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Taking a Trading System Live


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Taking a Trading System Live

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  #201 (permalink)
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Week 5 is in the books. Another dull week. The NEGC strategy #2 missed Wednesday's big move by about 5 ticks, but that's the way it goes.


So, I have a question for everyone reading this: After 5 weeks, and 13 days of trading, based on the current performance, would you still be trading this, or would you have abandoned it in favor of something (hopefully) better? It is a hypothetical question worth asking, and there is no right or wrong answer - there is just an answer for your personal circumstances.

Feel free to share your thoughts...






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  #202 (permalink)
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kevinkdog View Post


So, I have a question for everyone reading this: After 5 weeks, and 13 days of trading, based on the current performance, would you still be trading this, or would you have abandoned it in favor of something (hopefully) better? It is a hypothetical question worth asking, and there is no right or wrong answer - there is just an answer for your personal circumstances.

based on 13 samples I'd continue until I had more results.

The info you give per day is hard to decipher. How many trades are involved?

As I've mentioned before I would be concerned that the size of the losers is much greater than the size of the winners. Now that may be because a losing day has a large number of trades with small losses that add up to a large losing day. Likewise a day showing a small win might be a number of small losses and one or two large wins.

You haven't shared your methodology, nor do I expect you to but when day trading why stay in a trade that is going against you? Why not cut your losses and look for a new entry?

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  #203 (permalink)
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deaddog View Post
based on 13 samples I'd continue until I had more results.

The info you give per day is hard to decipher. How many trades are involved?

As I've mentioned before I would be concerned that the size of the losers is much greater than the size of the winners. Now that may be because a losing day has a large number of trades with small losses that add up to a large losing day. Likewise a day showing a small win might be a number of small losses and one or two large wins.

You haven't shared your methodology, nor do I expect you to but when day trading why stay in a trade that is going against you? Why not cut your losses and look for a new entry?


I trade up to 1 time overnight session, and up to 1 time for day session. So, never more than 2 trades in one day. Usually on days when there is a trade, there is only 1 between the 2 strategies. In 13 days, I'd guess there have been 15-20 trades.

The current stop loss for both strategies is 34 ticks, or $425 before slip and commission. This may change over time, due to re-optimizations.

As far as cutting losses and looking for a new entry, that was just something I had not done when designing the system. Too late to do that for this system. Maybe a brand new system would be better off this way.

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  #204 (permalink)
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kevinkdog View Post
After 5 weeks, and 13 days of trading, based on the current performance, would you still be trading this, or would you have abandoned it in favor of something (hopefully) better?


With this question, I am trying to get everyone to think emotionally, not analytically. Here you are, all excited to start trading a system live, one that you predict will more than double your money in a year. Yet, after 5 weeks of trading, you are stuck in neutral. You really need this system to perform, or else that trip to Disney next year is out. And you just read Trader Y's journal, where he is killing it with 100% returns just this last month. Maybe you should abandon your approach and follow his...

It is an exercise, but look at it emotionally, and put yourself in that situation. You'll learn some interesting things about yourself...

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  #205 (permalink)
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kevinkdog View Post

It is an exercise, but look at it emotionally, and put yourself in that situation. You'll learn some interesting things about yourself...

As an exercise it's easy, unfortunately the emotions don't really kick in until you have your own cash at risk. What are you going to do?

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  #206 (permalink)
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deaddog View Post
As an exercise it's easy, unfortunately the emotions don't really kick in until you have your own cash at risk.

The emotions you experience when you role play it can be helpful, if you are capable of being honest with yourself. Introspection is real, and Kevin is right to pursue the question in this way.

But yes, until you experience the pain and suffering of trading, you should avoid overestimating your self knowledge.

My real life story: I learned setups from a guy who traded those setups with discretion. I lost something like 20% of my account in one month trying to trade them myself in his style. I totally panicked and went back to my prior approach, which was not terribly profitable but worked for me. About a year later I paid to have my trading mechanized by someone with experience. The first month I went live with the new rules (early this year) I experienced a drawdown of roughly similar proportions to the previous debacle, but traded through it, and am now profitable for the year.

I knew from the moment I was exposed to trading that I had the discipline to execute. I also learned pretty quickly that I was too smart for my own good, and without mechanizing my trading I would be paralyzed.

If I were Kevin. I'd keep pulling the trigger. When I was in the nasty drawdown earlier this year, I actually enjoyed pulling the trigger. Every time I did so, I felt like a soldier at Thermopylae.

(full disclosure: I've had two lapses in discipline this year, so don't go awarding me a medal of honor just yet)

-RK

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  #207 (permalink)
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deaddog View Post
As an exercise it's easy, unfortunately the emotions don't really kick in until you have your own cash at risk. What are you going to do?

That is why it is an exercise - you have to pretend a bit. I agree it is difficult to do.

As for me, I know you've been contributing long enough (thank you!) to know what I plan to do...

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  #208 (permalink)
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rk142 View Post
The emotions you experience when you role play it can be helpful, if you are capable of being honest with yourself. Introspection is real, and Kevin is right to pursue the question in this way.

But yes, until you experience the pain and suffering of trading, you should avoid overestimating your self knowledge.

My real life story: I learned setups from a guy who traded those setups with discretion. I lost something like 20% of my account in one month trying to trade them myself in his style. I totally panicked and went back to my prior approach, which was not terribly profitable but worked for me. About a year later I paid to have my trading mechanized by someone with experience. The first month I went live with the new rules (early this year) I experienced a drawdown of roughly similar proportions to the previous debacle, but traded through it, and am now profitable for the year.

I knew from the moment I was exposed to trading that I had the discipline to execute. I also learned pretty quickly that I was too smart for my own good, and without mechanizing my trading I would be paralyzed.

If I were Kevin. I'd keep pulling the trigger. When I was in the nasty drawdown earlier this year, I actually enjoyed pulling the trigger. Every time I did so, I felt like a soldier at Thermopylae.

(full disclosure: I've had two lapses in discipline this year, so don't go awarding me a medal of honor just yet)

-RK


Thanks for sharing your story. I assume your second drawdown was in line with your expectations? If so, then it was very wise (but probably difficult) to trade through it.


What's Thermopylae?

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  #209 (permalink)
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kevinkdog View Post
Thanks for sharing your story. I assume your second drawdown was in line with your expectations? If so, then it was very wise (but probably difficult) to trade through it.


What's Thermopylae?

Yes - my analysis isn't quite as rigorous as yours (you are always quick to point out that your way isn't the only way, but I do think you are doing an excellent job modeling a process with better controls than mine and I'm quietly learning - credit where credit is due), but in order to trade these setups and get the returns I'm looking for I need to be prepared to endure around a 25% draw down at some point each year. It was probably good that I had to take my medicine early.

Thermopylae was the sight of a famous last stand by the Spartans against the invading Persians. A unit of 7000 held off an army of around 100,000. And when betrayed a unit of less than 1,000 made the final stand. They were overrun, but in the end the underdog Greeks won the war.

Drawdown & Discipline.

Hope you had a great weekend.

-RK

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  #210 (permalink)
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Trading this system is like watching paint dry!

As I close out Week 6, as you can see nothing exciting is happening. I suppose that it both good and bad - bad I am not making money (or anywhere near the average line), good that I am not losing money either.









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