GBPAUD Short R-1 DHT

Before I start I just want to clarify DHT stands for "Dick Head Trade".  I'm sure you can now tell the direction in which this post is heading...

On doing my weekly prep I found GBPAUD to be in MOTR S (strong selling), experiencing a deep pullback to W1 supply and had printed a smallish pin (my least favourite) which I choose to sell,  all technically sound.

However I hadn't checked the data for the week and so ended up buying AUD about 2 hours before an RBA interest announcement,  hence "Dick Head".

P/L: R-1.0     Exe: 1     Per:1

Defining Failure

So my old foe trade avoidance reared his ugly head again, leaving me asking why.  I wanted to be more brutal in terms of honesty as some new and continuing issues are coming to light.

Well I hope it is...

issue 1: defining failure

I noticed I had defined success in my trading truths but hadn't defined failure. This was a major omission, here are my updated truths.

1. Trading is based on probabilities
2. Probabilities produce random results but over time, predictable patterns/KPIs
3. Your patterns/KPIs, be they good or bad, will always tell you how to improve
4. The only way to reveal your patterns/KPIs is to build your numbers up
5. Success: is simply winning more $$$ through your winning trade(s) than you lose through your losing trade(s). Failure: is simply not finding out what your patterns/KPIs are!

issue 2: procrastination

 I have written my SBP (Strategic Business Plan) and TTP (Tactical Trade Plan) but guess what? I haven't been looking at my TTP every morning or my SBP every month and I get up 15 mins late every morning?! What the hell am I doing?

Amazingly in everyday life, even my wife says, I am not a lazy person. I get up more or less on time, I do my prep, I exercise daily, I coach people (fitness), the house is tidy, my accounts are filed, my taxes are paid, my responsibilities are accounted for... So I think it's not unreasonable to assume what I thought was "inherent laziness" in my trading is procrastination / just another example of my FBT.

issue 3: self doubt

The fact is I am now not so worried about the outcome of each individual trade, which is definitely progress. However these worries have merely shifted to the completion of each of 30 trade sample size. I've completed my first sample, now I'm having internal conflict about starting the next.

What happens if it fails? I know the correct answer is "well I try again learning from what my KPIs suggest". But the answer that is always there, niggling at my subconscious is "it failed, it was my work so technically I failed, I've been doing this for ages, am I always going to fail? I have to date, it's possible I've wasted many years of my life pursuing something I might never be able to achieve, what kind of man/husband/son does that make me?"

All pretty depressing stuff. I suppose the good news is I do understand the process, the problem is I don't believe it. With any luck "defining failure" and "taking responsibility" will start to combat my self doubt. 

going forward

When I stand back and look at the big picture the horrible irony is; I'm failing because I'm scared of failing!

Now that I'm older, cynical and grumpier I find that there aren't sexy solutions to problems, they're all boring, mundane and (annoyingly) usually quite obvious. With that in mind...
1. I've update my trading truths with my definition of failure.
2. I've update my TTP with correct time get up.
3. I've set my morning alarm.
4. I've updated my TTP to look at it first thing.

Additionally...

5. I want to be honest about who I am, a FBT and am adding a further truth to my TTP: "I am a FBT: I must take responsibility of unwanted behaviour to take control my actions".
6. A slightly esoteric idea here, I'd like to focus on accepting my outcome bias instead of trying to kill it with execution bias. With failure now reclassified as "not finding out my KPIs" my hope is that my fear of failure will turn into a "productive worry", if that's possible?!

R +1.2: 1 Win, 1 Loss

EJ trade: Shorted at H4 Supply with trend...(R+1.7)

EU trade: Shorted at weak H4 Supply (many tests) R-0.5

intro: so these trades were from orders placed on Wednesday and Thursday, I'm only updating today as they were triggered last night so not much to say until now.

thoughts: The EU trade was a loss probably because I was shorting really at an area where there was lack of buying interest rather than true supply. The EJ trade however I believe was a better supply level for 3 reasons. Firstly price spent very little time there, secondly the strong and aggressive drop from it, both suggesting a supply/demand imbalance, thirdly this was clearly the first revisit.

summary: All in all happy with this weeks efforts, I have managed to learn some lessons (with some help, thank you John) and have a positive week in terms of P/L. Quite possibly the last week of the month for me as next week is "wedding week"!

lessons: 1. ask yourself if your level is truly supply/demand or just a pivot hi/lo. 2. hard drops/rallies from a level and price spending very little time at the level are positive factors.

prep from the week:

end of week summary:

R-2: Both Trades Stopped, Shorting at Bad Supply

EU Trade: Shorted at incorrect Supply level (Pivot high in an uptrend).

