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Im completely new to these threads and this is my first post!
As the title of this thread suggests Im about to go live in a week or two. My trading system is discretionary but working around a number of rules and ideas that I have - although nothing absolutely concrete. Ive been testing on a SIM account for the last 10 weeks with good steady results.
I know that there are a number of threads with similar topics but the fear is building a little and I was wondering if there is some advice that you would give for the start of trading a live account (note that this is not my very first attempt - as most i have crashed and burned a number of times already, im hoping that with this attempt the learning phase will be complete!!). For example, has anyone felt that posting their trades online has helped to keep things in perspective etc? What do you do to keep your confidence up if you go on a losing run?
On a slightly different vein, as I mentioned, im running a discretionary trading system. To date Ive been doing one of two things with my profit targets/SL 1) set and leave 2) discretionary 'stop loss' i.e. move stop every so often and increase profit target. Personally I think that neither is 'better' than the other although i realise there are arguments for/against both - any opinions are appreciated
Can you help answer these questions from other members on NexusFi?
The best advice I've heard--at least what worked for me--is to ignore the urge-that-never-sleeps (to make significant money out of the gate) and trade quantities small enough that you "don't care" about the outcome, at least until the shock of trading live wears off.
I have traded live several times and each time I felt anxious and a bit nervous to say the least. This last time I felt no anxiety at all and have only felt a little anxiety from time to time. I attribute this most recent experience to one of 2 things; preparation or ignorance. May be a little of both but I lean towards preparation. So, based on that I would offer that you might need a bit more preparation so you will be able to execute your plan with real money the same way you do with sim money without being nervous or anxious.
However, if you feel that you are ready, be sure you trade exactly the way you practiced. If you find that you are changing things then you might want to stop live trading and go back to sim to prepare yourself better. Just offering this based on my own experience, not that of others.
Since you are developing at least some of your approach "on the fly" as it were, keep a journal with as many details as possible. The idea will be to go back after 50 or 100 trades and see what worked, what didn't, etc. This will help you better define and exploit your edge.
The biggest caution I can offer from my experience with discretionary trading is that the temptation to alter your approach will be huge, once you see something happen 2 or 3 times. DON'T DO IT! Wait until you have a lot of instances of something happening before you change your approach. Otherwise, you'll constantly be chasing performance, and success will always seem just one step out of reach - but you'll never get there.
I wholeheartedly agree. If you are trading Forex, trade micro lots or mini lots. If futures, trade the smallest size possible, as long as there is decent volume in the small ones.
Your goal the first 6 months should be to get comfortable trading real money. Then, to stop losing money. I would not even worry about making money to start. That will come with time, if you do other things correctly.
I am pretty happy with the way I am trading on SIM but finding it increasingly harder to attach importance to the account P&L which for the first 9 weeks or so felt pretty 'real'. The fact is that there is nothing like real money!
I will be trading BP and EC futures with a starting capital of ~$50,000 and never entering with more than 4 contracts in total (generally I scale in), hopefully this will keep the nerves under control a little as I do have strict Stops on all of my trades (1% per position).
I may keep a journal on the site so keep a look out
Starting trading with $50K and 4 contracts max - when you have a history of "crashing and burning" - is a recipe for disaster, in my opinion.
Why not start with 1 contract of each, at the most? If you absolutely need 4 for scaling in, then do the mini Euro - that would equal 2 full size contracts. There is no mini GBP, unfortunately. There are micros for each of these, but commissions will eat up greater %age of your profits.
Also, if by "scaling in" you mean "adding to a losing position" that is another troubling sign. If your initial discretionary read was wrong, I can't imagine why you'd want to put more money behind it. Cut the loss, and move on.
Almost every time I start trading a new system, I start with 1 contract, no matter how much money I have to allocate to it, or how much I want to trade it. I let the method prove itself, THEN I put more size behind it. And, that is usually a slow process.
Why not give yourself a max drawdown of $3000 or so on your $50K. This is 6%, and is a very reasonable initial drawdown limit. If you hit this, stop the bleeding and do some more work to figure out what you need to do. If you trade this way and enforce your 6% limit, you will be likely to start relatively slow. If you make 10% or so, and get up to $55K, then make your drawdown limit that $10K and stop trading if you get back to $50K. At each step along the way, give yourself more freedom, but keep a drawdown limit that will allow you to stop, cool down, and figure things out, without throwing money away unnecessarily.
thanks kevin and josh for your feedback. Im taking everything on board here so its interesting to see different opinions!
Kevin, I think i will look at the mini Euro contract - thanks for the idea. Unfortunately it means that i have to switch between graphs as all my work is done on the EC along with the indicators etc but this is def something that is not going to cause too many issues. Originally i had discounted this as the volumes did not work with my indicator properly, however i guess it more or less just follows the EC. Let me explain my 'scaling' - further feedback is of course appreciated. Basically I identify a range within which I think that the price will turn around in (i use some custom indicators/math etc here as well as visual). My problem is that in this range i dont know where the price will turn so in general i will take at the lowest point and then gradually add more if the price continues through the range - my stop is then somewhere just outside the range. THis approach is probably not the most efficient, but phychologicaly I hurt if the price just comes in the bottom of the range and turns but i dont take the trade! Anyway, all i can say is that hopefully my past experience has taught me something and i will avoid a lot of the pitfalls that were my downfall in previous attempts...
Josh, good idea. I will follow something along this line for sure. I need to check to see what my max drawdown is but im pretty sure its not gone past 4.5% so I will work a %around that.
You can still use the EC contract to base your decisions on - but just trade the mini. I would watch out with indicators on the mini, since there are times when there is no volume (it might mess up your calculations).
