31st May 2016 – Bund Daily Trade Plan

31st May 2016 – Bund Daily Trade Plan

News

0700 Ger Retail Sales 0855 Ger Unemploy 1000 EZ CPI
1330 US PCE 1445 US Chic PMI 1500 US Cons Conf
Month End

Stats

DATR 65+

WATR 1.67-

WK.50% –

M.50% –

Weekly Summary – Up week (iwx2) w.hi 164.49 lo 163.06

Previous Day – Down day with bear close

General Bias – SC -1

Big Picture

60min – Neutral Bias – rej from d.sz (2b) and LL, in BP bal 49-06

15min – Short Bias – for cont, exp to hold 78-85 and bac 53

Hypo 1 – Range – if price holds / bof 64-53 then longs t 78-85 bac 85 t 94-00; if price holds 96-00 then shorts t 78 t2 64-57

Hypo 2 – Down – If price holds 78-85 then shorts t 64 t2 58-53 bac 53 t 41-33 t2 24-13 t3 06 (watch for bof or bd)

Hypo 3 – Up – if price bac 00 then longs t11-18 bac 18 t 28-36

Red flag levels – For short trades 64.000 For long trades 63.53

 

My Journey and other questions answered.

My Journey and other questions answered.

I was asked a couple of questions by Pete in a comment on one of my Daily Trade Plans.

I like so much your blog, but just wonder how did you got there, did you blew your account several times? what was your path?

My path so far has been nothing special or different to many I suspect.

I have not blown my account during my journey, I am a financially risk adverse person, so I have always kept my risk to around 1% of my account.

This can be a double edged sword, whilst learning and developing an edge, it is a good protection from blowing accounts, but once one develops an edge, it can make it hard to start compounding a smaller sized account.

Personally, I prefer this method, as I had a limited size pot to start with, and blowing it would be a possible game ending situation.

The biggest draw down from start to date was around 33%, when I was developing my edge.

How much do you think one needs to making a living out of it even if i know there is an edge to get first; i mean how much you think ones need to get in there without getting too much risk with what you said before ( 6000e per lot )

This is a question I myself looked for an answer to in the first year of learning to trade, and could never find a satisfactory answer to. I am afraid I will disappoint you as well. The answer is depending, as there a few factors that one has to consider.

1. What is the expectancy. How much return we expect from the trading system.

2. What is the frequency of system. This has a massive effect on the returns. An edge that gives 5 opportunities a day will give a massive different return to an edge with the same expectancy that only gives a 5 opportunities a week.

3. How much we risk per trade. One system will give a very different return profile, when risk 1% and when risking 5%. When I say risk profile I mean return, likely draw downs and risk of ruin.

All these can have a massive difference to the amount of money returned, therefore will in turn effect the starting amount needed to make a living. And all this ignores what amount of money constitutes a decent or okay living standard.

Example of how frequency effects returns.

This is a Monte Carlo simulation of 500 trades, based on a 57% win rate and a 1.3 RR and an average frequency of 2.82 trades per day and starting balance of 10000, and 1% risk.

Starting from Monday 30th May, and finishing at 3rd April 2017 (roughly 10 months), based off 5 runs of the simulation, the return is between 14181 and 19797 not including the 10,000 we started with. With a draw down of between 6 to 8%.

Therefore, over that period an average of 1418 to 1979 per month. Of course this does not take account that the first months are going to be smaller and the later months larger due to the compounding effect. This is just an average.

Now this is the same simulation with the same figures expect that the frequency is now an average of 5 trades per week.

Starting from Monday 30th May, and finishing at 18th October 2018 (roughly 29 months), based off 5 runs of the simulation, the return is between 15460 and 22944 not including the 10,000 we started with. With a draw down of between 5 to 7%. So a very similar returns profile as the first simulation, which is to be expected.

But the average monthly (using the same caveats as before) return is 533-791.

