The Vortex Trader

I am done for the day - a profitable day and I am still a long way from my goal. Would have gotten close except I put in a buy order instead of a sell order and didn't realize it until it was to late to get out with minimal damage. After seeing the error I went through the mental gyration of hoping, maybe let it be etc... In the end when I realized I was spending more time being mad at myself for the mistake then trading, I closed out. With that thought still ringing in my ears it is in my best interest to walk away from the market early and not spend the next hour trying to make up for the mistake so I can reach my goal.

Before I get started trading for the day I have to address what is going on with my lot size. I intended to add one lot to my trades this week and I have not done so. What I make this to mean is that "I don't have confidence in what I am doing." I started putting arrows on my charts when I enter and exit a trade so I can analyze what I am seeing an not seeing at the end of the day. What I am seeing is that I am pretty consistent in entering and exiting trades to soon out of fear. I am also noticing that the market comes back to my entry point or goes to my target.

This is the problem with my trading style or my achelles heal. If I ever get the mind set that the market will "always" come back to my entry point, I am dead. I bring this up this morning to keep me from creating the mind set that the market will come back to my entry. The best traders mind set is valueing the stop loss for what it is, insurance for that one day when the market doesn't come back. That one day will happen, it is inevitable. That is a thought I can believe in.

So to improve my trading, I can thank my fearful thoughts whan they say "better get in or you will miss out on this move" and wait for a better entry. I may miss a few moves that way but in the end I will make more money. I will begin creating the habit of putting an arrow on my chart and not do the trade when I am hearing my mind talk about getting in or else. This will help my little mind feel like it is contributing to the trade and help train me to be patient and see the value waiting.

I seem to be a fear based trader, I enter and exit trades out of the fear of losing well earned pips. This is why I developed my style of fading in and out of trades taking profits along the way. I do have the intention of developing the ability to leave one lot on for the bigger move. I have not been able to do that yet. When I can do that with happiness and joy then I will become the trader I want to be. I can see it in my mind, now the trick is to create it in my actions.

what a slow day for me - my first trade was almost 3 hours into my session. First trade was short the euroyen at 125.38 I waited for price to break the 12530 for at least 30 minutes so I feel good about my discipline - I didn't listen to my intuitive voice to wait until price got closer to 50 - an aera the euroyen likes to get to. I also didn't wait for the yen to get to 00 another place it likes to go to - The other trade was shorting the GBP at 4158 - exited at 30 - this one I stayed in until it reached my target. I am not close to my goal for the day and with the market being so sloppy for my trades - I am happy. Only mistake today was not taking the inside bars on the Euro and the GBP long. I was looking for a short for some reason. My play is to go in the direction of the 21 sma which I didn't do. That is now in the past and I am happy with taking profits when I get them.

Another slow day - just one of those days when I didn't place one trade - So I have 1 hour to go and I'm feeling a little pressure to manufacture a trade. From experience I know its time to walk away and come back in little while. So that is what I am going to do because it is the right thing to do.

Well - I finally got a trade in - Long the usdchf at 1.1681 - but now I am closing it with a small 14 pip profit because I have a meeting in a little while that I need to get ready for. I could have done a stop loss or a trailing stop but I am more comfortable being out of the market instead of being in it during the late part of the new york market. my target would be 1.1720. I am happy about having stayed out of the market until I got a clear entry based on one of my plays.

Just went short the EURGBP at 8951 - based on a break of the upper bollinger band and an entry signal on my 1 minute chart - since its friday I will only be in this trade for a little while. Probably take 10 pips and quit for the day.

The week is done - The good news is that I am up for the week even after taking out some money in my account.

I found that I got a little sloppy in my trading today. By sloppy I mean I was not being effective in my entries and exits because I wasn't following my rules.

