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Confessions - Stories of defeat and lessons learned
More than a year ago I collapsed and cried for 8 or 9 days, I could not eat, sleep. I stayed all that time in my room, feeling bad.
All that because I've found out my strategy did not work. It was a mechanical intraday strategy with several signals each day. I have found out that it actually did not work in 2008 and before that. Having backtested "only" 2 years of data (thousands of trades) it seemed like the holy moly grail and I traded it with confidence, earning money.
I was in plus, when I collapsed. So, I made money and still felt worse than ever before.
I did not stop trading it, I wanted to see it failing. Trade after trade all profits were gone and when it was clear, it is a loser, I stopped trading it.
After that I traded another system which worked on paper, but not in real life because of slippage.
So, I stopped trading systems and became a discretionary trader. I has been going well since that moment. I am more than 50% in plus for March alone. The account is tiny though and does not represent all my trading funds. In money terms (and that's all that matters), it's like I have won nothing.
A little coarsely written, but much wiser than thinking that backtesting a mechanical system means anything other than "this is how the system performed," as opposed to "this is how the system will perform." Well said.
FT71 put it better when he pointed out that each new tick was like a new variable. backtesting just can never include the x factor of the new variable of the next tick. so there ya go.
Du sublime au ridicule, il n'ya qu'un pas. ~Napoleon Bonaparte
Are you kidding me?
Flash back to 2008: Lost my money. Lost my reputation. Lost my confidence. Lost my wife.
And by 2009, I had lost my house and its contents! By 2010, I started payiny child and spousal support. Yikes!
I was doing well in my day job as at July, 2007. Then I approached a friend of mine if he could share his secret of living without having to work so hard. After some hesitation, he agreed to share his secret. He was a day trader. For two weeks, and about $1000:00, he "showed me how to trade and make money" Now, I can resign from my day job, go part-time, and have an easy life making money, I thought to myself. Then one day towards the end of July, 2007, I resigned from my day job, put $20,000:00 BORROWED MONEY in my broker's a/c and started trading live!
By the time I declared bankruptcy in 2009, I had lost everything.
Gary D
Yes, I am still trading, but in sim mode! But can I call myself a trader? No system, no plan, no confidence. I am an enbodiment of fear, greed, and indiscipline. I have blown more than 4 a/cs, yet I did not learn anything from my mistakes. Please allow me to elaborate:
I bought several books and systems- Dr. Alexander Elder, Murphy, Mark Douglas/ Vantage Point software, Paint bar factory indicators, Emimi watch, Decision Point, etc. Up till this moment, I am still searching for that thing that will give me the "aahhaa " moment. But I am gradually coming to the conclusion that my failure to date is a reflection of the totality of my existence-fear, indecision, procrastination, lack of patience, and impulsive behavior.
Fear is real. As soon as I put on a live trade, my heart starts to palpitate. I hold tightly to the mouse and waiting to close the trade with 1 tick of profit. Funny enough, I will hold on to any failed trade until the pain became unbearable. Any object within my vicinity at that time turns into a missile! It's just incredible to explain the emotions of fear.
The process of going into bankruptcy, separation, alimony, child support, causes so much mental agony and lack of confidence. I will continue to write so that people can learn from my mistakes.
I´m sorry to hear of the difficult times you have gone through.
It seems to me that your fear comes also from a method where you have not enough confidence. What time frame/instrument do you trade and what is your trading approach?
You are aware of yourself. That can be rare in trading. You know you have fear, lack of discipline, lack of confidence, lack of patience. Those are all things you can correct.
You are trading simulated, that is the perfect place for you to be. Use that environment to work through all of the issues you have already mentioned. I'll give you some examples;
1) No system, no plan
That is easy. Take your favorite chart, find something you believe occurs relatively frequently, and decide to only enter when that setup occurs. There is your system and plan. it might not work, but that is what you are going to find out.
2) No confidence.
You will not have confidence until you have a plan. Confidence is something that comes on it's own as a direct result of having believed in a plan and then seeing that prove to be a good plan. Confidence is not a requirement at this point. Don't worry about that one right now.
3) I am an enbodiment of fear, greed, and indiscipline.
That's ok, you've admitted it, you are aware of it. You just described nearly every trader. If you are trading in simulation, what are you afraid of? What could you be greedy about?
4) I have blown more than 4 a/cs, yet I did not learn anything from my mistakes.
You have learned that you can blow up an account if you do the wrong things. That, in my opinion, is a rite of passage for a trader. You hopefully have learned RESPECT, which you are interpretting now as FEAR.
Try something; The next time you take a trade, set your stop loss at a $500.00, and let it go for 10 minutes. Set a timer, and take your hands off the mouse. Watch the profits and losses flow in and out of your simulated position, and allow the movement to be free. Breathe. Relax. It is not real.
Do that several times over the next few weeks. Did you make money or lose money? Who cares.
Try it with a $250.00 stop loss, does that FEEL better or worse? Increase the hold time to 15 minutes, to 30 minutes. Start to see that the markets have nothing to do with you, they just do what they do, whether you decide to participate or not. My guess is you will learn something.
