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lovetotrade's YM Breakout Journal
Started:November 6th, 2014 (04:13 PM) by lovetotrade Views / Replies:11,143 / 187
Last Reply:November 22nd, 2016 (11:16 AM) Attachments:137

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lovetotrade's YM Breakout Journal

Old September 18th, 2015, 01:26 PM   #161 (permalink)
Student of the Markets
Cocoa, FL
 
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Update on the combine.

So yesterday I had both targets met after a pullback from the FOMC announcement. It ended up being a precision strike, as both targets were met within a few minutes. Pretty sweet. Just shows that patience pays off, and that you don't have to catch even the bulk of the move to make good money.

6E- 45 pts($550)

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Losses continue to remain small which is a great thing, and I had another winning trade today which will boost me to an all time high in the combine.

More importantly than just passing the combine and getting funded, is the ability to trade consistently and profitably.

Very happy with my progress and ability to stick to my plan. Who would have thought it would be so hard to want to stick to your rules! It's getting easier. Today's slow grind lower had me wanting to jump in early, but I followed my plan and profit targets were met.

I am using this experience to build onto this system and factor in other ways to profit from days like today.

Happy trading!
-Chris

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Old September 19th, 2015, 05:17 PM   #162 (permalink)
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Old September 22nd, 2015, 09:05 AM   #163 (permalink)
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Alright so I got to use the stop reversal technique, and that seems to be a very legit trading pattern. It ran for over 50 points once again so my targets were fairly conservative, but it kept me from having a pretty large losing day. I just might need to spend some more time researching that isolated pattern. Add that to the list haha.

Currently reading Van Tharp's trade your way to financial freedom. Quality of the information is amazing considering it was written in the mid 90's! He was obviously well ahead of his time.
Update: This book has the most extensive explanation and application of expectancy I have seen by far. If the position sizing chapter is any bit as good, then this book will make it into my top three must reads. There is some serious meat in this book.

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Last edited by lovetotrade; September 22nd, 2015 at 11:56 AM.
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Old September 23rd, 2015, 11:02 AM   #164 (permalink)
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So the following quote is from Tharp's book, and made me take a step back. I think it is generally accepted in this forum that multiple scale out profit taking is the best way to go. I mean that's what I have learned and been convinced of for a while now. Yet here is what I just read.

"There is one kind of exit that is designed to get rid of losses, but it totally goes against the golden rule of trading of cut your losses short and let your profit run. Instead, it produces large losses and small profits. This type of exit is one in which you enter the market with multiple contracts and then scale out with various exits. For example, you might start with 300 shares and sell 100 of them when you can break even on all 300 shares. You might then sell another 100 shares at a $500 profit and keep the last 100 shares for a huge profit.

Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is. What you are actually doing with this sort of exit is practicing reverse position sizing. You are making sure that you will have multiple positions when you take your largest losses. In our example, you’d lose on all 300 shares. You are also making sure that you only have a minimal-sized position when you make your largest gain-100 shares in our example. It’s the perfect method for people with a strong bias to be right, but it doesn’t optimize profits or even guarantee profits."

So it definitely has me thinking. I am not one to take just anyone's word as the be all end all, but I believe there is definitely some merit to what he has said, and is worth taking a hard look at.

Recently I have changed my strategy to start taking profits at what seems to be the most logical levels based on the MFE of my system, so when I capture profits larger than 1R it is kind of by chance and not the norm, since that system has a higher than 50% Win rate.

But as I design new strategies and think through ideas, the multiple scale out profit taking is deeply ingrained in my thought process. I do think that there might be some specific strategies that this works best on, but it probably shouldn't be our go to process.

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Old September 23rd, 2015, 11:14 AM   #165 (permalink)
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... I am not one to take just anyone's word as the be all end all, but I believe there is definitely some merit to what he has said, and is worth taking a hard look at.....

Also keep in mind that it doesn't have to be an all or nothing proposition. For example, you could scale-out on your trades until you get to a certain a level of profitability - i.e., the "houses money". Then, you could switch to an all-in-all-out methodology once you're no longer trading on your capital. But of course, this also depends on the particulars of your system (i.e., is it a high-probability system or low probability one).

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Old September 28th, 2015, 05:33 PM   #166 (permalink)
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So after re-analyzing my back test numbers, now taking into account the pull back method vs. the break out, my previous profit targets seem to be obsolete. I am also finding that my win rate has fallen from the high 60's to the mid-50's, but I am quite o.k. with that as this is a pretty high number for a system that technically falls under the "trend following" category.

So my win rate goes down, my average stop is moved closer by 30%, and my profit target is extended by almost 40%. I can deal with that

So my new targets are now 25 and 40 points respectively, as compared to 20/25 previously. This small change would have added over $500 to the bottom line of my current combine. As of now my average loss will stay the same, but my average win will increase substantially. I will just have to become a bit more patient as my full PT will not be hit as often.

My biggest struggle currently is reducing trade errors. Having small errors here and there adds up quickly, but I try to learn from each one and set some sort of safeguard when I can, to make it easier to avoid those errors in the future.

Very happy with progress so far. Missed a winning day today due to travel, but that's part of the game right? Numbers seem to be falling in line with my expectations.

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Old September 28th, 2015, 05:52 PM   #167 (permalink)
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So the following quote is from Tharp's book, and made me take a step back. I think it is generally accepted in this forum that multiple scale out profit taking is the best way to go. I mean that's what I have learned and been convinced of for a while now. Yet here is what I just read.

"There is one kind of exit that is designed to get rid of losses, but it totally goes against the golden rule of trading of cut your losses short and let your profit run. Instead, it produces large losses and small profits. This type of exit is one in which you enter the market with multiple contracts and then scale out with various exits. For example, you might start with 300 shares and sell 100 of them when you can break even on all 300 shares. You might then sell another 100 shares at a $500 profit and keep the last 100 shares for a huge profit.

Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is. What you are actually doing with this sort of exit is practicing reverse position sizing. You are making sure that you will have multiple positions when you take your largest losses. In our example, you’d lose on all 300 shares. You are also making sure that you only have a minimal-sized position when you make your largest gain-100 shares in our example. It’s the perfect method for people with a strong bias to be right, but it doesn’t optimize profits or even guarantee profits."

So it definitely has me thinking. I am not one to take just anyone's word as the be all end all, but I believe there is definitely some merit to what he has said, and is worth taking a hard look at.

Recently I have changed my strategy to start taking profits at what seems to be the most logical levels based on the MFE of my system, so when I capture profits larger than 1R it is kind of by chance and not the norm, since that system has a higher than 50% Win rate.

But as I design new strategies and think through ideas, the multiple scale out profit taking is deeply ingrained in my thought process. I do think that there might be some specific strategies that this works best on, but it probably shouldn't be our go to process.

Something else I would like to add to this. Van Tharp talks about how the best money managers in the world set themselves apart by their creative money management processes, which have a lot to do with position size, but I think is also a combination of a variety of aspects, with profit taking being one of them. I most definitely believe that the greater you understand your system inside and out, the more you can manipulate max draw down among other things, through scaling out early, layering into a position while trailing your stop higher, etc. until you get the desired outcome.

And I think this is truly the artsy side of trading, where you are only limited by your own imagination, and through a clear objective and goals. I am loving this current process of learning as I go, and making adjustments as they seem necessary.

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Old October 17th, 2015, 11:22 PM   #168 (permalink)
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Wow, I didn't realize it had been so long since I updated the journal. No worries, I have plenty of lessons and thoughts to get down on paper. Well electronic paper anyway.

But first an update on the combine. On Friday I hit my trailing stop max DD which ended the current combine. My opinion of the combine so far is still mostly positive after three attempts, and I start my fourth on Monday. My biggest issue so far is the lack of wiggle room to have a reasonable draw down without fear of stopping out of the combine.

I had a serious psychological issue/breakdown(I'm assuming fear of failure) once I came within $1,000 of my trailing stop, and it was all downhill from there. I basically set myself up for disaster. I started making impulse trades, and hesitated pulling the trigger on my real trades. Mainly because the thought crept in that I was probably going to blow it, and it got worse with each and every loss. So something major to be learned from there.

