R-1.0: some Guide issues to address

UPDATE: Sam Seiden just published this article which is quite appropriate to this post, 

http://lessons.tradingacademy.com/article/candles-or-white-space-where-is-your-focus/?elq=0b658b8a3dce444e85c189409588f25c&elqCampaignId=1848

........

Issues

1. Fault not being aware of new trend / highs and lows x 3
2. Fault not being aware of PA (SS, Y Hi test) x 2
3. fault not trading off S/R

Fixes...

1. Start labelling Highs and Lows (HH/LH and LL/HL)
2. Start labelling potentially stectchy PA (SS/HM/Hi Waves/ Tests)
3. Only take trades off S/R!

EJ Obs: was right to initially look for Range trades, despite the trend being up with so much R "A" would have made a good short.  However when price made a LL-LH,  should have been waiting for a RL to get short (B). Fault not being aware of highs and lows.

EU Obs: initially planning to trade range was correct as there was no trend. However trade "A" was not going to be great as it was straight into a SS tail. However when Price made a LL-LH I should have been looking to short on a RL "B". Fault not being aware of SS or Highs and Lows.

GU Trade: Trend was clearly up so looking to get long was the right idea. However buying before price reached S and just after a test of Yesterday's High "1" was not a well planned trade. Taking trade "A" a few bars later long into Y Hi was had a much better chance. Fault Price not at S and having just tested Y Hi meant I was buying with weak hands: a bull trap.

UJ Obs: Trend was initially hard to identify flirting with shorting "A" was not a bad idea as it was at Y Mp and arguably some usable R. However once price made a HH-HL I should have been looking to get long on a PB "B". Fault not aware of Highs and Lows.

R+0.05: The Sweet Spot, When Bulls and Bears Are Doing The Same Thing

Today was great fun. I practised, I learnt and made a minuscule success.

The chart that really taught me the most or perhaps magnified what I am actually trying to do with my trading was the UJ. These lessons and observations were then mirrored and repeated throughout the session in the other pairs. The GU trade I took was slightly unlucky as every other trade I saw worked out, however I got out when it was getting choppy for a small profit.

Here are the major things from this session

1. I want to get Long when Bulls are buying at the same time as Bears are covering ...
2. I want to get Short when Bears are selling at the same time as Bulls are taking profit.
3. But you should only buy a lo (sell hi) if it is far enough away from the last hi (lo) to be profitable. Unless in a clear strong trend "start looking for price reversal setups back into the strong trend. When in a strong trend you do not need to wait for price to touch the BB(or S/R)"(thanks for this James)
4. More importantly than marking all S&R, is to mark the S&R where Bulls and Bears are both going to be doing the same (see UJ Chart correct and incorrect S&R example)
5. Doing the above is fun. I don't care what anyone says about trading. If you don't like doing something in any walk of life (ie following a system) you're unlikely to make it profitable! For the first time in a very long time (perhaps years) I found the work process engaging, entertaining and enjoyable.

UJ Obs: S/R level "Y" was not worth labelling because it was not worth trading. Any trade initiaed off it were only going to screwed by S level "X" and R level "Z".

EU Obs:

EJ Obs:

GU Trade:

22nd-26th Sep 14: R+0 Miriad of Issues

Monday: Physiological issues. Head Sludge... really struggled to concentrate, missed 2 easy plays. Introduced warm up for body and mind.  Body = Callisthenics, Mind = hard sum before starting day, certainly helped rest of week.

Tuesday: Plan issues. Actually failure to plan. During my session I realised that I don't actually know what I'm doing! My guide had taken me all the way up to prepping charts but no further. I have now added planning trades off the levels and am writing them( the plans) on the charts. Which means I am not constantly flicking through the charts and exhausted when a trade finally appears.

Wednesday: Trigger Issue: I have only been trading off inside bars for about 6 months which is not an excuse for missing a trade , it is a lesson and have added to the plan/guide to visibly mark IB triggers on my chart so I don't miss them!

Thursday: Session Issue. missed 2 really easy trades because they occurred 15 minutes before my session starts. I have got more lax of late and need to start by 0800 rather than 0830 like recently.