EJ Trade:  Shorted at poor Supply (Pivot high in an upswing/trend).

intro: Took 2 short trades from weak supply levels because they (the supply levels) originated in an up trend, not down trend. 

thoughts: something felt wrong/off about these trades from the start but perfectly fitted my trade plan so couldn't not take them. In all the probably hundred plus Seiden articles I've read he's never mentioned finding supply levels from down trend price action or demand levels from up trend price action but feel like I'm making a valid point here and my Monday and Tuesday "good" trades corroborate it. (I guess his articles are free so he can't give up all the knowledge he expects people to pay for).

summary: 2 losses but feels like for the greater cause. The observation above/lesson below feels like a cheap one to potentially improve my edge quite a bit. Would like to say that despite the losses like a said yesterday this "set and forget" trading is easy and this is because I'm not wrestling emotions.

lesson: Find potential demand levels in uptrend price action, find potential supply levels in downtrend price action.

video:

March 2015 Summary: R-0.4

Deposit/Withdrawal:		0.00		Credit Facility:				0.00
Closed Trade P/L:		-8.64		Floating P/L:				0.00	Margin:			0.00
Balance:		1 245.22		Equity:				1 245.22	Free Margin:			1 245.22
Details:
Gross Profit:		56.11		Gross Loss:				64.75	Total Net Profit:			-8.64
Profit Factor:		0.87		Expected Payoff:				-0.36
Absolute Drawdown:		19.54		Maximal Drawdown:				24.78 (1.97%)	Relative Drawdown:			1.97% (24.78)
Total Trades:		24		Short Positions (won %):				22 (45.45%)	Long Positions (won %):			2 (0.00%)
Profit Trades (% of total):								10 (41.67%)	Loss trades (% of total):			14 (58.33%)
Largest		profit trade:						15.08	loss trade:			-12.48
Average		profit trade:						5.61	loss trade:			-4.63
Maximum		consecutive wins ($):						3 (22.20)	consecutive losses ($):			3 (-19.98)
Maximal		consecutive profit (count):						22.20 (3)	consecutive loss (count):			-19.98 (3)
Average		consecutive wins:						1	consecutive losses:			2

intro: from the PL chart it seems there was very little consistency this month, a sea of chop! And this I believe is the truth.

numbers: Took a massive step backward. 7 more trades this month than last, probably because I wanted in to take  more trades to practice in-trade risk management but neglected out-trade management, whether I should really be taking the trade in the first place. My win rate is up to 41% from 35% which is an improvement but my largest and average profits/losses have suffered hugely.  With only 17% difference between my average win and loss size meaning I would need a success/hit rate of 83% to turn a profit the way I was trading this month. Last month the difference between my average win/loss was 42% so only a win rate of 58% was required. The numbers are telling me I will have a much better chance of success if I let my trades run and cutting losses quickly ( like last month) rather than trying for a high hit rate.

summary: I started getting a hang of my entry fears on a Paul Wallace quote " traders are paid to manage risk, analysts are paid to make the right calls" which finally hammered home the fact that I don't need to be right I just need to manage risk. I then thought (not wrongly) that because I have been avoiding trades for so long my in-trade risk management probably needed work/ practice. So I put on a lot more trades to practice my time stop and trail stop methods but was in all honesty a little lax on the entries and the levels I took, which of course is another part risk management and one that I neglected which clearly shows in the PL curve and numbers.  Ultimately I strayed from my plan a bit this month to satisfy some other parts of me, it's a hard one to say I was wrong to do this because my intrade risk management has improved but it is a timely reminder that risk management/trading most be a holistic approach. For this reason I need to go back and tidy up and amend my written plan (get the solider obeying commands again!)

lessons: It can be seen when I was sticking to plan at beginning of month the "lessons" were clear and useful. as I fell away from my plan the lessons were just a pile of drivel trying to reinvent the wheel (plan). The following are the good ones.

