Live Journal Exercise – Learning to Trade an Edge like a Casino

[Mike B 624]

November 6, 2019

I was only able to trade for about 20 minutes at the open due to work. I had $CVS and $AMD on watch. I didn't like the spread during the first few minutes, so I ignored it for a opening range strategy. I started watching $AMD, knowing that it would be choppy, but might setup for a nice 15 minute Opening range. It started to setup and then I had to go, so I ended up with no trades. In the afternoon, I didn't get back until around 1145, so I was not going to force anything and instead just watched the market to the close.

Sample Set Results,

S P G E E P P P P G G P P P G P 17 18 19 20

Edited November 6, 2019 by Mike B

[Rob C 826]

14 minutes ago, Mike B said:

November 6, 2019

I was only able to trade for about 20 minutes at the open due to work. I had $CVS and $AMD on watch. I didn't like the spread during the first few minutes, so I ignored it for a opening range strategy. I started watching $AMD, knowing that it would be choppy, but might setup for a nice 15 minute Opening range. It started to setup and then I had to go, so I ended up with no trades. In the afternoon, I didn't get back until around 1145, so I was not going to force anything and instead just watched the market to the close.

Sample Set Results,

S P G E E P P P P G G P P P G P 17 18 19 20

I wish I had your discipline Mike.

[Mike B 624]

November 7, 2019 - $AMD and $IQ

Well took 2 trades today. A 5 min Orb on $AMD and a 15 min Orb on $IQ. The $AMD trade was a great setup. Everything was there, pull back towards VWAP, rejection of VWAP twice with a shooting star candle, followed up by a break of previous candle creating a pivot point. Then it stopped me out, along with giving a couple cent’s for slippage. No big deal, it was a good trade, moved on and noticed the pullback happening on $IQ.

Once $IQ rejected VWAP with a break of the previous candle and the moving averages in a favorable position, I took an entry without any hesitation. Got a good pop and then it was like a brick wall hit the stock and put a stop to all the volume and momentum. I eventually got a 1R partial, but because of how slow it was moving I had to set a range order and go work. I thought about just closing out the position, but I was pretty far away from my breakeven point, so I figured I could survive for an hour or two. Well when I came back, it looked like the market makers came for me and some other trades. A huge spike to my stop along with .05 cent slippage and an immediate pop back up, with a ton of volume. Oh well. I ended the day with two good trades that just didn’t work out.

Life goes on and I will be there tomorrow for another stab at it.

Sample Set Results,

S P G E E P P P P G G P P P G P S P 19 20

[Mike B 624]

November 11, 2019 - $AMD and $IQ

So the results of the Me vs. The Market after entering a trade are, "Market 2 Me 0." I say that because the market got the better of me today. I had two good setups on $JD and $AMD. I took an entry on $JD, got the move in my direction but not quite out to my 1R level. The stock pulled back and I eventually got out at a break above the high of the pre-market, although this was about 4 cents below my stop out level. after exiting the stock went back in my direction eventually hitting my 1R level and 2R. If I had stuck with my plan, would have be a +1.5R instead a -.63R. 

Then there was $AMD. I hesitated a little on the entry costing me about 2 cents on my entry, no big right. Well as you will see it was the difference between stopping out at break even and getting a 3R winner.  I got the initial move to my 1R and covered. I then put in a range order for 75% out at 2R to let the last little bit ride to the PCL. Eventually the stock pop hard back to my break even and just as it was about to hit I realized I did not have a stop out that had my position. My range order filled stopping me out of 75% of my position and I quickly covered the rest with the hotkey. Of course, it came right to my break even point and reversed back in my direction. Had I not hesitated on the entry I would not have gotten stopped out and would have hit my profit target. 

Tough day today, but I walked walked away with a small loss after commissions and fees. I executed poorly causing me to leave money on the table. Better luck tomorrow.

I plan on posting my yearly re-cap later tonight. I just need to finish the last few portions up.

Sample Set Results,

S P G E E P P P P G G P P P G P S P E P

 

[Mike B 624]

November 12, 2019 $AMRN

Well I failed misserably at getting my yearly recap done yesterday. I had to take care of some personal issues that came up in the afternoon, so I will look at getting it done today and posting it.

I had a good watchlist for the open. $DXC, $AMRN, and $TME. I failed miserably on saying focused as a setup was generating. As the pull back on $AMRN was happening I wondered off and was looking at $TME. By the time I came back to $AMRN, I had missed my entry. Ironically, while looking $TME, I missed the short entry because I went back to $AMRN to see how the setup was doing. by the time I looked back at $TME, well you guess it I missed the entry. So it was a rough morning. I then started looking over my normal watch list and say $NVDA setting up around 1025, but just missed the entry. After that I called it a morning and decided I would come back after the President was done speaking for the day.

