Monday, November 28, 2011

From +50 ES point to +2 to ???

No trades for me on Monday, November 28th.  Since getting into the ES 1198 short on Tuesday 11/22, I've continued to let it ride, especially since I've been busy with non-trading related tasks as the holiday season starts to ramp up. 

So here are some thoughts as I saw my ES swing trade go up to nearly +50 points in profits, only to then watch it gap up around 20 points against me on Sunday night, and then getting within 2 points of being stopped out at break even today (Monday).
  • If this was a live trade (not SIM) I most likely would have exited earlier, probably on Sunday night for about a +20 gain.
  • Renato had a buy alert... right below the 1150 area (yes, the low of the move on Friday), so although I'm not sure I would have exited there on Friday afternoon (because weak closes are usually a bearish sign), that was potentially another option.
  • I could have done better daytrading vs. this swing  Assuming that I closed this single trade at the max possible +50 points, there were many daytrade opportunities that could have made just as much or even more during the time I was in this one swing trade.  But...
  • Big but...  Whether I would have captured all those daytrades and actually made that much is another topic of discussion.
  • Quick to enter trades, slow to exit.  That's my general nature (even as a daytrader), and the reason I've been able to hold on to this position for so long -- I'm slow to exit.
  • My natural Valium?  Having an active open position is somewhat like putting my trigger finger on Valium.  It makes me much more selective to enter new trades, unless they are very compelling. 
  • Permanent swing position?  So maybe I need to consider having a very small swing position as a way to counteract my need to always have something cookin'.  A mini-forex position comes to mind.
  • External non-trading diversions  There are times when I feel I'm too close to the markets.  It's as if I'm getting too clingy.  So how will I feel when the market treats me bad someday and I have nothing else to fall back on?  Either having other hobbies and interests or being forced onto other tasks should help provide balance.  Consequently, I believe having better balance will improve my ability to stick to a plan with discipline.
This particular swing trade has also been yet another interesting experiment to try rattle and shake my soul so that I can gain better understanding of myself as a trader.  This isn't the first time I've had a swing trade, but this time, I am much better prepared to observe and record myself to see how I think and act in a volatile market conditions.

Sure, if I had real money on the line, it would likely have been much more stressful, but either way, I believe this is a lower stress way of become more self-aware with myself.

When I am trading live again, I will likely go back to daytrading/scalping primarily for +2 ES points  I might consider swingtrading once I'm trading with an initial position of at least 3 or 4 contracts.

So the question that is getting louder in my mind -- when will I start trading live again?  I tell myself I'm in no rush, but there's also a side of me that wants to get back in the real game NOW.  Depending on market conditions, I'm thinking maybe next week at the earliest and sometime in January at the latest.


Tomross58 said...

Hey Grove,,

Lots of interestings things to consider, and I think one can only have these things to consider when you go through an experience like this whether its on sim or live. I see that that you mention that if live you would have taken profits at +20pts. I have to believe you would have a profit target set in mind on your platform or at least you should have one. A trailing stop set-up with the Matrix, or you just keep going back to check on your position (very stressful) to adjust your profit target and stop but thats dangerous.
My first thought here is that you are talking about managing a WINNING position. Another trader that we both respect has said that learning to manage a winning position is what will make you / us a successful trader. Whether its a swing trade or a daytrade we must have rules for us to follow to take what the market gives us.
Example: Rena,,,,always takes 1/2 off at 2 pts,,,,,,sometimes a bit eairler depending on conditions but he books profits and has a free ride. He then has rules where to exit the next 1/4 and lets the last 1/4 ride the wave. I think he is even willing to allow that last 1/4 to scratch. What great discipline. Over and over again and again as if its part of his DNA. I would think that sometimes he leaves money on the table but I also think his method adds up very nicely at the end of the day / week/ month. Of course he is using more contracts then you and I are at the moment but I have learned from him the importance of taking what the market will give me.
This trade of yours really opened up many important questions and there are many important answers to come from it and if known now will prepare you for the next time when live. Great post.


Grove Under said...

Hi Tom,
Great observation about how to handle a winning position. And I admit, my criteria for how to exit winning swing trades is somewhat lacking. So I'll definitely need to work on this if swing trading is something I plan on doing in the future.

That's yet another item I forgot to mention as something that's a lessons learned from this experiment, so thanks for pointing that out!

Anonymous said...

Hi Grove,

Well, I am pretty much convince I will go with renato. I still need to go over your postings and his website to study it. It is difficult leaving trader x style, since its understandable to me. If you could answer a few questions, it would be very appreciated.

How hard is it to learn renato 10 setups? I look at your charts and I have no idea what to look at.
Does he explain what to look for? Did you pick up his method rather quickly?

Since I am starting from scratch, which broker do you recommend. You mention renato uses oec and you use tradestation. Oec only has demo accounts, so not sure which to use.

At my glacier pace, I don't know when I will go live. I had plan to go live by now using trader x, but I am buying some real estate and well the funds are tied up at the moment.

anyways, thanks Hector

Grove Under said...

Hi Hector,
I wouldn't say you're leaving behind the Trader-X setups, but look at it as though you're learning even more about the markets from a different perspective.

I'd say the out of the 10 setups, there are about 2-3 that are most widely used. In fact, even if you never learned any of the 7-8 other setups, you could still do quite well.

I'm getting to the point where I'll likely end up using one variation of one setup for scalps that could generate upwards of a dozen trades a day. The DS system is quite adaptable to your style, but it may take some time to determine what works best for you.

I picked it up pretty quickly, since I used to trade via similar methods years ago. But the time it takes to learn will be different for everyone. You might pick it up in a few days, or it might take you a few weeks or more. All depends on how much effort you spend, and how actively you interact with Renato and the community to learn.

But even though I picked up the DS concepts quickly, I have a long way to go before I'll become a master.

In the meantime, as long as you're a part of the chatroom, you'll receive alerts from Renato regarding the trades that he will be taking. He's very patient in explaining *why* he's giving the alert, so that you can learn. If you read the testimonials on his website, you'll see that I'm in good company regarding how others feel about his as a great teacher.

I'm also planning on opening up an OEC account, in addition to keeping TradeStation. Not a bad idea to have a backup. But since you don't have any accounts, I highly recommend OEC since that's what Renato as well as many others use. Therefore, it'll be much easier to get feedback on how to setup your system/orders/etc.

Good idea not to rush into trading -- go at your own pace to really learn before going live. The markets will always be around.

Let me know if you have any other questions, or think about contacting Renato directly via his website. He's quite accessible and very helpful.

Good luck, and hope to see you over there soon.