Tuesday, October 25, 2011

Is this for real?

Today happened to be an interesting day where the ES market felt a little different from the prior couple weeks.  The "usual" market rattling news out of Europe seemed to put the thinly traded intraday morning session into a "psudo-psychotic-I-might-go-postal-on-you" mode. 

In hindsight, the Diamond Setups (DS) system still worked, and it's the usual operator error (my errors) that didn't either pull the trigger properly (using the excuse of how something's "strange" with the price action) or by not properly analyzing or being prepared for the trade (sloppy mistakes).

I'm a believer that it's good to experience as many adverse market conditions as possible, since that's one of the key ways to learn how to get through the tough times.  The next time I sense these "unusual" market conditions, I'll be much better prepared to adapt accordingly (in other words, stick to the plan).

As usual, I still had a great time today learning in the chatroom -- lots of good vibes and support from Renato (@RenaTrader) and the other members.  But since I made "only" $150 gross today (Tuesday, October 25) which was much less than what was possible, I experienced a slight letdown.  That's when I produced a report from my Tradervue.com trading journal to see how well I have done since I started learning, and I began thinking.....Is this for real?

So for the sake of full disclosure, here are the caveats before the excerpt of the report from Tradervue:

  • From the "Is this statistically significant?" perspective, one could argue that there isn't enough data, and that this is mostly noise, dumb luck, etc.
  • Remember, these are SIM (simulation) results, so they include a fair number of fantasy fills.  Since I use limit orders for entry and profit targets that are usually near the swing high/low extremes, it's not likely that you will be able to buy on the bid or sell on the offer with any meaningful frequency.  And my stop orders on SIM do not usually include any slippage.
  • There are 3 days missing from results.  I've written about this, how I went off my rocker for 3 days trading a majority of non-DS setups, so I've excluded it from this report.  I still feel the shame, and rightly so.
  • The gap between plan vs. actual is still quite large, believe it or not.  If I was scored against my ability to execute against the system, I'd be close to getting fired.  But for my personality and trading style, this particular system seems to provide a good margin for error.  However, time will tell once I'm trading a live account.
Regardless of the caveats, the numbers are respectable (especially for me), and seeing the P&L curve over the past 2+ weeks gave me a sense of confidence that "Hey, maybe, just maybe, I have a real decent shot at this." 

* * * * *

Here are my results from the past couple days. 

Monday, October 24
Total gross profits:  $487.50
Total trades:  6
Accuracy:  67%
Contracts per trade: 2

NOTES: Missed some good trades in the pre-market as well as some during he regular session, and also cancelled an order (from fear) that would have filled a few ticks from the high of the day.

Tuesday, October 25
Total gross profits:  $150
Total trades:  5
Accuracy:  80%
Contracts per trade: 2

NOTES: Thinly traded morning impacted by news out of Europe shook up the markets (me) for a bit.  Took a very cautious stance, missed some trades, and scratched a couple that would have been profitable.  Reminder, just stick with the plan.


Matt said...

You are doing a great job with this blog, its well written and I love the charts. I saw in one of the earlier post that your max risk is -3.5 points in the ES, is this your personal stop or is that the max risk Renatrader uses? Could you expand a little on the DS stops? I have seen a couple of his tweets and it seems like his stops are usually in 5-7 point range from what I have seen. Is that true?

Grove Under said...

Hi Matt:
Thanks much for the comment!

Regarding the stop size, it all depends on the style you choose to trade.

Generally, -3.50 is a good rule to use for stops (especially when setting up your bracket orders for your stop/profit orders). Then, I adjust accordingly to the specific setup.

Based on whether you're trading the aggressive or conservative approach, as well as the type of setup you're taking, your stop amount will change.

The stop location remains the same (i.e. the level where you're wrong), but your entry level changes based on a conservative or aggressive entry. So yes, in some cases, your stops could get up to around 6 pts, but it's not very common from what I've seen.

So in general, if you take the aggressive approach (more likely to get filled), your stop will be larger. And vice versa.

However, if you're trading primarily for scalp setups on a lower timeframe (as I do often), then those setups can have stops around -2.00 or so, depending on the chart formation.

I guess the bottom line is that you can really trade the system to fit your style, based on your preferred level of aggressiveness. Finding that is currently my big challenge, but I think it's starting to settle in.

Anonymous said...

Hi Grove,

I was following more or less until 2 hours later when I tried to put a sim order on oec, then oec and sierra froze up. Support for oec is very good and patient, tommorrow he will try to do remote assistance to see if it can be corrected. Maybe my pc is too old.

I am going over the transcript but I am either lazy or its hard to follow. Because Renato redraws the fibs, I don't know what levels are important aat that specific time.

I think you are doing fine. Just let the trade come to you. I know its easier said than done.

anyways, take care, see you tommorrow, hector

Grove Under said...

Hi Hector,

Thanks for the feedback. A big part of the battle sure is getting all the software, PC, and process all down, but I'm sure you'll get it.

Totally understand where you're coming from, since I was also there. Good luck, keep at it 110%, and you'll get it!