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System 2: Swings
- 3 Winners (+8,77R)
- 2 Loosers (-2,15R)
- active = 11
Retrospective
- we are getting more used to the higher trading frequency, but we still need some time to perfect our daily routine
- new NT script "SwingFinder" to screen lots of stocks for possible swings so we can scan the whole S&P 500 and german market
- discipline on our debriefing checklist is getting better, but still some misses on minor tasks
- implemented our first savings plan (mutual fund, bonds) for passive income according to our business plan
- trading definitly dominates our time, private life is down to a minimum for several month now and we should take things a bit easier since the foundation is built now
(our evening normally starts with something like "hey babe, so hows trading been?" or "hey babe, you know, i've seen this really nice stock and...").
Retrospective
- system from "holy grail" to "excellent" because of mistakes in 3 trades (order size wrong, mixed long/swing pos. size
once, adjusted stop wrong). 2 mistakes due to "sloppiness", one was actually a break of rules which we have
analysed further. The situation was: the stock fitted to both systems at the same time, so we have to clearify what to
do in such a situation instead of mixing both systems.
- we need to focus more on discipline and the process if we want to reach peak performance, therefore we will
redesign our daily routines to be more effective.
- adding S&P 500 stocks to the swing-pool has proven to be a good idea so far
Total SQN for DEZ+JAN is 3,26 (n=100) and Expectancy/STDDEV 0,39 = rating "excellent"
Notes:
- we were "only" about 50% right and still made a few thousand dollars, so this should show that there is no need to be "right" on trading if you want to make money (sure it helps, but it is not necessary!)
- we know the system would be better if we did no mistakes, so target is to play it without any mistake
- with proper mindset, position sizing and discipline, this system can make more than 100% a year (need 8R/month on 1% risk)
- we will focus on bringing this system to "holy grail" stats and holding it
System 2: Swings
5 Losses (-6,12R). One loss -2,54R due to a big opening gap. One mistake (-0,53R - Stop position wrong)
4 Winners (+9,50R)
Active: 11
Retrospective
- i made the major mistake to activate our futures system, even as there was no clear evidence given to do it. Resulting in a loss of -1,5R.
This reminded me that i should focus on what i am best in: coaching. My wife would never had broken the rules on that system, so we probably will do better
if i stop interfering after the systems are created and let her alone play them. Since i am doing coaching for a living and am good at it, it should be a
no brainer, but uhm...
- i created 2 new strategies for later use, both focusing on long term investment. We have 5 strategies for different market situations
ready to use in our business plan now.
- the swing system started with the biggest drawdown so far (-5R), but since we have a higher frequency of trades than in the beginning,
we already recovered and made additional +3,38R
Retrospective
- system down on break even for last two weeks without many mistakes (Total: -0,47R). So it must be a reason of
the discretionary mindset or normal behaviour of the system. Since my wife was not in the best mood last week, we
will focus on mindset training (attaining NLP-Practitioner seminar in march).
- neverless, the system works as expected. We are break even on 33,33% profitable, which fits to my statistical
forecast.
- long system made good profits last week, so it is always a good thing to play several systems at once in our
opinion.
- we will be break even on total equity with another $10.000. So we made up nearly all our former losses of 5 years
of bad trading (we are up about 85% on our total equity in the last 6 month). My wife still rejects to pay herself bevore
we reach that "magic break even number". I tried to convice her, that this number only exists in our beliefs and
there is no rule except to her own that decides when to take profits for living, but for her it would be "taking money
out of debt".
Retrospective
- we combined the Swing and Long System, so we have a clear rule when to promote Swings to Longs. ("let your winners run...")
- still, the swing system did not very well the last two weeks but it is nearly on break even with less than 30% profitability, so it works as expected.
- we needed clear rules for pyramiding, since we did not defined the position size. The last pyramide broke a freetrade, so we made up some easy rules to not let that happen again.
- since it took me a lot of time to do a big picture analysis i often cut short. To make my life easier, i created an excel file to analyse a lot of vector etfs and the big picture on p/e, interest rates, bonds and SMA's automatically.
Swing System: swing system 3 month live evaluation ended
What do we learned?
- higher frequency is more stressfull, the amount of trades and analysis is a fulltime job
- volatile stocks are harder to handle with our stops
- higher frequency is a nice opportunity to learn fast through your mistakes
- you don't have to be right often if the system has a high expectancy (33% was still break even)
- we tend to play the system very mechanical, cherry picking was not as useful as it was with our longs
- it is harder to maintain discipline on higher trading frequency
- through the swing analysis, we found a lot of nice longs. If the swing ended in a breakout, it often qualified for a nice long.
Swing Stats 3 month:
Profitable 45%
Avg. time in market: 8 days
Kelly2risk: 0,5% CPR
Total R: 5,24 (about 7,5 without mistakes)
Expectancy: about 0,68 (still open trades counted as cashed now)
Next Months:
- Swing system worked as expected in backtesting/walk forward, will be evaluated another 3 months in the next sidewards market.
- using only the long system now until market type changes
- evaluating new addition to long system: "efficient stocks". I will track this evaluation here in the journal instead of the swings.
Noch much going since we stopped the swing system, BOT two efficient stocks for our running long strategy.
We started playing around with another more short term strategy, but it will take some time in papertrading until it will be tested with real money.
Retrospective
- Mistake: one of the long stocks was not really liquid enough... we need some kind of filter for this, so i will add something to our market screeners.
- I started coaching someone who really wanted it for some time now and the feedback for the first seminar was really good. It showed me that i seem to be able to transport my trading knowledge to others through my coaching experience.