• stick to plan
• You can trade the M15 chart but no lower (Seiden)
• ensure you include the most extreme parts of levels 
• trade with the trend of the time frame you're on into longer term levels (you trade momentum not value)
• I have got better at managing risk, now I need to mange my entries. 
• when shooting stars/hammers fail it will usually be a full stop out, so very hard to reduce risk and might be better to wait for a re-attack instead of trading!
• Don't trade overtired.
• On time stops exit immediately after the third bar, it's had plenty of time an extra 5 mins aren't going to do much! 
•  Stick to Seiden's entry parameters
•  when at (many) tested level of demand or supply , you should look to fade it on a smaller timeframe. (seiden)
•  trading is about managing risk so trades should be measured by the following parameters: 1. ensuring that you are only risking x% of account (did). 2.  choosing low risk, high reward entries (didn't).2.  reducing risk (trail and time stops) in trade (did). 
• S&D is better drawn around some bars not one.
• lessons: 1. waiting for data to create moves that are then tradeable is useful and time efficient. 
•  I mustn't be scared of using limit orders to get into trades.
• lessons:  1. don't put so much weight on correlations, If you only have one true entry that's the only thing you can take!   
•  Don't be scared to trade re-attacks of levels!
•  Stop questioning the coach, start following the coach.

Chasing Price

Monday and Tuesday and possibly last week  can be summed up by an underlying, leaning towards chasing price rather than waiting for it. This is likely due to my not having read my method for a long time while continuing to study Seiden articles which have got me a bit "method swappy".

Will likely take tomorrow off and clear head then come back.

R-0.2: 2 Losses

EJ trade: after new low close on M30 chart, drilled down to M5 to short pivot high,  exit time stop (R-0.2)

GU trade: when price returned to M30 supply, shorted pivot high, exit time stop (R+0.03)

Missed EU trade: because hadn't labelled extremes see below

intro: woke more tired than I thought I would annoyingly. Did prep keeping it simple, 2 levels on each time frame then waited for them to trigger.  First trade was on the EJ m5 chart experimenting with this sort of momentum play I've been spotting. Second trade more a classic trade of mine, short at supply on GU.

thoughts: NA

summary: had I traded 1:1 I would have got that, but I went for more and ended up break even.  

lessons: quite tired so going to take the following with a pinch of salt.  1.  ensure you're using the more extreme parts of levels as you missed a couple of good trades on the EU and EJ because you used more middling areas which then looked as if they had been tested several times. 2. trade with the trend of the time frame you're on into longer term levels (you trade momentum not value)

videos:

R-0.2: 1 Loss, 1 Win, 1 Break even

EJ trade 1: Shorted shooting star (that I hate) at supply got full stopped, didn't correlate with EU or GU (R-0.1)

EJ trade 2:  Short with downtrend, at supply into demand (R+0.8)

EU trade:  (R0) shorted with down trend at supply, exit on time stop

Potential M5 trend trading strategy:

Observation: not really trading the best H4 level...

intro: too blood wound up with the missus to write this objectively. (She buys a flat then I have to drop everything to look after it, because I work at home. Either way she clearly thinks that what she has to do is far more important than what have to do, grrrr). More tomorrow...

intro 2.1: Price was hovering between old supply and demand levels on all pairs this morning (Friday), so my idea was to wait for price to (probably) rally (as the long term trend was down) into a fresh and longer-term level of supply and take a high probability short there. I took three trades, one loss, one win, one break even.

thoughts: My first trade was on the EJ at an M30/H4 supply level but the trigger was a shooting star (which often punish me) and the other pairs (EU and GU) were nowhere near supply levels, so little correlation. This trade took me out at my full stop loss and there was truly no way I could have reduced risk with the exception of not having taken the trade in the first place. My second 2 trades were on the EJ and EU,  no shooting stars present and both setup at the same time (so correlated),  one worked the other faded away. The most interesting thing about today was a trend I spotted and trades that fitted on it  that started on the M30 charts. M30 price was initially ranging but after an M30 bar closed solidly above this range (new high close), trading pull-backs on the M5 chart in the direction of the M30 close would have been very fruitful, see above.    

