Thursday, October 14, 2010

Chasing my tail today, scrambled to re-enter a few positions which I had bailed earlier this week. No great damage from missed profits, however very annoying that I had stops set at realistic distance back from price action and in a moment of emotional trading, I closed out perfectly good trades.
My current method of trading is as follows.
Once a chart is selected for entry using Volume Spread Analysis
Position size is determined by setting a maximum loss, (currently at 0.5% of account value)
determine 3x or 2x the ATR then divide the max loss by the ATR multiple = #shares to buy.
Before placing the order check that a target at least 2x the max risk is realistic.
Place the order, immediately set a stop once order is filled.
Place text and visual marks on chart to help manage the trade.
Include/// Date of entry// Entry price// Initial stop// Target// ATR #

Each potential trade must have the calcs listed in the workbook and a brief note in the diary on reasons for entry before the end of the day's session

Saturday, October 9, 2010

Has been a long time since I added here.
Have not been trading futures, concentrating solely on Aus equities mainly because I have great trouble being alert enough late at night to trade futures. I think if I lived in a different timeframe, futures would hold most interest for me, but the time of day makes a huge difference in how well I trade.
Will have to do more Futures shortly, if only to recover the loss in value due to my account being in US dollars. This effectively has meant a loss in value due to the AUD gain over the USD.
Anyhow, thought this might be a good place to create a diary for myself, a place to write a few thoughts about my trading. Things like how I'm feeling with my trades, how my methods are progressing. A place where I can return some time in the future and look back at my time trading.

Have had cause this week to monitor my emotions whilst trading. Lost my very best mate last week and past experience told me to take extra caution, have made some huge errors a few years ago trying to trade after the passing of my Father.
I decided to trade wider stops and set smaller trade positions to lock in potential losses to a maximum of 0.5% of the account. In doing so and making my trading more of a mathematical system I realised I can set and forget trades which makes it possible to hold more positions at a given time than I have been able to control in past.
Am liking the feeling and have noticed it has less emotional component than trading tighter stops. I think the fact I am more relaxed plus have more time analyse potential new positions, the result is better trading.
In the past, tight contingent stops have sometimes been costly by being triggered intra-day only to find price recover by end of session, meaning I have been stopped a position unnecessarily.
Since prior posts have really been embracing Volume Spread Analysis (VSA), might write down a few thoughts here as i progress in learning VSA.