Well, I found $AMRN with a nice ascending pattern around the same time Thor was trading it to the short side. I was looking to take it long once it broke through 20.35. I got my entry and nice pop right away. Took a partial at 1R and then set my range order for break even and 3R along with another limit order for 2R. Eventually I got stopped out at break even before the stock decided to make it move to the high of the day. As this is my last trade in this sample set, I think I am going to look at the % I take off at 1R. Looking back over the last couple months the percentage of 1R trades is pretty high.

Sample Set Results,

S P G E E P P P P G G P P P G P S P E P P

 

Edited November 12, 2019 by Mike B

[Mike B 624]

November 20, 2019 -$T

It feels like an entirety since I posted a journal entry. Well I didn't fall off a cliff, just had a lot of work related items come up and cut into my time that I set aside in the evening for Journaling. I still completed my personal journal, just didn't quite have the time to post it here. I also haven't posted the yearly recap as I haven't had time to finish it. I am going to be in and out over the next couple of days as well. I think I will be able to trade maybe 4 more days in November.

Today was a good day. I had $AMRN, $T, and $AMD on my watchlist. I still can't believe $AMD is above $41. I didn't get any Orb setups, but I did find 2 crossover strategies with the PLBO on $T and $AMRN. I hesitated on the entry on $AMRN, so I missed that move to the short side; however, shortly afterwards I got an entry on $T. Once I got in my reminder on my came up to remind me I had an appointment in 15 minutes. Always wonderful getting into a trade and then realizing that you need to go. Luckily for me, I got a 1R partial and set my range order; however, with some luck also comes disappointment when you return and see the huge move on a $T. Yes it was only like .60 cents but when your risk was only .08 cents your planned R is around 8.5. 

Oh well, strategy worked, I just couldn't manage it due to commitments. 

Sample Set Results,

G 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

[Aaron Darnell 4]

Mike;

I read many of your posts tonight.

My thoughts.

1) You are only willing to risk a few cents.  This requires perfect timing, entry, and to an extent knowing the future.

2) I see you got in on T today.  Are you willing to consider stocks not on your list?  For example, TGT had a nice move.

3) What do you prefer?  Intraday trend trading such as TGT.  Or volatility scalping such as MO, CORT. 

4) I see in most of your videos you are adding AMD to your watch list.  This is a violation of your process.  Follow your process of focus on stocks with a catalyst.  AMD rarely has a catalyst.

5) If the thought of losing money is too stressful then you might consider selling put credit spreads 45 to 60 days in the future on massive down days in the S&P500 or a favorite stock of the market (not yours).

 

Take care.

Edited November 21, 2019 by Aaron Darnell

[Mike B 624]

 

9 hours ago, Aaron Darnell said:

Mike;

I read many of your posts tonight.

My thoughts.

1) You are only willing to risk a few cents.  This requires perfect timing, entry, and to an extent knowing the future.

2) I see you got in on T today.  Are you willing to consider stocks not on your list?  For example, TGT had a nice move.

3) What do you prefer?  Intraday trend trading such as TGT.  Or volatility scalping such as MO, CRT. 

4) If the thought of losing money is too stressful then you might consider selling put credit spreads 45 to 60 days in the future on massive down days in the S&P500 or a favorite stock of the market (not yours).

Take care.

Hey Aaron, awesome analysis, I love feedback from traders as it helps me see my blind spots.

1) I would definitely agree with you, when I began trading I was focused on how much cents I was willing to risk and it was small. Since January when I started using Kyles hotkeys, I don't worry anymore about what the actual dollar amount per share is that I risk, because I have my hotkey's set to .33% of my account per trade or 3 trades within a day for ~1% of my account.

2) At the open I have a very defined set of criteria that I select stocks for my Orb strategies. This has been based of my performance and what I do well at. I am not comfortable with stocks above $50 at the open, they just move to much for me. After 30 minutes, I switch my layout and watch the same 9 different stocks daily along with 3 of the best stocks on the gappers that did a good move at the open. ($AMD, $MU, $JD, $SQ, $ROKU, $MSFT, $QCOM, $AAPL, and $NVDA). 