And neither of these simulations is taking in account any withdraws, just the return if we compound the funds.

All of the above examples are not even looking at possible differences in expectancy or risk amounts.

This is why it so hard to answer your question and why I never got an answer myself when I looked. As it is a chicken and egg situation. You need to know your edge, frequency and risk and what you want to withdraw at a minimum then we can work out how much we need to start with.

I know this is unsatisfactory, but I would rather be straight than give you some bullshit answer.

Good luck with your trading.

Practical Trading Statistics

Practical Trading Statistics

It is coming to the end of the month; it is time for me to update my Trading Statistics.

I am also using this opportunity to simplify my use of trading statistics. Currently I have the majority of my stats on a cheat sheet for each market I trade.

Below is a part of my current cheat sheet for the Bund Market.

Practical Trading Statistics

The simplify process is going to be in three steps

1) Check each stat on how practical it is to use and whether I use this on a regular basis. On each stat that I do not use regular or is not practical, I will then look at whether I should to do more research to make this practical or should I drop it.

For example

The Open In Range and Breaks the previous day’s High, has a 79% chance of closing above previous day’s vpoc, 71% chance of that days open and a 68% chance of yesterday value high. Whilst this is helpful in determining a direction, it is not that practical to use in determining targets or places to get in and place stops.

I will do more research on this stat to use if I can make it more useful. I will do a study on where the low of the day is after breaking the high. This might make this particular stat more useful.

Any stat that is not practical I will drop.

2) I will drop any stat that is under 70% (or the inverse greater than 30%), I will focus only on the higher probability stats.

3) Chunking

In the Mental Game of Poker 2, there is an interesting section on Chunking

While the size of working memory is limited, “chunking” is a way to get more out of it.

Chunking is when the brain compresses a lot of information into one small piece, kind of like a zip file or a cue card. Chunking can be illustrated in the way football teams name their plays.

Each football team has a unique language for plays that helps them communicate large amounts of data very quickly, for example, “Right Double Gun Montana Screen Left.”

Just these few words allow the quarterback to instantly give detailed instructions to the other 10 offensive players. Pages could be written about each player’s assignment during the play, however, intensive practice and study allows them to recall all of it with just a few words.”

from “The Mental Game of Poker 2: Proven Strategies For Improving Poker Skill, Increasing Mental Endurance, and Playing In The Zone Consistently” by Jared Tendler

I am going to work on improving my cheat sheet so that I can remember the stats easier during the day.

I am going to remove the percentages, I do not need to know the exact percentages, as they can be summarised with words, HP = High Probability and MP = Medium Probability.

And I will look at summarizing the whole stat play in a few words.

One of the things I have done is to have a tool on my charts, where I can draw the bands for standard deviation and 2 standard deviation of the MAE on a breakout and retest of previous day high. This helps me to keep the stat in front of my mind and gives a visual reference to take into account when looking at context and potential trades.

Practical Trading Statistics

I will look at each stat to see if I can visually replicate that stat on the chart rather than just reply on the hypo or mini plan.

This is all part of my process of simplifying my trading without making it too simple.

Weekly Trading Review 23-27 May

Weekly Trading Review 23-27 May

What did I do best this week and how I did I do it?

An okay week, not loads of trades but all of them good quality trades at my levels. A good focus on process and taking the best trades. A slight improvement on not micro managing the trades and the play to win mind set.

I will continue working on the play to win mind set and focus on following my process.

I let the morning visualisation and end of day review slip a couple of time this week. I need to ensure that these deviations to my routine do not become habit.

It is easy to start to think, when the trading is going okay, that the some of the parts of the routine are not important and they slowly get dropped. Whilst they do not feel like they are contributing much at the moment. They became part of the routine as they were beneficial to my trading. They have earned their place within the routine for good reason. And the dropping of these routines will likely lead to a drop in performance over time.

