What's happening this year?

I’ve pretty much fallen off the face of the earth over the last couple of months but not without good reason. My last update I was speaking of how I was deeply involved in coding all sorts of things that at the time were giving me a decent and much needed respite from the stresses of trading and the pressures that I had allowed to accumulate over the previous 1.5 years.

Well, during this phase of “rediscovery” I had a great many traders contact me about my free order book software that I released a while back. Asking what the next phase might be? whether I will be looking to continue working on it etc. The thread over on BigMikeTrading has become pretty popular since its release and I’ve had a few guys contact me to say how it’s really been an asset to their trading.

So it got me thinking. The thing is, I don’t actually use the 1LDom myself anymore and haven’t done so for some time. It was a prototype that I built using the existing Gomi framework a long time back and while it served its purpose at the time, which was to assess whether it was going to be the right fit for my trading, I quickly outgrew it for a number of reasons and moved onto my existing book which plugs directly into CQG’s api. So in putting out 1LDom, much of the work I ended up doing on it afterwards, i.e. getting it stable on all sorts of different feeds, computers, regions etc., did not directly benefit my own trading in any way and it was eating into the limited time I have available at present.

After a great deal of thought, I decided to redesign my existing book so that I could plug in a custom Ninja adapter that would mean guys that want to use what I use, could do so and would have a decent upgrade path from 1LDom. I figure in that way any work that I do on it for others will likely also benefit my own trading since I’ll be working mainly off one code base.  Of course since I’m always looking to keep my own tools top of the line, any changes in that regard would filter down to guys using my newest version automatically.

So that’s what I’ve been doing over the past month and why my blog has been quiet. I’ve been pouring all of my spare time into this new bells and whistles order book which will now operate both through CQG as standalone (my current setup) as well as through Ninja.

The only caveat and I must say this now so as not to mislead anyone, is that this new version is not going to be released for free. I contemplated doing a free version of it for a while but due to a number of reasons I decided against it in the end. Mainly that a free cut down version would essentially just be replicating what the 1LDom already offers and I couldn’t really find a spot for it in terms of product differentiation. That may change in the future but as off now that is my thinking.

Instead what I’m going to do is continue to support the existing free 1LDom with the source code and continue to offer that as the base entry level order book for guys that don’t want to spend any cash but still need a means of trading via an order book. For anyone looking for the next level up, well now I have something to cater for that too. It would be great if I could offer it all for free but I’m sure many long term readers already know that I am a struggling trader as it is and so the time investment required to pursue these side ventures has to be justified in some way.

I feel if it can offer me some form of small revenue stream that both releases the trading pressures and allows me enough time to crack this nut then it will be a worthwhile endeavour, on the flip side I can bring my past experience as a developer to the table and really offer up some quality tools that I am using myself and which I think may help others with their own trading too.

So that is essentially what I’ve been up to, where I’m going, why I’m going there and we’ll have to see where it leads too. In any case, I’m pretty excited about the new tool. I feel if people appreciated the last one so much then they’ll be blown away by this one. As it stands I’m just finishing off some testing but am hoping to run it through a beta phase in the next few weeks and it’ll possibly be available for any takers end of February.

More detailed posts will follow, although I’m planning on putting it on a separate site as I’d like to keep my blog personal and about my trading and not turn it into a techie sales shop. In the meantime here’s a video showing some of the order capabilities of the new Ninja version of the book.

Hope everyone’s trading is going well this new year.

1Lot

* Worth watching in HD and full screen to get a clear view of what's going on *

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Chugging Along

It’s been a few weeks since I last put up a post. I’m still working away as ever. Trading Live is on hold at the moment as I want to be sure I hit my second leg with a bullet proof plan that is an improvement on the first. As this may or may not be my last dance I figure I want to give it my best shot and so am not rushing in lightly with my changes.

A fully fleshed out plan is in the pipeline and will be further elaborating on said points in prior post. As of now I am still working on both the mental and technical elements. The physical element is in full swing and I’m happy to say that I’ve finished building a half gym in my garage which I’m now using on a daily basis as well as having joined a local squash team. Already I am feeling like my energy levels are returning and am excited at the prospect of getting back to my day to day trading routine.

The main point I wanted to make in this post is that during my review process I have noticed something that I think will one day be a corner stone of my trading success and so I wanted to share.

Ever since starting live trading I have kept a 3minute hand chart of the Bund. On my hand chart I mark down everything that occurs at my micro management level throughout the day. All my ins/outs you name it, it is on there. Looking back at this chart now I realise that had I not done this I would have added at least another 2 or 3 years to my journey. The ability to constantly refer back to precise points in time and see what I did, what someone else did, what someone is proposing should be done, what I myself am proposing should have been done etc. is absolutely invaluable.

The only way we can truly learn from our own process is to capture that process in a fashion that allows us to go back and review the journey. So having realised how important this element of my trading set up actually is, I am now on a drive to become even more studious than I have been to date. From now on I won’t be recording just my trading on hand charts but EVERYTHING. As much as possible, what I write, what I think, what I research, what I read. One of my goals going forward will be to ensure that I achieve maximum efficiency in my learning process.

