Mickey's Journal

[kiravon]

Trade 7

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[kiravon]

Summary Box is liable to changes as I focus more
on the data that actually matters

For example, I only really look at Majors, EG, EJ, GJ and Dax
although I don't ever seem to trade CHF so I might axe that.
Generally I don't really make any distinction between them
as so far they are all equally tradeable to me.

I have heard many times of the need to really get to know
individual instruments and their individual quirks and
nuances. That is all largely wasted on me except the three
main JPs maybe tend to trend longer and more reliably
on the HTFs but I wouldn't say that's exactly carved in stone

I have already dropped the Pips column. Actually although
my light bulb moment regarding pips versus profit must
have seemed remarkably naive it is amazing how often
systems, mentors, and traders' success is judged on
monthly pips. That is so ambiguous. 400 pips a month
is considered quite good, but what is good? in what
context? Trading M1 I would say it sounds very good
but trading Dailies far less so.

but ever since I started trading I have only ever thought
in terms of pips gained or loss so I really need to change
my entire paradigm regarding profit loss.

In actual fact you don't need to know $ amounts or pips
made or loss, the focus is how many pips made or loss
in proportion to the number of pips allotted to initial SL

so however many pips I lose in a trade doesn't matter as it
will never be more than -1% and it will often be less as I
move SL during course of the trade. but the % gain will
always simply be the ratio of pips gained over initial pips
risked as that was what determined the lot size.

My abbreviations are standard S1, S2 self evident, F = Fruit,
AA = Adams Apple, MIB and PIB same as Grant. DB are
Divergent Bars exactly as described in the original ebook.
and RAO= retracement of AO after first peak.

I am mainly looking for S1s, MIBs and PIBs, and DBs and
although I am not looking for S2s I will record S2 where
a break of AIMS is confluent with another set up. This happens
quite a lot and to my mind just underscores the relevance
of the AIMS levels.

Even as I write I have decided to further colour code the
columns according to importance. Every column must
be important or it needn't be there.

What is the most important column?

It isn't % gained or lossed as that is simply a reflection
of what I am doing right or wrong.

It is DS in relation to RR. In other words discipline in all areas
is critically important but for me at this point the most
important column is the RR but only insofar as it has been
very well reasoned, which is where discipline comes in.

a RR of 1:20 every time would be ideal but what really is the
likelihood of the price reaching such a distance without
reversing at some point and stopping me out?

What I am noticing now is a tendency to quickly check
for prior support/resistance levels and then place a PO

Then when I'm actually in the trade I notice a prior S/R level
that I had missed! I've done this a few times now. This
is all part of discipline.

Can price not sail right past prior S/R level? Of course but
they must be viewed at best as serious obstacles and statistically
price is far less likely to reverse when it has a relatively clear run

[kiravon]

I am monitoring my last trade for the week, I bought
TP right down to upper AIMS as I noted prior resistance.
TP is very close to being hit now.

but price might break through AIMS (S2) so will I miss out?
well so often that happens before price reverses leaving just
a wick above AIMS level.

but if it closes clearly above AIMS then reverses down to retest
that AIMS level and then turns back up again in the direction
of the original trade it is a case of resistance now becoming
support and I can re enter when price breaks the peak before
the re test, providing there is space to the next resistance
level. SL would be under the retest of AIMS and should
offer a very attractive RR. Any such trade I will designate
RT = Retest

As we can see, a nice little win but the original 1:3 ended up 1:1
but now with a possibility of re entering after a re test. but it
will need to be a very compelling re test

NOT a revenge trade for the 1:3 I missed out on!

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[kiravon]

Sickeningly, a burst of momentum took price up another
+45 pips to exactly TZ2 where my original 1:3 TP was!

There is a possibility of a Fruit here, otherwise
I will wait for possible retest

Now Price shot up +86 pips! Looking at M5 I should have been able
to read the charts better! Dax had been flatlining a longtime!
This should have been expected. In retrospect it was a very
predictable S1.

This would normally have been my favoured trade! trailing
M5 on momentum

I was too hung up on prior S/R. You can't disregard them
but the danger is in developing this inflexible one track mind

I should always trade momentum!

