Friday, May 20, 2005

Are you a trader

I have refrained from commenting on things happening in the WCCI since I left. I have not rejoined in secrecy as I can’t follow even 2 chat rooms without getting distracted. And I am currently interested in at least 4 chatrooms, which I would gladly follow, if…yes if I were interested in participating in multiple chatrooms for my ego, for secretly promoting Futures-Trader, for watever other reason you may come up with.

But yesterday someone I really respect as trader got thrown out of Woodies room:

Dr. Bob was forced to leave.

What did he do (as far as I can see from the outside)?

He introduced new ways to trade the cci, he traded a longer term cci, than the one favored in the room.

I still have Woodies email, where he told me, that moderators are free to use different cci lengths the LSMA or the 34 EMA, as long as they stick to cci.


But what Dr. Bob really did was applying Woodies CCI to his personel trading style to make it his own cci system. It was no longer Woodies system, it was his system, which he could trade and make money with.

Then he came forward and told you about it. And he was good at it from what I remember, when I was in the room… too good it seems.

Would Dr. Bob’s system work for you? No. As long as it remains Dr. Bob’s system it will not work for you. But you had the chance to make Dr. Bob’s system your own system. As you still have the chance to make Woodies system your own system. Basic CCI can work, if you make it your system. But as long as you just hang in the room to get entertainment, to have someone telling you, what he sees in the market, to see posts about entries or exits, or to have trades called, you will remain the market sheep, the wolves need to make their living.

NQoos advocates leaving all chat rooms, if you want to become successful. I think, being in the right room, knowing what you need to look for to become successfull and getting the social needs fulfilled at the same time is the way for me.

You need to have a system.
Any system works, as long as it gives you an edge and as long as you can make it your system.
Now look for the traders, who seem to do good. See, if you can see their trades on your chart. Did you get a signal, when they told the room, they entered. How do they manage their trades. You don’t need their charts, you need your own charts. The chart is like your living room, make it as comfortable as possible for you. Is their way acceptable for you? Some use 20 tick stops, some defend their positions by adding to a losing position, some take either a 20 tick winner or let it run into the stop, without flinching, unless they get a reversal signal.Is this your way?
You need to know, how you will handle your trade and stick with it.

So if you trade the Basic CCI, just a few days ago I said: by all means remain in the WCCI. It’s the best place to learn about the CCI. But recent developments let me change my opinion. Look elsewhere for your CCI mentor. And take a look at Sport’s blog and the CCI articles he mentioned. There are CCI sources besides Woodie and they are good ones.

If you know, pure CCI is not working for you, as you use additional information to confirm your trades or to manage your trades, take the weekend to think about your reasons why you are in the WCCI.

The most important one sure is, that you have made friends there.
Still I knew, I would be thrown out of the WCCI earlier than later, because my system had started to diverged from the basic CCI for 9 months and I told people about it. It was and is my way of testing my system by bouncing ideas in the room and I changed from a ranging trader at barely breakeven, which I was in the WCCI, to a profitable trader, who sure has his setbacks, but who is profitable for 5 months now.

I sure had a feeling of loss, when I decided to leave the WCCI, but fortunatly I first was sheltered in 2 private groups with some of the friends I had made and then a new gathering place was founded, where most of my old friends hang-out nowadays. Not as comfortable as Hotcomm, not streamlined, but we can discuss what we want, as long as noone reverts to name calling during the discussion.

Tuesday, May 10, 2005

Our FuturesTrading Room

The outcasts of the outcast now hang out in

Our FuturesTrading Room

Paltalk Miscellaneous Avenue

You are welcome to have a drink with us

TeddiesCCIroom or WoodiesCCIroom

I just saw the following statement in a newsgroup I follow:

>>>I haven't gone to the Hotcomm room, perhaps I should..... I have just opened the Pal Talk room TeddiesCCIroom.......

So you came to the outcasts first.


If you really just trade the cci, you might be better off in Woodies room, as you won't get so many ideas floating around, distracting you from your goal.

In Teddies room you will find a lot more ideas, which might or might not work. You have to look through them or you decide, this and this and this trader is worth listening to. So if they post an idea, it might be worth looking into it.

3 years in Woodies room teached me a lot about discipline, focus and simplicity. Unfortunatly the CCI alone wasn't the system for me, even if I saw, what Woodie did could work and during an Online-TAL, where Woodie called the trades live, I made about 100% more than on a regular day. But I could not transfer, what I saw and learned in the TAL to my regular day to day spread trading. That’s by no means Woodies fault, it just was not my system, which I tried to trade.

Going to Tedies room, I was confronted with a lot of ideas, which I had to think about and adapt to my own system after deciding who is who and who is posting ideas worth looking into.

Never looking for someone calling a trade, never asking whether this or that trader really made the points he claimed to make.

I was and am still looking for ideas, which work for me.

There is someone called Anti, who posts a lot of ideas and is able to trade multiple systems and indicators. If you ask him, he comes up with a clear description of the indicator you had a question about. He just knows them. Does he trade them? I doubt it. He seems to be the trader who has reached this envious state of being able to let his trade go. Who really let’s the market decide, if the trade goes to target or not. He has a signal, he takes it and then the market has to do what it is supposed to do. Go from here to the target or stop him out. So simple and so difficult to achieve in daytrading.

I don't care, if he makes money or not. I don't care if his trades are real. I'm in a chatroom to get ideas and to bounce ideas around. If I see an idea, which might work in hindsight and I see someone claiming to trade it successfully, I give it a chance. I adjust my charts and see, if the tradesignals tell me something.