It is bit like getting fit, at first the workouts are hard and over the first few weeks / months, these workouts have the biggest effect. Then once the workouts start to get easier as our fitness improves, and the effect becomes less noticeable, we start to drop the frequency of the workouts, and start down a path that only leads back to the where we started.

One of the goals next week, is to ensure that I complete my morning visualisation and end of day review for every day traded.

Now is the time to work on improving the quality of my focus and decision making within my trading process not to start getting sloppy.

What did I do badly this week and what lead me to do it?

I badly managed a trade that I got in to too early. So a D grade. I had a play not to lose mind set all the way though the trade but took 5 minutes out afterwards and the next trade was a Grade A. So whilst I am mentioning it, it not something that I am overly concern about.

More of the problem this week, was missed trades. Am I being aggressive enough with my entries on the order flow trades, 4 trades did not fill, when I placed an order, after I saw the flow that I was looking for, either it was a join or I was looking at 1 tick pullback.

I also had 4 trades this week that did not test my order by 1 to 2 ticks, I have looked at these trades and 2 of them, I had not placed at the correct buffer to the level but exactly at the level. Nothing really to analyse there, need to ensure that all trades are as placed as per my process.

And I had one trade where I removed the order before the news and then forgot to replace it.

What is the problem

The missed trades number is starting to rise, I had for a while got them down to an acceptable level.

Why do I have this problem?

I am not committing fully to the risk of these trades and it is my perfectionism and a playing not to lose mind set.

What I am going to do

I do record my missed trades and error trades as a general metric, to remind myself of how much error and missed opportunities is costing me.

This weekend I have split the missed trades into sub categories which allow me to look at each type of missed trades, so I can analyse these missed opportunities and come up with better strategies. Also I have noticed that the tracking in itself, can help to improve the situation.

Summary

Weekly Trading Review
“The trouble with quotes on the Internet is that you can never know if they are genuine.” –Abraham Lincoln

Re reading the above, I am letting a few things slip within my process and routines. The problem is commitment, I find it easy to be committed when things are tough or hard to do, but thinks start to slip when I reach the next stage and things start to become easier. I need to re commit to doing all my routines and processes.

27th May 2016 – Bund Daily Trade Plan

27th May 2016 – Bund Daily Trade Plan

News

1330 US GDP 1500 US Mich Cons Exp

Stats

DATR 65+

WATR 1.67-

WK.50% –

M.50% –

Weekly Summary – Up range day with strong bull close

Previous Day – Up day with break and close at 07, and a bull close

General Bias – SC 2

Big Picture

60min -Long Bias, into d.sz, 2tb, for cont, exp to bac 19 and hold 67-57

15min – Long Bias, for cont, exp to hold 07-00 or 95-85 and bac 19

Hypo 1 – Up – if price holds 07-00 or 95-85 then longs t 17-19 t 30-34 t2 46-49

Hypo 2 – Range – if price holds / bof 18-30 then shorts t 95 bac 96 then t 76; if price holds 76 or 67-57 then longs t 90 t2 00

Hypo 3 – Down – if price bac 57 then shorts t 45-41 t2 38

Red flag levels – For short trades 64.30 For long trades 63.57

26th May 2016 – Bund Daily Trade Plan

26th May 2016 – Bund Daily Trade Plan

News

0800 Span GDP 0930 UK GDP 1330 US Bullard
1500 US Home Sales

Stats

DATR 65+

WATR 1.67-

WK.50% –

M.50% –

Weekly Summary – Up range day with strong bull close

Previous Day – Up range day with bof of id.low at 33, bal hi at 64.07

General Bias – SC 0

Big Picture

60min – Neutral Bias, made LL, but bof and then HH, possible more bal. bac of bal 64.06-63.06 for direction

15min – Long Bias, pullback for 60sz (ftb) and back to 77, for cont, exp for 77 or 67 to hold and bac 95

