Not so nooby Not so pro- My fight with psychology

I want to move my 'Journal Thread', here to forexfactory, due to the low volume of readers I had before (lack of critiques).

You can find my original thread here:
http://forums.babypips.com/newbie-is...iscipline.html

For those who don't want to read up on my background, I'll summarize it here. I have traded live for 3 months, with my traders mindset being the one thing thats consistently holding me back. Starting this monday I will update this thread everyday with my full analysis, entry/market orders, and whatever battle is going on through my mind. I welcome encouragement and critisms as I travel the second step of the forex traders journey, when you are no longer a newbie, but you just don't trade good enough to be labeled good or pro. The limbo level.

I will be keeping track of my weekly returns and trades, will update my weekly results on this first post for all the new guys coming in. Look forward to chatting with you all

(My) IRON CLAD rules to never break when trading:

1) always know economic events that are potentially going to affect your trade.

2) Be aware of strong/significant Support/Resistance lines, NO HALF-A$$ing it

3) Pick the direction of the daily trend. DO NOT trade the fence!

4) Do not trade if feeling emotional

5) Do not trade if you do not know your entry, stop, AND take profit region

6) know your risk before entering the trade

7) WRITE THE SETUP IN THIS BOOK BEFORE ENTERING THE TRADE

8) Pay attention to volatility for range vs trend trading

9) DONT CHASE A TRADE. Best Price or NO price.

10) complete objectivity, complete faith in entering every trade. Believe in the stops you place

11) NO CALL OF DUTY DURING TRADING SESSIONS!

12) In regarding take partial profits, there will be two sets of rules. Under low volatility environments if trading inside a box I will take profit at roughly 80% of the range, not at the very end. If trading breakouts, I will take partial profit (half my position) at +20, take full profit at +30-40. When trading high volatility environments, I will take partial profit (1/3) at +40, and set to breakeven + trailing stop at +60. To cliffnotes this rule, I must TAKE something at either +20 or +40, no exceptions!.

13. If I land a real breakout, at the end of the trading day I will ask (and post here) "Was that a real breakout?" If it was, then I will not trade the following day, but will still draw/setup my charts like usual. Instead, I will demo a new account trading S/R lines for the no trading day.

My daily ritual:

Here is my more or less- Daily checklist.

1) Just waking up, win or lose (trade entries), I WILL NOT ENTER THE MARKET FOR AT LEAST 2 HOURS. I find that these first two hours is what is costing me profits consistently every week.

1a) Review COT data, Bond yield data, Economic Calender
2) Mark all relevent High- Lows from Monthly, Weekly, Daily. Also mark Daily Open. Must also label previous 2 sessions High/Low
3) Draw my breakout boxes for Daily, 4H, 1H
4) Sl will be set between 25-30 pips. I will have half my entries at break-point, and half my entries at break-point +15, if I'm trading in a kill zone
5) I will take partial profits (1/2) at +30 or +50, depending on level of volitility upon breakout. For range plays, I will take half profit at +20, and full profit at +40 no matter what.

So i have a question that hopefully someone can answer..

I use fxcm's trading station. fxcm also has MT4. Can I link explorer to MT4, trade from trading station, and still have results updated? thank you

No Call of Duty??? Dammit. I'm out.

11) NO CALL OF DUTY DURING TRADING SESSIONS!

yes u can

The whole call of duty thing is referring to zombies... since each zombie game takes like 3 hours.. and it requires 100% of your focus, so i can't be managing my trades at the same time im killing stuff lol. I made this rule when I missed a 150pip break out because I was shooting them up

The weekend gap following the friday rally was well within reason, so my open trades will be left open. No major news info at the moment, and current bias is short for the asian session. Current price action has taken the pair below daily 38% fib level (1.0325), so my my friday tradeis still okay. Im expecting price to do okay until it reaches about 1.0250, and if it clears the 1.216-1.0233 region (previous lows and daily pivot levels), it would be a good indicator price will be heading towards 1.0120. I will be looking to take profit at 1.0220, and possibly re-enter a new trade if price breaks below 1.02. I will be looking to go long at 1.0450, and as for my current trade, will bail out on it at 1.0350.

