Last week ended well for me.
In mid week I noticed that my win loss percentages for ranging market was 70%++ but when the price moves in trends, my win/loss percentage was less than ideal! about 20-30%!
I was floored.
So I sat down and thought about how different the two are - one oscillate from one resistance level to the last support, while the other flew in one direction.
The temptation to get in, or jump in or chase a trade is immensely great, especially when you see price move and move and move and move! But it's also equally deceptive. You never know when it stops and then go against you. And because price moves so fast, I wasn't even sure when to enter a trend move even when I'm anticipating it.
So I spent most of Thursday last week pondering on it....until friday morning 6am.
And then suddenly things click. I chuckled when I got the 'a ha' moment in bed before dawn.
So on friday, I rode the trend on eu and gu. I'm made pips and I was very happy. It wasn't the pips that made me jump for joy... I was very happy because I traded well in the trending market. 2 trades and to get about 40+ pips.
I want to thank BK who taught me so patiently, Robin who helped me implement it, wife who is ever so patient encouraging me and God whom I believe put all these wonderful people in my life...
I am blessed. (hahah don't that sound like me receiving an award or something?! )
What a satisfaction it was to end on a high note. My win loss percentage has also improved gradually over the last 2/3 weeks. If I can up my confidence during a trending market, I hope the win/loss can stay at about 70%. My money management has also improved- stops are smaller and my profits are larger. (I do see a few more kinks to work on this department though... one thing at a time)
Best of all I think I'm getting more confident because Im trading better. Yay! :)
*******
It's monday today and I started well. Up 40+ pips today. Praise God!
Monday, July 28, 2008
Friday, July 18, 2008
Ranging and Trending markets
Last 2 weeks was good for me.
As I learn more about the art, my win loss percentage is getting better. I have currently filled 2 pages of my journal with 70% win loss for the very first time!
It's a combination of putting in more parameters in my trade and learning the characteristic of price action.
For example yesterday I made a -15pips loss. Why? Because I was trading it (eu and gu) with a trending strategy in a ranging day.
So note to self... pick your daily strategy before jumping in.
As I learn more about the art, my win loss percentage is getting better. I have currently filled 2 pages of my journal with 70% win loss for the very first time!
It's a combination of putting in more parameters in my trade and learning the characteristic of price action.
For example yesterday I made a -15pips loss. Why? Because I was trading it (eu and gu) with a trending strategy in a ranging day.
So note to self... pick your daily strategy before jumping in.
Wednesday, July 2, 2008
Trade Psychology - the dark side
The more I learn about trading the more I understand now that mastering trade psychology is the most important part if one were to become a jedi in trading.
Because even with the best trading system...
If master one not his/her trade psychology, s/he cannot be a jedi. Fear there will be... and fear leads to the dark side. -Yoda :)
Okay, I made that up. Haha can't resist that one for a geek like me.
A big part of trade pschology are our cognitive biases. Let me list some of them down (taken from the book Way of the Turtle by Curtis Faith)
It's really easy to know them... who doesn't know that we need more than 3 test to proof a system? Who doesn't know that a given system can make you loss 3 times in a roll and yet still work?
Yet with money involved, emotions run high, at the time of trades, my mind was just not working... or rather it WAS working BUT with a bias. A strong bias that want to see things my way. It was looking at the market with a bias lense.
All this really didn't hit me when I read the book but when I started trading with real money, the meaning came crystal clear. Even if it's USD 0.01 per pip. I also learn that biases only happen after you enter a trade. Perhaps it's because now money is committed, your mind starts to 'hope'.
It's almost and imposibility after that to think clearly because the mind is so bias it doesn't know what 'clear' is anymore.
I think, that's where a trading system - an almost mechanical one - comes in. It comes in to tell you what you're to do and when to to do it. AND most importantly tells you your odds in the general whole picture so that you don't freak out when you have a string of losing trades.
Odds or Edge are unbalance probability tipped in your favour. Like in the roulette table, the edge is tipped to the house's favour so the more it spins the more they win.
A trading system is just that... a way to trade with an edge. All we have to do is to keep the wheel spining. That way we can 'fight' our cognitive biases without increasing our blood pressure too much.
Happy trading.
Because even with the best trading system...
If master one not his/her trade psychology, s/he cannot be a jedi. Fear there will be... and fear leads to the dark side. -Yoda :)
Okay, I made that up. Haha can't resist that one for a geek like me.
A big part of trade pschology are our cognitive biases. Let me list some of them down (taken from the book Way of the Turtle by Curtis Faith)
- Loss aversion: The tendecy for people to have strong preference for avoiding losses over acquiring gains
- Sunk costs effect: The tendency to treat money that already has been commited or spent as more valuable than money that may be spent in the future
- Disposition effect: The tendency for people to lock in gains and rides losses
- Outcome bias: The tendency to judge a decisino by its outcome rather than by the quality of the decision at the time it was made.
- Recency bias: The tendency to weigh recent data or experience more than earlier data or experience
- Anchoring: The tendency to rely too heavily, or anchor, on readily available information
- Bandwagon effect: The tendency to believe things because many other people believe in them
- Belief in the law of small numbers :The tendency to draw unjustified conclusion from too little information.
It's really easy to know them... who doesn't know that we need more than 3 test to proof a system? Who doesn't know that a given system can make you loss 3 times in a roll and yet still work?
Yet with money involved, emotions run high, at the time of trades, my mind was just not working... or rather it WAS working BUT with a bias. A strong bias that want to see things my way. It was looking at the market with a bias lense.
All this really didn't hit me when I read the book but when I started trading with real money, the meaning came crystal clear. Even if it's USD 0.01 per pip. I also learn that biases only happen after you enter a trade. Perhaps it's because now money is committed, your mind starts to 'hope'.
It's almost and imposibility after that to think clearly because the mind is so bias it doesn't know what 'clear' is anymore.
I think, that's where a trading system - an almost mechanical one - comes in. It comes in to tell you what you're to do and when to to do it. AND most importantly tells you your odds in the general whole picture so that you don't freak out when you have a string of losing trades.
Odds or Edge are unbalance probability tipped in your favour. Like in the roulette table, the edge is tipped to the house's favour so the more it spins the more they win.
A trading system is just that... a way to trade with an edge. All we have to do is to keep the wheel spining. That way we can 'fight' our cognitive biases without increasing our blood pressure too much.
Happy trading.
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