Simulating (to) Success with VSA

Came across a really great article via Bulletproof Musician.

The outward presenting theme of the blog is "how to improve as a musician" but at its core, it's rife with references about Deliberate Practice. If you replace every music reference with a trading idea, then you're golden. Ironically, I found out about the blog thanks to a prompt to ChatGPT asking for blogs about deliberate practice. I am going to start interleaving different drills in my backtesting more often moving forward.

On a related note, today I kick off backtesting of the S&P 500. I've got jitters going in, but I gotta just trade what I see and let the cards fall where they made.

Gamifying my backtesting a bit. So far, I've only unlocked the ability to trade the EU on the Hourly:

1. Backtest EU on the hourly and make 15R Reward Unlocked: Trade EU on the Hourly IRL (Starting 9/5)
2. Backtest S&P 500 on the hourly and make 10R
3. Backtest S&P 500 on the 3m and make 10R

Tough sledding so far w/ the S&P 500. Here are my stats after 15 trades lol

Welp, hovering around breakeven is still better than consistently losing so I can't complain too much. Gotta just keep putting the reps up and learning with every trade.

Recovering from Covid and finding it hard to concentrate/feel productive. It might be that temporary fog during recovery, but it doesn't help that I continued my draw-down when backtesting last week. I think I've identified the issue (rushing through my analysis and not giving proper focus when UHV enters the equation) but I'm feeling pretty unmotivated right now.

I might just check out for the rest of the week and bounce back next Monday if I can't muster some focus soon.

Slowly getting back on the horse. No trading again this week, but I restarted review of my trading flashcards and took some notes today:

Which area was most relevant when it comes to future improvement?

1. How can I focus on probabilities and repetition while also acknowledging that good analysis will also improve my results?
   1. Take every trade that meet the setup criteria w/ the understanding that the results are over 30 trades
   2. Focus on ONE aspect of your trading at a time for each series of 30 trades. For my next series, I want to just use focus on reading every single bar as price reaches and attacking when price reaches key levels on the hourly

2. Stop paying as much attention to the P&L where possible as it is irrelevant unless it's in the context of 30 completed trades
3. How can I shift my focus from predicting/expecting price action -> anticipating price action while knowing it is volatile and unpredictable?
   1. Always keep multiple scenarios in my head
   2. More reps w/ [[BbB Analysis]] as it is a great illustrator that the market doesn't move in straight lines
   3. Expose yourself to more probabilistic-thinking ideas
   4. Listen to Annie Duke's podcast on decision making for tips/tricks
   5. Reread Nate Silver's book

4. When I have too many bars on the chart, I unconsciously check out mentally and look for shortcuts in my analysis. If I limit the amount of bars, I'll be less likely to cut corners
   1. Recognizing that the markets are telling an evolving story and reading the bars gives you the plot. There are times when the market is acting formulaic and you can tell what's going to happen just by looking at the last five bars, but this is not the norm. That's why detailed analysis is important for me.

Signs of Progress/Improvement

1. I appreciate that I'm working my way back to the charts slowly and ramping up my productivity. It feels right if that makes sense. I'm giving myself some grace instead of burning myself out by hitting my head against the wall again.
2. I created flashcards to better lock in some of my thoughts
3. Instead of comparing my worst days to other traders' best days, I thought more about my worst days and other traders worst days, and then my setbacks don't seem so pressing. I've still come a long way and so I will not beat myself up when things don't go my way 100%.

No trading today, but I did reconfigure my mouse shortcuts after inadvertently wiping my hard drive a few weeks back. I plan on getting 1-2 trading sessions in before I travel for a funeral mid-week. I don't have the muscle-memory currently to trade live markets but I am aiming to get a week's worth of backtesting under my belt and then hop back in if everything goes according to plan.