So I guess that kind of bugs me about the combine program. My peak equity was right at 51,000, so I had a trailing stop loss set at 49,000. So here I was at break even on the account, nervous that I was going to blow my most successful combine, even though I hadn't lost any money on the account yet! Would I have even been remotely that nervous after even losing only 2% on a real $50k account? Assuredly not. So this leads me to the next major lesson, a lesson I have re-visited several times. The need for consistency.

One of the requirements to graduate from Van Tharp's Super Trader program is to trade at a 95% efficiency rate. This means that a trader may only make 5 execution errors for every 100 trades. Unfortunately even before I went off the deep end, I had already made quite a few silly errors in my trade execution that threw off my live equity curve from matching my hypothetical equity curve, which is my number one goal.

And guess what? My hypo PnL still is only at that 2% draw down of the 4% that I am allowed, and still within very acceptable limitations of the systems back tested history. What I am saying here is that if I had followed my plan, I would still be in the game. But hey, a hundred bucks for a combine reset is a much cheaper lesson than losing real equity on an account that size. So for that I am thankful.

So going forward consistency is my number one priority. I have optimized the targets further, and that has actually resulted in closer targets vs. farther away as I had previously thought. Right now I continue to average a 54% win rate, with a 2:1 reward to risk ratio. Not bad and it suits my personality quite well.

I continue to test my system against new ideas that come to mind, along with designing a new system that looks very promising, and will compliment the other, adding a new level of robustness to my overall performance.

As you can see my combine results were pretty good considering the period of under performance it is experiencing.

Continuing to learn and improve every day, really it's all we can do!

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The bottom line is this – if you don’t maintain a level of consistency in what you do, you will never be able to make the progress and achieve the results you desire. This is why so many successful traders talk about the importance of consistency in approach as that has often made all the difference between their success and failure.
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Old November 20th, 2015, 01:50 PM   #169 (permalink)
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Hey guys, so I realize that once again it's been a little while since I have posted, but it was for good reason I think. I was really just trying to focus on performing, and getting this combine conquered, which as of today, I was finally able to do.

So pretty excited to say the least. Our baby boy is due in January, and the wife had pretty much put a cap on my time left to take this to the next level. Actually there hasn't been much support in any part of my friends or family, so unfortunately I have had to get this far without support, and in spite of everyone instead of with the wind at my back. But I give thanks amd all praise to the good Lord for blessing me with the abilities that have gotten me this far, and am so thankful for the possibility to do what I love everyday.

I understand that I am not out of the woods yet, but I am very encouraged by my performance and current market environment. My number one goal despite winning or losing was, can I do this consistently enough to make money over the long term? And after my experience with TST I believe that is a resounding YES! I have taken my trading to an entirely different level, a new much more professional level, and my trading ideas are flowing at an all time high.

Another thing I have come to terms with is that the psychological part of trading is probably more than 90% of my actual trading ability. I chock it up to divine intervention, but I ran across Van Tharp's offer to give away his book "Trading beyond the Matrix", and it set me on the path to conquer all my psychological hang ups that were affecting my trading negatively. I am happy to say that I am successfully working through them and making great strides.

"Awaken the Giant Within" by Tony Robbins is my current platform, a book no doubt that I have had all along. Again just randomly picked it up, and fell perfectly in line with where I was at, and what I needed.

I am still fine tuning my system, truly becoming an expert at it. The system and I are becoming one, and it is performing just as good if not better than I had hoped. So I will scale it down to get me through the TST FTP, and scale it to size once I become funded and my account begins to grow.

Here is the combine as of this morning at $2500 profit, and my winning trade today at 40 points($500).

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The bottom line is this – if you don’t maintain a level of consistency in what you do, you will never be able to make the progress and achieve the results you desire. This is why so many successful traders talk about the importance of consistency in approach as that has often made all the difference between their success and failure.
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Old November 20th, 2015, 03:12 PM   #170 (permalink)
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The bottom line is this – if you don’t maintain a level of consistency in what you do, you will never be able to make the progress and achieve the results you desire. This is why so many successful traders talk about the importance of consistency in approach as that has often made all the difference between their success and failure.
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