Friday: No Setups off 20EMA. PA was just stuck in ranges and BW all session.

20EMA Thoughts: As for the 20EMA I am just going to let the removal happen naturally, like I did with  the 8SMA. At the mo it is more of a hindrance not having the 20EMA so that is a clear sign that for the time being it needs to stay and as there are clearly trades to be had I shouldn't sweat it. This is not to say that I am not striving to get my charts naked long-term but the more pressing issue is to get some trades going and see if I can with the above changes start to get in the black.

Summary: It's been an enormous week really. I have gone from thinking most of my problems have been psychological (which in part they were), to realising they can't be entirely if I am getting up and doing the work! So thinking they were then physiological (which in part they were) to finally seeing that there was also plan failure in terms of it not guiding me throughout my session. Ultimately in all three there were issues, these 3 things I am going to call the "3P's" (Psychology, Physiology,Plan Failure) as identifying each of them as potential areas problems can begin this week has been most useful.

1. Get up work and warm up Mind and Body
2. Prep charts and write trade plan for each pair on charts
3. Start watching by 0800GMT
4. Chillout until one the plans begins to setup
5. Mark potential triggers on charts particularly IB's
6. Take all setups they are high prob!
7. Should they fail SAR as this is high prob!
8. Issues? check the 3 P's (Psyc, Phys, Plan)

Thoughts on Replacing 20EMA

Couple of things...

Thinking on the 20EMA and how I use it, I really think of it as a guide to ensure that PB/RL is deep enough, my reason being to avoid buying too close to a top or selling too close to a bottom. Not saying I can't get rid of it, just that maybe if I understand/define why I like it so much I will be able to replace it easier...

Read this old article by Sam Seiden. He's talking about supply and demand, ensuring you're buying low and selling high by marking out prior S&R before your session starts. Then planning a trade around these levels and using OCO orders to "set and forget" to ensure he doesn't mess with it when the anxiety creeps in. I actually don't think I'm that far off this. I basically do all of that except the orders. Maybe doing a few set and forgets will help me trust my analysis, when I see it work? 

John put me on to Sam Seiden a while back with one his PDFs i think on ForexFactory...

here's some other stuff I want to read on tradingacademy.com...

https://www.tradingacademy.com/about-us/news/sam_seiden_back_to_the_laws_of_supply_and_demand.pdf

http://lessons.tradingacademy.com/article/trading-with-the-trend-4/

Here's today's EU chart and an update...

R+0: Failing to Plan

It's all very well saying you're going to remove the 20EMA, but if it's the basis of all you setups (like it is mine) you're kind of fucked if you haven't prepared some new ones. ;-)

Now this might come across quite serious but while writing this I am actually quite amused and grateful that I spotted this pretty much immediately.

Q. how much probability do I need to enter long or short? In my 20ema setups I was getting price to touch a S/R area + the 20EMA (in my eyes 2 bits of evidence) for a valid setup. If I remove the 20EMA what am I going to use instead to strengthen the trade (or maybe more importantly) my resolve?

None of my 20ema setups occurred in this session SO I'm not giving myself too hard a time. I did spot some other trades BUT these (at least in my head) required the 240EMA/H1 20EMA and surely in essence this is the same a trading with the 20EMA as it's just another EMA. 

Part of me is thinking: 1. trade off 20EMA+S&R in trend. 2. Trade 240EMA+S&R in sludge (like today).

EJ Obs:

EU Obs

GU Obs

UJ Obs

R+0: Again No Setups

As I mentioned yesterday I'm starting to seriously consider removing the 20EMA from my chart (thanks for the comment John). My anxiety is that this is in a way where my melt down started last time. But I've got to remember I am a very different trader now and over the last nine months my understanding of trading levels has greatly increased. 

So as an intermediary step I am going to keep the 20EMA but reduce it's tone down to practically the same colour as my background (see below)... 

Note to self probably need to start earlier, been going for 0830GMT, think 0800 might be better.

EU Obs: Missed trade as before my session started, but trade just as trade-able without the 20EMA!

