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My One Year Journey to Break Even


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My One Year Journey to Break Even

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  #1 (permalink)
 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
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My One Year Journey to Break Even:

This "Journal" thread will mostly focus on my backward looking one year journey and what helped me get from complete newbie futures day trader to "Break Even".

My original background story prior to this iteration of futures day trading can be found here:



You can also review some of my very first posts to see how much of a newbie I really was (regardless of my past trading experience).

Each post will outline an history of specific successes, failures, and valuable lessons learned.

Questions and comments are welcome!

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  #3 (permalink)
 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
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First Post After Introductory Post:

I signed up for futures.io (formerly BMT) around November 2011 but was not yet ready to take it all in yet. I became Elite Member specifically for the Better Renko bar type. Anyway, many posts suggested not to engage with a "guru" vendor as most of everything one needs was available on futures.io (formerly BMT). Although this is mostly true, I did engage with a vendor (which will remain anonymous) in December 2011. It was a good move for me as it got me into a system and community - it was an important stepping stone but not the ultimate reason for my success.

I would come to find out that a system developed by someone else may help initially but only I could develop a system that suits my personality and trading style. But at the time I did not know my trading personality or style, so you gotta start somewhere.

Also found out that a system has less to do with success than money management and "psychology" (which are comprised of many things). This is not an epiphany by any stretch as it's written all over futures.io (formerly BMT), but learning and internalizing these truths takes time (there are no shortcuts) - some learn it fast, some learn it slow (I'm in the slow group).

So I started SIM trading as suggested. The worst thing (for me) happened at first - beginners luck. Why is this bad? Because it's success based on nothing but luck but perceived as "oh I got this...this is easy....I'm going to be rich....I can easily make a trading income daily" - what a crock, what a lie. This certainly was a major contributor to my first downfall for me (one of many to come) both SIM and in the future LIVE.

(My humble opinion on SIM - good for when you're first starting out and to trade new ideas but is not even close to LIVE. As a matter of fact, most SIM only hurt my LIVE trading. I can easily tell the difference between the two by how I "feel" inside when trading one vs. the other. My "feelings" while trading LIVE are still a work in progress but the lesson learned was only to trade LIVE if I want to be a good LIVE trader and learn how to deal with it. This is what has worked for me and may not work for everyone else.)

More to come...stay tuned.

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 djkiwi 
Mercer Island WA
 
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TrendTraderBH View Post
First Post After Introductory Post:

I would come to find out that a system developed by someone else may help initially but only I could develop a system that suits my personality and trading style. But at the time I did not know my trading personality or style, so you gotta start somewhere.

@TrendTraderBH

Nice work becoming a breakeven trader after one year. That's an accomplishment as many never achieve it or it takes years. I agree with your points above particularly about the system fitting your personality. One of my systems works off audio computer generated signals using multiple instruments. Once the signal generates I will then further evaluate the signal based on an additional set of criteria with special emphasis on trade location and evaluation of the risk v reward.

Cheers
DJ

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 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
Platform: Ninja Trader
Trading: Futures
 
Posts: 299 since Nov 2011
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Just a small clarification for posterity sake. The "breakeven" is on this current iteration of my trading and pertains specifically to this futures day trading account that is approximately one year old.

I'm sure I'm still down an Ivy League's education worth (at least) from all my years of trading.....lol



djkiwi View Post
@TrendTraderBH

Nice work becoming a breakeven trader after one year. That's an accomplishment as many never achieve it or it takes years. I agree with your points above particularly about the system fitting your personality. One of my systems works off audio computer generated signals using multiple instruments. Once the signal generates I will then further evaluate the signal based on an additional set of criteria with special emphasis on trade location and evaluation of the risk v reward.