Just like with AUD/USD, There is not any major news at this point, and reviews of the COT/Bond yield analysis doesn't show anything in the works. At its current short bias, the price is in a really good location, with clear skies heading south until 1.3670, where I will aim to take profit. I have my stop loss at 1.3820, in case a long bias takes effect in a strong, quick rapid sucession. Since the two trades I am in are both held over the weekend, I have no new trade setups yet, so no pictures will be posted for now.

AUD/USD: Sell: 1.02918--> closed : 1.02440 = + 11.6% (due to closing partial positions)

EUR/USD: Sell: 1.3730 (average due to scaling in)--> closed: 1.36662= +4.03%

USD/JPY: Buy: 77.031, closed: 76.81= -1.8%

Total gains for the week = +13.83%


Will post analysis for the day before london.

http://i40.tinypic.com/9isoc0.jpg Since I fell asleep, I missed the squiggly line buy entry right there. Strong support in that line (1), weak small red candles leading up to that price in a parabolic fashion (2), and matching 50% daily fib level (3) gives three confluences for me to enter in a short at that position for 3% risk. But, since I missed it, its okay. What entry I do have on right now, is a short entry at 1.0230, due to overlapping daily/ 1H fib levels right at the daily pivot level. I have set the stop at 25 pips, and will be risking 3% on this trade, providing the entry is hit during middle of asian session or earlier. If time is closer to london open I will cancel the order. Take profit is set at +30.

UPDATE: sell 1.01781, stopped out 1.01701, +1.2% ( I added to my position twice, and realized on the last one that I lost track of support, and added positions AT THE SUPPORT, instead of taking profit, which severely cut into my profit. This should have been around +3% gain)

sell 1.01612, exited 1.01777, -1.8% (I entered at the ends of a sharp drop, and realized that I was at support + market sentiment switched to a temporary long bias. Had to exit with a loss to preserve my capital, did not want to wait til SL)

And another note, I stupidedly entered a long USD/JPY trade trying to catch the aftermaths of the intervention. I exited at -7 pips (-.3%) once I realized how retarded that sounds.

http://i41.tinypic.com/nxjqeg.jpg

So here we currently have a long bias on most of the pairs, which I believe to be temperary, or until I look and decide that its more solid. Anyways, as I compare different pairs for correlation, I find myself drawn to the 38% fib level, which overlaps in multiple ways. This correlates to a resistance zone in other pairs, and looking at the weakness of the current candles, I place a sell order at 1.3660, and 1.3680, split positions sandwiching the 38% and 50% level to play the bounce. If price breaks past this zone, then long bias is definitely strong and will hit 1.3720 before I worry about any other entries for this pair. I will be risking 2.1% on this trade, roughly, with take profit around 2.1%.

UPDATES: Sell 1.3618, took profit at 1.3595 and 1.3592, = +1.3%



UPDATES: Just in, GPB/USD: Sell 1.58621 (risk 2%), took profit at 1.58357 (+2.2%) I had this sell order placed under the recent low of gpb/usd, and figured that if price had strong momentum and breaks past the low, I can get a few quick pips while price formed a new low. I manually closed this trade, the original tp was set at +34 pips and I took profit at +26.4, the daily S1.

SUMMARY FOR THE NIGHT OF 11/15/11: +2.6% (quick scalp for a few more bucks, then had a entry order hit activate and hit stop loss for -3%, and two entry orders that missed a fill by <0.5 pips which would have gained 3% each)

http://i43.tinypic.com/34e6y4g.jpg

I see a bullish divergence formed on aud/usd, neutral on gpb/usd, and both eur/usd and aud/usd reaching critical support levels (monthly lows + pivot for eur/usd, 2 week low for eur/usd). Thats two levels of confluence plus the fact that asian session tends to go opposite in direction of the london/usa sessions, so I entered in my long trades at both locations. I have risked 2.0% on the eur/usd trade, and 3% on my aud/usd trade.

