I was trying to figure out the best way to deal with my losses. And I see this photo on Trader-X’s blog. Darn! This is what I am looking for.

[photopress:yankeesSuckKid.jpg,full,centered]

This is the business we have chosen ~ The GodFather, the movie

Dear diary,

Another losing day for me.
“OK, I am going to shut down this blog, stop trading, slam my computer, close my trading account, go to look for a job at McDonald since it is operating 24-hours a day now in Singapore.” 😆

Cut the BS..Well, the feeling sucks, when having a string of losses. But nothing really serious. Before blaming the market, I look at the chart again. Yesterday’s loss apparently was my mistake. Thanks Vincent for reminding me about my stop level. Who would put the stop loss level right at the last high? That’s me. And I was well prepared and highly qualified….to be whipsawed to dealth.

I was looking at currency market yesterday since I got a little extra time before cash market opened. Instead of trading during normal U.S cash market hours, better opportunities were found around 6am to 9am (NY time). This is something I will have to consider (basically, it means, I will be rushing home as earlier as possible).

I am pretty lucky to have learnt some money management ideas, and having a pretty good start of August. You will only feel the importance of controling your trading risk and capital protection when you are having a series of losses.

Time to have my coffee. Let’s fight another day.

Dear diary,

Another losing day of the week.
I thought I am going to write a chunk of stuffs to express my frustration, but after getting some sleep, I forget about what really made me so frustrated. 😆
(Remember, my ‘Two losess in row, walk away for good’ rule)

There was no problem with trade execution. Everything was done as planned. And I was stopped out as planned as well. Though the Rs are relatively small, it made me think of 2 possible improvements I can make to my trading.

• Though yesterday I mentioned the opening volume analysis suggested by John Carter, I have yet to add it into my ‘must do’ list. And, again, it seemed to be proving itself yesterday. From the chart available to me, the first 6 bars in 5-min charts were trading below 10,000 contracts. I would be watching it closely for another week.
• Instead of trading E-mini S&P(ES) and mini-sized Dow (YM) at the same time, I will be trading only one of them with bigger position size.This is not an improvement of the system, I am just seeking a easier way to manage my trades. Most of time, if not everytime, ES and YM are moving in a highly similar fashion.

So far, dummy trading yields positive expectancy and profit for me. However, I am looking for another or couple of setups to fill my trading tool box. Is it possible to make a living by trading only one setup? I know the answer, do you?

To keep track of the effectiveness of my stop loss, I decided to record down the market direction at the end of the day after I got stopped out.

E-mini S&P : Long stopped, market down. Correctly stopped.
Mini-sized Dow: Long stopped, market down. Correctly stoped

Dear diary,

It was a slow and quiet Monday. Before I started the day, I was reading John Carter’s book. His point on opening volume of E-mini S&P(ES) caught my attention.

If the first six bars on a five-minutes ES chart have most of the volume at or well under 10,000 contracts, expect a choppy, tight range session.
If the first six bars on a five-minute ES chart have most of the volume at or well above 10,000 contracts, expect a more volatile session with better trends

I think this is a pretty good idea. I use it as part of market tone determination for day trading E-mini S&P(ES) and Dow mini(YM) during cash market opening hour. That was what happened today. Other than the very first candle, the following 5 candles of E-mini S&P were trading below 10,000 contracts. And in fact, the broad market was rather quiet (partly because there was no fresh lead, no economic report). I ignored any possibility of trading E-mini S&P and Dow mini for the day even though there were a couple of dummy set ups. (I was right in this case).

Instead, I was looking at E-mini Nasdaq. ( Until this point, I am thinking, if market opening volume analysis of S&P shows a choppy, tight range session, can Nasdaq escape from this market sentiment and dancing in its own pace?) I got a short position.

That were a little of discipline and psychological plays. E-mini Nasdaq was indeed, moving in my favour after short position was established. And it poised to reach my 1-R break even point. It did not. To be frank to myself, I was really tempted to close the position when it was moving back around my entry point. It was the temptation and that’s all. I left it alone and sticked to the rule, let the market stop me out (And I got stopped out, Darn)

First trading day of the week, I am down with 1-R. No big deal, at least, I stick to the rule. The challege here is market tone determination. More works need to be done.

Ok, I just talked too much.

I like to write the postmortem of my day trading after I catch some sleep. It makes my mind clearer.
Dear diary,

Ok, yesterday I made a good trade with 1-R loss. (Good trade with loss!??!, nut!) I said good trade, because the trade was executed and stopped out as planned. No rule was broken.

Of course, I can’t feel great with 1-R loss, but that’s part of trading. I have been reading about options expirations on Mike’s blog. After doing some quick research on the web and short discussion with Vincent, basically, options expirations implies high volatility and whipsaw trading. I am not sure if the implication is remarkable, though some traders choose to step away from market on these days. I need some experience before jumping into conclusion. I will take the trade if dummy set up appears. (Here it goes, my first experience ended up with 1-R loss, #!@#$*@#)

While discussing trading multiple positions concurrently, Vince mentioned this point

KEY to trading multiple positons : “Once you are in a trade your job is to just manage the stops and forget about the market action during the day – this will keep the emotional level low. Only use market levels to reset your stops or to take partial profits and the trading plan will take care of itself.”

I think he really got the point. After establishing positions, our job is basically managing the stops. No prediction, no gut feeling and no monkey acting. Manage the stops according to our plan.

Mike left some good comments on my blog which I think I gotta quote it here.

A couple of things may help. Create rules for when and how you can move your stops. I found that moving my stops before being in the trade for an hour was making me miss moves by stopping me out too quickly.

It may also help to define your maximum loss for any 1 day. THis is an idea I got from John Carter?s book. That?s part of his business plan. 3R is my ?cry uncle? point. If I lose that much I wind things down for the day and just wait for an ?easier day? to try to make my money back?

Good points!
It is a long journey of learning and refining my trading strategies. Along the way, I should feel lucky to know these good people who are willing to share their opinion and experience. After all, there is really no secret in trading. It is just a job that I need to set my own rules, and monitor my inner self and ‘behave myself’ within the boundary of my own ‘Law of trading’.