Lesson's learned for the week. Stay with my trading times. Be diligent with my stop losses; they are there for a reason. I still have a hard time using them which means I tighten them up to much. Example, last night I was short the usdchf and moved my stop 20 pips. Of course the market hit my stop by 3 pips then fell out of bed. My fear of stop - losses causes me great concern at the moment. I see the reason for them, just have a hard time being that wrong. When I am wrong about market direction, I begin living in hope. In this range bound market that may be ok, but in a trending market hope is dangerous. I am giving myself a little pep talk.

I hate stop losses because they guarantee a loss.
Is that true - yes
Is that absolutely true - yes
who am I when I believe stop losses gaurantee a loss. Nervous wreck, uncertain what to do, I do wild and crazy trades, I put my account at risk and feel reckless.
Who would I be if I didn't have the thought Stop losses are a guarantee loss.
More disciplined, honest with myself, a better trader, more sure of what I am doing.

What is a turnaround

I love stop losses because they guarantee a loss.
That is true because a stop loss is a smaller loss than a blown account.

I hate stop losses because they don't gaurantee a loss
Not true

I hate stop losses because they gaurantee a win.
This is interesting to think about. So this is where I sabotage myself. By hating stop losses, I will have a hard tome becoming a better trader. Example, a trader friend of mine in Chicago used to make a profit everyday but it wasn't until he started excepting losses as part of business that he began to make serious money.

I am done for the week and look forward to monday.

I participated in a workshop this weekend dealing with my relationship with money. A couple of insights that came out of the workshop.

first insight - what I don't want people to know about me is that I talk a great talk and I don't walk my talk. What that means to me is that I am a liar, that my image is more important than substance and that I am afraid of the risk.

How these self judgements show up in this journal is by me not actually talking about all my trades. I am ashamed of some of the trades I take and how I manage them so if I don't talk about them. This allows me to keep my percieved image of being a pretty good trader intact. I also am ashamed that I only trade a couple of lots at this time and pretend that i am putting on bigger positions. I don't put on bigger positons because I have not learned to accept the risk. In Trading in the Zone, by Mark Douglas devotes quite a bit of material on the difference between average traders and great traders. One big difference is that great traders accept the risk as part of the business and the trader who thinks that putting on a trade is a demonstration of accepting the risk rarely learns to be a great trader.

In my mind, I can see the huge difference between those two experiences. To continue my discussion on stop losses - when I accept the risk I can put my stop loss where it belongs instead of tightening it up because I am afraid of the risk I am taking with a larger stop loss. I can see how not accepting the risk also has me cut my trades short and also keeps me from finding a daily trade where some of the stop losses get to big for my risk comfort zone.

I also am frustrated that my assets seem to always lose value immediately after I buy them. Be it Real Estate, Stocks, Bonds, Money Market account, Forex, business ventures, you name it, I have learned how to lose money doing it.

Another learning was when I asked a rock what the simplist thing I can do about money the answer was "Love what I do for money" and when I asked the moon the most outrageous thing I can do about mony now the answer was "Be grateful for money loving me and wanting to be in my life."

I have this belief that money wants to leave me which is reinforced by my belief that assets that I buy always lose value immediately after I buy them.

Changing my story work for the day

I am angry because money always wants to leave me.

Is this true "no"
How do I trade when I believe this thought "I am defensive, visualize the worst happening, undisciplined in taking a loss, feel like I am cheating some how, change my trading plan, anxious, feel guilty, angry, mioptic, scared and feel like a little boy playing with matches and gasoline.

Who would I be without that thought Relaxed, patient, happy, joyful, wealthy, a studd.

Turn-around

I am not angry because money always wants to leave me
true - example, money shows up in my bank accounts every month.

I am angry because money wants to be with me - true
this is interesting, I have a belief that people want to steal my money so I limit how much I have so as to not lose so much. Money really wants to be with me, I limit how much I have based on my fear of loss and my fear of loss is what I am really angry about.

I love trading because it is such a great window into my humanness and gives me daily biofeedback on the lessons I need to learn to be joyfull and at peace with myself as I live my life.

This will be a great week.