It's relatively easy to see, whether an idea might work for me or not. I know the contracts I trade, I know how they move and just by looking at a chart I can experience the pain, when I think about an entry signalled on the chart, which then goes against me first, before going to the target.

There is someone else, a women trader, who posts relatively seldom, but if she posts, it’s worth looking into the idea, even if it is not immediatly obvious, that it will help your trading. Still knowing, that someone, who trades for real uses a certain method or indicator, makes it worthwhile to look into this indicator. Sometimes you need to give things a chance to prove themself.

In WoodiesCCIroom you will not have these problems. Go away and come back 2 months later and you will still recognise, what is traded and how it is traded.

In Teddies room in 2 months everything will have changed. Maybe we trade the stochastic, maybe we trade the Aroon or a discretionary daily bias indicator. Who knows. This room is fluent and changing. Having new ideas, discarding others, comeing back to old ones. If you like that, if you are able to identify the ideas, which integrate well with your system and disregard the others, then Teddies room might be something for you.

Monday, May 09, 2005

It just needs 1 trade...

to break you.

You have 50k in your account and you don’t believe me? Statistics tell you other wise! Forget it. It doesn’t matter how much you have in your account!

1 dumb trade can break you.

And they happen to all of us. Experienced or novice, it doesn’t matter. We all do our real dumb trades. Just that to experienced traders they don’t happen so often and that an experienced trader is better trained to put it behind himself emotionally, accepting, that what he did was his 1 dumb trade, he is allowed to make a year and that now he is back on track.

Often they happen after vacations, when you are eager to get all the lost opportunities back, to jump into the market, showing yourself you still have this great streak you had right prior to your vacation. But the market has changed and instead of tiptoeing into the market, you plunge in head on. Defending your belief, scaling into bigger positions, than you traded before, holding overnight, as during your vacation you decided to become a swing trader going for the home-runs and no longer be content with nickles and dimes.

But it also happens after you see a big drop or spike caused by fundamental news, catching a lot of traders wrong footed. Then the normal rules no longer apply. There are just shallow rebounds, but nothing to get you back on track in case you entered using the regular rules.

Take the Euro plunge on Friday caused by an exceptionel good jobs-report. No one expected it and Euro dropped around 170 ticks from the highs. If you expected a rebound after 120 ticks, which is a sure bet usually and added to your position, when Euro went down further, you are now deep red. Sure you can try to explain to yourself, that the reasons for the Euro to rebound to the 1.30 area are there, that we have this or that pattern forming on the daily and weekly, which warrants holding a deep red position over the weekend.


But what would you tell your trading buddy, if you saw him trading like that?

You would tell him, stop it! Was there any reason at all, remaining long this chart, if you entered around 1.2880, after the momentum drop and a rebound did not come forward?

Sure, it’s painful making a trading error, sure it will cost you more than just the regular cost of doing business, when you now take this stop.

I can be wrong!
Euro can go back to over 1.2900 and I have seen these reversals as well. But right now the trend is down. The trend was down, when he entered the position and the entry long was based on the expectation of a countertrend to develop.

While switching timeframes might be warranted, and also scaling into a position can be a good entry strategy, I have painfully learned, that you should not mix trend and countertrend trades.

If you go with the trend, you can use wider stops and big targets. If you go countertrend, you use a small stop and you watch your position carefully. If the countertrend does not materialize, you are out, as the trend proved to be too strong. A countertrend starts, because traders like me and you decide, enough is enough and we have our fixed targets at 10–20 ticks. Sometimes bigger fish joins us and a countertrend starts. But sometimes that’s not enough and the countertrend dies. You can see this nicely on the chart, when around 1.2855 a countertrend was tried, but died as the selling was too strong.

So make sure, that you recognise your 1 dumb trade early and cut off the hand, before you lose your arm. We traders are like octopus, we can grow back a hand, it takes a while but it can be done. Growing back an arm or leg takes longer, and once you lost more than that, you are in trouble, because to make back a loss of 50% of your account you will need to double it afterwards. If you have 10k and lose 10% you still have 9k and you can make back 1k in a few days or a week trading like you always did, but if you lose 50%, your account is at 5k and you need to make 100% just to get back to where you started.

Sunday, May 01, 2005

One Bar ahead

Hilarious discussion on Cheese's Blog:

Woodie frontrunning the whole room with the WCCI (btw in 2003 it was based on the Kurtosis indicator (Excel VBA example), which is available in Tradestation and Sierra as far as I know. So put it on your charts and see what it tells you)

Do me one favor. Take your trading chart and take a look at them. What would One Bar ahead of your tradesignal give you as Entry?

At least on my Eurocharts, just looking at 8h of trading, my trades on average would have gone 8–15 ticks against me, before going in the direction I would have taken the trade, having an early signal present. And that does not include all the trades where I would get in one Bar ahead, but then the Signal never materialize.

Looking to be in one Bar ahead is just another name for the search for the Holy Grail. But instead of the Holy Grail you would end with a lot more Stops and losing trades, before hitting the one big home run 100 tick train, which of course you leave at the next station with 10 ticks profit, as you don’t want to lose your precious profits, while forgetting that you already paid 5 stops before boarding this one.

Being in one Bar ahead is not the way to wealth and happiness!

  • Trading your Plan is …
  • Recognising what works for You is …
  • Building your mental strength is …
  • Trust yourself, not someone else, is…

the secret path to wealth and happiness