Another mixed week as I try to implement my new methods. I realize that it’s important to have the right time frame in view at all times to get a better picture of market overall activity. Otherwise, you can get caught up in the heat of the short term battle and wind up making mistakes.

Good week for learning risk management. As I do battle with real time charts, it becomes clearer how to manage positions and control risk by adding, subtracting,entering, or exiting a position.

What I’ve found is there are pockets of uncertainty in the market but there are also areas of high probability. The key is exploiting the high probability areas while avoiding the more uncertain zones. That may sound confusing to the average market watcher, but for a person who actively studies market data daily, it makes more sense.

Looking closely at market activity, it’s uncanny the way the market moves – as if to entice both Bears and Bulls at the same time even though only one side is right. The key is time frames. The market can be bearish and falling in the short term, but still heading higher longer term, only to be heading lower on a still longer term. This is how the market can trick you into seeing what you believe, and why it’s very important to know what time frame you’re trading in.

 

Great week on paper as I recorded big gains. I say “on paper” since in the nature of hedging, you have both positive and negative positions, so paper gains or losses may not directly reflect the true gains or losses made to the account. It’s a relative value between the two positions. So while I did make gains this week, my paper gains  show a higher value. I’ll have to properly trade the opposite position to lock all the paper trade gains in.

That’s the interesting thing about hedging. A couple of days my trades had net negative adjustments on paper, but were positive in increasing my account value as I adjusted my long/short positions. Even so, it’s strange seeing negative trades as a good thing. Trading both long/short shifts my focus to being net long or short instead of the individual trade.

The focus this week has been on implementing the new strategies and insights I’ve acquired the past month. The biggest challenge is trading real-time on the right end on the chart. The complete chart you see at the end of the day may look easy enough to figure out the market directions, but it’s another thing when you are doing it real time price bar by price bar. It’s the equivalent to driving on a road where the road is being formed right in front of you as you go, and you try to anticipate were the road is heading so you stay on it.

It’s a lot like the old school video game, Night Driver:

 

 

 

Now imagine trying to play that game with only 2 or 3 light posts mapping the way instead of a whole road of them- that’s similar to day trading. That shows why many find day trading to be quite difficult.

 

There’s a slight learning curve in recognizing new signals in a real-time environment versus end of day charts, but I’m making good progress.

Trading results this week confirm the great potential in my new methods. Two days this week I had generated sizable profits rather quickly, before giving a portion back due to misreading some signals. That’s the exciting part – any mistakes made were not due to my system, but due to missed signals I didn’t pick up in time. Practice makes perfect and I’m getting familiar and refining my techniques each day.

The one drawback is I now have to chart watch, as in pay much more attention to all the markets smaller movements instead of just the bigger ones.  A main positive benefit is I can now successfully trade much smaller moves in the market which provides more trading opportunities.

 

Happy Fibonacci day!

0 – 1 – 1 – 2 – 3 – [ 5 - 8 - 13 ] – 21 – 34 – 55 – 89 – 144

The next Fibonacci day won’t be until Aug 13, 2021. [8-13-21]

 

 

**** This has been a Nerd Alert ****

 

** Update **

@kittyluve reminded me that non science/technical majors may not be familiar with the Fibonacci Sequence and what it means or its significance.

It’s a series of numbers that occurs time and time again in nature – also in trading!

 

Here’s a primer on Fibonacci and his famous sequence:

 

 

 

 Here’s a more artistic/aesthetic description of how the Fibonacci Sequence occurs in nature:

 

 

 

Saw the vid online – looked cool.

 

 

This week was both a negative and positive. The trading/hedge position is really still in play so only adjustments were made. The adjustments from trades opened from prior weeks were negative while the adjustments for this week were positive with a net negative sum for the week.

April is already over – that’s 4 months of the year already – already 1/3 done. It’s amazing how time flies. It’s funny how as a kid time seems to go by so slowly.

With the end of the month comes talk of overall trading progress. The best terms to describe this month are both horrific and terrific. Woeful and wonderful. Tragic and terrific. In other words, it was a month of both very bad but very good events with the good news outweighing the bad by far.

This month had me experience some of the worst trading results since I started posting results. Loyal readers familiar to my volatile trading curves from last year know that I’ve been able to dodge many bullets and still come out on top at the end of the month or at least neutralize the damage. Well, my number finally came up this month and the culprit was in my new trading style of delta trading – keeping two active and opposite positions open.

With my old method of just being in one direction, I can only get burned from one side. However with delta trading, you can get burned from both sides – making it possible to lose twice as much as a one directional trader would, which is what occurred.

What happened was is that I lightened up one side, but was wrong on direction and the market moved strongly against me. That resulted in me adding back my hedge to put the protection back on, then the market roared back the other way. That means my hedge neutralized me getting back most of those gains. I once again adjusted my position by removing the hedge and the market reversed and roared against me again, giving me two big losing trades for the month. I haven’t done the calculations yet, but I’m sure the results won’t be pretty with a big double digit loss.

This is where posting results doesn’t make for a positive experience as losses are hard to take, and harder to make public. But that is the life of keeping a transparent journal – if I’m willing to post my big gains, I have to be willing to post the big losses. As I’ve said in the past, my performance graphs are straight up transparent as it shows my account status as opposed to just closed out trades. Since I’m still carrying a portion of the losing position, if I just reported on closed trades, a good portion of the loss would be hidden until the trades were finally closed out.

I know traders who struggle to make consistent profits and post losing performance month after month. I have to take my hat off to them because I know it would be very difficult for me to keep posting a series of big losses. Most folks have no desire to make their mistakes public. Although uncomfortable, revealing losses helps keep me grounded and better focused on risk management. It’s a good motivator to keep risk level in check.

So I was done in by my hedge trading this time whereas my prior directional trades would not have suffered as much from the wide market swings of the month.

So did I make a big mistake by attempting to incorporate this new trading strategy? To be honest, I was having some thoughts about that but that soon changed as I was doing my post trade analysis.

A big mistake, no, make that HUGE mistake that many traders or people in general do when faced with a mistake is try to forget or bury it and move on as quickly as possible. They gloss over their actions without taking time to figure out the critical details that can lead to improvements in habits or techniques. I built up my current methods by determining what works from what doesn’t and then refining them to make them more effective. Being a creature of detailed observation and analysis helped me immensely in improving my performance.

Analysis this time around resulted in revelations that rival my best “aha!” moments to date. I uncovered a hidden error in my trading analysis and the resulting improvements are at a game changer level. My biggest weakness with directional and hedge trading was that my short term accuracy was poor. My directional trades often reflected this with having to wait days or weeks until my long term targets panned out. This always troubled me since I knew it would only be a matter of time where I got the long term target wrong and then even my directional trade could suffer the same magnitude of loss such as I just experienced.

Well, I believe insights gained this month have solved the short term direction problem. Why so confident? I back tested my findings using data from the past and other markets and it holds up to confirm my findings. Current market behavior continues to validate it as well.

The ironic thing about my discovery is that trying and failing at hedge trading for the month were directly responsible for it. I’m fairly certain that if I maintained just single direction trading I would not have been able to take this next leap forward. One of my greatest achievements has come out of the ruins of one my biggest failures.

It’s a discovery that left me wondering why I didn’t figure it out sooner. It’s all about nuance and level of detailed observation. Working trades from both directions helped me to pick up on those additional details.

The latter part of the month had me figuring out how to best incorporate my improvements into my trading strategy. I’ve already noticed a stark improvement in my trade positioning accuracy.

Another big leap has also been made in risk management and figuring how to effectively manage the hedge part of the trade for maximum returns.

 

Overall, here’s the visual for how I now feel about trading against the three threats of fear, doubt, and uncertainty:

 

 

 

Okay, maybe not THAT confident, but you get the idea! =)

 

 

Bengal cat exhibiting behavior similar to many people at a bar during happy hour when the tap flows fresh and cheap ( I’m looking at you @eciila with all those references to the pleasures of the brew of hops and barley   I can picture you making that “sound” with a good beer, haha. )

 

 

 

The kitty has the right idea….sounds like he’s saying yum, yummy!

 

TGIF!!!!!!

 

 

 

There are bad decisions, and then there are worse decisions…..

 

 

 

By the way, the X-Box Kinect prize that was being played for can be had for around $100 new and less than 1/2 of that used.

 

I have to wonder….where’s the mom??

 

 

Decent week, but this has been quite an interesting month so since next week is the close out, I’ll save all the details for the month end review.

 

 

 

In the past I wrote a blog asking where are all the retail trading blogs hiding, as they have proven hard to find.

The results of my searching have led to some discoveries/assessments:

 

I’ve found several retail blogging sites but the vast majority of those who are still in the “struggling to learn” stages of trading. They haven’t reached consistent profitability yet. There are many more blogs that have become abandoned ghost towns of someone’s attempt at active trading/investing. The trading ability fails to improve to profitability and eventually no new posts are entered, leaving one to assume that the venture has been discontinued.

Looking for successful retail traders that blog is a much more difficult search, reflecting the difficulty in becoming proficient in trading. The search for good traders that blog and aren’t “selling” anything is like looking for water in the desert – very few and far between.

 

However, my extended search has uncovered a few successful traders that blog. Here are two currently active ones:

1) Jules in Jumbles

Jules will always have a special place in my memory since she was the first successful “small trade” retail trader I encountered that posted her entries and exits on charts using down to earth methods similar to my own like support/resistance trend lines.

Her blog stands out since during that time, I was also among the struggling traders trying to get consistency and was quite far from feeling confident enough to start posting performance stats. It was that struggle that prompted my search for other traders. After a while and string of mixed results of trading hits and misses, I started to wonder if it were actually possible to make a living by trading on a smaller scale like I was doing. I knew folks who traded 1000′s of shares daily and earned five and six figure profits on a daily basis, but that wasn’t my trading style. I didn’t want to trade in that frenetic style of catching slight moves using heavy leverage and thought it was possible to make money on bigger moves without needing as much if any leverage. Problem was my short term trading wasn’t going that great and needed improvement. My long term trades (investments) were okay, but I was going to have to get good at shorter term trades if I was going to be able to make a living from trading.

That little negative voice within started asking me if I should continue and maybe I should just give up since it wasn’t possible. I couldn’t turn that voice off with my own skills at the time, so I thought the next best thing would be to find someone who was trading on my scale and being successful, which would prove the concept of it being possible, and therefore achievable. Searching for other trading blogs turned up lots of folks in my same situation, struggling to be profitable- not very encouraging. I didn’t need to read about another blogger having trouble with trading- I could just read my own for that.

Then I found Jules’ blog. What struck me is that while she had mixed results of winning/losing trades, the majority of trades were winners. This was when the majority of my short term trades were not. I looked at her older blogs and saw she had completed a positive year of trading gains. That was a big inspiration for me as my returns in short term trading were, um, less than positive for the year.

That’s all I needed to see to shoo that negative internal voice away and I knew that my methods could be successful with the proper mix of time, effort and perseverance put in. Eventually I made it through the more difficult parts of the learning curve to get more consistent results and built up enough confidence in my methods to go public with stats. Part of the reason for my trading blogs is to also “pay it forward” by showing others that it’s indeed possible to succeed in the retail world of trading despite all the negative press from naysayers.

Jules’ potential in my opinion is only limited by her mind. She reminds me of Neo from The MATRIX. She’s posted a few blogs where she “claims” she can’t really trade but I know better. There was an incident where she made a bad trade and another trader questioned her ability to recover from it. In response, she traded daily for a month making nothing but positive trades each day. It was very impressive and shut the doubting trader up pretty good. To trade everyday for as month with only winning trades is not an easy thing to do by any means, and even rarer to do it by force of will. 

She is considering taking down her public blog at the end of the month, so if you care to visit her site, be sure to do it before then just in case.

 

2) Baby Sun’s Future Trading Diary

I met this blogger on another site of a very successful trader, who was positing four figure winning oil trades on a daily basis. Someone eventually questioned his posts as being suspect even though he wasn’t selling anything. In response, he made his blog private and that was that. 

Baby Sun told me she doesn’t need to look at a chart to trade real-time which I think is fascinating. I use my charts like GPS roadmaps and definitely need them for my style of trading.

I have her to thank for motivating me enough to upgrade my trading methods to incorporate hedging and range trading. I always knew I “should” incorporate hedging into my strategies, but never got around to it. She helped “motivate” me when I was stuck in a wrong way trade while she was posting nice profits every week. I said to myself  ..”and why am I not making anything for weeks on end while I wait for my expected move to happen when I could be making money regardless of the market direction?”

Like Jules, she’s also modest about her trading ability, but the facts speak for themselves. She once posted that she had made some trading errors and was in trouble and worried- only to end the month with record profits. Sounds like a pool shark to me…don’t get tricked into any trading contests with her.

 

I find it interesting that the two active, successful retail traders I know online who are not selling training or books happen to be women. The stereotypical “trader” is often portrayed as male but this should be a boost to all females who ever considered engaging in active trading/investing. Both have been in the trading zone this year with great performance.

Similarly, both have occasional considerations of not continuing their blogs, which helps to explain why successful non commercial retail trading blogs are on the rare side. 

 

It also bears noting that none of us trade the same way. There is no “SECRET” trading method that works for everyone who is successful. There are many ways to make the market work for you, you just have to find/develop one that’s a good fit for your trading preference and risk tolerance.

 

Neutral week for me- in terms of gain/loss, but a good one in hedge management, adjusting long and short positions. The move to pre-program the hedge trades along with directional trades has worked well in solving the problem of trader bias in skipping hedge trades.

Working both sides of the market simultaneously takes some getting use to, but like everything, gets easier with use. The transition has been a bit of a challenge, but it’s definitely the right way to go to take my trading to the next level. When optimized, market movement in any direction each week will generate profits.

A good thing about hedging is that it forces you to always consider both market directions, which makes it less likely to get in trouble with trader bias in getting hooked on one direction. Permabears try to short the market no matter how strong the move up is, and Permabulls are constantly bullish. Both wind up losing big when going against an extended trend.