Bluetrader's Journal

I'm starting this journal to better manage my trading and take it to the next level. I've been demo trading James16's methods for six months now. I've been break-even and have found a consistent approach that fits my trading personality. Much credit is due to the James16 thread and all the seniors who tirelessly contribute for the benefit of new traders.

My goal with this journal is to spend a good deal of time improving my trade management skills to get past the break-even threshold. I believe I'm at the point where I can fine tune exits with my strategy and get to being a profitable trader. I'm open to the fact that it can take 6 months or 6 years.

I hope this journal evolves with my trading career. That means I post all my trades. My biggest weaknesses thus far have been:

1. Patience
2. Trade Management
3. Handling Losses

Sound familiar?

I'd like to post my mission statement to live by every time I look for a setup, place an order, manage a trade, and close a position:

I am a professional trader who treats my trading as a business. I plan each trade before I enter an order. My priority is to protect capital before looking for profit. I believe in my edge and will let it play out over hundreds of trades. Because I believe in my edge, I consistently follow my rules without question.

Hope everyone can benefit as much as I will. I would like to individually thank the following traders whose posts have been a source of endless wisdom: merlin, james16, mbqb11, raczekfx, Darkstar, and Dopey. Although I have never met these guys personally, to me, they represent what is good and positive about the Factory.

-- Danny

Summarized Trade Plan

Time Frames: 4 Hour and Dailies

Trigger Bars:
Bearish Outside Bars
Bullish Outside Bars
Pin Bars

With the following qualities:

1. Larger than surrounding bars
2. Off a price flip or round number
3. At a swing high or low (except for occasional continuation trade)
4. Is spaced away from recent price
5. Has space to move

* The J16 chart thread explains all these points in detail. For those that want further explanation, I highly recommend that thread.

Trade Management:

1. Initial stop is at other end of the trigger bar
2. Partial exit around first area of traffic
3. Trail remaining lots using support resistance

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This is a general outline of trade management/exits. When possible, I will also take note of different techniques to maximize profit.

After each trade, I plan to record my thoughts in this journal using the following template as a guide:

1. Was it a Good Trade?
2. What did I do RIGHT?
3. What did I do WRONG?
4. Current Goal(s):
5. Comments:

From time to time, I would also like to discuss current ideas bouncing around in my head as it relates to trading.

Good luck with your plan.

I am starting to trade a real account as well and I followed most of the steps you mentioned including reading a lot of things not only about trading but also about the psihology which is behind trading.

I am sure you will find useful the information from here: http://grailtrading.blogspot.com/ . It's a lot to read but there are some very important things stressed by the sould trader, a very very good trader with a lot of experience.

Good luck again and all the best.
V.

good luck to you blue I will try to drop in

Thanks FX, amazing story you linked to. I'll check it out. Also wanted to note FX, I'm trading on DEMO until I can prove myself worthy of a small account. I'll post what "worthy" is soon. It will be clear.


Really appreciate your presence Mike. I'll be sure to mention the Yankees once in a while to get your attention.

-- Danny

Was it a Good Trade?
Yes. Followed all my rules.

What did I do RIGHT?
I realized that the trade was stalling a bit. Instead of exiting the trade, I tightened my stop and let the market take me out. Although this trade didn't work out, I gave myself a chance to let the market prove me right while not taking a loss.

What did I do WRONG?
Nothing. Although the trade could always go to the moon... I'm okay with following my rules.

Current Goal(s):
Patiently wait for a setup within my rules that I can trust myself to follow through with proper trade management.

Comments:
The continuation setups can always be tricky if they don't move fast. I had this trade on a tight leash and in all honesty, lack confidence in these more so than the traditional counter-swing play. This lack of confidence in the entry manifests itself into nerve-wracking trade management. Experience will help with this. I like the fact that I didn't wait too long before I got out of the trade. There are better trades down the road.

-- Danny

Hi Blue,

I don't want to mix your journal with my own stories but I guess here is a good place to tell it. I started to read James16 thread in October last year and I practiced on demo for 8 months constantly with marginal profits at the beginning and above 8% in the last 3 months so I decided to move on a real account with 10k. I took what I considered the best from James16 and thanks to guys like Mike we can dream about a living from trading.

I took the same trade you mentioned on my real account and it went good, I am still in it. Let's hope we will have similar actions in the next days.

Good luck and hope you will move to real money soon.