Signs of Progress/Improvement

1. I realized I was taking shortcuts when reading the markets and made adjustments. It takes more time to review a chart now, but I feel much more aligned w/ the markets. The price action now tells a more cohesive story which increases my level of conviction when i decide to enter a trade. This is great, even if the market doesn't pan out because I feel like there's a method to my madness instead of constant noise.

Which area was most relevant when it comes to continued success/future improvement

1. It's possible that I'm overtrading when it comes to my entries, and this could be why my results are all over the place.
2. How can I better identify when the market is building up a cause?
3. OTOH, I want to get in the habit of having exposure at every key price level.
4. My main goal for the next trading session is just detailed analysis. Some follow-up questions:
   1. What timeframe is most relevant for this analysis?
   2. How (if at all) should the other timeframes account for this dominant timeframe?
      1. I should review my existing notes on multi-timeframe analysis as a reference point here.

Based on what I Learned what changes or rules did/can I make

1. I can refine my entry criteria in order to circumvent the need to over-trade
   1. Price action suggests that someone is accumulating/distributing and gearing up for a size-able move. This will look like:
      1. UHV bars that are successfully tested
      2. Clear accumulation/distribution as price reaches a key level

   2. Clear volume discrepancies in the background

Thoughts

1. Great job getting back on the horse.
2. I really like how I approached my problems differently this time:
   1. I listed what I wanted to get better at in the 'continued/future success' section
   2. Then I spelled out rules that would make a difference in the subsequent section.

3. I feel like I was procrastinating on jumping back into trading for nothing. Then again, that's how I always feel when I stop thinking about a problem and start completing actions to resolve the problem.

A little flustered at the moment. There are so many areas that I want to improve upon that there's a bottleneck of things to do and it feels a bit overwhelming. Today I'm going to write down every decision point I make when trading and what factors come into play. From there, I'm going to rank each level in terms of importance and perceived skillset and use that to figure out which wheel is the squeakiest.

One month later and I'm a lot more structured (which led to more confidence). I ask myself a series of questions when analyzing a chart, and one key question that I've added is so popular yet I never made a conscious effort to do it. The question is a two-parter:

I highly recommend people add it to their chart analysis to better see the forest for the trees

I occasionally watch live markets with an accountability trading partner, but lately, I've been mostly reviewing my flashcards and creating trading 'drills' to shore up some areas of weakness. It's not the first time that I've taken a step back from backtesting, but for the first time, I'm realizing how dangerous it can be...

Backtesting provides that unique, immediate feedback needed for deliberate practice/confirming improvements and I haven't been getting feedback outside of flashcards/occasionally watching live markets. I currently believe that I've drastically reduced the gap between my current skillset and my ideal skillset, but I need more feedback to confirm this.

I'm going to jump back into the simulator to start next month. The reason I'm kicking the can down the road ~2 weeks is partially avoidance, but (imo) it's mostly because I want to square away 1-2 aspects of my trading process before I get feedback from the simulator. This is potentially a sign that my ego is too involved in the outcome of the next 30 trades on the simulator so I'll have to work on navigating that bridge as I cross it.

I reflected on my last post and I've decided to work through what I can during this shortened holiday week and then start backtesting next Monday instead of waiting for December to arrive.

A part of me is working to ground my expectations so that I don't get too far ahead of my skis in case I struggle when backtesting, but I also am looking forward to the feedback, good or bad, so that I can target areas of weakness if need be. I've been focused on meditation and implementing a growth mindset, so I've stopped shirking responsibility/accountability for my results. Feedback is an objective output of my current skill level.

