First Days Off in Months
Reflections of a trader finally starting to understand the infinite game - the post I wish I read months ago!
A picture of drafting this post… within this post! So… meta!
A Weird Feeling…
Today is the first day I’m not looking at charts - at all (I’m forcing myself to do this, really)…
it feels…
weird.
It’s not really a giant relief I assumed it would be. Even right now as I draft this, I’m fighting a slight feeling of FOMO that I’m missing the open… it’s just after 09:30 EST on Wednesday and typically at this time I’d be leaning into the 1 minute chart, watching volume and delta trying to figure out when - or if - to play a 1 minute opening range breakout.
But not today or tomorrow. No charts, no trading.
It’s weird to do something religiously for months on end and then suddenly stop… kind of like a bit of a void, and you’re unsure how to fill it.
(I know, I said I would be taking this entire week off but the volatility brought in by news and global events the past few days pulled me back in - I’m happy to report I’m up 50p so far from Monday and Tuesday - this should have been 250p if I could finally learn how to truly book profits and walk away, but that’s another post for another time - or perhaps that’s part of this post).
Anyway, after a few hours at the gym, I’m at the pub writing and reflecting on the past half year or so, and doing what I love other than trading - building software and writing.
This post will be sort of a two-sided coin: on one side, I believe I’ve finally hit consistent profitability with my trading (or at least have seen myself do it), and on the other side, every day, I still struggle with my own ego, selfishness, or fear, or greed that has the potential to send me back to where I started at the beginning of the year. It’s a really weird feeling.
So yes, on the upside, in the past few days, I’ve realized something quite significant:
I have finally become a profitable trader.
I know this because when I run my system, I’ve seen multiple days green in a row. In August to September I had an astounding 20 day win streak. On the days I lose, losses are smaller than the profits on the days I win. But these things only happen when I am trading my system. Between my options account and futures account, I transferred out $700 - just from last week (5 days) alone trading 1-2 MNQ. Over the past 10 days, it’s closer to $1k. I now have about $1.5k left to get back the $5k I lost half-tilting with no system using 1 NQ at the end of September.
Granted, I think my speed to becoming profitable was helped along by my prior forays and experience with options, but until this August, I never really took trading seriously, finally doing (the absolutely required work in my opinion) of studying statistics, price action, risk-reward profiles, and journaling the trades.
And yet still - I can feel it deep inside - the ever-encroaching fear of bad habits creeping back against my system to ruin everything. This is a daily struggle for me to fight against just a few annoying vices: self-confidence, ego, fear, and greed:
Is this setup really that good? (Doubting a now-proven system even after reviewing my trades and data)
Should I have held that trade beyond my profit target? (Negative emotions of leaving money on the table)
Oh man, this thing keeps running… let’s re-enter! (After the target was met and profits booked)
What if I get stopped out? I MUST NOT revenge trade! (Gets stopped and revenge trades anyway)
Ah, what the hell, I’m up already $300 from this morning… let’s take a quick look in the afternoon / evening! (Proceeds to give back profits on bad setups / chop)
If you trade as much as I do (read: probably WAY too much), you’ll run into every single one of these mental hurdles throughout just a single day of trading, and many of them more than once. Trading is truly a constant mental battle.
I continue to forget or ignore the wisdom of what all those multi-decade professional traders continually repeat (and should repeat because stupid traders like me don’t listen!):
Trading is a business; every trade is a business decision.
Your defined risk (stop loss) is what you pay for your trade. If it’s hit, that’s not shameful or a sign of doing anything wrong, that’s the cost of running a profitable business - a business where uncertainty is literally a part of the business model.
The goal of trading is not to be right, it is to make money.
As part of refining my trading edge, I am trying to incorporate following these rules and mindset religiously - almost to a mantra level. I must always remember: My ability to be profitable is based on math; it does not give a shit about how happy or sad I am about the outcome of a trade.
The Catch-22 Of The Beginner Trader
As part of this reflection and writing this post I wanted to think back this whole year on sort of what I learned about learning how to trade in general. Learning any new skill is hard enough, no matter what it is. However, I have a theory that trading is especially hard and almost designed from the start to be extra punishing to beginners.
