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No live trades. Had the platform loaded for live most of the day but was not feeling confident.
Sim trading went better. Everything that was lost yesterday was gained back today. Yesterday took 21 sim trades for -$600. Today took 4 sim trades for +$600. Hmmm, is there a clue here? One adjustment was to stay away from the 6 and 8 tick stops. I picked the spot on the smaller chart then gave it a little more wiggle room.
I like your journal. Very disciplined updating of progress, thank you for sharing. You are somewhere around the same place as I'm in journey to trading career, so I often visit your journal to see someone is running in line next to me.
I wonder about your SIM results for longer period. Would you share statistics that Sierra Chart is making? That is if you take SIM trades. Not sure whether you just mark them on charts, or you actually take them in SIM account.
The chart plotter shows where each sim trade is taken on each chart. I don't publish the overall results of sim because it really doesn't mean much to anyone but me. I often take sim trades out of experimentation and sometimes there is a lot of weird slippage in Sierra charts so the results are skewed a bit.
I hope you can get through this part of your journey faster than I have! Good luck and thanks for visiting the journal
Weekly Summary 10/12/15 to 10/16/15
Live Trades: 1 loss
Week’s P/L: -$94.60
Starting balance for the week: $3286.29
Withdrawals for the week: $0
Deposits for the week: $0
Ending balance for the week: $3191.69
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: $191.69
Took one trade for a loss this week. Mostly sim trading in a continuing effort to evaluate my ability to properly read the markets under conditions other than AAA rated trades. The answer, at least for the past two months, is that I am 50% at best. Flip of a coin. I will have a hard time making money as a 50% trader.
One might ask the question, “then why not just wait for the AAA rated trades?” To which the answer would be, valid point. However, as it is my goal to make a living at this thing, and these juicy trades happen so rarely, I question whether they are enough to get the job done. I suppose it would be a good start, but at some point it feel like I will need to find more frequently occurring opportunities, and that is what I have attempted to do with this sim thing over the past two months. So, my plan is to continue to have the platform loaded live in anticipation of the really good ones, while experimenting with other trade opportunities in sim.
Weekly Summary 10/19/15 to 10/23/15
Live Trades: 0
Week’s P/L: $0
Starting balance for the week: $3191.69
Withdrawals for the week: $0
Deposits for the week: $0
Ending balance for the week: $3191.69
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: $191.69
No trades this week. I am decompressing from my two month excursion in to trading more frequently. The hypothesis was that I was passing on too many good trades and giving up a lot of potential. This experiment was meant to test this hypothesis. The results were not very good and quite frankly it injured my confidence to some extent. I ending up taking too many marginal trades in an effort to not miss anything, while still passing on a lot of good trades, resulting in significant sim losses. It is quite apparent that I have to find a better way to qualify viable trade opportunities in real time if I am going to trade more often.
As explained in an earlier post, I track price’s movement for every trade, irrespective of whether or not I am still in the trade. The tracking begins at entry for the entire day until price either hits my initial stop, makes a too-large retracement (subjectivity involved), or the session ends. This allows me to see the potential in my trades apart from how I actually managed the trades. These movements are noted in a spreadsheet with columns for:
-Total movement in favor
-Total movement against
-Percentage that reached 1R, 2R, 3R, 4R…before hitting -1R
I keep a running total of these results for the most recent 20 trades. This helps me see how my trade potential is trending.
During this two month experiment the results for the most recent 20 trades tended to hover around 50% in getting to +1R before -1R, sometimes a little more, sometimes a little less. It is my belief, and I am willing to be convinced otherwise, that a trader will have difficulty making money if they are picking trades where price is getting to +1R only 50% of the time, in spite of the idea of asymmetric returns. If a trader is having difficulty getting to 1R at an adequate rate, they are equally as likely to have difficulty getting to 2R, 3R, 4R at an adequate rate, and this is exactly what my stats showed. In fact, the stats for larger returns got progressively worse relative to the 1R returns. For example, if price was getting to 1R 50% of the time, one would expect price would get to 2R 33% of the time. But actually it was more like 25%. These types of numbers do not bode well for making money in my opinion.
So what to do? Well, first is to take a break from experimentation. It is obvious that I lack an adequate way to qualify what I think are good, but not spectacular, trade opportunities. Too many do not work, so I am thus just training myself to lose. Second is to build a track record of higher percentage trading. A target of 65% to 70% to 1R is a good start. The only way I know to do this is to wait for those rarer, spectacular opportunities. I have done this in the past with success. It can be frustrating since a lot of good looking trades will be avoided that end up working, and the account will build more slowly than hoped. I will need to be ok with this. This will require more patience, less trading, and probably less time in front of the computer. The more time spent looking at the charts, especially during slow times, the more impatient I tend to become. Spending less time trading is ok. There are a lot of dull periods that could be better spent doing something more productive. Lastly, and perhaps a bit controversial, I need to return to live trading. Live trading forces more discernment, less experimentation. This forces me to take only the very best trades. In addition, I want to begin once again advancing the ball, even if slowly. This will help me feel like a real trader who makes real money trading.
I found out that it is much harder to improve % Win, than to improve RRR
I do agree with many things you wrote. I see same situation with my trading. