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Afraid to Trade Live - Advice Needed
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Afraid to Trade Live - Advice Needed

  #1 (permalink)
Elite Member
Atlanta, GA/USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Ninjatrader/CQG
Favorite Futures: ES, NQ, CL, GC
 
Posts: 82 since Jan 2015
Thanks: 243 given, 81 received

Afraid to Trade Live - Advice Needed

Hello Fellow Traders,

I need some advice. My sim trading has improved significantly over the past 9 months and I would really like to start trading live. I've gone from consistently losing and not having a clue why, to consistently winning and having a really good understanding of how markets really work. But I know that going from sim to live is not going to be easy. That's why I'm seeking advice on how to make the transition.

I guess the real question is "am I really ready to trade live"? Are my results really good enough? Well, maybe you guys can help me with that question as well.

Below are my results from the past year or so. Notice how erratic my equity curve was before Oct. 2016. The change came after I decided to conduct an experiment. I had noticed a repeating pattern in the market and I decided to try trading just that one pattern. I created an ATM strategy in Ninjatrader, entered the trade when a setup occurred, and waited to see what happened. No emotion. No concern with the outcome. This was just a test.

Well I was shocked at the results. My first test resulted in 5 winning trades in a row. I couldn't believe it. I had never had that kind of success before. I kept checking the results over and over again. I felt like I was double-checking a winning lottery ticket. Surely this couldn't be right. But it was. I had just had 5 winning trades in a row, all on the same day, all 10 ticks or more. All from one simple setup. I was in shock.

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I didn't understand it. Why was this setup working so well? I had to know if I wanted to have any confidence in it. I have to have confidence if I'm going to rely on something. So I started researching. It took a while (over a week) but things started to make sense. And it didnít work all the time. Only in certain market conditions. But that was valuable information too.

I kept trading this setup, trying to determine when to take the trade and when not to. I found it easier to look for reasons not to take the trade as it worked so often that even when you thought it wouldn't work, it usually did. After several months I was able to determine the market conditions that supported the setup and those that didn't, which helped.

There was several problems with the setup however. You usually had to wait long periods for it to occur. Sometimes hours. Some days you didn't get any setups at all. And then there where those days when you'd get 2-3 setups, and they'd all be losers. It happens. At times I would get so bored waiting on a setup that I'd take other trades. But the results of my other trades were so much worse that I'd quickly realize that they were just a waste of time. So I'd go back to waiting on my setup to occur.

What I didn't know early on but learned after a few months of watching and waiting was that watching and waiting was a very good thing. I started to understand price action a whole lot better and it improved my situational awareness, making it easier to determine when and in which direction to trade. This was an unexpected benefit of waiting on a setup where you know you have an edge. But in hindsight it makes total sense.

But there were still long, boring sessions that I just wasn't enjoying. And I also didn't think it was smart to just have one setup to trade, so I went back to taking other trades while waiting. It didn't improve my results. In fact, it made them quite a bit worse. Often times I'd be already in a trade when my main setup occurred. But it did allow me to practice my execution skills and test other setups. And since I was still sim trading I just considered it more experimentation.

Now I'm guessing some of you are wondering why I was still trading sim when I already had a profitable setup. Well, the truth is I just wasn't very comfortable with the setup. Have you ever heard the saying that the best trades are the hardest ones to take. Well that was true with this setup as well. I just knew that as soon as I started trading live, it would stop working. To this day, almost 9 months later, I haven't taken this setup live not once. But I believe that's actually a good thing. I'll get to the reason why a little later.

The other reason I am still trading sim is because I think it's stupid to risk real money when you don't really know what you are doing. I learned to fly a plane on a simulator. And now I've learned to trade on a simulator. And although I've still spent some money, it was for education, software, data fees, etc., not gambling. In my opinion, unless you are trading a proven strategy that you are very proficient with, you are just gambling.

But there is still another reason why I am still trading sim that I just figured out recently. I am flat out scared to trade live. And I've determined that the reason I am afraid is because I'm severely under capitalized. I have very little money, insufficient income, and a history of losing that would scare anybody.

Ok, this is getting kind of long so I'm going to rush through the remainder. Long story short, I paid a programmer to automate my strategy, only to learn that without discretion, it was basically a breakeven strategy. But I still think it was worth it to automate the strategy, because what I learned from back testing gave me a clearer picture of when it worked, when it didn't, and why. So I still use this setup in my trading today, but I've added a couple more. I've also incorporate a few more pieces of the puzzle which has really taken my trading to the next level.

Check out my current equity curve. Notice the rate of increase over the last two weeks. I'm feeling really good about the things I've incorporated into my trading recently. That's another reason I'm ready to go live. I'm just a lot more confident in my trading now.

