Thursday, 16 March 2017

T-Model Trader - Working Around a Problem


Hello Traders.
I have been quiet of late, focusing on getting Pro Trend Trader ready. I will be getting back to normal from next week, adding in a live trade alongside the regular Sunday Analysis videos. I am also working hard on some new projects, including a trading cartoon following the adventures (and misadventures) of a beginner trader. It's just for fun, but I hope to have episode one ready before long!
Back to the beginner trader series now. And here we see T-Model working around some everyday issues (and I am happy to know it is not only my internet provider who is only a little better than useless!)
I hope you've all had a great trading week.
James Orr
T-Model Trader  -  Working Around a Problem
Here in Australia, I live in the metropolis of Melbourne, which has been voted the world’s most livable city on many occasions. If I have it right, I believe that it has been number 1 more times than any other place in the world. In making this decision, I am assuming that a judging panel spends time in the cities on their list assessing for the poll on a variety of merits or lack thereof. Having not lived in every city on the planet that they judge, it is hard to say whether this is a fair call or not, however it does have many wonderful qualities and is a lovely place to live.
I am also thinking that the judging panel either is not here in late spring, or they don’t suffer from hay fever. The entire city has been planted out with wonderfully big and beautiful tree’s lining the streets, which sadly are also totally allergenic. It is like a collective sob-fest at that time of the year, with so many raw red eyes walking around in sneezing frenzies.
Whatever they actually do, one thing is for certain and that is that they don’t take into account the internet connection where I live, which at the moment I am more than willing to call 5th world standard, if such a rating exists.

My connection has been a puzzle to every telco that I have tried. I have spent so much time talking to the various companies that I actually got to know several people due to repeat contact over the phone. No one has a clue as to what the problem is. It appears that my place is in an internet black hole.
I have constant drop outs of signal. To make in it even more of a pain in the butt, it mainly starts late afternoon here, about 2 hours before the London market open. Then for the next several hours, it is off and on. A drop out of signal can easily last for 20-40 minutes at a time, resume for 60 seconds and then drop out again for a period of time. This it can do 10 times over the course of my trading evening.
As you could well imagine, this makes placing trades and everything associated with that a rather bothersome task.
In the really early days of trading, this was a scary thing as I had no control over what was happening (nor any idea what was happening) if the signal dropped out during a trade. On those days when it was really bad, I actually chose to not trade just to be careful.
This is where the notion of “management points” became something seriously critical (beyond them being critical anyway) with an added dimension just to up the learning curve.
If a trade presented itself, then I had a couple of options if the signal was particularly dodgy that day. Firstly, I could just not trade. However, I was starting to get really frustrated by this approach. I have on so many occasions watched the end of day review thinking… “Oh that was a nice trade”, but sidelined due to connection issues.
Secondly, I could phone the trading platform company. That might sound like a possibility, however, sometimes I spent so much time listening to cheesy phone music waiting to speak to someone, that I wondered if the signal drop out was wide spread and I was one of many. Basically, that option didn’t really work (nor did I really want to be having to make a call).
So….plan C was called for.
Given that I have no idea as to when the signal could go on me, I have had to develop this constant and critical observation as to what price action has taken place and potential management points into the future. So when a trade did indeed set-up, I already had my management points fixed clearly in my mind. This I had to do, simply because a trade entry has to also have a take profit level entered at the same time. Given that some trade entries can be relatively quick processes, then I had to have the decisions on that limit order clearly defined.
In the early days, I have entered trades and promptly lost connection. When the signal is reestablished again, I had found on many occasions that price had moved in the desired direction only to have reversed, creating a loss. Frustrating as you could well imagine.
Interestingly thou, this bothersome internet connection has created an interesting by-product.
Now, I always have a limit order in place. If the signal stays connected, then I simply adjust that limit (never remove it thou) if it is that a bigger move is taking place and wish to ride it as much as possible. In this respect I am then constantly projecting forward (moment by moment) to the next level of management points, as to where price could well react and adjusting that limit order just in case the signal goes kaput.
The upside to this problem has sharpened my abilities as to trade management assessment. I say this, because in the early days, not only did I not realize that there was such a thing as “trade management”, but I was also indeed hopeless at it. This takes me back to the last blog of 2016, when I said that my initial understanding of trading was so completely na├»ve. In thinking about it, I had no concept of anything beyond just placing a trade. So when the notion of “trade management” appeared, I was completely at a loss regarding this process.
My internet connection goes through waves of working or not. This last week or so has been a really bad time as far as this is concerned. The positive side to this is that I have had some really great trades, all without me being present for it (which does, sadly say a lot hey).
A few days ago, I lost the connection for around 90 minutes. What is interesting about this particular trade is that in seeing what took place, I am sure that I would have most likely not allowed this trade to get to that pre-determined limit order. Putting that another way, I would have meddled with what was unfolding and exited too early.
So over the many months now that I have been adapting to this, I am seeing that there has been a very positive outcome. In having to set that limit order, I have had to trust my analysis. I have to believe in myself in this regard. So it is in the end, all about trusting myself and what I have embodied about the processes of trading.
I have lost count of the many times that I have exited a trade due to that fear or sense of lack of missing out. That underlying feeling of taking a small profit because it is “better than nothing” attitude is such a challenge to shake off in that trading development.
So, the silver lining to this connection problem has challenged me to quickly analyze and immediately set the trade parameters. In understanding that I have a tendency to get bogged down in looking at the chart with too much analysis, then this has forced me to move beyond that stagnation of thinking and act more decisively.
A month ago I entered a trade and then lost the connection about 20 seconds later. It was such a delight to not only see that the trade was successful, but also that it only moved a couple of points beyond my limit order before reversing. To have been able to successfully pick a management point as such was a real boost to the confidence levels.
Just as in life, it is interesting what challenges present and the often unseen side that goes hand in hand.

Till next time
T model.

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