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I'm absolutely devastated, don't know where I'm heading now


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I'm absolutely devastated, don't know where I'm heading now

  #41 (permalink)
 jlwade123   is a Vendor
 
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OliverB View Post
My trading system started malfunctioning by Sep 18 , the last quarter.

.....

What do I do next? How do I find a decently profitable strategy that actually works in this market?


Hi Oliver, that is the date ECB started giving free cash to banks with TLTRO-III which imploded US repo markets. So this is an ultra-uber, financially engineered market. My best guess is that the big banks, JPM, Deutsche, HSBC, BNP Paribas, BAC, everybody, is getting short term funding from ECB, monetizing it in the markets (derivatives and spot-fx) and then will make loans in the Euro markets. So that explains why US markets have skyrocketed this last quarter. TESLA going up how much? 55% from September to December - and then gaining another 80% in January.

So unless your trading program has buy and hold until March of 2021, which is when this program expires, or fed wakes up and lowers reserve requirements and rates to re-attract global banks, I would not change the trajectory. Just my 2 cents.

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  #42 (permalink)
 
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 brettji 
phoenix, az
 
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Oliver,

I scanned the thread and didn't see a reply after asking what instruments you trade. If I missed it, I apologize.

You mentioned pivots, are they daily, weekly, etc? Have you tried looking at something like the ES and weekly pivots with your model. Maybe the daily mid-pivot in the ES for continuation or reversal.

Not sure if you like intra-day, but there was a nice pre-market reversal this morning at a daily mid-pivot. below the weekly R2 on the ES.

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  #43 (permalink)
 tgiann3 
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I didn’t read through this whole post; a few of the replies I read had good advice. Two things you might consider:
Change your holding period. Do the opposite of what is not working currently.

More food for thought. Now that you’ve had some losses it’s going to make you second guess yourself. You need to find another stream of revenue and get a little money flowing to meet life’s needs and take the pressure off. Failing to do this will only make the problem worse. You might need a break from trading. Like a month or so. Just clear your head. Before you come back start reading. Then go back to the sim. Good luck.

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  #44 (permalink)
 
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 phantomtrader 
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OliverB View Post
Luck wouldn't last for more than 2 years straight.

No I'm not an option seller, I'm an options buyer.
I blew up my account through a series of failed trades. Obviously I made a mistake of going a little too hard to "recover" myself on trades I thought were gonna be certain winners because they checked all my requirements. But I lost miserably.

I did try option selling because I've been told the edge is in favor of Option sellers, but the risk is quite high + the profit% is lame unless you sell naked contracts, and the risk isn't worth it.

What could have changed? I can't put my finger on one thing



"No I'm not an option seller, I'm an options buyer."

This is your mistake. The majority of successful option traders are SELLERS. Look at credit spreads on the SPX. A lot of these guys do very well on the weeklies. I've traded far "OTM" SPY and SPX weeklies for a couple of years. You should take a look at some of their performance and backtest, learn and start trading the weeklies to recover your losses. It will be slow, but if you learn to do it correctly, you can recover.
Example: https://www.limitupgroup.com/

You can learn to do this yourself - you already know the options markets.

Day trading today is order flow - if you can't read order flow, don't day trade - it's a guaranteed disaster.

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  #45 (permalink)
 swatfa 
dubai UAE
 
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This is all topsy-turvey stuff. The reason you're confused is because you simply don't understand the basics; you're not the first and you certainly won't be the last.

The market is pure chaos; a hurricane, volcanic erruption, a supernova explosion. The fact that the japanese took that chaos and presented it through simple pretty candles is a double-edged sword (it makes some sense of the madness yet it ruthlessley makes traders believe the market is simple to understand).

As others have said, your 'system' might work for 6 months, or 1 year, or even 10 years, until it doesn't. So many macro and micro economical factors at work that even having a phd in game theory won't make you any wiser. The only way you can win is to stop considering yourself as a 'trader' and and assign yourself the new title 'risk manager'.

It's all a probabilities game, so what measures are you taking to keep the probability in your favor? if you think the answer is along the lines of ''well i have a system which uses a combination of MACD and pivots and i wait for this to happen, then that to happen, etc etc'' then game over; you're the same as the countless others who have all studied the same thing and all achieved some level of high percentage gains for a limited period of time until things stop working.

Ask yourself the following questions; if these seem foreign in context to your strategy or plan then you're doing things completely wrong:
1) What volatitlity threshold have you set for yourself to enter or exit trades. For example, do you place trades when the VIX is under 10 or above 15 or do you withhold on placing trades until market volatility adheres to your trading ruleset?

2) What stop loss have you set for the day? i don't mean stop loss for each trade but rather wthe total max win and max loss you've placed for a day.

3) What are the 3 or more reasons that you have as a criteria before placing a trade (my mentor used to say that a chair needs 3 legs minimum to not fall down, similarly you should have 3 or more reasons to take a trade).
For example, a chart shows price has just bounced from a vol stop and is moving up & market has been trading in a higher-high so there's a trend & momentum across 3 timeframes is also positive & the number of buyers/sellers on level 3 data is showing a very strong possibility of price movement in favor of your expected move.

The market is not your personal ATM machine, as a 'risk manager' your job is to make sure you have extremely specific rules to follow to ensure probabilities are in your favor, and eiher the market conditions and volatility conditions are ideal for trading your system or you take a step back and wait until conditions return. It's not uncommon to sometimes go several months without trading. I rememeber a couple years ago when the VIX was stuck below 9 for nealy 6 months o r more i had to stop trading whilst everyone around me was whining and crying wondering why their strategy was no longer working. If you can't afford to wait out the times when trading is not ideal then you should not be trading, simple as that, there's no point saying 'trading is the only thing i can do' when you can't trade. It should not be your source of income for food and survival, that would be reckless.