Cheers
DJ


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 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
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Posts: 299 since Nov 2011
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My SIM trading eventually devolved into embellishing my emotional side and was really gambling and not serious. This lasted about two months. My plan was to go LIVE in three months from the start and I slowly realized that this was not going to happen because I was not ready. In actuality, LIVE trading commenced six months after start (and even that was too soon). Being in a hurry to trade is a prescription for losing money imho.

Finally, I was able to get consistently profitable in SIM using two contracts. At that point I realized I was missing something - it was great that I was self-aware enough to realize it (wish I had that self awareness in my previous trading - it would have saved a lot of money). What was missing......?

A trading buddy....someone to knock around ideas with and analyze each others trades and learn. Also someone willing to develop a relationship and one who realized the great benefits (for both) of this arrangement. In this arrangement, usually one is less experienced than the other but over time that tends to equalize. What I learned from my trading buddy was absolutely the number one reason I advanced. It was free (best things in life are free) and so valuable.

More to come

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 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
Platform: Ninja Trader
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Posts: 299 since Nov 2011
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Today I'm going to sidetrack a bit as something interesting came up.

Just watched the markets today and took no trades (although intended to prior to sitting down to trade). In the past that would have really bothered me. In fact I could never sit through a whole session without taking a trade. This is how it usually went - let one good trade go by, then another, and then another....finally realized that there is good trading out there and take an entry (of course not as good as the previous three good ones) which ends up being a loser. A very frustrating way to trade and also easy to make it a pattern.

That doesn't happen much anymore. I used to count how many trades I make per day (now I count how many trades per week) - that paradigm shift alone prevents me from problems like I outlined above.

Also, another small detail is switched to points (in NT) instead of dollars which helps psychologically for me.

More to come....

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 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
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Posts: 299 since Nov 2011
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Next in my journey was lots of changing systems and bar types. Changing whether I enter on stop orders on momentum moves or limit orders on pullbacks. As soon as something stopped working I made a change until that stopped working then made another change.

With all those changes I still became SIM profitable and planned to go live. One of the (first) big mistakes I made was to trade two contracts LIVE instead of one to start. I underestimated how different LIVE trading was compared to SIM. At first it almost gives you a brainwashing (like you're on drugs or something) and mistakes happen.

The funny thing was I had beginners luck to start LIVE (unfortunately) but it was based on not following proper trading protocol and that false confidence set me up for a big fall. My first month ended up a small loss, my second month a small gain (about even including brokerage commissions and fees). After the third month I was ready to quit (losing about 40% of my account). I was frustrated since I was supposed to be pulling money from the markets and the opposite happened after months of training and learning and hours upon hours. However, I was over-trading big-time and not quitting when I needed to quit. I found out that losing trades usually bred more losing trades and winning trades made me cocky. It was a miracle I didn't give up but it was tough.

The next lesson helped - turning to a Trading Psychologist. He helped by giving me some exercises and mentorship....but it took many months to sink in. Although he really helped me I found out that time just takes time - there are no shortcuts. New skills for the majority of traders take a lot of time to develop, some are naturals but they are rare (and I'm not one of them LOL).

More to come....

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 TrendTraderBH 
Detroit, Michigan
 
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Today I'm going to take another side journey as it relates to scalping:

When I started this iteration of trading, the focus was purely on scalping. My "definition" of scalping is where one's target is less than one's stop loss. This means that your percentage of winners needs to exceed your percentage of losers over time to overcome the high risk to reward ratio. It looked so easy - surely the market will give me 5 measly ticks much more regularly than it would hit my stop.

Unfortunately in LIVE trading it didn't work that way and the percentage of fees (commissions, exchange fees) eat up a larger part of the pie when taking multiple scalp trades. I traded like this for several months.

The positive lesson I learned from this was I actually became a profitable scalper over those several months, meaning after fees my equity curve began to rise. So what was the lesson I would learn in hindsight months later? If you can scalp profitably its a great accomplishment and foretells positive trading news for the new trader.