summary: Ultimately I think I've been putting a little too much emphasis on entering trades to manage risk the last couple of days, this thought started and rightly so a couple of weeks ago because I knew I needed to practice managing in-trade risk (working time and trailing stops correctly). However I've done that now and I need to go back to a more complete method, namely I need to be more "picky"/ mechanical/"checklisty" on my entries AND manage in-trade risk correctly.  Today for example the M5 trades would have been great , but some of the H4 levels I was looking at were fundamentally flawed because they had such high wave wicks.  It would have been better to wait for a surer / fresher level before looking to short (see pic above).

lessons: 1. I have got better at managing risk, now I need to mange my entries. 2. when shooting stars/hammers fail it will usually be a full stop out, so very hard to reduce risk and might be better to wait for a re-attack instead of trading! 3. M5 becomes tradeable on new high or low low close on M30 = trend.

prep:

trading day:

No Trades: Double Guessing Self

EU M5 trade missed:

GU M30 trade missed:

intro: terrible nights sleep (if any) as aggravated an old shoulder injury.  Got up did prep but didn't act on any of it, this created some self loathing so calling it a day early going to get some rest and try and get this shoulder sorted somehow.  Hopefully will get a couple of trades on tomorrow at solid S/D levels and manage the risk correctly.

lessons: 1. M5 levels are tradable provided long term S/D is far enough away to warrant a healthy target. 2. Don't trade overtired.


trading day...

R-0.7: 2 Losses

EU trade: Short with long term trend down at H4 supply , but supply level was old.

EJ trade: Short with long term trend down at H4 supply , but supply level was old.

intro: Ultimately was thinking of not trading today as had a busy day and FOMC this evening meant price might be congested.  However ultimately I want to trade and get my experience of managing risk up.  Not the best trades off old levels of supply with demand beneath but the best of a bad situation.  I could either short with the long term trend down at a longer term supply level, or buy counter trend at an old level of short term demand. So I stand by my trades.

thoughts: managed risk better today trailing first , but because price had made a decent pivot high on the M5 , and ultimately exiting on a time stop after 3 bars of no progression.  However I should have got at the end of the bar and not waited 5 mins after.

summary: Made the best of what the market offered me, these were not trades I would normally take but building experience feel most important at the moment as I need to get my trading working soon.

lessons: 1. On time stops exit immediately after the third bar, it's had plenty of time an extra 5 mins aren't going to do much! 2.  Stick to Seiden's entry parameters

today's trading:

R+0.5: 2 Break Even

EU trade: issue trailed stop too quickly meant early stop out and missing target.

EJ trade: issue trailed stop too quickly meant early stop out and missing target.

GU missed trades: a strong down trend started and my initally thought was to short rallies , but I didn't really have a strong mechanical game plan to profit it from it. Looks like shorting M30 rallies with an M5 pivot high trailing stop would have worked...

intro: Price in down trend so looking to short.  Price returned to H4 supply on both the EU and EJ for the second time which is not ideal but because the rallies were steep with no pullbacks and the RRR was approx 2:1 I entered short. However I trailed my stops too quickly and missed my targets on both.

thoughts: Price then revisted H4 supply for a third time but by this time I felt supply was fading so my plan was to get long on a pullback to demand on a smaller time frame (M30), this happened (see above navy blue rectangles) but I missed the trades as I was preoccupied. Also a nice trend down started on the GU and my plan was to short rallies but didn't really have a game plan to profit from my observation.

summary: A good read scuppered by trailing stop too tightly and not devising a game plan on the GU.

lessons: 1.implement the momentum/time stop first. 2. Use the trail stop  only on pivot highs/lows that move against trend. 3. In a trending market trade the pivot highs/lows on the M30 and use the M5 trail stop method.

today's trading...

R-0.6: 2 Losses

EU trades: Shorts at supply in downtrend, issue =  old level meant sell orders all filled.