One thing I have noticed is that I am CONSISTENTLY not getting filled! Price would often be <5 pips from my entry, and lately its <1 pip from my entry before skyrocketing in my predicted direction. So much for precision huh? I am working on a tier'ed risk strategy to allow for me to at least catch some of these moves, even if most of my position is not a part of it. For EUR/USD, I will take half profit at +20, move stoploss to +5, and take full profit at +30. my aud/usd position is missed, but I will leave it for until asian session ends, in which I will cancel it.

BUY: EUR/USD: 1.3502, stop loss at -25 pips, take profit at+30 pips

http://i43.tinypic.com/4g0z78.jpg

To sum up my trading day, I had several losses, and several wins. Lots of stupid mistakes, which I will discuss every single one. But what saved me, was this awesome liquidity vacuum that allowed for me to go from -10.8% to +1.6%.

To explain the liquidity vacuum, I have posted the picture, which I will discuss. The arrowed areas represents areas of extremely low liquidity, which provides a very fast change in price. The initial one brings you into the bottom consolidation box (I traded in the red because I was trading the range-trade bounce on a weak support level, so I did not catch the initial drop during asian session). The break out of the bottom consolidation box occurs during the first bullish candle close that landed outside the box (which I caught). The fact that you get a strong movement up right after the recent strong move down means that entire range had a liquidity vacuum, essentially a zone that had no resistence (like knife cutting through butter instead of a brick). So after the consolidation box up top, when price broke out down south, I KNEW price would drop extremely heavily and not find any resistance until it reaches the consolidation region again, allowing for me to gain back all of my losses plus more. One other thing to mention is that right before the breakout, there was strongly risk-off news feed, as well as aud/usd forming a huge hammer indicating a southern break.


Now, for the things I messed up on:

EUR/USD:

I made the assumption during asian session it ALWAYS moves opposite in direction to LON/NY. This is not always the case, and so I traded a range-trade against the trend, when price action was indicating a downward bias + a pending breakout. I missed the breakout even though I saw it happen, because I was tied up in a EUR/USD that I did not want to take a loss on (got stopped out)

I also got faked out by the initial fakeout from the upper consolidation box. But in this case, I immediately closed my positions to get ready for the southern breakout, thanks to the use of correlation between pairs, S/R levels, and general price action indications.

AUD/USD:

I missed my entry orders TWICE by <1 pip, so I got annoyed and manually entered in a short trade, failing to notice that by the time price missed my entry so much, it reached a strong resistance zone that also coinsides with a weekly 50% fib level, so price bounced about 40 pips, easily wiping out my 25 pip SL.

Finally, I need to make a new rule about my entry orders- If it misses initially, I MUST CANCEL THE ORDER and wait for a reset, because by the time price reaches my order again (anti-trend orders especially), it will activate my order and completely blow through the stop loss with ease. Its true that emotionally, I am very very calm compared to before. But frustrations on getting missed fills (The way I trade is so precise that its common for me to get missed fills that are <5 pips in difference) causes me to lose track of the bigger picture. I hope this update is helpful for the other noobies.

FINAL TALLY FOR THE DAY: +1.6%

Had a bad day so I'll just make this brief, Im down roughly 6% for the week. At my high I was +18%. Yesterday alone would have been a +20% winner... BUT I MISTIMED my entry by 10 pips, and got stopped out right at the turning point.

Mistakes-

Not taking partial profit where I was supposed to.
Not exiting the market at breakeven at a sentiment turning point (in hindsight I can see exactly the moment when I started "hoping", Fck!)
Not moving to BE after I was relatively in safe waters.
Fall asleep about 30 min before the turning point started.