You’ll notice a couple of new links on the right hand column; I’ve been experimenting with Google Drive and quite like the simplicity of the setup. Going forward I’m going to try and turn this into a searchable research base that can be shared/discussed/referred back to/learnt from etc., it also allows me the ability to create multiple streams off my blog that will include my day to day trading journal as well as my research, back tests, technical aspects of my trading etc. but it allows me to do it in a manner that is more readily accessible and usable. Plus it means I don’t have to clutter up my blogger feed with items that may not necessarily be to everyone’s taste.

If you are interested in any of those lines of work then feel free to have a browse or drop a comment.
It's primary objective is to support my own trading process but if I can help others while doing so then that would be an added bonus.

In any case, let’s see how it pans out going forward. Hope everyone is having a good trading week.

1Lot

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The Fight Back - 3 Point Plan

1. Technical – I spent the best part of last week reviewing my last 1.8 years of trading and comparing my results to my algorithmic models. What did I learn? not much – it only served to confirm what I already know, if you want to become a big trader you have to really learn to step out on a ledge. No amount of mathematics will ever shield you from the unknown element that lurks in the market. If you cannot step out on a ledge and feel comfortable doing that, you will never become a BIG trader. 
2. Physical – My current physical condition is absolutely appalling, my body has been battered for 4.5 years solid, endless hours as a keyboard warrior have taken their toll and my physical conditioning would make a senior citizen appear athletic. For some time now my physical health has been swinging between terrible and worse and I’m tired of feeling like shit. If I want to get my mental game back in order I need to start with my physical game, this includes my diet, my fitness levels and my overall health and well being.
3. Mental – I hate to lose, absolutely can’t stand it. This is something that I think is never going to change. I need to learn to adapt in a way that this inherent trait hinders me less than it has been doing. I think the only way for me to ever be able to properly overcome this sticking point is to learn how to WIN PROPERLY.  A healthy dose of fear can be a good thing and as Charlie D. once said “I don’t see the value in becoming a good loser, what’s the point of seeing a guy walk down the corridor and your friend says to you” - “hey, you know that guy, he’s a great loser!”. Charlie D. did not like losing and yet he was one of the greatest traders of our time. I suspect it was because he learned to manage his fear and he knew how to WIN - not because he learned how to become a good loser.

I've got a few posts in the pipeline to elaborate a bit further on these summary points. At the moment I am concentrating on the plan and the action as opposed to the posting but when I come back I'm looking to hit my second leg with a more balanced approach that will see me looking to break the back of it by taking out my key sticking points in each of these areas.

For now it is safe to say I am still in the game and quietly plotting my comeback.

A good trading week to you all.

1Lot

p.s. some trading inspiration below :)

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The Trading Precipice

I feel like I’m currently at a point in my trading career where I’m in a do or die situation. I’m tired of making the same mistakes over and over. I’m tired of being mad at myself for making those same mistakes over and over.

I’ve gotten to the point where the unending stress and fighting against the will of my subconscious on a daily basis is having a horrendous impact on my physical health and well being. For me the repeated mental pain of trading is beginning to manifest itself in real physical pain.

My body is beginning to rebel in ways I wouldn’t have thought possible some years ago. The last month has been particularly bad for me. The scale has finally tipped to the point where I spent more days in the month feeling physically ill than I did feeling capable to operate in any sort of normal fashion. Some days were so bad I was bed ridden and unable to do anything - let alone trade.

People often ask the question, how hard is it really to trade for a living? I think the best way to answer that is probably with another question: How bad do you really want it?

I’ve been quiet for most of this week on my blog because I’ve been pondering the future of my trading career. Reviewing where I’ve been, where I am and where I’m going. I have felt for the last couple of months that I’m at one of those huge decision making points in one’s life and something has got to change.

Either I figure out a way to make it work, or I accept that maybe I’m not quite as smart as I always thought I was. The huge difficulty for me is that I’m not a quitter and I have never been a quitter - the thought of giving it up at this point in time is as hard to bear as the thought of pushing ahead.

I always knew it was never going to be easy. What I perhaps didn't know was that it was going to be quite this hard.

1Lot

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Wednesday - 22/08/2012 - Daily $Bund Window (SD-5-3)

Just a quick heads up on the Daily Window Game, the $Bund has moved into daily window SD-5-3 as marked out in the red circle below:

As mentioned earlier I choose to play or pass a window before the play happens and in this particular case I'm passing this window - so no further action from me on this one. As an aside I've been giving a great deal of thought to my trading framework over the last few days and it's quite possible that I may switch off the daily window game for a period of time.

I feel at the the moment I'm kind of running on the spot and not really getting anywhere with my equity growth, you will notice that my curve on the right has been creeping up at snails pace for the last 1.8 years. Much of my gains came from my first year and after my recent poor run I am now flat for my second year until now.

I feel I'm getting to a point where I need to take drastic action if I want to stay in the game long term. I have about 12months before I will really start to be under the cosh in terms of living expenses and being at a point where I need to show some real results to justify my continued full time commitment to trading. If it was just up to me I would trade until I had nothing left but a cardboard box over my head but I have other people in my life that I need to think about also.