Thanks FX and thanks for sharing your story. That G/U trade shot up like a rocket on Friday, but need to stick to my rules. Hope you got some pips on that one.

-- Danny

One of my biggest struggles is keeping track of all my trades in detail to track my progress. What typically happens is I do great logging all my trades when things are going well. When I get into a losing streak, I begin to doubt my plan. I then relax my discipline on trades and fall off the wagon.

The source of this problem stems from bad experiences from losing. In the past 11 years I've tried many trading systems with zero success. The fear of failure is still there. I know I will succeed eventually, but that doesn't erase the bad memories. I need to convince myself this time will be different. And I need to believe in myself and my ability to trade profitably and consistently.

To that end, my approach this time has been entirely different. For the first time, I've taken a long-term 'marathon' view on trading. There is no more this self-imposed pressure to succeed. Trading price action has also given me a reliable approach I can TRUST. Trusting myself and my system has been so big in my ability to grow and assemble a level of consistency I have never been able to do before.

So the positive signs are there. I will not fall off the wagon anymore because the foundation has been laid.

In practice, I have defined the following guidelines to keep me on track. My plan of attack is to:

1. Have an objective entry and trade management strategy built in to my trading plan. (Develop reactive approach)
2. Stop trading for the rest of the week after taking a Bad trade. (Prevent revenge trading)
3. Review previous winning trades from my glorious journal. (Build confidence)

-- Danny

Failure for 11 years is not easy but now you are on the right way so you don't need to stay away from the market for 1 week after a bad trade especially since you are on a demo account. Staying away from the market won't bring you pips and also won't increase your confidence. More than that after 3-4 such weeks the failure feeling will become stronger and this won't help at all to pass over bad trades and bad experience.

Good luck.

Hey FX. To be honest, I haven't found anything good to trade. I disagree with your statement about staying away from the market because of a bad trade. The trade I took was good because I followed my rules, regardless of pips.

I've been looking at my charts every day and waiting for a good setup. The fact that I'm on demo shouldn't affect the way I trade, I should be just as picky. I expect the patience will pay off, all I can do is be consistent and wait for my setups.

I'm short GBP/JPY at the moment and will post when this trade is closed.

-- Danny

Hi Blue,

First of all, that BEOB on gbp/jpy was sweet. I am pretty sure you took it.

On the demo account you should be picky as well but staying away just because you missed one trade won't help you. The biggest challenge would be to trade after a failure, these situation will help you to improve

All the best,
M.

Was it a Good Trade?
Yes. Followed my rules.

What did I do RIGHT?
Reacted to price information. Price made a sharp reversal, so I placed my stop just above that DBLHC bar.

What did I do WRONG?
Nothing.

Current Goal(s):
Patiently wait for a setup within my rules that I can trust myself to follow through with proper trade management.

Comments:
The hard reversal was enough to take me out of the trade at a small loss. There was a strong PPZ waiting 135.60 (my first target), but price reversed hard before it got there. I wouldn't change anything about this trade. I followed my rules and once again gave myself an opportunity to win. On to the next one.

-- Danny

Was it a Good Trade?
Yes. Followed my rules.

What did I do RIGHT?
Exited at strong PPZ with target.

What did I do WRONG?
Nothing.

Current Goal(s):
Patiently wait for a setup within my rules that I can trust myself to follow through with proper trade management.

Comments:
This one took off and never looked back. I set my target at the PPZ below. The setup was against the trend so I didn't expect much from the move. The round number and double top gave me added confidence to take the setup. Also liked how the round number held price after the bar closed. This was a nice trade worth the wait.

-- Danny

Was it a Good Trade?
No. I broke my rules when I failed to move my stop above the pin bar that formed 2 bars after entry.

What did I do RIGHT?
Entered on a nice bar and location.

What did I do WRONG?
Failed to move my stop above reversal bar.

Current Goal(s):
1. Patiently wait for a setup within my rules that I can trust myself to follow through with proper trade management.
2. Consistently follow my exit rules by using new price bar information to reduce risk.

Comments:
Took a loss on this trade after it wandered around for a day. I liked the location and the bar engulfed the last 15 bars (high to close). I became hesitant when the pin bar formed because recent losses/breakevens have proven to be profitable after I got out. I reasoned that maybe my stops were too tight, so I gave this one room to breathe. Not a lot, but more than usual.