EU trade missed: should have pre-empted old supply level failing and got in on a demand level on a smaller timeframe.

into: Poor entries, good money management.

thoughts: Recognized that the level of supply I was trading was old but doggedly took trades almost solely to practice managing risk. While missing the best trade that I had recently read about in a Seiden article.

summary: Writing a bit about this in an unpublished post on risk. Crap entry, ultimately there's more than one way to manage risk.

lessons: 1. when at (many) tested level of demand or supply , you should look to fade it on a smaller timeframe. 2. trading is about managing risk so trades should be measured by the following parameters: 1. ensuring that you are only risking x% of account (did). 2.  reducing risk (trail and time stops) in trade (did). 3.  choosing low risk, high reward entries (didn't).

morning prep:

in session trades:

R+0.2: 2 Losses, 1 Win

EJ trade: problems started here with incorrect trail stop method.

EU trade: problems continued here from EJ fear of "loss of momentum" overflow.

GU trade: correct trail method,  could've held longer but happy with breakeven for day given busy afternoon.

intro: Last night I got very overexcited thinking about managing risk and started writing a post on it.  One new method I thought of was tracking trend bars highs or lows with trade as a trailing stop method.  I implemented this on the EJ trade, it got stopped out early, made me doubt momentum in the EU trade because of the high correlation between the EU and EJ, which made me exit the EU discretionary. However I managed to hold the GU and use the correct M5 pivot high trail method and clawed back into the black.

thoughts: NA

summary: All started with using the incorrect trail stop method, but all fixed with the correct trail stop method.

lesson: You trade momentum, so you must track momentum moves (pivot highs/lows) when trailing stop, albeit in a smaller time frame,

trading day:

R+1.1: 2 Wins, 1 Loss

EJ trade:  Short at supply in strong downtrend.

EU trade:  Short at supply in strong downtrend.

GU trade:  Long at H4 demand into fresh H4 supply =  early exit

intro: started today where I left off yesterday... wanting to practice what my coach defines trading as : "managing risk". The penny dropped yesterday when watching a trading documentary with a trainer who was under-trading and as such was not allowed to move to live trading because he didn't have enough experience; Sim trading is about building experience managing risk.

thoughts: first two trades were simple shorts in a downtrend at supply, momentum never really kicked in so exited for +0.7 on both.  The loser was probably not the best trade, although I'll concede to myself that it wasn't easy.  I bought low at H4 demand which was the right idea,  but on drilling out to the h4 time frame I saw price had just put in a pivot high, defining supply just above current price so I got out for -0.3 as I realised I had no edge. This was a counter trend trade.

summary: Happy with today, another 3 trades under the belt and another 3 experiences managing risk.  got to be careful counter trend trading even off longterm levels, in the GU example I would have been better off trading short term charts with trend.

lessons: 1. Don't fight the trend.

Today's trading...

No Trades: Struggling With Entries and Exits

EJ trade: worried about M30 demand cutting short, short. 

 EU trade: got supply level in wrong place.

intro: added 3 new pairs as coach suggested. I chose the USDCHF, USDJPY and AUDUSD, however I'm taking them off. At the moment life is very hectic.  My fiancée and I have just exchanged on a flat that is riddled with problems and is taking up a lot of my time seeing as I am the one who "works from home". Couple this with the fact that there are issues at a property I rent out that is my main source of income, suffice to say I am pretty stressed.

thoughts: there were 2 issues today the first being where to get in the second being where to take profit. The EU and EJ were the only pairs to potentially setup but I scared myself out of the short trades on the M30 charts because there was M30 demand nearer than 3:1 on the EJ. This fear was definitely due to reading a Seiden article yesterday about why trades fail. But this was regarding stocks and my D1, H4 and M30 charts were all trending down and so the only demand I should really have been fearful of was  a longer term one and that (H4) would have achieved a 3:1 and did. And I missed an entry on the EU because I got my supply level in the wrong place.

summary: stressed means I ballsed up entries and lost objectivity regarding supply and demand. Not surprising really I didn't get any trades.

lessons: 1. trading with trend, trade into longer term levels. counter trend trading , be aware of M30 levels. 2. S&D is better drawn around some bars not one.

morning prep:

afternoon summary:

Missed EJ Trade

intro: Did prep this AM, initially found it hard as I'm quite tired and price is retracing to long-term levels.

thoughts: plan was to wait for ECB interest rates and US initial jobless claims, then wait some more for the reaction to push price into a level of supply or demand and then take the other side.

summary: I did do the above however I missed my entry because I was looking for a LOHP short rather than a sell limit entry.

lessons: 1. waiting for data to create moves that are then tradeable is useful and time efficient. 2. I mustn't be scared of using limit orders to get into trades.