I should always be aware of prior support and resistance levels

While I've been crying in my beer we have a DB formed and
more possible upside

and now a retracement of AO after first peak (RAO)

[kiravon]

Feeling pretty demoralized at the snakes and ladder nature
of my recent results until I just realized these seven trades
have only been taken since 20th! 3.1% in three days
I believe on average = 20% per month!

and I absolutely know I can do better than this

[kiravon]

We didn't get the retest, didn't get a Fruit.

Hopefully now a bounce off Green on M5

PO hit and in profit with RR 1:7 at TZ1,
I would set a more 'realistic' level but
only resistance is the TZ1 level

it may do a few frightening things before then
like cross back over Green etc but experience
has taught me the most profitable thing I can do is
set TP as realistically as possible and leave the house,

( actually I can't mobile trade because I won't
install any trading apps - I need a full size screen to trade,
when I think of how much I get wrong on my PC its frightening
to think what I might do with a tablet in a noisy Mall somewhere! )

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[kiravon]

The TP at TZ1 was hit yielding a nice 1:7 RR
a nice way to kick off the weekend

Dax does seem to be a tad bullish today.
so possibility of more but I will be watching
Stops like a hawk!
Trade 8

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[kiravon]

Have re entered following another DB set up.

TP set at TZ1 again at 125 pips with SL under DB just 25 pips.

but what does Mark Douglas say about euphoria?

I just won a 1:7, now fully expecting to win a 1:5!

I looked again at charts and there is in fact prior resistance
on Daily at just a little under TZ1 so I reduced TP
to 105 giving a 1:4 RR

Just by law of averages alone I must expect some rent
at some point. So a -1% rent will be reasonable, but there
was no reason to superstitiously avoid this 1:4 trade

The chances of hitting TP are actually quite good and
out of ten identical trades if I won only three times
I make 12% - 7% rents = +5% which basically sums
up the whole trading process quite nicely.

btw of the -7% rents I should be moving the SL
as trade progresses meaning that -7% could be
considerably less

In the meantime Trade 9 still Dax doesn't appear
eager to reverse although it must run out of steam eventually.
Its retraced to 38.2% fib twice now, is that a Gartley
pattern? In any event it's not over yet

If I win this trade and make 14% last three days I think I will
have some euphoria problem, and I will probably
need the weekend to regain some equallibrium.

Hmm, euphoria

price is edging up gingerly and a new AIMS is formed

I almost never win add ons

I have added on PO just 0.5% risk for the very first time!

Well if I was using GKFX I would be, unfortunately my IC
Markets broker won't allow less than 1.0 lot size but I will treat
the result based on a 0.5% risk as it's a demo account only
so all SL risk and TP rewards are all only in relation to each other
for demonstration purposes so whether it's 10.0 lot or 0.001 lot on a
micro account isn't important to me at this point, as long as
I know how I would be getting on in a real account.

In other words if SL is 30 pips and calculated to be a 0.5% risk
and TP is 78 pips,- if I win I have added 1.3% to my account

For the first time trading is really reminding me of the old horse
racing days. My systems were usually odds on, just a little under
1:1 but they did win most of the time, about 75% - 80%

but the thought of winning 1:4 or 1:7! I would never have a chance!
as I simply wouldn't have the information that would indicate they
were likely to win! of course a tiny minority of pro gamblers can do this
but they are steeled for very long losing runs which I really wouldn't
enjoy anyway.

I was just stopped out for BE and my add on for 0.5% risk wasn't triggered.

The price seems to have gone into a range last 22 bars, no real confidence
to know what it might do next and 2.30 GMT on a Friday probably not the best
time to be sticking my neck out

10.1% in three days pro rata 72.7% pm! it would be nice!

Trade 9

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[kiravon]

Inflexibility!

This is something interesting from John Seebreeze

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It was something I was experiencing earlier

Expecting another 80 pip spurt but got 22 candles
that just simply weren't going anywhere.

As has been adroitly said, there needs to be structure
and movement and the brighter ones among us such
as John possibly don't have to wait 22 candles before
arriving at that conclusion!