I'm going to look to make some adjustments to see if I can get out of the rut that I'm in and break through the glass ceiling that I've currently got sitting over my head. The daily window game is my weakest method in terms of my current play book and so it is in that respect that I may be looking to switch this off and focus on my single strongest method and then get more aggressive with it.

I will put together a post on this in the coming days - still thinking about my approach at the moment. Changing things in trading can be a very delicate balancing act as I'm sure a lot of readers are already aware of, nothing will be done lightly.

Cheers
1Lot

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Sunday (Review) - Daily $Bund Window (SD-5-2)

Just wanted to bring some closure to $Bund window SD-5-2 started here: SD-5-2 10/08/2012

For a framework summary go here: Method->Daily Window Game

I don’t have a great deal else to add to this window. Unfortunately as good as my plan was, my execution was horrible. We left off in the last post where I had exited out of my position around 142.33 and was looking to get back in at a better price and reduce my risk to zero.

As it turned out my exit was superb, I was right at the bottom of the long rout and price began retracing back up and topped out at 142.54, unlikely a fill would’ve been possible but 142.50 should’ve been adequate. Note my re-entry to bring my risk (11 ticks) to zero was 142.44. Instead I was GREEDY, I was looking for 142.60 to resell.

What usually happens to greedy people is the market gives you the middle finger and takes off without you. Remember the market is all about Fear and Greed, if at any point in time you become Greedy or Fearful you are sitting with the rest of the crowd. In this case I was right up front dressed as the mascot.

The following day price collapsed fairly quickly and so I was looking for one of my other setups to get back in which did not take place. The market stormed all the way down to my 141.00 area without much of a look back.

Key points for me to remember from this non-campaign:

1.        Scratching base trades is a violation of my rules.
2.         Research the 9:00am high volume swing verse the 7:00am – 8:00am swing.
3.         Trying to be a genius wizard again, consider putting in some rules to curb this habit.
4.         Consider the velocity of short side moves verse long in the campaigns.

My final tally for this campaign is a meagre 78 ticks. More like this and I can be assured of a negative expectancy over the long run, although the campaign has ended profitably it should be viewed for what it is - a very poor campaign.

As we stand currently this wave is still open and has topped out at 288 ticks which is around the 1^st STD deviation for daily short waves over the last few years. See the orange bar below for the magnitude of the current daily short wave (SD-5-2).

At this point I'm considering this play closed as it has moved through my loose 141.00 target. From here this game goes back into wait mode and I'm looking for a new potential short daily window (SD-5-3). I will decide before it occurs whether I will play or pass and if the decision is to play then I'll be looking for that first base trade.

1Lot

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Learning to Trade the Order Book (Software)

If there’s one thing that I think every trader should spend some time doing at the start of their trading career it’s this - learning to understand and interpret an order book.

I can’t emphasise enough how much this has helped me in both my trading and my understanding of markets and how they move. I remember in my early days watching a price bar explode and wondering exactly what was going on. What was the mad rush to buy? Who was doing the buying? All these questions and more are explained when you take a little time to sit down and study the order book for the market in which you trade.

For those that don’t know, reading an order book or DOM is very much like learning to read the ticker tape as is commonly referred to in old trading texts. A good DOM fashions the data in a manner that we are able to make better sense of what’s coming off the tape (Time & Sales). It is essentially a tool that allows us to see how much is being bid and offered at various price levels and what trades are actually taking place at those levels.

Given enough time and study I believe one could quite literally trade with only this tool. I’ve heard of some professionals that do this and some other famous professionals that make a great deal of use of it. See Paul Rotter aka “The Eurex Flipper’s” interview at Trading Naked.

So if you want to learn how to trade the order book, the first thing you need to do is get hold of a decent piece of software that will allow you to set it up in a manner that is useful. Some that I can recommend are TT’s XTrader, CQG’s CQGTrader and CTS. Some months ago I modified Gomi’s popular volume ladder in Ninja Trader and turned it into a fully functioning book that will allow you access to all levels of the Bid/Ask as well as a decent volume ladder and cumulative total. If you would like to use this version then feel free to go ahead and download it. It's free.

Download link is here:

1.         Downloads->Ninja Trader->OrderBook->Download->Chart Template
2.         Downloads->Ninja Trader->OrderBook->Download->Order Book Zip

The below video is a small demonstration of what the book looks like and how it works. The instrument in view is the E-mini S&P and its essentially me just sticking on a couple of simulation orders (can be viewed in HD).

For instructions on installing, go here: Downloads->NinjaTrader->Order Book->How-To

I’m going to post a few more things on the order book and what one should be looking for in trading it. Much of what I will refer to is in the context of the framework these tools provide. If you are keen to pick it up or follow along then it would be worthwhile having access to one of these or at least a tool that provides similar functionality.

If you want to just download my version and play around or spend your own time learning it and making observations, then I would encourage you to do so. It will be worth the time invested. If you are completely new to it, expect to take about 3 months of at least 1 hour’s worth of practice/study a day for the numbers to start making sense.

Enjoy and hope you find it useful.

1Lot

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