Jotted down some thoughts to get some structure going into my backtesting this week. I used David Allen's 'Getting Things Done' project framework as a rough outline

Define Purpose/Principles

1. The main purpose of my backtesting 30 trades is to get feedback from a decent sample size of trades to determine whether I am ready to risk actual money in live markets
2. Actions that will tarnish my results (even if they're positive):
   1. Being inconsistent w/ my rules
   2. Not documenting what I learned, what I feel
   3. Getting tunnel vision and not telling myself a cohesive story that updates w/ new data
   4. Poorly weathering a drawdown

Outcome Visioning

1. An ideal outcome is getting results that tell me that I have enough consistency/discipline to move onto live markets
2. Another meaningful outcome is that the 30 trades gives me objective feedback on areas that I need to tighten up to become an elite trader

Brainstorm/Organize
A smart idea I heard from a decision-making podcast is, before you start an uncertain project, ask yourself the question "If the project doesn't turn out how I'd like it, what is my guess on what factor would be most likely the cause of blame?" (aka a pre-mortem). By identifying the most troublesome aspects, I can actively plan in advance on how to counteract them and increase my odds of success.

Here are the top three problems and the proposed solutions I came up w/.

Problem: I have reigned it in a lot but I might be a tad overconfident. If there's a large gap between my perceived trading skills versus the feedback I receive from the markets, my confidence could falter.
Solution: As much as it pains me to type it, I have to acknowledge that the next series of 30 trades is not as consequential as I'd like in the grand scheme of things. Regardless of what happens over the next 30 trades, I'm proud of how well I've bounced back and worked on structuring markets after having my confidence severely shaken a few months ago. If I end up having a generally positive outcome across the next 30 trades, that is definitely a step in the right direction, but I have to begrudgingly acknowledge that if the next 30 trades tell me I'm not quite ready for live markets, that is also a step in the right direction (albeit a much smaller step lol)

Problem: I might be so focused on getting great results that I start trading my account balance instead of the charts
Solution: I will reflect on my emotional state before/after each trading session and during every trade. At the end of the trading session, I will look for recurring themes to work on

Problem: Even though drawdowns are a part of trading, if I experience an extended one, I might start to doubt myself and my strategy
Solution: I will create a playlist of meditations on overcoming doubt, and remaining calm in stressful situation. I plan on using the playlist daily, not just when things are going poorly.

Identify Next Actions

1. Create a list of meditations that tackle potential issues that you will encounter Completed
2. I will create a backtesting template in the app I use so that I can automate some daily structure
3. I have a daily call w/ a fellow VSA trader and I need to move back the start time so that I don't feel rushed when backtesting
4. I need to create a trading environment on the backtesting app that I use

On another note, I finished reading Mindset by Carol Dweck and plan on creating some flashcards on it later this week. I plan on starting The Mental Game of Poker soon as well. The author also wrote a book specifically related to trading, but I figured the material likely overlaps a lot and the trading book has a lower rating online anyways.

I got proverbially punched in the mouth yesterday lol.

Even having only executed two trades, and one being a fat finger, I can objectively say I was overwhelmed and not in tune w/ the market at all.

Over the last 24 hours, I did a bit of wallowing in the uncertainty before I stopped ruminating and started creating a plan of action. The conclusion I've reached is that I've gotten much better at segmenting data during snapshots in time thanks to my flashcards, but I have a lot of room for growth, especially when new data is incoming and I have to either ingest it or disregard it.

I'm taking today to brainstorm some solutions and I'm aiming to be back to backtesting by tomorrow's session. On the bright-side, I found out a week sooner than I would've by moving the date forward lol.

Gonna be posting trades and (context leading up to trades) for feedback. I took three trades today

Context
The market is volatile & hard to read but I think that it put in a hard fought higher low since smart money entered the picture. Uncertainty directionally but I will watch for a test of VAH as a sign that bulls are winning.
Trade Entry #1

Attached Image (click to enlarge)

It's hard to decipher, but my buy stop was triggered after the shakeout to the lows. My notes were "Shakeout but not a great close/volume. Price is rejecting price at the prior agreed upon value area (the rectangle) tho... Let's see what happens"
Trade Exit

Instant Stop out. D'oh. Felt good though and the bar suggests that the bulls have control.