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  #46 (permalink)
 Miesto 
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I recommend you to read Mark Ritchie "My Trading Bible: Lose Your Shirt. Save Your Life. Keep on Trading: Insider Secrets to the World of Stock Market Investing".

https://www.amazon.com/Trading-Bible-Mark-Andrew-Ritchie/dp/0964695200/ref=sr_1_1?keywords=mark+ritchie&qid=1581082146&sr=8-1

All the best,
-Mich

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  #47 (permalink)
 
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 Phixl 
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Join compass fx sharp edge trading room. It will change your life. Ray is the best and most giving teacher in the retail space. He is also a real institutional trader. He also sends tweets with trading ideas for a small monthly sum


OliverB View Post
My trading system started malfunctioning by Sep 18 , the last quarter.

At that period I managed to score some quick scalp trades due to high vol but nothing like my regular system.

I wouldn't say something in me has changed, I had a specific checklist of conditions that have to be met for an entry to occur, and since then those conditions have vanished.
After that I tried to develop something else using the same technical analysis but it didn't work.

Reliable indicators I used like MACD have started to act weird. Suddenly my entire setup became useless.

Just to make my point clearer, I used to have around 75% success in catching trends.
2019 and onward? Maybe 20-30% success, not to mention times where it shifts on my a** and going opposite direction unexpectedly.

I'm seriously clueless about how I'm going to proceed.
I tried going a different route and employ a more conservative system of selling spreads. It failed too, best case I made a profit of like 15$/contract on average.

Insane frustration. It feels like I went down from a level of being a motocross riding to barely managing to ride a bike with wheels assist.

What do I do next? How do I find a decently profitable strategy that actually works in this market?


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  #48 (permalink)
 Meklon 
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OliverB View Post
Discretionary. I don't have experience with automated.

It's a little bit hard to explain but I'll do my best!

The markets have been trending up, that's correct, but not in a way that fit my trading style.

I used to place 2 main types of trades which are both trend style trading strategies of option buying:
- Daily-swing (if the daily move is strong enough I keep position open)
- Longer (5-10 days) trade when I could tell a strong move is ahead of us. It's basically a scaled out strategy of the one above

My main "indicator" is Pivot Points, that's how I gauge the movement potential and set my entries/exits/stops.

So it either got stuck and didn't reach the set point due to low intraday volatility, or volatility was too high but all the movement occurred outside of the PP range.

There are obviously plenty of factors I took into account like moving averages, MACD and Candlestick patterns. But it all stopped to work (if it makes sense).
My system can't predict a movement properly anymore, and when I did get a signal, the market simply ignored it. If it says "reversal now" the market continues up, if I go on bullish signals market reverses.

Dude, first of all, I have to tell you that NO strategy works all the time and NO indicator is producing consistently reliable results. The key that drives ANY trader success is your ability to recognize changing market conditions and read the Market Context. I am 90% certain that the problem you experiencing is caused exactly by what I have said above - changed market conditions (Context). The unlimited liquidity provided by Central Bankers across the world (especially by Federal Reserve) is casing unprecedented drop in volatility and tight ranges in most of the days and this is ESPECIALLY deadly for folks like you who trade options. Low volatility is options killer if you buy them and it also very negatively affects spreads, diminishing returns because of the tight intra-day ranges. The new norm for the world indexes now is UP or SIDEWAYS. There is almost never you can see any profit taking or a substantial pull back, unless it’s caused by an unexpected event.

Also, the tools you using to identify trends are all lagging indicators and in the low volatility environment they will almost certainly will get you in trouble. I personally think that in this environment trading options intraday is useless and dangerous. You may want to switch to higher time frames and use more reliable methods to identify support and resistance for your trades instead of MACD, moving averages and candle stick patterns.

Cheers,

Mek.

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  #49 (permalink)
 momentom 
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Oliver B, I'd suggest that you identify just on single pattern that repeats itself. Perhaps one of your old trades or maybe a new one. Get that one trade working in SIM . Maybe it doesn't trade often enough to make a living with the size you can trade but you can then find a second trade to make work. I think you are looking at a move and trying to match it to your old self. Start with the basics and find what that single trade looks like. I'd add orderflow to it. There are plenty of tools in most platforms nowadays to be ble to see the flow. Old answer to"how do I eat an elephant?" - one bite at a time.

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  #50 (permalink)
 semiopen 
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One might figure if a trading strategy stopped working it might make sense to mention what it was when asking for advice; maybe save another poor wretch from making the same mistake. If someone, by coincidence, suggested the same strategy that caused you such misery, would you take the time to tell them? Certainly is a weird game we are playing.

A list summarizing of major ETF performance recently is below:



One could lose money trading these puppies by selling too often.

Tmm = (High / Low) - 1.
Amm = (EndPrice - LowX) / (HighX - LowX)

If you bust the list into shorter time periods within the general date range; Amm has consistently been high at the end. That means selling at a Max has been questionable during the period.

Lmm = 1 means the period high occurred after the period low, -1 means the low appeared last. -1 seems to under perform during the last few earth years.

MaxLr and MinLr shows the natural log return of buying at the start and selling at either the high or low. This is a decent way of understanding up and down volatility.

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