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No live trades today. Continued sim trading the standard method. Missed at least 11 nice trades due to a lack of trust. Of course, in trying to get these 11 there would have been a few more losers. Need to use sim more effectively to get over this tendency to let my gut guide trade decisions. The end goal is to prove out the method one way or the other so that fewer decisions are based on emotion.
Sim results, standard method:
10 trades
3 wins
7 losses
Max DD: -$134.34
P/L: $32.44
Exited 5 trades early at or near BE. If all 10 trades were allowed to run to +1R or -1R there would have been 6 wins and 4 losses, for a net gain of +2R on the day. Therefore, exiting early cost me today, but at least the potential was there.
No live trades. No reason to go live until I can sort out my inconsistencies.
It has been a very frustrating few weeks of poor trading. At best, price is getting to 1R no more than 50% of the time, while rarely getting to 2R. It feels like every trade is going to be a failure. More than half the time they are. By 11:00 today I had taken 13 trades, 9 of them failures. I got out of a few at BE, but the bottom line is that most of my trades have very little potential. This is a problem that has vexed me since the big sell off in late August. Am I trading my method differently? Does it no longer work? Or, are the markets just difficult to trade at this time?
While watching with great boredom a lackluster market going nowhere, something occurred to me as a possibility: the classic problem of over trading. More specifically, trading too often under the current market conditions where price has little probability of reaching target (2R). Studying the 3X charts, I noticed that there really weren’t that many good opportunities available, yet I was trading as if the markets were moving all over the place. So, what to do? Well, it seems there are two options:
1) Use the same targets and stops but trade a lot less often, waiting for trade areas with more potential to reach 2R.
2) Trade smaller tick charts, reducing the size of the targets and stops accordingly.
For kicks I decided to finish out the session with smaller tick charts and ½ sized stops and targets on YM. The results were much better with 5 of 8 trades reaching 1R. Both options will be tested over the next few days based on market volatility. Hopefully with this adjustment I can get back on track, regain some confidence, and start taking live trades again.
9/30/15 Wednesday and 10/1/15 Thursday
Live Trades: 1
Day’s P/L: -$9.02
No live trades today, one live trade yesterday on YM for -$9.02.
After struggling for about a month with my success rate, it dawned on me that I might be taking too many trades relative to what the market is making available.
Have spent the last couple days on these two goals, with promising results. Focused on taking only those trades that have clear potential for 2R moves. Added smaller tick charts to catch 2R moves in smaller trends.
More importantly, 6 of the 10 trades got to +1R, while 5 of the 10 got to +2R or more. This is much improved from the recent past. In addition, I was able to identify a lot more potential trades, many with lower risk. Will continue to make this my focus from now on.
Monthly Recap September 2015
Live Trades: 10: 3 winners, 7 losers
Month’s P/L: -176.87
Starting balance for the Month: $3625.41
Withdrawals for the month: $0
Deposits for the month: $0
Ending balance for the month: $3448.54
Beginning account balance from first live trade on 3/10/15: $3000.00
Total Withdrawals: $0
Total Deposits: $0
Total Gains/losses from 3/10/15: $448.54
Live trades took a back seat to further testing in sim this month. Wanted to see what would happen if I took every trade in sim that I would normally just place a marker for. The results were not inspiring, in fact, they were downright depressing. My marker results have been pretty good. Something was amiss. Either I was taking trades that I wouldn’t normally mark, or the markets had changed.
My conclusion is that the markets have slowed and I was taking more trades than the markets were making available. The adjustment is to either take less trades based on market conditions, waiting for areas that offer at least 2R potential, or drop down the size of the tick chart and adjust stops and targets accordingly. Will experiment with these options.
Since the results in the standard direction were so dismal I experimented with inverse trading, taking the exact opposite position to my standard trade. These results were actually pretty good. This could be something to play with more at certain choppy times. It is difficult to trade against my instincts but it could be profitable under the right conditions.
Weekly Summary 9/28/15 to 10/2/15
Live Trades: 1 loss
Week’s P/L: -$9.02
Starting balance for the week: $3457.56
Withdrawals for the week: $0
Deposits for the week: $0
Ending balance for the week: $3448.54
Beginning account balance from first live trade on 3/10/15: $3000.00
Total Withdrawals: $0
Total Deposits: $0
Total Gains/losses from 3/10/15: $448.54
Only one trade this week. A lot of sim trading. Sim trade results not very good. The poor results confirm that more work is needed. No way this type of experiment could be done with real money.
That said, there are definitely moments where I should be taking shots with real money. Gold after the NFP Friday was a case in point. I am still positive overall but I need to keep the account progressing. Trying to trade live and in sim is a challenge. It is easy to fall back on the safety of sim. However, I still feel the method has more potential than just sitting on my hands for days waiting for the perfect entry. Putting the method to the test is what sim is good for. So, I am torn between wanting to move the account balance forward, and testing my system to gauge its full potential.
To hopefully resolve this conflict I will set the default mode to live, while switching to sim momentarily to test various set ups. Once the trade in sim is executed, I will switch back to live mode to be ready, both mentally and physically, for an A+ set up. Hopefully spending the majority of time in live mode will keep me focused on live trading more than I have been the past few weeks.
Trade situations to look for live:
-Direction changes after trend line break failures.
-High momentum events
-High volatility events
-Significant bounces off major S/R and trend lines.
-Price riding channels lines while building momentum.
These represent the higher probability situations. I can continue to test the less compelling situations using sim.
10/5/15 Monday
Live Trades: 1 loss
Day’s P/L: -$81.13
One live trade on ZN. Good trade but maybe should have waited for a higher low before looking long.
Continued to sim trade but had the platform defaulted on live most of the time. This helped me concentrate on live trading. Did not see many more opps that looked A+ to go live. Spun my wheels on the sim trades. Results:
Got nipped a couple times with stops that were too tight for the pattern. Either need to widen stops or find patterns within patterns when using the smaller stops. I am liking the idea of the smaller tick charts in this environment, but need to be careful not to trade in big stop locations.
Thanks for the encouragement. My discouragement is usually temporary. The current frustration comes from several sources:
1) What I identify in real time as good entries are too often not. Total price movement is right around 50% at 1:1 Reward/Risk. It's well below 33% at 2:1. Not a formula for success.
2) Because of this I am naturally having difficulty fully trading my method.
3) I am stuck as to what to do about it .
Hopefully some answers will come to me as I grind out the options in my mind. Often the best answers come during the worst of times because this is when the mind is working the hardest.