So on top of this and all my missed entry fills (missed by <1 pip), I would have had a spectacular week. But my week is far from spectacular. Must shape up next week. Need some psychological modifcations for my pre-trading game.

Final thought: I can see when my analysis becomes faith. Its being able to leave the battle when you switch that defines a winner from a loser. This is the one goal I will focus on tackling next week.

Risking 3% per trade with the small amount of time you have been trading is probably not a good idea. If you lower the risk to less than 1%, you will have less money in the trade and will be able to make better decisions. That will also build better habits. Once you see consistent success start raising the risk a little at a time.

This is just my humble opinion, this is what I was doing when I almost lost my first account. Luckily I caught it before it was all gone closed my account and went to demo for a while before going back live.

Just a suggestion from someone who has been there and done that .

Thank you for your comments, but the % risk I do does not affect my trading mentally. Its the other stuff that messes with my psyche- missed fills/bad timing with entries/mis-analysis.

I have talked to someone who I consider a mentor of sorts, and from now on will only trade the one strategy that has proven a consistently high success rate. His words were "If you have the tools to become rich, why are you testing out other theories?! Save that for after you become rich!"

Makes perfect sense. Can't believe my goals were leading me astray from my most important goal- making money.

http://i41.tinypic.com/2n1xunm.jpg

I have decided to go back to my box trading strategy, and will only be trading this until I become rich. Explaining things in my journal should be relatively easier now.

Here's what is going down:

Divergence in US bond yields (you can see it form on the 2yr bonds)
Decent shift in direction by commercial traders, bigger changes on eur/usd and gpb/usd compared to aud/usd.

All this points to a strong short bias. For the pair EUR/USD, Strong support is found at 1.3433 area.

Strong correlations all setup to breakout south for a decent amount of pips, So I entered at the top of the box, and TP at 1.35, since due to timing I was not sure if a breakout was imminent. By trading the correlations, I re-entered about 30 pips into the confirmed breakout for extra pips. You can see initially I got stopped out once- I saw a temporary bullish spike and took BE, expecting to be able to re-enter at the better price (the top of the box).


Trades for EUR/USD:

Sell: 1.34798 TP:1.34587 (+4.6%)
Sell: 1.35361 TP 1.34998 (+2.5%)
Sell: 1.35284 BE: 1.35284 (+0%)

http://i42.tinypic.com/4rf8fr.jpg

This was also a box-correlation play as well. I had an early exit when I thought there was a chance of a failed breakout formation, and re-entered after breakout was confirmed. Had to take profit early due to daily 61.8% fib level, which seems strong. Currently all pairs I'm watching (AUD EUR GPB) are all hitting support levels, So I'm set up for a BUY bounce trade.

SELL: 0.99655 TP 0.99559 (+1.2%)
SELL 0.99356 TP 0.99206 (+1.8%)

http://i43.tinypic.com/v4xq9f.jpg

I exited this trade at only +1.3 pips, because of margin requirements. However, in terms of all my pairs reaching support, I have boxed in this zone with a purple box. This area will determine the continuation of the breakout, or the reversal.

Since theres no major news related events that I am seeing so far, I don't expect the movement to gain much more pips in relation to the big picture.

SELL: 1.57290 TP 157277 (+0.08%)

UPDATE: End of day results= +~3.7%
i had two entries activated that lost. one was overleveraged because I had the sl set to 10 pips more than it should, and the other.. will have to reaxmine the trade itself to determine the problem.

One thing I do know is, my bounce trades only work for the first bounce if you aim for 10-20 pips on average. Looks like from tonight on, no more entry orders til I get the bug fixed out.

The bulk of this weeks move has not happened yet because I have not caught the catalyst, so outlook is still very positive for this week.

Amen to that! Learn one strategy and learn it well, that is all you need. Trade it, until it becomes second nature. That is what I am currently doing as well.