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I'm absolutely devastated, don't know where I'm heading now
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
Hard to tell without knowing your strategy. Were you day trading? Swing trading? How many trades per year? How much did you risk per trade?
Have you backtested your strategy with prior data? To determine if your strategy was luck or not you need to backtest it and run it against a random coin flip strategy.
I have mentioned this in a few threads but I and many other traders would probably agree, there was something that appeared to change in the market last year. I found it exceptionally difficult, especially in the last 1/4.
However, I do not rely on technical analysis because technical analysis doesn't work, especially when it's not evidence based. Before traders jump on that statement about TA I advise you to read the book by David Aronson "Evidence Based Technical Analysis" - he debunks most of TA as worse than wrong, but also shows you some ways to evaluate a method via statistical test that eliminates data mining bias.
With that said, my system is based purely and only on volume - I still limped home for the last 3 months of 2019! I am not sure I can even put my finger on what it was that had changed, but what used to work or had a high probability of working really struggled to make an impact. This year has been much better.
I like to think that the repo, or Fed meddling was the cause but they meddle with the market all of the time so I just can't put my finger on it.
My advice is to read David's book. It might provide you with some ways to re-assess your technical analysis.
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- Trade what you see. Invest in what you believe -
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There are only two options at this time. Really only one. You persevere. Endure what you have to in order to re-establish your vocation and you press forward. Learn from this, but never dwell on it. Press forward be diligent and never give up.
My worst period as a trader was brought about by a true Black Swan event. I was terrified that at any moment the risk manager would be in my crowd to escort me upstairs. I had some reserve in a personal account, but It was never closer to being over. Side note...you have not really seen the worst until your net liquidation sails past zero.
A huge trader, an industry legend, had agreed to back me...I had no idea about this support. It was offered because of something that I did totally not related to business. But not knowing who had my back I started to work nights and weekends delivering food for my friend Jimmy at Buona Beef. Nothing mattered other than providing for the family and staying in the game. From that place of humility, I learned more about myself and how to trade than any other time.
Unfortunately, yes it can. Also blowing up your account after a few trades should never happen. If it does it means you took way too much risk. You should always be prepared to see your strategy stop working. I personnally doubt you can have a real edge using trendlines, macd and pivot points. You should read the book jonnyboy advised you to read. From the table of contents I can already tell it will help you understand all the biases you fell into. You should also read about risk management and how to avoid the risk of ruin.
My experience with back testing is it looks great on the back testing but once applied to the current markets it usually fails. If you believe that the markets are dynamic and random what worked in the past has a 50/50 chance of working in the future. Also, It appears that the platform vendors are the people who make out with back testing programs.
Just my 2 cents probably worth 1/2 cents.
Exactly, there are many pitfalls in backtesting. Creating a profitable system using backtesting on price series is very difficult and can only be done by those who really know what they are doing. Many people will show you incredible backtest performance but it doesn't mean the strategy will work live.
I agree. I believe back testing has a place, but very few profitable back tested strategies are ever profitable walking forward and if you bring exotic bar types into the equation...forget about it.
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- Trade what you see. Invest in what you believe -
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