EJ Obs: Missed trade as before my session started, but again trade just as trade-able without the 20EMA!

GU Obs: Not favouring the 20EMA would have made this easy to trade!

R+0: Great Routine, No Setups

Bingo! Much better day, Got up did some callisthenics,  a little math to wakeup the head,  worked the LOA, did prep and then wrote game plan for each pair on chart (and by chance C had all the windows open in the flat so lots of fresh air). Worked a treat.

Screen looked like this...

EU Obs: Mark and Update trigger line to avoid missing the eventual setup. Add to guide!

BUT was this even easier to trade with no 20EMA?!

GU Obs: Got a little confused and was still looking to short rather than the SAR...

 BUT would this have been easier to see had I not had the 20EMA on the chart?!

R+0: Still Missing Plays (Lack of Order)

As opposed to yesterday I felt good this morning (no fuzzy head) despite having a heavy night. Again got up on time and did prep so I clearly wanted to trade, but again I missed setups. 

I'm starting to think that I'm actually lacking direction/clarity during the session. After I've done my prep there's honestly not much order in my trading day. I keep my "game plan" for each pair in my head, but as I'm looking at 4 pairs this can get confusing and I probably end up skipping through the pairs, analysing PA for trades far more than is needed(ie when PA is in a range!). I often feel by the time a setup occurs my eyes and objectivity are exhausted and end up passing on/missing the setup. 

So it seems clear and completely obvious that I need to add to my prep a short written game plan (on chart or blog) for each pair. This way I will be able to spend less time analysing the charts and more time glancing at them, so that when PA meets my setup criteria I will be fresh and able to exploit my edge.

Technical NB: Noticed that inside bars create nice S&R!

EU Obs: Hi wave triggers can be traded! AND Inside bars make S/R levels

EJ Obs:

R+0: Missed 2 Plays, Physiological Effect.

TBH head sludge hit from the outset, I wasn't really entirely with it and wasn't really ready to trade when I started. I'm not saying I didn't want to trade, I got up and did the prep, so clearly had the impetus. I just wasn't ready by which I mean I wasn't completely awake, patient, calm and concentrated.

This seems to be one of the cruelty's of trading that: if you aren't on the ball you don't just have a less productive day (like most people/jobs) you lose money and/or the opportunity to make money!

The last couple of weeks I've been getting up and starting at a very specific time like I've done for practically the whole of my trading "career".  But I noticed those 2 weeks of joyful trading (some weeks ago) occurred when I started trading when I felt ready to trade (completely awake, concentrated and relaxed) rather than when I felt like I should trade.

The interesting thing is that what I'm describing is physiological not psychological. I'm not having negative thoughts I just found it hard to concentrate on all things (emails and reading included). But my initial thoughts are that its psychological because the physiological symptoms are in my head.

Classic case of over-thinking rather than looking to the most obvious reason first? Probably!

Anyway what are the fixes? Not sure, going to try the following...

1. Work mindset:  Doing this LOA stuff first thing, to think positive. (happy mind)
2. Do a little physical exercise, yeah I've let this slip recently! (warmed up body)
3. Do a little mental exercise,  never done this but stands to reason to warm head before expecting it to work. I'm thinking maybe a long multiplication/division sum. (warmed up mind)
4. Healthy breakfast and hydrated (happy body)
5. failing that Coffee!!

Feel there's something I want to say about taking part and winning. It's true that I should be trading/playing to win but if I can't/dont take part in the correct manner I'm never going to be able to achieve this!

NB: also took off the 8 SMA today and changed the 20EMA so its a little more subtle, find PA stands out better.

EU obs:

UJ Obs:

15th-19th Sep: R+0.5

Monday: Feeling a little low due to not sticking to routine.

Tuesday: Tentative (not enjoying myself)

Wednesday: Out

Thursday: Missed a trade by minutes, but having more fun.

Friday: Obvious trade occurred early.

SUMMARY: Mindset was the issue this week, simply not enjoying my time in front of the charts as much as I could. Started to get over it on Thursday mainly because I tried to mirror what I like about my coaching/training in my trading day more on that here...

