A Passionate Intraday Trader.

by Andrea
(Rome, Italy)

A visitor's post to the "Your Trading Journey" page:

I've been trading from January 2009, never paper traded, I've paid lot of dollars every single little lesson that came from the market. I'm not a beginner anymore, but I'm not yet where I decided to get: being consistent and earn a living with trading.

I trade US equities only, I'm Italian and my working hours are terrible! My initial trading equity was 20,000 euro, recently raised to 50,000 and 10,000 to use margin.

I started reading books, I was hungry of knowledge about this world, that could really give me freedom and no roots. I programmed many indicators discovering some of them already existed as the Keltner Channel or some oscillators.

After 2 years of trading and a lot of readings I can say that books are nice, but you - talking to a newbie - will learn on the trading arena most of all and you will truly understand the content of those books after you've been trading for a decent time. Trading will tell you what kind of person you are too. Psychology plays a BIG role in this field. Interesting maybe, my trading evolution is parallel with my cognitive psychological work. As soon as I improved as a person, my work improved.

At the moment I have zero trust in indicators cause I consider them just a manipulation of prices and volume, two elements much more clear in their natural shape. I've created dozens and they all resemble each other. I use only moving averages, my own set of channels based on volatility and an indicator for the bar range on the market index. I follow the DJI.

My opinion is not that indicators are meaningless. My opinion is that you should choose a set of them and use them consistently - not jumping from one to the next or trying to find the one which predicts every low and high,you'll find this one but its accuracy will be very limited to a certain period - learning their shapes, their curves, their messages. It's like knowing a person, step by step, to create a unique complicity.

"Let profits run" is the phrase I should have never listened, "cut your losses" is more useful to me.
Every time I allow them to "run" I take a pullback and psychologically I'm usually not able to see a profit falling to zero and even against me. My advice here is this: if you make a profit, don't let the market take more than your gains IF you're not calm enough to bear the zig zags in what could be a daily wide range bar. A lot of times there's time to take a profit and be back in when a pullback comes.
Little bites at the end of the month make a big bite.

I am making money collecting little bites. Sure, this needs an high percentage of accuracy and I've got it, I'm wrong 20% of the times. Yet, this has not been enough to make money. Why? psychology. Fear to risk, fear to lose, fear even to win. Some words read only yesterday from the very first book i read more than 3 years ago: "people here don't need to show something, to prove something, to thrill themselves even if thrill is necessary; they're here to make a profit".

I said I'm using margin, I do cause I know what I'm doing...otherwise, stay away!
An interesting lesson among the long term ones is that "value" is not enough to drive a stock. I'm reading about how good would be investing in RIMM since price was at 60, now is...20? I've recently observed carefully small caps...rising fast, falling faster. If you want big and fast, be fast to take something.

I use a good software which allows me to program lot of stuff, has nice graphics - my eye wants beauty! - and alerts, lists, almost everything I could need.

I've read this site and the blog and I have finally found someone who speaks about trading, all the strategies are like the ones I use. The problem is, in my opinion, that controlling many stocks - each day a lot of them met the patterns - could make confusion and drive to make nothing. It happened and still happens to me, look here, there, like this, that and when I look at the clock it's gone half an hour.

For my style I have chosen to limit my observed stocks to 200 recently. " lists for nyse, 2 for nasdaq. I use the list of DJI too to spot easily the relative strength. This concept...relative strength...remind that: it changes even in intraday.

To complete my disordered description I add that my results and my accuracy improved terribly since I started using multiple time frames, daily, hourly and intraday 5min. and 1 min. This is what I read in my early times: "convergence of signals". An intraday breakout is good, if it corresponds to a breakout of a pullpack on the hourly chart is great, if it corresponds to a breakout of a daily level well...it's your piece of gold ;)

Last thing that could help newbies is: what rises too fast will pullback and what falls too fast too. So, if you want to buy, force to wait if it's rising fast already, if you're wrong and it falls down, try to wait a pullback too for a better exit. This has been true for me, I've seen lots of trades with losses caused by these fast movements sold almost always on the lows of them. It's frustrating. I use this concept to trade both sides now, buying the rally and shorting the pullback. Sometimes the stock is too strong to pullback but in that case it's possible to exit with a decent loss.

