Monthly Archives: January 2012

An aside on brokers…

So I’ve been looking at different brokers for the last week(s) for no particular reason other than I like the look/feel of MT4 charts and the fact that they’re not Java driven. It’s quite possible this is simply another example of ‘mucking about’ rather than addressing the actual issue of making decent trades.

Well, thinking about it a little, this is definitely a case of looking at the scenery instead of driving down the road – or whatever mixed metaphor I can come up with 🙂

However during this process I’ve been slightly dis-concerted by the efforts made by brokers to get you to use a demo/open an account and trade with them. Considering I’ve probably received at least three phone calls from each of the three I enquired/downloaded a demo of and had a fair number of emails answered… well it seems a little ‘desperate’

Did everyone pull their accounts when MF Global tanked? I remember seeing some ‘new account opening’ stats a few months back and the numbers looked small even in the USA.

Anyway, just thought I’d mention it as it was on my mind.

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Trading plan = phew! Now, lets get on with it ¬_¬

Right off the bat – and before anyone gets excited – this plan does not contain the setups or notes related to how I’m going to be actually trading in 2012. Well it does but I’ve got the only un-redacted copy. Sorry. The main reason is that since this is based on material I’ve paid for then sharing it for free will get my arse sued right off. Please don’t be disappointed and remember I’m still at the sideways stage 😉 so you need to go sort out your own plan.

Secondly – this is not a study in how to write a trading plan. I’ve nothing to teach here and nothing to sell you. However I thought it worth sharing as a way of encouraging anyone who hasn’t got one to go write one. You’ll see this is my sixth attempt at doing this since Jan 2011 which means either I’m lazy, incompetent, foolish or all of the above.

I finally got to a place where I recognized that I need this framework to operate in and I’ve pulled together enough actionable ideas to make this a reality for me. Re-reading stuff I’d written before (as well as previous posts on this blog) is frankly embarrassing. I’m sure there will be stuff on here from now that I’ll cringe at in six months time.

I do reference people that have really shed a significant light-bulb on trading for me so it’s worth looking at from that perspective though. A lot of personal information has also been removed obviously!

It’s partially thanks to the following (free!) software that I got this document to the state it’s in. Focal Filter allows you to create a blocklist of sites that you can’t get to for a certain time. Massively useful with all the distractions of email, twitter, facebook and twitter. Did I mention twitter? 🙂

If you’re easily distracted by crap online then I can really recommend it. I know what of I speak etc. There’s a dedicated Mac application for this kind of thing so go googling for it.

However back to the point at hand. It’s taken me far, far too long to get to where I can actually write this. Why? Well lets look at some of the main reasons.

1.) The majority of information I went through from Jan ’11 till Oct ’11 was simply wrong

2.) Trying to trade on a 5 minute chart while working full time. This is simply impossible.

3.) Not understanding the inter-relationships of multiple time-frames. *see below

4.) Not enough time in front of charts, taking trades and seeing how prices move

5.) Not having a clue – at all. Not understanding how important a plan is.

So the major light-bulb has come on about how price moves and how different time-frames can shed light on this. From this point you can get a hint of where a good entry point might be and then plan accordingly. There are no magic indicators as far as I’m concerned.

The other main thing to point out at this stage is relying solely on a chart without knowing what’s going on in the market (i.e. news) is like going into battle with your eyes shut. You can bet that major market participants are paying close attention to what’s affecting their market/their positions.

A final point to make is that record keeping is important. I suspect that this will become a significant understatement in 3-6 months… Record keeping may actually be the only way to improve over time. Read that again and really think about it. If you’re not recording your trades and why you took them then, erm… you’ve probably been getting the same results I have – crap results 😉

I’ll explain how I’m making this work for me and provide a proper trading update in a couple of weeks. Also looking at different brokers/platforms but that’s an entirely unrelated topic.

TradingBusinessPlan-Redacted

So there you go.

Plan? Check!

Practice?

Process?

Well, that’s what 2012 is for right? 😉

2011 summary 2012 heads up and ‘secret weapon’ insight :D

So I’ve managed to procrastinate at olympic levels on writing this post but feel the need to draw a line under 2011 before moving into 2012. This kinda comes under the same category as tidying up, sending un-used clothes to the charity shop and filing paperwork but lets go for it 😉

First off – I’m continually surprised by how much I actually got out of blogging both as a way of kicking my own ass but also the comments, feedback and great people I ran into during the last 12 months. This ‘ere humble record received 6480 views last year and more astonishingly I gained >160 followers on the twitter. I have no idea what to do with the twitter side of things btw but thanks for the interest!

I’m entirely amazed by this and would like to say ‘Thank You’ as well as wish everyone an awesomely successful 2012.

I’m painfully aware that this ‘media’ (?) success is completely un-reflected in my trading results however and since this whole blog thingumy is entirely peripheral to the main point I’m not going to say much more other than bits of the site here need bringing up to date (esp. books) which I’ll do as and when. (honest)

So I’ll break 2011 down into quarters to give the whole thing some structure and take it apart from there…

Q1, Q2, Q3 Jan-Sept

I guess looking back this is really the ‘no freaking idea phase’ where not only did I not know but essentially everything (including myself) could have killed me. The bit where the caveman walks out of the cave in the belief that velociraptors are actually cuddly, kind creatures that are simply miss-understood.