R+0.5: Setup Occurred Early

Didn't really have to work on my mindset throughout session as Setup occurred first thing so kind of knew another trade would be unlikely in 90 mins (on the M5 chart) kept an eye on things and as you can see the next possible play only just setting up 2 hours later on the right of the chart.

EU trade: Shorted Rally to PC+00 placed stop at highest blue box (prior hi/top)

R+0: No plays, "WV" thought

Okay missed a EU trade by minutes...

Was watching EJ put in some bottoms and was thinking about how in the past I have tried to short/pick) the second Top of a potential "M" or buy/pick the the second low of a potential "W" only to get whipsawed. Today the EJ put in 2 equal lows (W) and I felt that should it reverse at that level again I'd buy/pick the triple bottom as a higher prob play. NB sometimes its easy to lose sight of that a trend-line/horizontal-line can only be drawn from 2 points so buying or selling off these is always going to be a minimum of a triple top or bottom.

EJ Obs: Picking/playing Triple tops or bottoms are higher prob play than potential W/M play.

EU Obs:

Thoughts of Removing 8SMA

So I have been using the 8SMA with the 20EMA inorder to get my trend direction.

• Up =  8SMA crosses up and over 20EMA
• Down = 8SMA crosses down and under 20EMA
• The issue occurs after a solid trend consolidates in a rectangle and the MA's lose there predictive powers and start to chop a little, when this happens my signals don't keep me with prevailing trend.

The 8/20 has been very helpful in the past as it seems to only slightly lag behind the trend while not being too sensitive to give constant trend change signals. However in the past few months my understanding of S&R levels has dramatically improved and there have been more than a few occasions where I have wanted to stay with the prevailing trend but have obeyed my rules to stay with trend and listened to my indicator (8/20) to only be shut out of a nice move... This most often occurs after a solid trend consolidates in a rectangle and the MA's lose there predictive powers.

I am starting to consider now removing the 8SMA and truly trading/playing in an Al Brooks template. But this is something I'm going to have to think about.

R+0: Missed a Play, a Little Tentative

Honestly I don't think the PA on any pair was that nice this AM however this happens and does not invalidate a setup that meets its criteria.

Truth is I didn't really want to play today and lo and behold I ended up missing a setup and not playing (I got exactly what I wanted).  This is of interest as I clearly wasn't thinking of trading in a fun way, otherwise I would have wanted to participate.

If I'm honest I was thinking about "how not to lose money", which is innately stressful, rather than "how to make this moment/session profitable",  which at its heart is an entertaining and fun challenge. I guess ultimately today I failed before I started because my mindset was one of preservation instead of Playing to Win.

EU Obs:

No Plays in my Session

NB: Felt weird all day, low you could say.  I got up and did my work this AM but nothing setup so didn't bother writing a journal as I had nothing of "note" to say. Mentioned this feeling to the GF and got talking about how much of my work can be unquantifiable (ie if I haven't had a trade or made any observations of note) and thus at the end of day's/session's like these I can end up feeling a little "blah".

And I think the act of not even writing up a post actually compiles this feeling and so here I am at the end of the day writing a post to attempt to negate this feeling and as a record that I did try. This ironically is of course of note as it a is a telling insight into my psychology.

Trend Reversals

Just a note for my records... My last post was about trading trend corrections this is really just to clarify in my own mind what an actual reversal is.
In an uptrend even a LH shouldn't change your outlook, all that matters are the lows! If price reverses at the prior low the uptrend remains valid however the long play that this sets up may not be... Depending on how close the LH is to the trigger it might not be worth playing.

No Plays, Quite a Few Corrections though

Okay was waiting on a GU trend trade which I had to give up on when PA O/C ag the 20EMA. However I was watching the EU chop about on clear S&R levels which looked quite appealing.

Currently IMHO the best reversal (by which i mean trend correction)plays are...
1.OE from their prior low or high, so PA has to go a long way before it will find a hold.
2. Is at an S/R level.
3. Has some kind of candle reversal (HM/SS/EP)

GU Obs:invalid LSH as o/c age 20ema.