Why is trading so damn hard for beginners? And why do beginners (like me) so often relapse into tilting and blowing accounts? I believe I’ve finally figured it out, and it’s for a variety of reasons:
You need experience to trade well. So, naturally, being a beginner you WANT to trade as much as possible, you WANT to be in a position - no matter long, short, or whatever - at what feels like almost at all times, but this is exactly what you SHOULDN’T do. Trading is a game of patience and critical selectivity, not a flurry of many rushed and sloppy trades. The markets will always be there.
You need confidence to trade well. And of course, at the beginning of your trading career, you have 0 confidence, because you don’t know what the hell you are doing and you have no strategy yet!
You want to make money. Okay, this one sounds dumb, right? Of course, the goal of trading is to make money. But focusing on making money at the beginning, and especially focusing on your P&L while in a position or intraday, is ruinous to the beginner. I’m still guilty of this one - and I know even some of the pros are from time to time! But as traders we must not forget: The past is the past. The future is the future. Your system is the only given and setups exist and will present themselves regardless of anything else.
All these things create what I call the catch-22 of the beginner trader! I implore you to consider them; don’t make the same mistakes thinking you are somehow smarter or can skip some part of the learning curve; trust me, only financial and emotional pain is down that path.
Being a Workaholic Doesn’t Necessarily Improve Your Trading
Another personal problem for me is that being a software engineer, (and I’d like to think I’m a rather motivated one at that) it’s definitely not foreign to me to stare at screens the entire day and even come back to them sometimes at night. I’ve done my share of 18+ hour days. In a partially unhealthy way, I kind of replaced this dedication with trading, but I think like anything (and maybe even especially with trading when mental clarity is so key to success) overdoing something leads to actually detrimental results and stymies your true potential. I know breaks are essential for mental health and well-being (and actually improving your work), but I often find I don’t take any sort of breaks at all! That’s also what I’m slowly trying to incorporate back into my life, starting with these few days of break. (And even here - on my day “off” I’m still writing this post 😂)
In the end, futures markets are ultimately a double-edged sword - they trade nearly 24/7 - this is both a massive blessing and a curse - knowing that you are just a few clicks away from making $100-$1k on the day… to FOMOing and losing $100-$1k a day on a 0 setup trade - for the rest of your life!
My Vision of My Trading Future… (Trading Futures 😂)
I’ll start a new full-time software engineering job soon, so I probably won’t be posting as much as I’d like here. Who knows - if I get good enough maybe I can come back full-time writing, doing research on intraday sessions, and publishing results here as well as well as on AMT JOY. However, I believe I see light at the end of the tunnel for what could become a lifetime trading method. Here’s what I envision in my trading in 5, or maybe even 10 years out:
Look at the daily, then 4-hour, then 1-hour, then 30-minute charts - what patterns are there? Are buyers or sellers in control? Are we in balance? Where is long / short inventory positioned? What seems to be the path of least resistance?
Run my models and system - is there a statistical edge with the current market conditions?
If - and only if - there is a setup, limit order 1-2 NQ with defined risk and profit target according to the model.
Wait for the limit order to be filled, if it never is, call off the trade and cancel all orders.
If the order is filled, close Tradovate and review trade at the end of the day - as a defined systematic trade, it will be either 1R loss, breakeven, or 2R win
Let’s say I do one such of these super selective trades per day, so 5 per week, or 20 per month. If you take a look at AMT JOY’s Risk Lab (and if you’ve been reading my posts, you’ll know I like to keep it simple with 50%+ probability setups with 50p:25p RRR trades on MNQ / NQ), 5 trades with a $500 risk (1 lot NQ) and 2:1 reward:risk ratio has an expected value of almost $2.5K a week or a staggering $10K per month. With $1000 risk (2 lot NQ), that doubles to $5K a week, or a whopping $20K a month. Pure insanity. The possibility is there. It’s up to me to control my vices to achieve it. I’ve seen the side of profitable trading now and know what it feels like.
Now, I claim this is my vision, but somehow I’m still acting like a novice, on the grind 10-12 hours a day, staring at multiple time frame charts and price action. To be fair, it’s good training & good experience. I still pick things up and generate new research ideas or statistics to add to my models almost every day.
But still, I believe now in order to fulfill my vision, I must start acting like it.
I must become the trader I want to be - the utmost selective with my trades, and willing to accept the by-definition random outcome of the trade gracefully.
So, those are all the things that I’m reflecting on and thinking about on these days off. Thanks for sharing this time with me.
Until next time,
-Chris
Love it bro! Keep it up :)