Random Trading Observations

I realize i haven’t posted in here in months. Many things happened since the last post. Please find below random observations, thoughts i’ve had since then.

  • I went on a ski trip in February. I was on a roll before. Spotted setups on my phone during the trip but abstained from trading them. What i wasn’t prepared for was the comeback. It took me weeks to get back in the game. Barely. I couldn’t read the market at all, and thus was frustrated for not taking advantage of opportunities when they were there. I know i shouldn’t be that emotional to missed opportunities and that it shows my youth in the game. I may be lying to myself but i think all accomplished traders went through that stage at one point in their development. It probably takes more time when you’re on your own at home than when you’re in a bank, hedge fund, prop firm, with experienced people to coach you. In any case, we’re in june now, and I haven’t reached that level of synchronicity with the market since then.
  • If there’s one thing i learnt, is that the trader is the edge, not the strategy. The more i know about the market doesn’t implicate more money in my account. It’s not the opposite either, obviously, but the correlation is very low. Of course having more knowledge (market structure, time and price, etc) helps, but it such a ridiculous part of what’s necessary. It’s not even close to having control over yourself. And don’t forget money management either.
  • Your broker is not your friend. I already knew that, but i recently experienced it first hand on a 50€/micro-lot account. It was laughable. I’ll do a separate post on that.
  • Find below a copy/paste of a chat i had with a group of like minded traders. To understand the lingo in here please go through all ICT’s material first.
  • Yesterday’s video, the 2h one, the “ATM” method. What he said about from one swing point to the next on the hourly chart, it’s something i’ve noticed on my own on the daily chart. A swing point at a previous high/low (or key level, usually OB or breaker), watch price go the next liquidity point (the next swing point). Study it further in details. The 3 days forming the swing point, what template is each of them? Mark out True Day for each of them. Mark out 50% (equilibrium) of true day on each of them (warning golden nugget in here). Is any of these levels significant later on?

    You’d think with such knowledge you’d make a killing. And yet that’s not the case. I really like this quote, “the trader is the edge, not the strategy.”
    On 2 occasions i missed on opportunities, that i was waiting for (!), because they happened late in the day, or late in the week. I was drained by the time they happen. Hence ability to focus, work ethic, are ESSENTIAL qualities of a good trader.
    Clearly that’s where i have room for improvement. On another occasion i took a trade well outside killzones, on my phone. Everything else was there (the what, the where), just not the when.
    That’s emotional control, how strong mentally are you.

    Once you understand that, it’s about finding the right balance between “evolving” and playing your strengths and trying to force discipline, which will never work. You’ll run in circles.
    The driver of the race car doesn’t have the same abilities as the engineer who design and build the car. Ask the pilot to formulate long term trade ideas and play them, it won’t work. Conversely, ask the engineer to scalp in a high volatility environment, it won’t work as well.

    Another thing i’ve noticed on my own, ICT briefly touched the subject this week: weekly template. Not every week has the low on tuesday LO, the high on Thursday NYO. (classic buy template). GBPUSD this week is classic NY (or LC) reversal. Consolidation during the majority of the period, then fake move then reversal.
    When such a template happens (daily), the reversal happens in the late part of the day (NY, or LC). But where does it happen, maybe at a key level as i’ve mentioned above? What does the market does after that? Could it go on the next daily swing point (liquidity area) ?
    Translate that on a weekly timeframe. What is the equivalent of NY – LC ? I’d argue thursday = NY, and friday = LC. Has this happened before? What happened next?

    Btw, what daily template usually follows a 3 bars swing point?
    Include Buy/Sell models, breakers (which are the real levels the banks are working, as ICT said it in the 3h video after the 2h14 mark).
    You can indeed map out the whole market.
    But all of this is useless if you can’t control yourself and trade a style that fits you.

  • Position size. I started with a 2000€ account in july 2015, reduced gradually my size to 1 micro-lot to ride the learning curve and still play with live funds. My equity curve made a low in January 16 at 5.49% drawdown, then it was higher lows, and pointing up, but still underwater. In april i did the math to find the smallest position size that would cover all scenarios on every instrument with my widest SL. I would finally have a fixed position size, now that i thought i knew what i was doing. Indeed, since my priority was to reduce risk, i would trade 1 micro-lot with a 20 pips SL on EURUSD (0.09€/pip) just as i would on EURGBP (0.13€/pip with a 30 pips SL). So a 2R winner on EURUSD would not cover for the 1R loss on EURGBP. It was not the point until then, i was merely trying to figure out everything else. So i did the math, and fixed my position. Unfortunately the first week i did that i read the market completely wrong and took 3 losers, which quickly made new lows on my equity curve. But what i was really satisfied with was my mindset. It didn’t bother me at all. Because i know sometimes i won’t get it right, but when i will i’ll quickly overcome that. Indeed, the next trade after that was a 2.xR winner and covered more than 2/3 of the previous losses.
  • Most new traders tend to overtrade. I tend to undertrade, and that’s a problem. Traders praise patience, but sometimes, in my case, i think it’s fear. Fear of uncertainty, fear to trigger, not patience. And what happens is days go by, even weeks without me placing a trade. I slowly get out of sync again, and time flies. It’s been almost a year now and i have nothing to show for it, except my understanding of price. It’s essential i place at least a trade on demo to stay in tune with the market. Absolutely essential. I can’t allow to drift away anymore.
  • The family is pushing me to go to London and join a prop firm or something similar. It’s time i reach the next stage of my development and since i’m kind of running in circles (or so it seems) it may be time to try something new. If you are or have been a prop trader please get in touch or leave a comment. I’d like to know what i can realistically expect from such an experience, what it would cost, etc. If you know resources on the matter, forum threads, podcasts, or anything else, please share them in the comments.
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Random Trading Observations

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