EU Obs: Quite appealing looking reversal/correction plays. for 3 reasons.
1. No real trend.
2. OE moves, by which I mean miles away from it's last Hi/Lo so it has a long way to reverse before it meets anything that might stop it.
3. Reversal Bars as triggers.

EJ Obs: One good Reversal/correction play.

Psychology of "Trading to Win"

I think I might finally understand "Trading to Win". Tbh to me it sounds better as "playing to win" because win implies a competition and I find it far easier to think of that as a game rather than a war (This is probably because I'm not a huge fan of confrontation).

Anyway I have been getting up for years wanting to trade and that is exactly what I've gotten. I've bought and sold money, the net result has been a loss but I got exactly what I set out each day to do. In recent weeks I've been playing to win which has meant using a little more insight. Not in terms of avoiding trades, these are almost always valid however my management of each will change, widening ISLs to the next tipping point (placing then were they need to be rather than where I want them to be or look best) also my willingness to SAR should a good trade go against me. These actions are ones that are trying to keep me in potentially profitable moves or immediately trying getting back to BE should one go against me (not in a revengeful way, simply in terms of probabilities, if a high prob play fails then something is clearly up and taking the other direction in all this weakness is probably the best idea IMHO).

Some Realtime Practice

First day back where I've felt normal/well and haven't had guests sleeping where I work... No trades just a real time practice.  Some rust, some nice observations.
1. Shorting into a HL (Buying into a LH) is going to be weaker play than selling into a LL (buying into a HH). As the HL was a test of the trend low and so price can now more easily reverse. Where was a LL is the trend low and still needs to be tested.
2. When a with trend trade shows weakness (ie O/C ag 20) this strengthens the potential SAR of it.

GU Obs: Simple trend trade, entering at 20+S

UJ OBs: another simple with trend trade, the 2nd was less likely to work as the prior low failed to close below the previous one.

EU Obs: Another case of how shorting into a HL is not always the best idea. Also sticking with the basic strategy is far less confusing.

EJ Obs: Chart shows that if the w trend trade shows weakness (in this case O/C ag 20) it stregnthens the SAR of it.

August 2014 Summary

A Issues:
1. Good trade off R failed but failed to SAR to get back to BE. (Not having much fun and feeling stiff)
2. Good  trade off R failed but failed to SAR to get back to BE. (Not having much fun and feeling stiff)

B Positives:
1. Simple PC+ .00 trade and Having Fun.  meant I was relaxed and happy to adapt to PA.
2. Simple PC+240 trade and Having Fun.  meant I was relaxed and happy to adapt to PA.

C: Issues:
1. Good Trade off R but "Adapted" / exited early. fear.
2. Good trade off multiple R failed but failed to SAR to get back to BE.
3. Good trade off multiple R failed but failed to SAR to get back to BE.

D Positives:
1. Simple trade off multiple R and Having Fun so happy to adapt to PA.
2. Simple trade off multiple R and Having Fun so happy to adapt to PA.
3. Simple trade off multiple R and Having Fun so happy to adapt to PA.

E Issues:
1. Too tight on ISL meant early stop. (Not having much fun and feeling stiff)

Summary: I don't think I'm taking bad trades, I just think I'm managing them poorly and this usually happens when I'm not having much fun because I am so to react to PA.
Failing to SAR when a trade fails and being too tight on a ISL were my causes of loss and happened when I wasn't having fun/ under the weather.
Having fun and reacting to / giving PA its required space were the times I made money. 

25-29th Aug 14 : R-1.4

Monday: On Holiday

Tuesday: Over tired from weekend away decide not to trade.

Wednesday: Short session as had to do maintenance at flat,  no setups

Thursday: Needed a slightly wider ISL. Range highs not prior high.

Friday: Some apprehension creeping in. remember the play not trade!

NB: Friday night - Saturday I had a full blown fever. Thought I wasn't feeling quite myself on Thursday but didn't have have any clear syptoms.

Summary: Listen to body, turns out you were run down.  Stretch your ISL to the best tipping point.  it may not be the prior high/low but a bit further. Remember to Play not Trade!