Trading Diary - All about trading

I am not a day trader, but i trade frequently throughout the year and watch the market closely. One thing i always avoid in my trading life is, live quote screen. This sounds funny and silly to most traders. But I am doing that, and I am benefited from this habit.
How often you can hear your heart pumping when you were looking at the live quote screen? By watching the live price, my emotion changed, and my trading plan changed and my trade decision (Entry/exit) changed. And i got painful lessons because of this advanced technology. From this point, i know i can never be a good day trader, instead I might just be another quitter of market.
In fact, other than day trading, I do not find a good reason of glueing my head to the live quote screen. I have predefined entry point and stop loss. All I need to know is if my order got filled. I have an advantage of using less advanced seconds-delayed price screen. Emotion disturbance is greatly reduced. I simply put in my orders according to plan. Once in a while I am checking out the price, to confirm if there is any extraordinary big move. Secondly, most of brokers provide free seconds-delay quote screen and charge a fee for live price.
Instead of spending time watching the live price ticking up and down in seconds, it pays to spend a little more time in reading, or back testing system. This is a learning experience.

Keep looking at live quote screen might make you look like a pro or even feel like a pro. However, what it does matter is the way you actually approach the market.

In the early morning (GMT+8 830am), I have decided to put in Sell stop order for Corn Dec05 and a Buy stop for MSCI Tawai August contract. Putting on these two trades was based on my system signals. Everything was planned.
Corn market opened slightly higher comparing to yesteday’s close. I believed it is still in short term downtrend. I thought it might be another waiting day. I was kinda of surprise after seeing my order got filled after coming back from lunch,as market was rather slow. So, the first reaction was, ‘did i miss my stop loss point?’. Nope. I keyed in my planned stop order. Market did went in my favour for a while, but selling force was rather weak. I was tempted to exit the position with a loss of commission only. But I did not. Reason? i insisted to follow my system. Experiences of missing profit and making losses when i did not follow my system suddenly filling my mind. So , i closed the quote screen, and continued my works.
Well, an hour before market closed, my stop loss got filled as well. ‘Darn it’. Feeling down for 15 seconds. I smiled and record my trade into trading journal. Yes, i made a loss. But i am feeling alrite. It was not because the loss is relatively small, I followed my plan. Everything was in order. This is the very first trade in commodity, having trading index futures for quite sometime, I finally got a feel of commodity futures trading, and better knowledge of price movement. Corn closed low, but it was above my entry price.
Buy stop of MSCI Taiwan was far away from opening price. This is a system signal. Again, during the day, i was so tempted to create a sub system within my system, which was buy on open and do a day trade for fast money! I did not. I did that before, made profit before, however most of the time, my balance sheet turns red at the end of the month whenever i did that. Well, order got eliminated after market closed.

It was a day with losing trade. It was day with discipline.

It is a tough process to developed a efficient trading system. It is tedious to run through back testing year by year of historical data. However, I think it is the toughest job to follow your system with defined rules. Human like and good in defining rules. We know how important it is to have rules to get our life organized and avoiding unnecessary risk or even damage. The problem is, we always find it hard to follow the rules Trading is no different from real life.
Let’s take a look of an example. System generated a BUY signal for SIMSCI on 29/07/2005 after market closed at 276.9. The system was telling me put in a buy order at opening price + 2.2. So, the buy stop order should be 280.2. Well, now the evil is struggling. “From 276.9 to 280.2, it is 3.3 away. Normal trading range of SIMSCI is 2.5, how is it going to fill my buy order? How about I buy in at open straight and do a day trading ,sell at any point higher if it is lower than 280.2. I might got in some fast cash! That sounds cool, I need to develop a sub system within my system” The result of follow the evil’s suggestion instead of following predetermined rules is destructive. Yes, 280.2 did not get filled, and the sub system bought in some contracts. At opening, follow the fluctuation of price, and guess what, I ended up with a small loss. The loss is small, it did not cause any damage, but it is totally avoidable. Building a ‘Sub system’ within a system in this way is a fool’s game.
Why did the system issue a buy order at 280.2 which is out of normal daily trading range? What is the characteristics of the system? After thinking of this , I realized the mistakes I have made. I have set in parameters and checking to confirm market moves in the strength and the odds are with us to go higher if the setup price is triggered. These rules are tested. If market fails the reach the point, it is simply telling me, ‘Hey,now it is not the time to get myself in the market’. What I should really do is ,staying aside.

Market will open tomorrow, no point betting your hard earned cash without knowing that odds are actually not with you.

Have a profitable day,
Swin