SS-ADR-v502 Diary Entry for 3rd Sep to 7th Sep 2018

Diary Entry For SS-ADR-v502 Trades

From 3rd to 7th September 2018

Summary

Every day was a winning trade. Weekly total was 227 Pips. Trading a standard lot size of 100,000 pips where 1 pip is $US10, that translates to $US2,270 in Aussie dollars where currently the close price for AUDUSD is 0.71051 AUDUSD translates to $AUD3,195.

Trading a relatively smaller lot size will give a relatively smaller return. Trading 10,000 lot size would have returned $AUD319.50.

I committed many trading cardinal, venial and almost mortal sins and at the end of the week had squandered most of the gains I’d made.

For the complete sorry sad story of my demise read the following blow by blow daily account and conclusion. Also how I intend to mend my ways and my analysis for Monday’s trading.

Monday 3rd September 2018


There was a significant gap down. On inspecting the chart in the morning I thought this gap is going to be closed. My first mistake was to think this rather than blindly following my rules and putting the one short trade I thought I could do better by putting on a market entry buy with profit stop at the bottom of the gap and a pending sell wait trade. I waited too long before closing out the buy trade for a loss and entered the sell trade in time to profit. My short closed at my profit stop of 1.2885. Next day I was determined i would follow my rules exactly. Little did I realize how hard it would be to follow my own rules. In hindsight I was still not confident enough to trust my own system. If only I’d realized how good it could be. This gap was filled in handsomely on Friday which my system predicted for Thursday.

Tuesday 4th September 2018


Tuesday I put my trades on in the morning determined to leave them. At 5pm I had a look and watched the movement. The charts were moving pretty rapidly and the price was close to my profit stop. I could bear watching and I started to think maybe the price won’t get to my stop and will reverse. Instead of taking some of the trade or leaving it as I should I closed out early with less than I could have had had I let the system work as it should. Moral of the story is if I’m in profit, move the stop loss up and leave it alone. If it reverses then I can take comfort in the fact I held true to my own plan rather than reacting from fear of loosing out. The two fears that have robbed me of system profits are the fear of missing out and the fear loosing. Recognizing these emotions and being able to control them will be paramount for future success.

Wednesday 5th September 2018


On this day I can remember waking up with doubts in my mind. I was thinking there’s been 2 successful days this one may be a loosing day. This emotion is the fear of loosing. Fear keeps us from acting when we need to. I was mildly confident and was determined not to meddle with the trade. But again I was tempted to look and when I saw it was in profit around 6pm AEST 9am GMT I took half profit, trailed the stop loss up so the rest of the trade would close profitable. But I still couldn’t leave it alone and ended up manually closing out the trade for slightly less than I should have received.
Mildly frustrated but was assured by my friends and mentors that I had done the right thing. In hindsight it would have been better to just have moved the stop loss up and have left the trade to run it’s course. Later that night the trade reversed spectacularly.


Thursday 6th September 2018 **My Born Day**


This was my birthday and I was feeling euphoric. I made the mistake this day of deciding to double my lot sizes. I thought “to hell with it, it’s my birthday, surely today’s going to be my lucky day”. This is the gambler in me coming out. As it turns out if I had stayed cool and kept those trades alive the following day they would have closed out for a huge win. At the time I remember watching the trade and seeing it was in profit and that it had stalled for a couple of hours. As I’d over committed I could not leave it so as always i pulled my trades for a profit before going to bed that night. It went higher but dropped overnight back to the approximate position when I pulled them the previous day. My rule is to close out previous days trades on a new day so I don’t end up having too many trades on and risking margin calls. Of course I did not know that Friday’s non farm payroll event was going to end up favoring my current position so the success of 106 pips would not have occurred using my current rules. I could adjust those rules to take off have the trade and leave the other half for the new days trade if it looked like there was still a good chance that trade my end up in profit. Looking at the charts it did seem certain we were headed for higher ground. Next time.


Friday 7th September 2018

This picture says what happened but misses out on the struggles that went on in my mind. By the morning of the 7th the trade of the 6th had already been closed. I entered my trades as normal going back to my previous lot size. I felt positive, and was determined to leave this trade run it’s course. If only I had followed my own advise. After receiving a frantic SMS from Andy of Forexct to short USDJPY that this was an opportunity not to be missed. I committed the cardinal sin of following his advise, which has failed me multiple times in the past but hope springs eternal. My SS-ADR-v502 suggested the direction was good. I added another trade. Now I had effectively doubled my risk for the day. This added extra pressure on me to watch the trade. Also I was no longer following my rules and was trading a pair USDJPY that I had not thoroughly strategy tested. Of course USDJPY after a short time spent in the right direction reversed radically. I closed it for a loss. More advise from Forexct came on my phone telling me to beware NON FARM PAYROLL event volatility. I thought fair enough, my current trade is positive and the charts showed prognostication, having wildly moved up and down for at least a couple of hours. I went ahead and committed another cardinal sin and closed out my trades in the positive. But that’s not all.