I am working on a daily trade that is a modification of another system.

The play is a 2 wma on a daily chart. The entry is when the wma cross the monthly open, in either direction go in the direction of the cross. Entered my first trade today on the Euro. My first entry was at 12677 and I closed out at 12708. I am not a Fan of the Asian market on sunday and since this was my first trade using this method I am more interested in price action around the cross. There is always the question - enter on the open of the next candle after the cross or wait for the retrace back to a support or Resistance area. I think this is the most difficult thing to master when using crosses as an entry signal. I don't know how to make that determination other than from experience and shut ones eyes and hope it works.

The 31 pips I will take as a great way to start the week as I begin to live trade this methodolgy. When I opened this trade my goal was 2700 which is not exactly a day trade but it was what my goal was.

When I look at an hourly chart, I see a pretty good head and shoulder forming, and I also expected price to go back to 1.2700 to retest this round number. So my real risk at the moment is the story of I shoulda stayed in that can develop if price runs back to the 3000 area in the next couple of day. It is this story, if it develops that can affect my trading this method in the future. Part of trading is living with the woulda, shoulda's that become so pervasive when you have traded for a couple of years.

Now why am I live trading something I have not demo traded for at least a month. Because I learn better when I live trade, or so I tell myself. Actually my greatest losses come from trading something that I don't have a history with. In this trade I put my stop loss on the other side of the monthly open at 1.2630. As an insurance stop. I am out for no other reason than I was above my original goal and I still don't have the stomach for holding a trade long term. I am trying to talk myself into getting back in.

Not today.

I am struggling a little bit today on my trades - the volitility and the huge moves last night make it tough to figure out what is going on. So far I am up for the day but my trades have been very quick and not giving myself much room for price to run - maybe the market will settle down in the next hour so I can do a better job of trading.

It is the end of the day - just a bunch of scalps. Shorted the EurGBP at 9295 got out at 9274- then got lucky in a way when I shorted the EurYen at 12527 and picked up 40 pips 10 minutes later - moves like that are so hard to stay in especially on the yens because they can come right back almost as fast as they moved to get there. I am also practicing waiting 5 minutes before entering a trade. I put an arrow on my chart and then wait. This actually is helping a lot. I am so quick to see a setup and then I pull the trigger instead of being a little more patient and waiting just a little longer. I still have to pull the trigger and can sometimes wait to long. That is part of trading as well. At least when I miss an entry I no longer find myself chasing price - I just go to the next chart and look for an entry. I am still not allowing myself the freedom to let at least 1 lot run. In time.

What to do - focus on the retrace of the CHF, JPY or EuroJPY cannot do all three at the same time - not talented enough - the chf is wierd because of the bank announcement to buy so that is off my list so back to the yens - will pick both of them to watch and see what develops.

Ok so this is what I am looking for on the USDJPY a push back up to 9850 - and short retrace then a push to 9870 area and then will take the retrace back for 40 to 50 pips - thats my hope this morning - we shall see.

Wow - Am I an idiot or what - I laid out the perfect plan on the JPY and then didn't follow it because I was chasing the market on the GBP and AudJpy - I had my first lossing day in a while and I am tired. Today I battled the market because I changed what I was doing. One of those mind farts where I thought I had something figured out and presto the market proved to me that I have jack squat figured out. The good news is I lost less than 2% of my account the bad news is that I was trading defensively.

Lesson learned - I would love to say yes and I know that I look forward to the next time I get in a bind like today and that is not being honest. I created the bind I found myself in. I would love to put it on the market, and I can't do that because it was totally me. At least I am aware that I changed something and know what it is that I changed. The bad news is that I have a habit of changing things during the trading session so I don't know what I am doing. Reminds me of the Scene in the replacements where coach asks what the team was afraid of. The Best answer was quicksand - things are going good , then one thing happens then another, and another and pretty soon I am buried.

