Wednesday, June 10, 2009

Wed. 06/10/09 - A lot harder than it looks

A lot of newbies jump into the markets in hopes of "easy money". They read about the (very few) successful traders, their high roller life-styles, ability to work from anywhere in the world, etc. and jump into the market with dreams of grandeur: making thousands or millions while sipping a cocktail on a sandy beach. Trading is so NOT like that. It's an extremely challenging and difficult way to earn a living. It tests you mentally, physically and psychologically all at once. Right when you think you've got it figured out, the market proves you wrong and tests your confidence. The charts are also VERY deceiving since they make it look so EASY in hindsight. Show any newbie a 5-min chart, and they'll be quick to point out how much money you could make (ironically self-acclaimed gurus also use this trick). To cut it short, this shit ain't easy so think more than twice before you jump in, and even then, don't do it for the money.

I made around $80 bucks today, and they were probably the hardest $80 I've made in my life. I was talking to Matt on Yahoo IM when I placed and exited a trade for a profit, and I told him "I've never been so happy making so little" LOL - and trust me, it wasn't because I made a few bucks, I was happy because I finally executed a trade according to plan, and was rewarded for it. I was acting like a bitch most of the day; hesitating on all my setups, not entering the market when I should, etc. I'll go over a few trade setups that I would have taken on Sim but for some reason, did not take now that I'm Live. Here's how my day went...

ES (5-Min) - Pre-Market Short-Sell Setup

I really wanted to short at 950 in pre-market, but hesitated thinking "I should wait till market opens and let the opening range get set". I then thought "I should place a sell stop 2 ticks below the 848.50 level in case we get a sell off at the open"...and even put in the order, but later pulled it out thinking "946.50-947 is support - why short so close to support?". Missed some nice down-side action. Lets move on to the next area...

ES (5-Min) - 9:00 AM Central - Trade #1

Over here, I see that the 944.25 area held and is a potential double-bottom from the over-night price action, and I think we'll rally back up now so I hit it Long at 944.75 with a 1-pt stop-loss; a "low-risk" trade in my mind. Price moved so fast against me, I got 1 tick slippage on my stop taking a 5-tick loss. In hindsight, I should have waited for a bullish candle to close above 947.25 and then looked to perhaps buy a pullback. That should have been an indication that price was set on heading lower, but we've had such choppy price action leading up to today, that the possibility of a strong trend down day didn't really cross my mind. Moving on...

ES (5-Min) - 9:45 AM Central - Not Going Long Now

Plenty of support at 939.50, but after taking that prior loss, I decided to stay away from the Long side. Was looking to enter short on a retracement back up to the 944 area but price didn't get there.

ES (5-Min) - 12:00 PM Central - Treasury Auction Coming Up

At this point, I'm glad I stayed out of Longs and am shocked that ES is testing the 936 area. This was a pretty solid area. I look at the consolidation heading into the treasury auction and place a buy stop at 941.50 and a short-sell stop at 935.50 to catch the move in either direction. At the last minute, I bitch out, and pull my sell-stop order thinking "934.50 is support so why risk 6 ticks just to make 4 ticks".

ES (5-Min) - 12:55 PM Central - WHY did I pull my sell-stop at 935.50?!?

Frustrated as all hell now - Wondering if I'll ever make it in this business. Will 932.00 hold? Holy sh*t! How low can this market go? Don't you shorts eventually have to COVER? Come on!

ES (5-Min) - 1:40 PM Central - Trade #2

OK - finally seeing some signs of a bottom. Would like to short if price gets back to mid-point and/or VWAP but for now, this could be a nice scalp to the Long side. Hammer at the lows followed by a strong bullish candle. Should try a Long at the mid-point of the bull candle. Was tired of missing so many trades, so manned up at entered Long at 930.25 with a 6-tick stop. Price moved up fast to my target 933.25. I was actually expecting price to get back to 935.50 area but I didn't want to over-stay since this was a counter-trend setup. At this point, I was too emotionally and mentally drained so called it a day.

ES (5-Min) - I can't believe price retraced back up to over 940 this late in the day!

What a day! Glad it's over.

ES (Daily) - Bull Flag?

The Daily chart is still looking bullish to me. Looks like a bull flag on the daily, and we now have 4 dojis in a row, and we're at the low end of the up channel. Will we get a break-out tomorrow? Who knows. I certainly don't! Retail Sales and Jobless Claims data out at 7:30 AM (central) tomorrow morning. Trade well!


  1. Congrats for the real trading!

  2. lol, nice chart annotations.

    The best way to transition from paper to live is start pulling small gains. It helps build routine and confidence.

    Good post.

  3. tst, thx,

    MvW, the transition is turning out to be more difficult than I thought. Only have 2 more days to trade all day; then I'll have to re-evaluate the situation with work/school and see if I have any time left for trading.

  4. "don't do it for the money"
    I think it's a testament for all successfull ventures. YOu gotta be focused on the task and love what you do, and the money will take care of itself. it's a lesson i've learned

  5. Awesome write up man! And congrats on turning profit for the first time live!

    Keep at it... I need you thinking you can be a millionaire at this before you start your job so you'll quit soon and keep trading! ;)


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