Late Friday night I looked again at the charts and was disappointed to find that my profit stop for Thursday and Friday had been met. The GBPUSD candle was madly heading north and the thought struck me if i get in now who knows how high it can go. Not only did I chase price on Forexct account but i over extended myself again by setting 1 standard lot 100,000 where each pip movement was $US10 or $AUD14. I was chasing perceived lost gains. Of course by the time I put the trade on it reversed and then wildly gyrated giving hope and taking it away with every heart beat. I closed out for a lose and then tried again with a short. This trade was a better idea but the wild movements and the fact I’d traded a standard lot again when I didn’t have enough equity to cover a margin call added too much stress and I closed for another loss.

Finally I closed the laptop to lick my wounds.

Positives

  1. The system works as long as trades are entered and left till the next day and not interfered with, by the end of the week even with a couple of loses the account should still be in front.
  2. The Equity in the Pepperstone Account has improved inspite of my efforts at sabotage.
  3. The experience has hopefully convinced me that my interference will not improve results this means I will have more free time to pursue other interests.

Negatives

  1. My interference cost the account dearly.
  2. The current account equity is small and there is a temptation to add more but I think it’s better if it remains small while I learn to control my own impulses.
  3. I’m currently under financial pressure and the pressure is mounting.

Takeaways

  1. Once the daily trade is entered the trading account should not be accessed again until the following morning. This is easier said than done but hopefully I’ve learned by my mistakes.
  2. With the current financial pressure on me, I need to take any options I can to reduce stress. So sticking to one trade a day and to a safe risk and subsequently safe lot size is critical.
  3. My best chance is to reduce any chance I would have to revisit the charts till the next day. This means not entering any trades other than the first trade of the day that fits the current system I’m trialing.
  4. I need to remember that this system is a daily trading system and needs the whole day’s trading to determine a result. I need to avoid looking at my trade particularly at volatile trading times during the day when there will be the most temptation to interfere thinking my manipulation will somehow improve the system’s long term results. The truth is the best I can do is to leave the trades run their natural course.
  5. I need to remember that by interfering in any way with the entered trade I’m obviating the systems results.
  6. I must avoid taking any notice of news events and messages particularly from forexct as acting on this information will effect the integrity of testing this SS-ADR-v502 system.
  7. Temperaments that are slow and ponderous and require time should avoid fast moving markets which require first thinking and an iron will when markets move against decisions to stay the course.
  8. Temperaments susceptible to becoming anxious and fearful in danger of coming under the influence of the fear of losing or missing out should avoid fast moving markets especially volatile wildly fluctuating markets. The best time to trade for slow thinking deliberative traders is the start of the Asian market.
  9. It’s important that slow thinking deliberative traders like myself especially those with a sanguine temperament who are easily tempted to gamble or are under financial pressure and are vulnerable to being tempted to gamble should avoid watching fast moving volatile wildly fluctuating markets. Without serious training using demo accounts or strategy testing this type of trader is seriously in danger of self sabotage.

Monday 10th September Trade


Tomorrow’s trade is similar to Fridays where the long trades take profit is a shorter target and the stop loss a little lower. The take profit is a little under 1.2955 right on the 40pip mark from Friday’s close. The stop loss is 1.2865 4 pips lower than the reverse candles wick. The thinking behind the stop loss is that it is set to stop a loss that would make it impossible to recover from but that gives the profit stop a greater chance of being reached first.

Tomorrow’s temptation will be to enter a buy stop pending trade rather than a market buy trade. The problems with entering a pending trade are :-

  1. It may never be triggered so there is the potential that the days trade will be missed.
  2. It means I’ll be required to look at the charts to see that the trade has been entered this may mean I’ll end up manipulating the trade or entering a market entry trade anyway and be in a worse position than I was if I had just entered a market trade at the start of the day.
  3. The system has not been tested for this type of entry so the expected results won’t be known and that brings in a new level of uncertainty.
  4. The small amount of possible gain does not justify risking the lost trade.

No, I have to trust the system and play by the rules. If the strategy testing results are to be trusted than the real trading will show this to be true, otherwise I may as well pack up and go home.