Trade Entry #2

Instead of licking my wounds, I doubled down and immediately looked for another entry: "I am not going to chase it but I am making a bet that price would test for supply one last time before continuing higher".
And I'm in the trade. That second bar was scary to hold onto.
I moved my stop to breakeven but I realize that the market might have room to run so I may want to temper my aggression here and give a lil room for price to develop. The question is whether I'm moving my stop because the mkt says its warranted, or because I was stopped out in the previous trade?

...Looking at it (a bit) more objective, the most recent bar + close was the lowest volume of the day and closed off the highs. This makes me nervous. I will keep my stop at breakeven.

I feel like I could tighten my stop and get 1R here but I'm questioning whether it seems too. I think it's the smart thing to do so I will have to tighten my stop to lock in gains and let the market unfold
Trade Exit

I played this a little too aggressively perhaps.

I think I could've taken a step back and did a full review of the market to take stock and see the forest for the trees.

With that said, in terms of my entry, it was easily my best-executed trade I've ever made lol. It probably looks run-of-the-mill to most but for me, I had a theory, and maintained conviction even after I was shaken out of my first trade.

Getting Context again
After the stop out. I took a step back and analyzed the market as a whole to try to reset and listen to the market.

The market has put in some (hard fought) HHs and HLs. There's a 2BR that hasn't been taken out as a minor Sign of Strength. Price is struggling to get out of the gates but this could be emblematic of bullish absorption. I would be looking for a test bar to get involved... and when I look at the bar that stopped me out, it looks an awfully lot like a test bar...

Reading individual bars, there's mostly strength in the background and price has consistently moved away from the danger zones (albeit some shortening of thrust). It's the bulls market to lose
Trade Entry

"The test bar has a weak follow-through. I can close at breakeven now but I will risk .5R to see how things play out. Not a solid opening salvo tho."

"Bulls tested for supply and successfully closed at the highs of the day. Not as much conviction as I'd like. I moved my stop to breakeven. If price continues to hesitate, I will exit"

"Lots of overlapping bars showing indecision from the bulls. My stop (the highest light dotted line) has been moved up to lock in a minimal amount of gains."

"Kinda wish I was still in the trade judging from this bar, but I'm proud of the trade regardless. Again, I showed conviction to double down when I believed I understood the story of the background."

"God give me patience... and I mean right now"

I reviewed my finances yesterday and started to feel a little impatient about my trading. Today though, I came across that quote during an audio meditations that I listened and it put things in perspective.

I have been working on consistency and I've achieved it technically... currently, I am consistently a breakeven trader lol. Sometimes I feel like I'm taking one step forward and one step back w/ each trade. I have always told myself that it's harder to go from 'losing trader' -> 'breakeven trader' than it is to go from 'breakeven trader' -> 'winning trader' but it is still frustrating in the moment. I suppose that is just the process of learning. Here are my stats:


IMO, the biggest factor is that I haven't been able to catch any large moves yet. My largest winner is only 2.3R. Previously, I was also treading water, but eventually caught a +4R trade to move my P&L curve away from breakeven where I'd go back to treading water until the next big move. That was rinsed and repeated until I got 20R.

Since I haven't hit any home runs during the current session, my P&L is just languishing near breakeven. In retrospect, it's not that the opportunities never occurred, I just got stopped out due to bad breaks or bad habits that need to be stamped out.

I suppose I need a larger sample size before I think of anything conclusive about my results. I feel like I am learning something new w/ every stop out and 1R winner, so my prior results aren't representative of my future potential. That is probably the biggest takeaway for this mind-dump of a post... I shouldn't place so much emphasis on what has happened in the past, because I am constantly improving, and the past is representative of old beliefs and trading processes. That is a growth mindset approach, and my frustrations about being breakeven are understandable, but subtly represent a fixed mindset where the past will always dictate the future.

Should be 30 trades technically but I'm ending this series of trades @ 29.

Personally, I was framing things negatively for most of the last post, but me missing 2-3 winners is all that separates me from having +10R returns. I can say that I caught some unlucky breaks, but then again, I want to be good enough where it looks like luck is favoring me anyways and I'm clearly not there yet.