I'll keep an eye on this pair to see what happens today now that NFP news came out. However, I had an obvious opportunity to tighten my stop and take a small loss yesterday. I didn't follow my trading rules because I let recent trade outcomes cloud my objectivity.

-- Danny

Hi Danny,

If you ask me, when we trade we have to forget the last trades we had doesn't mantter if those were good or bad. In this way we will not feel the necessity to revenge on the market.

I was -2.5% the last week after just 2 days and I could stay away from the market since some bad trades happend but I prefer to be there and stick to my plan and forget even the last trade I closed. I managed to finish the week with +0.7% which was not excellent but I am pleased.

Dunno if you read it but "Trading in the zone" will help you a lot. I have it so if you want it just send me a PM with your e-mail.

Regards,
M.

Was it a Good Trade?
No. Didn't follow my entry rules on this trade.

What did I do RIGHT?
Stuck to my exit strategy. Unfortunately, it doesn't compensate for bad entries.

What did I do WRONG?
Took a small bar in a tight range with little room to move.

Current Goal(s):
1. Patiently wait for a setup within my rules that I can trust myself to follow through with proper trade management.
2. Consistently follow my exit rules by using new price bar information to reduce risk.

Comments:
Really upset with myself on this trade. It was a complete disaster that I will use to remind myself of what happens when I take small bars in consolidation. I have no excuses for this trade, it was just bad. My reasoning for taking it was the current down move and retrace to the PPZ. But that was it.

I paid dearly for this with a full bar loss. The lesson learned on this trade: TAKE BIG BARS AT SWING HIGHS/LOWS WITH SPACE. With that out of the way, I need to clear my head and move on to the next trade.

FX, thanks for the suggestion on the book. I've read it. I'm working on it.

-- Danny

Was it a Good Trade?
Yes. Followed my rules.

What did I do RIGHT?
Planned my entry and exit strategy based on market conditions. Set and forget.

What did I do WRONG?
Nothing.

Current Goal(s):
1. Patiently wait for a setup within my rules that I can trust myself to follow through with proper trade management.
2. Consistently follow my exit rules by using new price bar information to reduce risk.

Comments:
This was as good as it gets as far as bar size, swing high, space, first traffic area. I'm happy with this trade because I had a predetermined exit and price hit it pretty quickly. I didn't feel price would get past the lower PPZ without some trouble, so I took profit just above it.

-- Danny

One of the psychological barriers to trading I encounter is the moments after entering a trade. I’ve learned that my ability to trust a trade and have the patience to wait out the possible drawdowns is directly related to my confidence in the entry. This is most evident when I enter a trade I have low confidence in and begin to second-guess whether it will work out.

Cause for Concern
The fact that I enter sub-par trades is at the core of this problem. Why do I do this? Because I don’t want to miss a profitable move. The fear of missing out occupies my thoughts when I see an average setup. Its alarming to me that I lose control of my discipline during these crucial moments. The symptom of this pattern is over-trading, mismanaged trades, full-bar losses, and mental exhaustion. The net result to my bottom-line: ZERO PROFITS.

How can I have more conviction?
Simple: Only trade A+ setups that gives me a repeatable edge. It’s then up to me to get out of the way and let price do its thing. Too many sub-par setups start stalling and have a higher likelihood of failing. Then while in the trade, I lose confidence in the setup and start doubting my entry logic. To gain confidence in my trading, the best setups will fail less and have more momentum. In time, this will give me confidence to hold onto a trade because I TRUST MYSELF and my analysis. It’s about building confidence in a repeatable edge and exploiting that edge as it fits my trading style. Simple. Not easy.

Action Plan:
1. Take A+ setups knowing you may go weeks without trading. (Builds patience)
2. Once in a trade, give the trade space to move before adjusting the stop. (Builds trust)

-- Danny

Was it a Good Trade?
Yes. Followed my rules.

What did I do RIGHT?
Followed strict exit criteria to not let a 90 pip winner turn into a loser.

What did I do WRONG?
Nothing.

Current Goal(s):
1. Patiently wait for a setup within my rules that I can trust myself to follow through with proper trade management.
2. Consistently follow my exit rules by using new price bar information to reduce risk.

Comments:
I was confident this trade would get to the first trouble area, but it stalled soon after by forming an opposing pin bar. Considering the choppy movement, I decided to move my stop to BE. Figure moving to BE at this point will give the trade room to move and remove my initial risk. After going almost 90 pips into profit, I won't take a loss on this trade. On to the next one.

-- Danny