I was handling two trades at the same time and mucked them both up because I was unable to concentrate on the price movement of one. Actually, at one time I had 3 or 4 trades on at the same time. That is definately a recipe for disaster. I can say I did not do a good job today of staying focused and had to wait until the daily retracement to get out resonably whole. Which means I was down more than 2% on my account at one time. The reason I like to trade the later New York market is that there is a high probability of the Asian market bailing me out. Problem is that by the end of day I am exhausted and get out to soon. I am just grateful to be almost whole.

I can replay the day and see where I got off track. I put alarms on my charts this morning for the first time and all of sudden they went off on almost every currencies. The alarms created an atmosphere of excitement because the fish where jumping everywhere. The excitement broke my concentration so I went into automatic mode and traded with little regard for what I was doing. In my head I had this thought that alarms where going off so it must have been time to get into the market. Trading haphazard like that is unhealthy. I set the alarms up to give me a heads up not to trade on. In the excitement I lost track of what I was doing and almost blew it. So I have taken the alarms off and will figure out how to deal with them tommorrow. Right now I am wanting to wrap up my day and lick my wounds and get ready for tommorrow.

I also knew this day was coming. I was getting to mighty about not having had a losing day in a month. With that I will take the day off tommorrow and let my inner being recover.

When I started this thread, I knew it was going to be more about what's going on between my ears than the next best system. Boy was I right. When I read this journal, I see the growth after each set back. Yesterday was a set back and today I learned from what happened.

I am done for the week, made enough money to keep my promise to my wife by paying myself a weekly paycheck and grew my account by a smidgen. I was content this morning to practice - put the alarms back on and then practiced trading with them going off - what a difference when I acepted the alarms and did not respond to them with a knee jeck reaction but instead focused on what I was doing. What I noticed is that the alarms gave me a great menu to work with - if I didn't like one set up I had a couple of more to choose from.

Still don't like the distraction and I can live with then in this moment.

The start of new week - I have that thought in my mind questioning if I will ever reach my goal. The thought is the one that says "you are never going to get there at the pace you are going so ramp it up." That is the thought that actually gets me in trouble because when I act on that thought, I get out of my comfort zone and then I start making trades that are reactionary instead of solid based on a set up that I have seen over and over again. I could make this internal dialog mean something and instead I will do my work on it so that I can grow from it.

Thought

I am never going to make enough money trading going at the pace I am so I need to ramp it up.

Is that true - sure feels that way.

Am I absolutely sure that is true - no

What do I feel when I believe the thought "I am never going to make enough money trading going at the pace I am so I need to ramp it up." I feel tense, I feel anxious, I feel like a loser, I feel depressed, I feel afraid, I feel worried, I feel like I am wrong, I feel like I made a bad choice.

What happens when I believe the thought "I am never going to make enough money trading going at the pace I am so I need to ramp it up." I give up, I lose focus, I beat myself up, and tell myself I have been lucky, I hide, I lie to build myself up, I tell myself trading is a grind.

How do other people react when I act out - they distance themselves, they get angry with me.

Who would I be if I didn't believe the thought "I am never going to make enough money trading going at the pace I am so I need to ramp it up."
Patient, confident, consistent, relaxed, able to put on bigger positions, happy, joyfull, living my dream,

Turn the thought around

I am going to make enough money trading going at the pace I am

is that true or truer - I don't know. Stop and listen to the inner voice - is it true that you are going to make enough money going at the pace your going - no that is not true, example - because I change my trading style, I am feeling a lack of confidence to put on larger positions or letting my winners run thereby limiting my return significantly.

Another turn around

I don't need to ramp it up to make a lot of money, is that true no
example My account will not grow fast enough to make the effort worth my time.

Given this, the real question I have to answer is how to grow an account effectively.

So this week I will focus on how to grow my account effectively, At the moment I see 3 ways, 1. Take on more trades, 2. trader more lots, 3. let winners run longer and cut short losers.

