 contract. Holy crap. Even with a $30k account that is like 6% a week. Look out Paul T. Jones.

LT

P.S. I am still waiting to trade about 50% as well as you. Maybe by the time I'm 60. Haters gotta hate.

DT233 said...

YOU'RE A MACHINE!!!

Jules said...

:-) LT. I started the journey with an open mind - I respected others' opinions about what trading is about, although I didn't always agree or find them relevant to me.

I did not and still will not openly criticize trading methods that don't make sense to me, so I kinda expect the general trading population - particularly the gurus - to not sneer at traders who trade differently from them. I used to be very affected but now I am just mildly annoyed and feel for people who are just starting out who might be talked out of an approach that is right for them by gurus who think they know better.

Which is why I love Michael Woo, and Long and Wrong, and Solfest, and Lonely,and Sandy. Rather than imposing, they make readers think for themselves, and about what works for them, and they are wickedly funny in the way they go about doing it. Trader-X is another trader that embraces diversity and encourages others to develop their own trading method and system, and I have a lot of respect for him.

Jules said...

DT :-)
I wish I were :-) It has been my dream for years now. Day and night I try to brainwash myself to be EMOTIONLESS. LOL.

ZuAiMoNk said...

I really like your approach towards trading. Will be a follower of your blog. As student, I really find it difficult to balance both trading and school.