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Now I know a lot of traders think that sim trading is a waste of time, but I disagree. Used properly, the simulator is a great learning tool. I also know that most traders don't take simulator trading seriously. I didn't either for a long time. But I was "experimenting. I was trying some of everything. However, once I found something that seem to work, I got real serious. The simulator then became a tool to allow me to test my discovery. And it served me well.

I traded a live account when I first started out back in 1998. I lost over $50,000 trading live in the eleven years that I've been at this game. Did I think I would lose? Hell no. But I did. I remember thinking "with this much money and the ability to trade full time (I volunteered for a layoff to get a severance package) I'm sure to learn how to trade before I run out of money". Well, I was wrong. I had to return to work at the end of 2005. In 2004 I was so dejected that I seriously considered committing suicide. I was just that disappointed in myself. I had given up a damn good job with HP and blown all my money gambling. I couldn't call it trading after I looked back over my results.

I also remember being too cheap to pay someone to teach me. Even at $10,000, hiring a mentor would have been cheaper (and smarter) than trial and error. But I didn't think so at the time. I figured I could just use that money to gain real world experience. I had no idea how hard it would be. But trading is the hardest thing I've ever tried to do in my whole life. And now I understand why.

I was sure I could teach myself to trade given enough time, focus, and commitment. After all, I had taught myself everything else I knew. I was a Microsoft Certified Systems Engineer working for Compaq/HP when I was introduced to trading, and I taught myself everything I know about computers. I just read books and practiced on my home PC and a network simulator. I intended to learn to trade the same way. It eventually worked, but it took me over 11 years and more than $50k. Not the best route in hindsight.

If I could do it all over again, I would try to find a mentor. Someone with proven abilities (not some of these pretenders out here now) and I'd try to persuade them to teach me. I'd pay them of course. It just takes too long any other way. Very few people would invest the time and money that I have. But my options were very limited, so I kept coming back to trading. It was the only thing I knew of that could produce the kind of money I want to make, not have to deal with any customers or products, work when I want to, and from where I want to. The benefits were too great for me to give up. But I really never thought it would take this long.

In 2014 I decided to give trading another look. I vowed to "do it right" this time. I planned to get a mentor and do some real studying. No more trial and error. No more shooting from the hip. I was going to take it seriously this time. And I have. I looked for mentors, tried several trading rooms, read many books (some more than once) watched webinars, purchased several trading courses and spent many hours here on futures.io. I've also spent many hours sim trading and reviewing my trades. It still has been very difficult. I haven't found one single person that could or would demonstrate proper trading techniques to me. Not the trading room mentors, not the so call gurus around here. I'm not doubting anybody, I'm just saying what I haven't seen for myself. Less than a year ago I was really beginning to doubt that success at day trading was even possible. Now I know otherwise. And I also know how.

I funded my account a year ago with $6000, when I thought I'd found a system that worked consistently. It was one posted here on futures.io. The first week I traded it (on sim), I made over $3000. That Monday I started the process of opening a new trading account. By the time it was opened and funded, I had lost faith in this "cool new system" that I had found. Even its creator doesn't trade it anymore. And as far as my funded account, I've only made two trades from that account. One loser and one breakeven. That was a while ago. I haven't tried trading live again since. But now I'd like to.

But, I'm still under capitalized. I don't have money I can't afford to lose. That's why I'm afraid to trade live. That and the fact that I've lost so much money in the past. I finally learn how to trade, how markets really work, and now have no money to trade. I have been considering Topsteptrader but there are things I just don't like about that operation. I really just want to trade my own account. The results will be instantaneous, not 90 days down the road. But at least TST is an option.

Ok, I know this has been a ridiculously long post, but I wanted to put all my cards on the table. Based on my results above, do you think it's safe to start trading live? Should I trade my own money, what little I have? Should I try to overcome the hurtles of TST?

I'd like to try trading my own account first. I have some ideas of my own about how to transition from sim trading to live trading but I'd really like to hear what my fellow traders have to say. Please be kind enough to share your thoughts.

PS: If you don't have anything positive to say, please don't respond. I don't need any negative feedback. Constructive criticism is fine but blatant negativity or discouragement is not what I need.

Also, if your suggestion is that I give up trading because I'm under capitalized, I mean no disrespect but you can keep that to yourself also. If you read my post it should be obvious to you that I'm not a quitter. I will find a way.

Thanks in advance.