Lets be realistic now - taking on more trades: Works as long as more trades are winners than losers - real problem I see is that the more trades the more inconsistency, the smaller the lot size the slower the growth because the losers will happen just enough to keep me in the game but not give me the money management edge to grow an account effectively.

Trade more lots - This works as long as one is consistent with how one trades and has mastered number 3.

Let winners run longer and cut short losers - the laws of trading which are easier said than done.

So given this work what am I going to do the grow my account this week. The first thought was add more lots because the real job of letting winners run longer and cut short losers seems too daunting a task. Interesting how my mind works. The one thing I need to master is the one thing my mind shys away from.

Now - can I become a profitable trader and make enough money trading to meet my needs if I back away from learning to let my winners run and cut my losers short. Honestly, I don't know. I am sure there are traders who are successful trading this way. What I see is the whole concept of averaging down and fading in and out of trades is a way of compensating for not learning to be a trader that can let winners run and cut losers short.

I have muddled my way into making a little money every week by trading fading in and out. So the question for me is - is this satisfying and a trading style I can be happy doing knowing that I may never reach my goal earning enough money to satisfy my desire lifestyle?

I gues I know what I am working on this week. Answering the question

Is what I am doing today worth doing for the next 6 months without changing anything?

I am not sure if it is the inquiry I am doing about my trading or the market - I have not been able to pull the trigger this morning, mainly because I haven't had one great set up that I resonate with. I have had a lot of hindsight trades.

Actually, I am looking at too many things and not focusing on one setup and taking it. I have chartitis a terrible desease that happens when one is being to cautous and restricted. The only medicine I have found for chartitis that works is to take a break and come back another day. Better than the alternative which is to take a trade and see what happens.

I woke up this morning ready to reap some pips only to find out the market is not really interested in what I want to do. Sitting on my hands for a couple of hours is on my short list of boring things to do. This is when I start looking for another system because I know someone out there is making pips today amd if I had the right sytem so would I. Instead of doing that, I am stopping for the moment and will come back when an alarm goes off giving me a heads up that one of my plays is worth watching.

My 4 hours of watching the market are up and no trades today. I had my setup on the Eur and GBP in the last hour and let them pass. Now to look at this moment and see what I can learn from it.

First - I was telling myself that because the market was so slow I couldn't trust a set up because any little news coming out of the FOMC meeting could adversely effect my trade. So what was at the core of this thought - the fear of loss and my unwillingness to take the risk associated with taking the trade.

Actually, lets get a little more real here - I was talking with my trading buddy and actually started to predict what the market would do. That is a mind set that does not work. Because I was telling him what the market would do, I had a vested interest in being right. The need to be right stopped me from entering the trade even though I had a great setup with minimal probability of loss.

Now I am judging myself with hindsight, which again does not work because one never knows what the market is going to do. What I am beating myself up about is that I have certain things I look for that happen every day and I didn't take the trade when it showed up. This is me choosing which trades will work and which ones won't. It is me choosing randomly that creates the inconsistencey in my trading. By choosing in this manner - I can never grow my accont because I am taking a good edge and making it weaker.

This is the achelles heal for me. I choose trades based on thinking I know what is going to happen so when I am wrong it hurts and I chase the market to be proven right. What I need to learn is to take trades based on my setups and let them be what they will be.

I feel the need to contribute to my trading journal today. I have no idea how to trade the market after a day like today. I wonder if there will be a decent retrace during the Asian market. Has a day like today changed the overall trend and how accurate are the indicators. In my mind, they have been skewed by the large move after the fed's rate announcement.

I did manage to make a couple 10 pip moves after the announcement on pull backs but my lot size was very small because of my lack of confidence in what I was doing. I did follow my indicators for my entries so that was satisfying. I was gambling and yet I was not.

I am working on a refinement of my charts. Not sure why other than I feel as a businessman, I need to keep improving my business. Part of that is learning how to simplify what I am doing so I don't have a bunch of charts adding to my confusion when a trade set up happens.