Definitely, I'd like to write and share too much, but something among my words I hope will be useful to someone trading his way to freedom, like me.

Barry's reply: Thank you very much for that very detailed description of your trading journey. Maybe one day you could drop by with a photo of your trade station for my visitors and I'll attach it.

You said, "never paper traded, I've paid lot of dollars every single little lesson that came from the market." I think that rings very true for most traders, including me. However, I must say, that if today's day trading simulators existed when I first started, I would have spent many weeks paper trading first before risking real money like I had to, before I really had a feel for how things worked.

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Aug 21, 2011
Another day trader from ITALY
by: Francesco

Dear Barry,
I've studied with great interest your website and since I've just started day trading (I've been a covered call writer since a couple of years) I've found it really useful to me.

I've read every single line and than I found the letter from Andrea which was fantastic....I'm Italian too and live in Perugia (150 Km from Rome).

I would be very happy to keep in contact with Andrea, since he already has a 2 years experience and probably could give me some great advice...hope you can help me.

Going back to your website, the difficulties I'm finding in my recent paper trading is related to markets lateral trend. It happens frequently that I find a nice set-up, get in and place my stop order. The stock (or the QQQ) initially takes the right direction and I let my profits run, but then pullbacks and hits my stop loss. I use to use a 5 minutes chart. Could you please give me some advice?

Many thanks, Francesco

Barry's reply: Francesco, considering the way this comment system works, I may not have access to your email address, so you might want to use my "Contact Us" form to give me your email in case Andrea would like to contact you. I have a strict privacy policy for visitors emails, but if his email address has not been deleted I will let him know about your request and he can decide whether or not to contact you directly.

Regarding the pullbacks and being stopped out, taking losses is simply part of being a trader. As I've mentioned several times on the site you can certainly be successful even with losses approaching 65%, but it's imperative to let your winners run as far as possible to counter all the small losses and make an overall profit. The math makes perfect sense. But, the problem for most traders, is that the psychology behind it all is so difficult to deal with in real trading. So at this point, you have two choices while keeping the same trading strategy. Widen stops and take less losses or tighten stops and take more but smaller losses. Gradually you'll gain more experience on stop-loss placement and that will help, but the bottom line is no one knows what price levels that stock is going to trade at.

Jul 13, 2011
About Paper Trading
by: Andrea

I feel to add something about paper trading, it could be interesting. My paper trading has been only historical, not in real time, during my exploration of the oscillators and some basic trading systems based on ADX or MACD with channels, but I admit my research has been made in a limited way and I have definitely never been a believer in a mere statistical approach, I am surely a discretionary trader, according to market conditions and my personal scheme about what COULD be going on. I underline "could" cause I force myself to react and not to predict.
I did some paper-charting too, drawing myself bars on paper used for technical drawings, drawing zig-zags and turning points, trendlines...sounds unbelievable now even to myself.

About real paper trading, made during real time trading sessions I did some on direxion etf, in the middle of my journey, the ones with 3x leverage, according to a serious study of the DJI on the 5 min. chart from 2006. Psychologically speaking, I noticed the same attitude to video games: if I'm killed no problem, I start over. When I read on books about taking a diary I wondered why so many pages where written about something that sounded so obvious to do. It was not.

Taking a diary is like looking in our own eyes in the mirror,if you're a little bit honest, you can't lie. You're forced to deal with fears if mistakes are done, fear to feel of little value, fear for the future. I always experienced fears like these ones, but it's peculiar of my old "psychological structure" so to say. When real money is on the table things changes a lot for me, emotions which sleep in paper trading arouse and impact on my actions. I admit that if I'm always been really very good in analysis and even in prediction, I am not yet in the action to take. I'm still making mistakes that are difficult to explain when I'm cold-minded. Real losses helped and help me in analyze my mistakes deeper,seriously, to pay attention to psychological waves.

To find a middle measure, it could have been nice to start with a little amount of real money. But in this field, everyone has to find his own way. I truly believe that the inner psychological structure is affecting 65% of results and unfortunately to be aware of these inner waves is not easy, it takes as much work as the one to understand markets.

Paper trading or not, to take a detailed diary is priceless!

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