Monthly Archives: August 2016

My Final Post.. for now

If you can’t tell from the lack of posts I’ve been making, I haven’t done research in a while. And for the first time since I started this blog, and for the first time since I started my journey as an aspiring trader, I don’t plan to do any research for the foreseeable future. I want to structure this final post in 3 parts: The personal side, the analytical side, and the future.

On the personal side, having to quit sucks. It really sucks. Having to admit to all the people who told me I would never make it that they were right hurts. Having to invest literally thousands of hours (I would estimate 4500-5000) and get practically nothing out of it is depressing. Trading for a career was THE career as I saw it years ago – full time, hours a day watching the charts like Morse code, seeing things 99%+ of people couldn’t see, acting on part gut, part knowledge, seeking the dream of being an elite at something. I could go on and on, but the short answer is it didn’t happen. Perhaps the focus should really just be on one word: why?

Per usual I’d like to think that there were 3 main reasons:

First: Lack of useful screen time

I’m big on visual learning and learn by doing, and trading is no different. I’ve learned over the years (in a lot of aspects of life) that to learn things well, I take them and break them apart into as many different parts as possible and analyze them to death until they make sense to me. Seeing the actual process of getting into and out of a trade was something that I never quite got the hang of. Sure, testing in the lab I got a good sense of what structure I want to trade being given the candles, but I’d argue that there’s a difference between trading OHLC candles in and of themselves (really only trading the open and close) and trading the candles AS they are forming. Getting an idea of what “live flow” looks like isn’t something I’m familiar with. I felt that not being able to actively trade the London and NY sessions hurt my ability to learn this feature of the market greatly. Additionally, not being able to piggyback another person’s trades (understandable) or viewing someone’s past trades (also understandable) added on to this. Let me explain. In so many other trades (pun not intended) or elite skills, such as poker, chess, strategy games in general, there are replay features, streams, etc. It allows a user to passively absorb the “correct” trading environment. Junior pit traders and the like get mentored in this aspect, and it was one I think would have been very helpful to me.

Second: inability to network effectively

This is an area that while I wish it could have happened; I think it was simply a goal and not an expectation. Many people make it without it. To be specific, I was unable to find another person, or group of persons, to share ideas with on a peer-to-peer level. I’ve found in my numerous encounters with people that as aspiring traders get closer and closer to a working system, they guard it closer and closer. New traders happily share all their ideas about how they think the market works (unfortunately generally disproved statistics) but more seasoned traders either a) speak very vaguely about how they trade or b) trade a specific way or have a certain understanding of the market and are adamant about not straying from it. Again, I don’t wish that I could have someone spill all their secrets to me, but having someone who could both test their own theories and challenge/offer input in my theories would have been the ultimate “2 heads are better than 1” situation. I met a lot of “thanks but I think this instead” which isn’t very useful given the scope of the availability of forums already. Not a requirement, but another “nice to have”. I’ve shared all the relevant findings in my career, but I don’t expect the same of everyone else.

Lastly: Inefficient use of time and incorrect initial analysis.

I think this might be my biggest reason, and this one is my fault completely. I think I picked the wrong approach to the market. I spent so much time analyzing waves and movements in micro frames (30m/1hr) and not enough on the big frames (d1/w1). Looking at micro frames absolutely requires one to trade full time to effectively make use of it. As stated with screen time, I never had time to actually trade what I was studying. IF I found a big enough edge, I would have had to go straight into full time trading and hope that it was enough to make a career out of it. Wrong wrong wrong. So wrong. In hindsight, my thought process was simply: have no knowledge->acquire edge to trade full time ->trade full time. However, I should have taken an extra step or three and done something more like the following:

have no knowledge->acquire edge to swing /position trade(1-4 trades a month) ->earn some extra income (5-10k/year)-> continue to acquire knowledge to swing trade smaller frame (1-6 trades a week) -> earn substantial income(10k+ a year) ->gain enough knowledge to trade intraday = trading full time.

Aren’t time frames just reflexive of themselves and they’re all the same? No, not really. Trading on a larger frame grants a lot more wiggle room to be wrong (since position sizes are so small). You can be saved in a position trade in so many ways. Unexpected news, expected news, interest rates (carry trading), light weight martingale strategies, random chance, etc. The probability that a specific point will be revisited is obviously much larger when you allow weeks rather than hours/days. You can afford to miss your entry by 50, 60, 100 pips and it’s not that big of a deal. In a live environment, it’s different.

When I think about scalp and intraday traders versus swing and position traders, I think of this comparison: precision vs. prediction. I think scalpers are extremely niche in their knowledge. They know a few things and they know them damn well. They’re reactive and quick. Swing traders on the other hand are more about preparation. They have to continually adjust their outlooks based on news, and rather than react, they anticipate. That’s how I see it anyway.

If I could offer one last point as to why I failed to go fulltime, I’d simply say that I was missing “it”. Not seeing the things that other people couldn’t see.  Not being creative enough. Not thinking outside the box enough. Not thinking inside the box enough. Not enough coding power. Not enough preperation. In my opinion of trading, the ends does justify the means. If you failed, you have no one to blame but yourself. There’s no rigging. There’s no luck. It simply is. While I still have thoughts that I could do it one day, I couldn’t do it in the prescribed timeline.

And with that, I’m off for now. If you were looking for the happy ending, so was I. It’s not all doom and gloom however. I have learned a LOT in the past 3-4 years. I’ve surprised myself with how well I can work data in excel, how easily I can manipulate raw data into swings for analysis. I could probably be more efficient in anotehr language like R, but perhaps that’s for another time. A reboot of sorts. I know so many FACTS about the fx market. Not opinions, not thoughts, not theories about the “market marker” that is out to get us. Statistical, raw, empirical evidence about how price moves. And that’s kind of cool. Maybe I do have the edge. Maybe I just need to work it over time and play my spots that I know. There’s always tomorrow, another trade, and I WILL trade.

With that, I’ll be on vacation until the end of the month, and hopefully by the time I get back I can upload one last live account to myfxbook. Until then, remember: Question, Research, Profit.