3) I have 3 strategies I trade. 5 and 15 min Orbs that I have been doing for a year and within the last couple of months I have been working on a new afternoon strategy that involves the 9/20 crossing the 50. It did not work well in September because I did not have a good entry point identified and would get chopped up a lot; However, when I was watching Thor's Video on PLBO, I noticed my moving average crossover strategy was appearing quite often before his entry on the PLBO. So, I went back and did some analysis on my trades and found that the more often than not the ones that did work had a very similar setup to Thor's PLBO and the ones that I got stopped out on didn't. Therefore, I have layered Thor's PLBO strategy over mine and I just got done testing it in Sim. $T was the first live trade I intentionally used it on. 

That was a long way of saying I scalp at the open and like trend trading after the market has been open for 30 minutes. 

4) When I post my yearly recap you see that it not the money that is my issue; rather, it is I just don't like to be wrong. 

[Mike B 624]

November 21, 2019 -$AMD

I had some good trading today, just misplaced my stop on $AMD, which caused me not get the 1R move that I should have gotten before getting stopped out. There was nothing wrong with the setup or the entry, just that I put the stop too high. It should have been about .05 cents lower, which would have gotten me the 1R partial and even a 2R partial. Oh well learning moment.

I got out of the trade, when the "asks" started stacking up. The stock eventually went to 39.65 before coming back to my entry point.

Sample Set Results,

G S 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

 

 

[Aaron Darnell 4]

Mike;

Here are my comments on AMD.

If you don't want comments let me know.

I'm hoping Abiel can start uploading my videos to youtube which will give you a chance to comment on my trades also.

[Mike B 624]

4 hours ago, Aaron Darnell said:

Mike;

Here are my comments on AMD.

 

I always welcome comments, this is how we all learn and what makes this community great. 

What study do you have on your chart?

[Aaron Darnell 4]

The study is a fibonacci retracement.  I only added this to the chart for illustrative purposes.  The R1, R2, R3 are text boxes that I added.

If I was looking for a power hour scalp I'd look to stocks that are strong in 1 direction for the entire day.  For example CAT on the long side or PDD on the short side.  The key is to focus on stocks that trended intraday.  Life is to short to waste it on scalping chop.

[Aaron Darnell 4]

Mike,

Here is a trade I made on SPLK today.  I botched my order.  My order was set to buy 100 shares.  As I clicked cancel I got filled on 5 of the 100.  This caused a little confusion on my part, once understood, I focused on the target.  I decided to not add at any point and let price move to my target.  Given the small share size there was no stress.

My best trades are usually made after the market is open for about 1 to 2 hours.

 

[Mike B 624]

November 27, 2019 -$UAA

So I had a little mini vacation to Las Vegas, well actually it was more work than vacation, but it still prevented me from being able to trade for the last three days. I felt great coming into today, but also realized that it was the day before Thanksgiving and that I was very eager to trade. I even mentioned to myself to hold off and make sure the setup is valid and not to anticipate the market and enter early. Well I failed miserably at that and took a trade without a good setup. 

The pattern was there, but none of the other indicators such as level 2, moving averages, etc were there. Hints why upon the entry, I thought to myself why did take this entry. Shortly afterwards I was stopped out. I chalked it up to rust and the need to get a trade in. Overall happily with the discipline on stopping out and not rushing back into another trade. 

After this trade, I packed it up and started the long drive home.

Overall, proper execution on bad analysis. I would rather get stopped out on a trade like this then make money and re-enforce a bad habit.

Sample Set Results,

G S S  4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

[Mike B 624]

Well, no trades on Friday as the market was slow and I had some platform issues. Over the weekend I completed my 1 year of trading recap. well actually 13 months as I wanted to compared November 2018 to November 2019. So here it is a month behind when I originally plan on posting it. I hope you enjoy it. I am also posting it in the members only forum.

  

 

 

I thought I would take after Rob C. and do a 13 month of trading anniversary recap about my trading journey. In this recap I am including the biggest lessons I learned, what I wish I had done differently before going live, and last but not least my recommendations for new traders, at the end I also added a comparison of November 2018 to November 2019. Hopefully, this help you not make the same mistakes I made, or help you prepare to go live. I figure, it will be best to start with recommendations for new traders, so here I go.

Recommendations for New Traders

1. Develop a business plan that has a vision, an overview, a trade plan (Robert H. Template is great), objectives, and an action plan with monthly, quarterly, and yearly goals. If you would like an example, send me an email and I will send you a copy of the one that I use.

2. Trade every type of strategy until you find what you are good at, and then refine it and come up with a playbook before going live. There is a link in my daily journal on page 13 if you would like an example.

3. Develop a risk management plan, and then seek someone out that has been trading live to give you constructive advice on it. Take that advice and apply it as you see fit, and remember they probably lost money at some point in their journey.