EJ missed trade:

morning prep:

afternoon summary:

BBC Traders Millions By The Minute Season 1 Episode 2 Full Episode ( from 10mins 15secs to 12mins 10secs are the most interesting IMHO)

R-0.4: 1 Loss EJ, Missed 2 good trades

intro:  One trade on the EJ, Long at H4 demand wouldn't have traded it any differently. But missed some trades.

thoughts:  After my losing trade I went out for a run.  When I got home I missed a couple of good long trades on the EU and GU which occurred in H4 demand because no alerts sounded to alert to the level of interest. The problem being the tradesoccurred in a wide area of interest. I also probably got a little carried away worrying about getting a convergence of M30 and H4 demand.

summary: Placed one good trade  but missed two great ones because I couldn't set alerts to draw my attention to them as the range they occurred in was too wide for alerts to be effective. This means that I am going to have to "check in" every 30 mins (as entries are on M30) when price reaches an area of interest to ensure I don't miss entries.

lessons: 1. When price reaches a long term supply/demand level check in every 30 min period to ensure you don't miss any trade setups. 2.  When prices reaches a long term area all setups are valid

morning prep

afternoon summary

EJ trade

R-1.0: 1 Loss EJ, 1 Breakeven EU

intro: A very long wait today for any trades to occur and got impatient. This resulted in me forcing a trade on the EJ.

thoughts: The EU trade was good, the EJ trade was bad. I think I am putting too much emphasis on high correlations. The EU and EJ were very highly correlated today and I felt I should really be getting short on both at the same time. This resulted in me taking a short on the EJ from a weak level of H4 supply I wouldn't ordinarily use just because it coincided with a EU short.

summary: Had I just taken the EU short I would have been break even for the day, possibly had I got in on the re-attack as my coach suggests I would have got a win and clearly XLT traders do this too. Whatever... the most important thing is that I didn't trade my plan and I got bit in the ass for it.

lessons:  1. don't put so much weight on correlations, If you only have one true entry that's the only thing you can take! Yes ideally it would have been great to get short the EU and EJ today as there correlation was very high but don't force it. 2. only use pivot highs/lows and gaps with strong momentum moves as supply/demand! 3. Don't be scared to trade re-attacks of levels! 4. if it wasn't clear at the time it wasn't a trade but if the move off it was fast it might now be a tradeable level.5. Stop questioning the coach, start following the coach.

morning prep...

afternoon summary...

EU trade...

EJ trade...(weak supply... not actually supply!)

No Trades Some Mistakes

intro: Missed a trade as out, missed another as only looking at one time frame....

thoughts: Okay to elaborate from the above.  Missed a trade because I was out grocery shopping, what you going to do? The other was an interesting miss, probably best explained in the afternoon summary video however I'll have a go. What happened is price pulled back to a H4 level of demand but I couldn't find an entry on the M30 chart (my entry time frame) however on the H4 chart there was a very simple HOLP entry which I missed because I was down on the M30 chart.

summary: The thing is that I am only taking entries on the M30 chart which is funny because I trade M30 levels on the M30 chart so in theory, I should be able to trade H4 levels on the H4 chart.
lesson: at the very least I need to be looking at the M30 and H4 charts simultaneously.

morning prep...

afternoon summary...

No Trades Again, Poor Prep

intro: Another very sideways day until the initial jobless claims and bammm!

thoughts: Nothing setup for me today I thought. but on recapping my day this evening I realized I miss labeled a supply level on the EU which meant I missed a great trade! The fault came from labeling the absolute high of a pivot high rather than the where the originating point of where the downward momentum kicked in...

summary: Very glad of the big move, just what the market needed to get out of this congestion.  Hopefully I'll get something tomorrow. Lesson: the pivot high/low isn't always exactly where the momentum kicked in!

morning prep...

afternoon summary... only a chart as in coffee shop... sod it here you go...