There are two things I do reasonably well, trail momentum
candles on M5 TF and also set TP at fairly realistic levels.
but a word I used earlier is a theme I wanted to return to

Flexibility - or more precisely Inflexibility

Today my hard wired inflexibility became glaringly obvious
despite some good profits banked.

I missed 85 pips of momentum bars because I had decided
prior resistance would not permit any further price movement.
at which point the market printed a series of momentum bars in
front of my eyes but I just couldn't adjust quickly enough
to profit from it.

One Turtle observation was that entrepreneurs made the
best traders. interesting! Isn't the very meaning of entrepreneur
someone who can readily exploit an opportunity?

In other words I could see there was momentum but couldn't
change my mind about the prior resistance level.

In retrospect it was a classic S1! Dax had been flatlining
for a long time. broke out of AIMS and just kept going up.
It was the time to be trailing bars not dictating to the
market what it could or couldn't do based on my cursory
analysis!

Being in the NOW, in the moment, not shackled by past
decisions that had been proven to be mistaken.

I can see my mistake clearly but I need to be able to
think on my feet and be my own rapid response team.

On the M5 charts you must sometimes respond within
seconds, its not something you can 'sleep on' and think
over the next day! - particularly in a very fast moving
market!

but if pondering and deliberation is our thing we may need
to stick to the higher TFs.

Its nearly all about the skill of reading the charts, reading
the pulse of the market, and often that may mean reading
the speed or momentum of the market

Conversely, I did eventually take the hint and geared myself up
for some more momentum.

22 horizontal bars later I was still all dressed up with nowhere to go

not accepting the party was over long since

at least I had the sense to move Stop to break even
which at least saved me -1% rent.

But the speed thing reminded me a bit of romantic interest, sometimes
you need to take things slowly, and make calm and very well thought
out decisions on where the relationship is likely to be going, and
what should be the best thing to do when that level of commitment is
reached.

but there can be times when such a ponderous approach would prevent a
potential relationship from even getting started

I was in an 80s disco with a mate once and he rather hesitatingly
was creeping around this girl trying to muster up courage to
ask her for a dance.

She declined but interestingly she did give us both a masterclass on
how to ask a girl for a dance. It was quite a revelation! The
essence of it was speed and confidence and absolutely no
hesitation whatsoever!

Hence the old adage ' He who hesitates is lost'

I got it wrong both ways today, firstly standing aside while
everyone else was filling their boots with a brilliant momentum
trade ( like my hapless friend in the disco )

then, when I was finally all geared up for speed there was just
no wind in the sails, just a 22 bar consolidation and no action.
I'd missed the opportunity.

The ability to be flexible, and quickly and effortlessly adapt to a new
situation appropriately is encompassed in what has been referred to
as 'unconscious competence'

I am not there yet. I am certainly very conscious of when I am
trading competently and that is only one level below but I still
get flustered on occasion. Stuck, not knowing what to do
when things take an unexpected turn. Should I take decisive action
or should I keep my powder dry?

or as the old hymn put it, ' When to do and when forbear'

Simultaneously to the above I made another two mistakes,
or rather I made the same mistake twice. I set a TP with
a very nice RR maybe about 1:4.

Then after PO was triggered I noted some prior resistance
that I had somehow missed. So on both occasions I bought the TP
right down to the nearby prior resistance and won both trades.

But, incredulously had I just left the 'risky' original 1:4 TPs they
would both have been hit! and I might have made about 16% rather
than 10%!

If I was going to introduce a new cardinal rule it might be to set such
TPs and then run out of the house immediately and don't come
back until end of trading

I may indeed just need to get out of my own way

and significantly, for all the sound arguments for monitoring,
trailing etc, etc

Statistically the traders that 'set and forget' actually tend to do better

I begin to see why

but for anyone who is actually still reading this diatribe my advice is

you really need to get out more

[kiravon]

Double Position size without too much risk?

Extensive reading over the weekend and some new ideas I want to implement

I think I might need the flexibility of opening two 0.5% positions even though
I hate anything that might seem to be more complicated, but it makes more sense,
some of my trades really do run on but I don't want to be setting 1:7 TPs everytime
as I know that is not realistic.