Hypo 1 – Range – if price holds / bof 95-07 then shorts t 77; bac 77 t 67-58; if price holds /bof 67-58 then longs t 95-07

Hypo 2 – Up – if price holds 77 then longs t 95-07 bac 07 t 17 bac 17 t24-30 bac 30 ext t 49

Hypo 3 – Down – if price bac 58/55 then shorts t 48 t2 34-27 bac 34 t 16-06

Red flag levels – For short trades 64.07 For long trades 63.06

25th May 2016 – Bund Daily Trade Plan

News

0700 Ger Cons Cli 0900 Ger IFO Biz 1330 US Goods Trade Bal
1400 US Harker 1530 US Crude

Stats

DATR 63-

WATR 1.67-

WK.50% –

M.50% –

Weekly Summary – Down range week with neutral bear close

Previous Day – ID of the Bof, with neutral close. id. d.low at 53.33

General Bias – SC -1

Big Picture

60min – Neutral Bias, made LH but unable to bac 33, in bal bac of 63.33 for short bais

15min – Short Bias, for cont, exp 66 to hold/bof and bac 33

Hypo 1 – Down – if price holds / bof 66-77 then shorts t 43/41 bac 41 t 33 bac 33 t 15-06 t2 96

Hypo 2 – Range – if price holds / bof 33 then longs t 66 t2 77; if price holds / bof 77 then shorts

Hypo 3 – Up – if price bac 77 then longs t 90 t2 00-07 bac 07 t 17

Red flag levels – For short trades 63.77 For long trades bac 63.33 then 06

24th May 2016 – Bund Daily Trade Plan

24th May 2016 – Bund Daily Trade Plan

News

0700 Ger GDP 1000 Ger ZEW 1500 US New Home

Stats

DATR 66-

WATR 1.67-

WK.50% –

M.50% –

Weekly Summary – Down range week with neutral bear close

Previous Day – Down day with neutral bear close and bof of prev id. d.low at 53.33

General Bias – SC -1

Big Picture

60min – Neutral Bias, test and rej 60.sz and bac thru minor bz and test 60.bz 43-33, and pullback. For t/c to short exp for bac of 33 or LH and then bac of 33

15min – Short Bias, for cont, exp 58-63 to hold/bof and bac 33

Hypo 1 – Down – if price holds / bof 58-62 then shorts t 41-33 bac 33 then shorts t 21-06 bac 06 t 97-90 t2 80-67

Hypo 2 – Range – if price bof 33 or holds /bof 20-06 then longs t (33) 63 bac 63 t 77, if price holds 77 then shorts t 56

Hypo 3 – Up – if price bac 77 then longs t 90 t2 00-07

Red flag levels – For short trades 64.07 For long trades bac 63.33 then 06

23rd May 2016 – Bund Daily Trade Plan

23rd May 2016 – Bund Daily Trade Plan

News

0800 Fr PMI 0830 Ger PMI 0900 EZ PMI
1045 Ger Auc 1115 + 1300 US Bullard/Williams 1445 US Man PMI

Stats

DATR 66-

WATR 1.67-

WK.50% –

M.50% –

Weekly Summary – Down range week with neutral bear close

Previous Day – Range down day with very weak bear close

General Bias – SC 0

Big Picture

60min – Long Bias, for cont, exp to hold 48-33 and bac 75 for test of 86-96

15min – Long Bias, for cont, exp to hold 56-48 and bac 75

Hypo 1 – Up – if price holds 56-50 then longs t 70-76 bac 76 then longs t 86-96, bac 96 t 00 t 12-18

Hypo 2 – Range – if price holds / bof 70-76 then shorts t 56 bac 56 then shorts 5 43-41 t2 33; if price holds / bof 43-33 then longs t 54 t2 70

Hypo 3 – Down – if price bac bac 33-27 then shorts t 16-06

Red flag levels – For short trades 63.75 then 96 For long trades bac 63.33 then 06