Roland aka Trader146

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  #2 (permalink)
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  #3 (permalink)
Elite Member
Atlanta, GA/USA
 
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Trading Results from the Past Two Weeks


So below are my results from the past two weeks. That's when I started incorporating some additional tactics in my strategy. I didn't get it right every day but I did most days. I actually only had 1 losing day in the past two weeks. And the number of ticks gain was greater as well.

I know two weeks is not a long time but this is just showing my most recent improvements. I've had a steadily rising equity curve since last October. I feel I'm getting pretty good at this.

These are screen grabs from my Tradervue account. The "Volume" is the number of contracts I traded x2. It calculates the buy and the sell of each contract. I was experimenting with larger sizes recently so I can scale in and out of trades.

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  #4 (permalink)
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Hi Trader146,

Nice job on recording good stats. I noticed in your 2 week sample, on the day 1-May, you had quite a large intraday draw down. Is this a infrequent occurrence or over your larger sample do you see this happening a bit?

It could be a potential psychological challenge when you are live, even though you managed to trade back that day on sim, when live you might find yourself doubling down on bad decisions?

Potentially analyzing your past sim performance based on risk tolerance rather than profitability might be a good way to build confidence that you can go live.

Also, did you have expectancy statistic per a contract / per a position? MFE/MAE.

Is you strategy scale-able? can you dial down the contracts and grow into it?

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  #5 (permalink)
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one small step

hi Trader 146,

there are thousands of trades every day.

tradingon

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  #6 (permalink)
Elite Member
Houston, TX
 
Futures Experience: Intermediate
Platform: NT
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Hey man, great post, like your stats and graphs.

However, if you can't afford to lose your current trading stake ($9000?), then IMHO you should not trade. You may have a great system/setup but personally I would never trade with money that I couldn't afford to lose. That's just me.

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  #7 (permalink)
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Atlanta, GA/USA
 
Futures Experience: Intermediate
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Broker/Data: Ninjatrader/CQG
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amoeba View Post
Hi Trader146,

Nice job on recording good stats. I noticed in your 2 week sample, on the day 1-May, you had quite a large intraday draw down. Is this a infrequent occurrence or over your larger sample do you see this happening a bit?

It could be a potential psychological challenge when you are live, even though you managed to trade back that day on sim, when live you might find yourself doubling down on bad decisions?

Potentially analyzing your past sim performance based on risk tolerance rather than profitability might be a good way to build confidence that you can go live.

Also, did you have expectancy statistic per a contract / per a position? MFE/MAE.

Is you strategy scale-able? can you dial down the contracts and grow into it?

Big drawdowns are one of the things I've been working on. I realize that it is highly unlikely that I could emotionally handle a $3600 drawdown. It also would bust a TST combine. But it is scale-able. If you'll notice, the very next day I was only trading 1-3 lots and only took 5 trades. And it was one of my better days. I had 100% winning trades that day and made $895.00, in less than two hours. So yes, I'm trying to scale things back so that I'll have a better chance of duplicating the result live.

Large drawdowns has been something that occurs too often for my taste. Hell, once is too often for me. But it has been occurring less frequently recently as I incorporate additional components to my strategy. However at this point, everything is a test, so I'm still willing to try things...in sim. Once proven and refined, I can make it part of my strategy if I choose.

As far as expectancy, Tradervue does provide those stats. Here are mine for the past 10 trading days:

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Here are my stat for the past 90 days:



Thanks for your feedback.

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  #8 (permalink)
Elite Member
Atlanta, GA/USA
 
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ShatteredX View Post
Hey man, great post, like your stats and graphs.

However, if you can't afford to lose your current trading stake ($9000?), then IMHO you should not trade. You may have a great system/setup but personally I would never trade with money that I couldn't afford to lose. That's just me.

Thanks for your feedback.

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  #9 (permalink)
Elite Member
Atlanta, GA/USA
 
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tradingon View Post
hi Trader 146,

there are thousands of trades every day.

tradingon

And...?

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  #10 (permalink)
Elite Member
Atlanta, GA/USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
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Favorite Futures: ES, NQ, CL, GC
 
Posts: 82 since Jan 2015
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Trade Expectancy



amoeba View Post
Hi Trader146,

Nice job on recording good stats. I noticed in your 2 week sample, on the day 1-May, you had quite a large intraday draw down. Is this a infrequent occurrence or over your larger sample do you see this happening a bit?

It could be a potential psychological challenge when you are live, even though you managed to trade back that day on sim, when live you might find yourself doubling down on bad decisions?

Potentially analyzing your past sim performance based on risk tolerance rather than profitability might be a good way to build confidence that you can go live.

Also, did you have expectancy statistic per a contract / per a position? MFE/MAE.

Is you strategy scale-able? can you dial down the contracts and grow into it?

Trade Expectancy

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