Another thought that occurred to me is if like Grant and others you are able to bring
your Stop to BE much of the time, and indeed reduce your Stop appropriately
whenever you can, this should present an opportunity for profit with no additional
risk

PROVIDING that the ratio of BE's and final Stops is clearly established

If you are seeking the security of trading 1% risk only, what that means is that
worst case scenario is that you lose your entire initial risk = 1%

but of course that limits your profit to RR/1%

I better explain that

I will exaggerate to try to make the point - Supposing you only win 30%
of the time but because of shrewd management you are able to reduce
the initial 1% risk Stop up to BE 70% of the time on the trades that didn't win

As far as position sizing is concerned would it not be madness to risk a mere 1%
per trade? as you actually never really lose you just win or break even.

In such a situation you could place an initial Stop with a risk of 10% and probably
double your account every week

Of course that is not the real world but some are experiencing 50% of losers where
Stop was moved to BE so whereas there was risk they typically reduce that risk
to nothing

So lets say your maximum risk is 1% which equates to $10

and your average RR is 1:2 which would mean your average win
is $20

It would obviously be nice to win $40 instead without adding to the risk
by actually doubling your postion size

Technically you can't do that because it is possible to have ten trades
and each lose in the first minute as price spikes and Stops you out at
the full 2%

So 2% would double your profits but also double the risk

Technically yes, that is correct

But if your track record is such that only 30% of trades lose and 30% BE
and 40% win what might be the possibilities? at just 1:2 say over 100 trades

Well there is bad news of course - you lose twice as much on all your losers
ie 30 x 2% = -60%

and the good news obviously is that you win twice as much on all your 1:2 winners
ie 40 x 4% = 160%

and the 20% of BE's you win or lose nothing

which leaves 100% profit over 100 trades an average of +1% on every trade taken
which is how it should pan out if you regularly are able to reduce SL to BE and
are confident you will continue to do so.

If you continue to risk the standard 1% in the identical scenario ie
100 trades RR 1:2 then 30 trades will lose 30% of your account
BE's lose nothing and 40 winners at 1:2 make 80% giving a net
profit of 50%

So profits are doubled whereas the risk is not

What is the risk? well at 2% risk if you get 50 consecutive losers before BE's
were placed yes you will blow your account

Ordinarily at 1% risk if you get 100 consecutive losers before BE's were placed
you will blow your account

In either case if you get 40% winners and 60% losers you will get
A) +20%
B) +40%

BUT if your 60% losers are often actually reduced SL's, often to BE then it becomes-

A) 50%
B) 100%

So my thinking is simply that if a trader is routinely moving Stop to BE his losers
will be drastically reduced, and if his losers are really as low as around 30%
then he can safely increase his position size

But you would need a very reliable track record, so this is something for
the future for me.

Meantime I am short on M5 EU PIB this morning with an extremely hopeful 1:15 RR
. PO triggered and reversed for -1%

Trade 10

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PO placed now on the H1 which is an S1 H4 confluent with RAO PIB and RR 1:4

Trade 11

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I accidentally Stopped myself out at -34 pips which is about -0.7% of account

But back to M5 H1 still Short on this Fruit

I'm not much good at angulation so I took Bill William's advice and simply tried
comparing the Blue with Price, but I'm also not very good at Price angle so
I'm using 5SMA as a guide. I find this much easier, whether it will help
profits I've no idea but we should go with what we're comfortable with.

Trade 12

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-1% rent
Trade 13
Another Fruit

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-1% rent again, that's 3.7% down today

In my Trading Plan I will stop trading at three consecutive losers
except where the total loss is under 3% in which case a fourth trade
is permitted as today. So normally I wouldn't want to lose more than 3.5%
in any given day

but to use this as an example of the Double Position size plan -

If my losing trades resulted in 50% of them only incurring BE
then today's result would still be four losing trades but instead of
-3.7% it would not be double the loss ie - 7.4% but rather only
-4% whereas the potential for profit would be double.