4. Number one in my book is “Respect your Stop.” You are going to be wrong, have hotkey mistakes, and make bad trades. One of my criteria’s for going live was to go 20 straight trading days without violating my stop, because if I could not respect my stop in Sim, then how could I think I would be able to respect it when I was live. I believe this is the reason I have been able to not let a stock go past my stop this year.

5. Last but not least, and I am sure you heard it from a lot of traders, it is a process that will take time, so enjoy the journey as you develop yourself as trader and truly get to know what makes you tick.

 

Recap of the last year

Personal – The one thing I was not expecting once I began my live journey was how much I would learn about who I was. Andrew and all the other moderators talk about how important psychology is in trading. It is not just the psychology while trading, but also getting to know yourself and understanding why you react the way you do in different situations.

It took me a couple of months, but I eventually figured out that I hate to be wrong, because in my profession being wrong can have catastrophic consequences. That is why for the last 23 years I have strived for perfection in everything I do at my job. Now introduce a profession where successful traders are wrong 40% of time and you can see I have a lot to learn. Trading live for the last year has made me a more flexible individual, and is helping me to become a better overall person.

Technical – My biggest fear once going live was that I would blow up my account and not be able to continue before I could get through the learning curve; therefore, I decided to take Andrew’s advice and treat this like a business. Prior to going live, I developed a 5-year business plan, and a career plan, trading plan, and metrics to achieve over a year.

If any of you kept up with my journal, you saw that I approached the last year through baby steps. I would attempt to master one topic first, then move onto the next. Below was the path I took:

                Step 1: Risk Management Plan – Failed at this until July 2019.

                Step 2: Stop Loss Plan – Mastered it in Sim, I say this because I made it a whole year without violating my stop loss (full disclosure: 1 time I couldn’t get out a trade due to platform issues, but I did hit the button to exit).

                Step 3: Entry Plan – This took me a while to nail down on my Orb strategies but by May I was very happy with it. When I introduced an afternoon strategy it became a huge problem and my equity took a hit, because my entry plan did not work, 25% accuracy when I took it live. Thanks to my risk management plan I was able to survive with minimal losses and have been able to readjust the entry to acceptable win rate of 61%.

                Step 4: Profit taking – By far this has been the most difficult thing for me to deal with. I refer you back to I hate being wrong. I would be quick to take profits, so I could be right, but then would miss the larger move. If I held on longer; however, meant I would get stopped out more, resulting in the dreaded being wrong situation. I am still working on this but having a solid risk management plan has made it much easier to deal with.

Monetary – Well, I know I am not the next great trader, nor have I ever thought I would be. I am perfectly happy being the 3^rd string quarterback making minimum wage, so over the last year this has not been much of a focus for me yet. The only monetary thing I really wanted out of this year was not to blow my account up. In the end I accomplished that, so after I get a profit taking plan that works with how I trade, I will look at increasing risk. I know it is crazy trading stocks not to make money, but to develop my trading skills, I think I read that somewhere once.

Biggest Lessons learned

1. I hate to be wrong

2. Thinking in probabilities is a must, and I needed a lot of work in that area.

3. I am really good at executing my stop loss

4. I have sufficient discipline to execute a solid trading plan.

5. My risk management plan I developed in sim was crap and caused me to lose more money than I needed to.

                1^st Risk Management Plan:

November 2018 December 2018 - Took same share size per trade with no consideration for equity amount

January 2019 – July 2019 – was risking 3% of my equity per day to make 1% of my equity, yeah makes no sense, right?

                2^nd Risk Management Plan: I now risk 1% of my equity per day to make 2% of my equity.

6. The more I focus on money the worse I trade.

7. Having a business plan prior to going live gave me a road map to follow when things did not go the way I expected.

What I wish I had done before going live

There is only one thing I wish I had done before going live.

I wish I would have had my risk management plan focused around max loss per day instead of focused around what I needed to risk in order to make X dollars. This was a huge miscalculation on my part and I didn’t figure it out until 9 months into trading, when I started to focus on profit taking and why I couldn’t get my winners to outweigh my losers. Once I realigned my risk management into a correct ratio, I started having bigger winners and smaller losers and my net equity curve finally started to move up.

Comparison of November 2018 vs 2019

Item	2018	2019
Total Days Traded	15	12
Total Trades	28	9
Average Trades per day	1.86	.75
Profit/Loss %	(2.6%)	1.2%
Rule Violations Average per day	3.5	.6
Trades outside Edge	5	1

Net Equity Curve November 2018

 

Net Equity Curve November 2019

Edited December 3, 2019 by Mike B