On the plus side (possibly out of desperation) at the end of June I began to learn vipassana meditation which I’ve not mentioned anywhere in this blog previously. Now, I’m sure some people will take the piss 😉 and if you’d have told me in the beginning of 2011 that I’d now be doing this every day I’d have laughed my ass off too. No really. I’ve done stand up comedy about Jesus beating someone to death for driving in the centre lane of the motorway so don’t start on this, ok? K 🙂

The reason I mentioning this now is to say doing this has had a ridiculously positive impact on my life outside of trading which has fed back into how I view what I’m doing on this particular (trading) area…

So vipassana is ‘looking at things as they really are’ which, if you know any psychology at all or understand perceptual bias is very worthwhile getting your head around with regards to trading. Now hopefully you’ll follow me on this…

People (the majority of retail traders) look at trading (imho) because they are un-happy with their existing situation and being a trader will ‘solve all their problems’… doesn’t look hopeful eh?

This means that when trading they are extremely attached to the outcome and that will inevitable cause them to NOT see what’s actually going on in the market – they will be too anxious, too scared, too fearful and too everything. They will do everything wrong. Take profits too early, trade emotionally (revenge trade) and also pass up opportunities to actually do things properly.

Their trade will represent how they see themselves in the market. Overconfidence on one side (possibly) without the required actual knowledge versus fear on the other side also compounded by lack of knowledge.

Now to come back briefly to this – I’m writing this blog to prove to all the retail traders out there that have got sucked into the FX hype that it can be done and it would be pointless to pitch up out of the blue running around shouting ‘I did it – I’m consistent’ without being able to contribute to the rather sketchy (i.e. shit) path worn in the road by the travellers before. I’m talking about lack of ‘proper’ methodology about how to master this skill but I’m also digressing a whole hell of a lot. Sorry!

Anyway the psychology will kill you if you’re looking for success in the market to ‘fix’ an issue you have out there in the real world. One of the ironies here for me is that if I wasn’t going after this goal then I’d likely never started meditating in the first place and I’d not have seen what a powerful tool this has been at every level.

Here’s a hint at what’s happened outside of the trading arena.

  • No longer dealing with people that just sap my energy
  • Now getting on better with friends/colleagues in a job role that (while stressful) I really enjoy
  • Have resumed running in addition to the usual gym stuff I do
  • Haven’t had a cold or any sort of illness for the last 6 months
  • Eating better and sleeping better
  • More ‘level’ emotionally

Now, is my life suddenly perfect? Hell No 😉 but I’ve realised that all the solutions are actually locked away in my head and that they will absolutely NOT come from getting really good at trading in order to solve problems by being able to throw money at them…

So what does this mean for trading? Like a dog with a bone I still want to become very proficient at this skill. However, all the reasons for doing so are now subtly different because they’re no longer keying in to all the negative emotional and psychological debris that massively gets in the way of any kind of decision making. The emotional ‘tie’ between me as an individual and my position in the market isn’t going to screw me over (as much – lol) whenever I’m looking at what’s going on.

Now, am I suddenly a ‘super trader’? No because I still have some un-helpful character traits that I need to sort out.

1) I’m way too impatient. By this I mean I close good trades far, far too early. This is just going to take some new ‘rules’ and self discipline for me to stick to them

2) I’ve been trying to trade 5min intra-day bars when my work commitments make this virtually impossible. Putting myself under this kind of pressure has had a negative effect in the last few months. I actually like this timeframe a lot but it’s not workable in my current circumstances

3) Still crap at record keeping. Which essentially points to laziness on my part and currently have one and a half days before the end of tomorrow to write a proper trading plan for 2012. We’ll see how much coffee I can consume tomorrow eh?

Before I get into Q4 here’s another observation… The ‘goal’ of becoming a consistently profitable trader isn’t the actual goal at all. A goal is nothing more than an end point and when you’re at the foot of the mountain it’s entirely the wrong thing to concentrate on!

The goal is to master the process of executing good trades and managing them well. Concentrating on the ‘goal’ is simply going to be the most massively frustrating thing you’ve ever tried and you will more than likely give up. It’s the process that is 100% more important than the goal. Some obvious examples

Trading
goal – money etc. you’ve seen the spam too so I won’t elaborate 😉
process – simply learn to execute good trades one after the other

Diet
goal – lose 12kg
process – keep in mind what you eat, track it, don’t over-eat, exercise

Learn a language
goal – chat up anyone (LOL)
process – learn the grammar, structure, vocabulary and practice, practice, practice.

So you see, it’s the goal that’s sexy in the beginning but the PROCESS is way more important. This is why (to a certain extent) all the ‘positive thinking/affirmation’ crap gets on my nerves. Be mindful of the process and forget the goal 😉

Q4 Oct – Dec

Here I think things actually improved. I got some proper tuition and possibly found the humility to listen and focus on the process of becoming proficient at a skill using my own eyes/brain rather than expecting coin to fall from the sky like some sort of manna from heaven… Yes, it’s taken my 9 months (well more like 12+) of bashing my head on the wall before I realised I didn’t know anything about what I was really trying to learn…

People I’m learning from…

  • Jimmy Young – absolute 1st rate tuition/value for money/pull out all the stops so you ‘get it’ however intra-day (5 minute) so kinda challenging for me and the j.o.b.
  • Chris Lori – price action, price action, price action (1hr-4hr-Daily)
  • Nial Fuller – as above with a different slant

On this basis I’ve been making a fair fist of trying to trade during the day while working and let me be clear about this – it absolutely doesn’t work 😉 The amount of ‘mental’ required to get into the flow of what the market is doing on a daily basis isn’t compatible with staying employed. So I’ll be moving up to 1hr/Daily charts while keeping on with Jimmy’s excellent course as we progress through 2012.

So there we have it. I’m gonna head out to get a coffee and write a trading plan framework

Thanks again for all the comments, support, suggestions and especially criticisms

All the best to everyone for 2012

Namaste

Rob 😀

Finally 2012 can’t really start properly without some of the following because we must all be a bit ‘loco’ 🙂 Kickit! INsane in the BRain 😀