Friday, June 22, 2012

Focusing less on become better

As they say, change is constant.  There have been recent changes to my family's schedule that is making me have to evolve and adapt - summer break schedule, here we come.  Since family is my first priority, I will adjust my trading schedule to fit their needs. 

I'm still on my self-imposed time out from trading, but I'm been fortunate that focusing less on trading has given me a fresh perspective on what I need to do to become both a better trader and person.

Therefore, my current goal is to NOT focus as much on my trading, but on other aspects of life, such as health and mental well being.  By working on strengthening those areas, I believe it will cross over and improve my trading performance.

Here are the current areas of focus:
1)  Reduction in trading time:  As mentioned, family commitments have increased, so time for trading has decreased.  The likely scenario is that I will focus on short term trading for only certain hours.  I am also looking into more swing trading.  I will also factor in a good 1-2 hours for research and journal updates during the day vs. the evening hours as I have done in the past.

2)  Trading strategy reevaluation: Therefore, the reduction in my trading hours will require that I reevaluate my overall day trading strategies.  For example, determine the impact of trading only certain hours of the day on my P&L.

I will also need to begin evaluating swing trading strategies that require only end of day trade evaluation and order management, which may mean that stocks might make their way back into the picture.  There are also other trading strategies I'm reviewing that may help transition to a reduced trading schedule.  Lots of homework ahead.

3)  More exercise:  I am currently working out 5 times a week, ranging from kickboxing, cardio, and yoga.  This is a pretty large increase from 1 to 2 days of exercise I was averaging before.  I have to admit, exercising and yoga has generally increased my energy levels, but more importantly, my ability to focus and remain centered.

In a great book I recently read called "The Willpower Instinct", the author referenced studies which demonstrated that exercise and meditation both have a similar positive impact on the prefrontal cortex part of the brain -- that's an area that controls impulsive actions, like revenge trading.  Which leads to...

4)  Hypnosis: Along the lines exercise and yoga, I have begun listening to hypnosis CDs a few weeks ago that are focused specifically for traders.  In addition to listening to trading affirmations and approaches for improvement, the process of going under a trance has had the added benefit similar to meditation where you leave the session feeling energized and rested.  I believe it may take a couple months or more of regular use before the effects become evident, but I believe some positive effects are being to emerge.
It looks like this period of transition will soon settle down so that I'll be able to focus more on trading.  But in the meantime, I'm realizing that this is likely a well needed break after an intense year of learning.  Based on how everything is progressing, I believe I will emerge from this period mentally stronger better able to deal with my challenges. 

The journey continues...

Tuesday, June 5, 2012

Update $AUDUSD: Out +10 pips

I woke up this morning thinking I was still in the AUDUSD long trade, but found out my breakeven stop was triggered last night.  However, it was interesting to see that since my stop was placed at the exact low of a sharp move, I ended up getting a positive +8 pip slippage, resulting in a +10 pip gain.

This trade eventually went on to go about +87 pips from entry (~3.3R), hitting the first target of .9800.  So the takeaway is that when taking a counter-trend trade based on the higher timeframe (daily chart in this case), exit (or perhaps large scale out) at the first clear target area (.9800 as mentioned earlier).
AUDUSD 15 min

Monday, June 4, 2012

Back on the grid...back in $AUDUSD...and archery

After being mostly off the grid for the past week, it's good to be back.  But since I'll be in single parent mode for the rest of the week, my trading related activities will be significantly curtailed until next week.

Trading SIM on ES
I'm continuing to trade the ES on SIM, since I realize that I haven't yet completely bought in and committed myself to a specific trading plan that meets my personality and style.  That's probably one of the biggest factors of why I'm having discipline issues (i.e. overtrading).  Therefore, I'm back to the basics, doing homework, trying to figure out what type of timeframe, setups, style, etc., work best for me.  This may continue for quite a while.

Trading live on AUDUSD
However, I'm much more comfortable on the swing trading forex side, and I posted the observation last week of watching the .9665 to .9700 levels for AUDUSD, which continues to be respected.

The entry
After seeing a good setup on AUDUSD earlier today that took place above the .9700 level, I entered a long position at .9716 with a stop at .9690.  At this time, the trade is nearly 2R and once it approaches 3R, I will consider raising the stop to b/e or another appropriate location.
$AUDUSD 15 min
The target(s)
My target is still TBD, although I see some significant levels at the whole numbers of .9800,  .9900, and 1.0000, so I will watch the price action at those areas.  However, I realize that this is a contra-trend trade going against the bearish trend, and that any pullback higher may be very short lived.
$AUDUSD 4 hour
Archery and Trading
While on vacation, I took a short introductory class on archery.  What's very interesting about archery is how similar it is to golf as well as trading.  It's not a reactive sport, so it's up to you when you choose to engage.  But it was pretty clear to see that after you learn the basics and master the fundamentals, the biggest obstacle is then mental.

So when I asked the instructor how critical the mental game is to archery, it wasn't a surprise when he said it's the most critical component during competition.  He brought up an author named Lanny Bassham who wrote a highly rated book called With Winning in Mind: The Mental Management System.

Lanny competed in the International Rifle Shooting event in the 1972 Olympics and came up short with a silver medal.  So he spent the next few years studying Olympic gold medalists, developed his mental management system, and won the gold medal in 1976. 

I have not read the book yet, but I have seen some summary notes online.  It appears that many of the exercises and theories are very similar to what you commonly read in the trading or other sports psychology type books.

I'm getting to the point where everything I read regarding performance psychology makes me feel as if I'm walking around in a big circle -- been there, done that.  Everything is a variation of a few key themes, presented in different ways.  Nothing I read now seems to be truly new or groundbreaking.

So whether it's archery, golf, trading, or any other performance field, there are no secrets on what it takes to become an elite performer. However, just because I know a lot about what I'm supposed to do to improve my mental game, doesn't mean that I'm doing what I'm supposed to do.  There's a big gap.  So it's time to start planning and executing.