The energy and skill I acquired from becoming a profitable scalper was the foundation for me becoming even more profitable when I left scalping behind. So once I moved to higher time-frames and inverted the risk to reward ratio, my profitability soared and losers meant less since even at less than 50% winners I could still be more profitable than scalping.

I also realized that to be a successful long term scalper one needs to be a master trader that makes very few mistakes and manages trades better than almost anyone. That skill requires more years of experience than I currently have so I'll leave that for others.

In hindsight I am really happy I learned to be a scalper first as it helped me tremendously. To me, it's analogous to the weight the batter in the batters box practices with before he removes the weight for his real at bat.

More to come.......

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 baruchs 
Israel
 
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Quoting 
My "definition" of scalping is where one's target is less than one's stop loss.

I'm the biggest opponent to scalping. I explained why many times on this forum, still the more accurate definition for scalping should be "going for a small target". I don't think that you would classify as scalping a trade with 400 ticks target and 450 ticks stop.

Baruch

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 TrendTraderBH 
Detroit, Michigan
 
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Posts: 299 since Nov 2011
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I agree with you. Maybe I should have added that any target of 15t or less.



baruchs View Post
I'm the biggest opponent to scalping. I explained why many times on this forum, still the more accurate definition for scalping should be "going for a small target". I don't think that you would classify as scalping a trade with 400 ticks target and 450 ticks stop.

Baruch


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 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
Platform: Ninja Trader
Trading: Futures
 
Posts: 299 since Nov 2011
Thanks: 504 given, 286 received

Another aside for today:

I'm going through a bit of losing streak lately. The difference this time is the "lesson for the day" I have learned and employing.

During losing streaks of my trading in the past...I would start to blow stuff up and really make the losing streak a "good" one lol. The last two losing streaks including this one (approximately 8-10% draw down) are being regularly interrupted by just plain old stopping trading for the day. It's tough to end the day, multiple days, or the week with a red number but it is important to know when to walk away and come back the next day or the next week etc.

This lesson could have saved me thousands of $ but as I mentioned before I'm a slow learner.

Losing steaks don't last unless I let them permanently last.

More soon.....

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 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
Platform: Ninja Trader
Trading: Futures
 
Posts: 299 since Nov 2011
Thanks: 504 given, 286 received

Another important lesson that took me a while to get and doesn't always stick but getting better is knowing when not to trade due to adverse market conditions.

This "rule" when followed probably saves (me) more money than profitable trades make (me) money.

Other folks have a different name for this rule calling it "only trade your specific setup".

It is usually a big victory (that doesn't feel like one) when the market didn't give me my setup or market conditions were not optimal and I walked away without taking a trade.

Very hard to do when all those around me are taking trades for profit and announcing their successes on their threads but I remember than my setup makes me money consistently and others, do not plain and simple. Repeat that 100 times....lol

More to come....

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 TrendTraderBH 
Detroit, Michigan
 
Experience: Beginner
Platform: Ninja Trader
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Posts: 299 since Nov 2011
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I rarely post a daily/weekly update but thought this week so far had within it an important lesson.

I've been pretty tired this week and in some cases noticing myself distracted and even nodding off in front of my computer. Additionally, I've missed limit order fills by 1-2 ticks for trades that went on to win big. This implies tentativeness and lack of confidence in my trading lately.

The upside is I've realized this and instead of taking bad trades after missing out on the good ones, I've just packed it in and decided not to trade. A common pattern I've been able to overcome (trading "psychology") is taking bad trades (or not as good trades) as the previous ones missed. Now if I miss the good ones there is always tomorrow. Nothing worse than losing my "edge" because I reduced it by taking less than optimal signals.

As an aside, my "edge" usually produces 1-3 optimal, full compliant with my rules trades per trading day in the hours range of 8 am to 11 am Eastern time. Anytime after that time or even towards the end of that time the trades quality deteriorate significantly.

The best trade is sometimes not to trade as that at least yields break even which is already better than 90%.

More to come....

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