I will spend the rest of the week brainstorming the (minor) tweaks to make and I will start a new series of 30 trades Monday. I will rinse and repeat this until I get 20R.

I'm feeling more confident about the consistency in my trading (even if it is breakeven) but I would like to get more feedback on price action that I overlook. I spent a while yesterday brainstorming the best way to share trades moving forward.

I used to write my high-level notes in Notion which has a great presentation feel. Below is an example of what it looks like and here is a link where you can click around.
With that said, it's such a bitch to fill out that backtesting starts to feel less like I'm learning how to trade better, and more like I'm doing accountant work. As a result, I slowly stopped using Notion for the past few months.(I'm not sure how many people are going to want to leave FF and visit another site to get some VSA principles also)


One more obvious solution is to post more trades directly in ForexFactory. My daily routine involves a lot more trades than I've shared, but my journal notes are in markdown language and found it a bit difficult reformatting it to BB Code, so I've dragged my feet a bit. Yesterday though, I found a MD -> BB Code converter that should make things easier.

As a longer-term project, I'm contemplating this self-hosted solution. I have it up and running on a server already (haven't imported any data yet tho). It's a long-term goal that has lower priority though because making it publicly available would require a big detour into web-hosting and I want to stay directly focused on trading for now.

I've spent a few days over the past week or so redeveloping how I structure my days and analyze my trades. Cautiously optimistic about the future but 2024 is going to be trying personally (and globally). Here's to hoping that I can carve some signal out of the noise and achieve consistency re: profitability

Happy New Year to everyone reading.

The past few weeks have been a bit more stressful than normal. I mentioned earlier that I'm trying to figure out how to better share my trade tracking process, and that has led me down a path where I also reevaluated my personal tracking process as well. It has lead to about 3 different solutions that turned into dead ends after +5 hours of commitment for each avenue. There's something mildly irritating when my time is wasted feels wasted but in retrospect, I suppose that it's an investment and once I find the right trade tracking process, it will streamline my analysis so that I spend less time documenting and more time analyzing.

FWIW, I think I've landed on the ideal setup... I use Obsidian to track my thoughts and theories, and I'm expanding its usage to also track trades by leveraging some of its plugins to supercharge my notes and turn them into a trade tracking database, I've had to brush up on a teeny bit of JavaScript and watch a 1.5 hour tutorial on YouTube, but it seems like the hardest part is behind me. I'd approximate that it's about ~70% built out.

This side-quest has felt like an extended detour away from backtesting and a small part of me feels like my skills are starting to atrophy after only a week. It could be because I had a loop of feedback -> adjustments -> improvement w/i my trading routine and that made my improvement in chart reading more tangible.

I am anxious to get back to reading charts but I have to also acknowledge how a solid trade tracking process will remove most of the friction from my day-to-day. Any reversion of my market understanding will be resolved once I get back in a groove.

My new trade tracking process rocks

I've finally gotten the hang of it and the streamlined feel allows me to focus more on my analysis instead of data input.

I also recently created a 'Deep dive' template for charts that I struggle with so that I can really get into the nitty gritty and pinpoint what particularly is throwing me off and how I can resolve that issue moving forward. Still hovering around breakeven after knocking out 3-4 more trades last week. Looking to get ~10 trades per week moving forward which works out to 2-3 per trading session (Fridays are for review).

Pivoted to just trading Springs for now and it's trending in the right direction so far. Here's the last 30 trades:



For me, what's most exciting is that my results seemed to be getting better w/ time/repetition, but it's still early.

Over the next 5 days, I'll will be doing a deeper review of these thirty trades and come up w/ a gameplan to improve for the subsequent 30 trades

<spoiler alert>This is likely to be my gameplan indefinitely: Take 30 trades -> review -> adjustments -> Repeat step 1<spoiler alert>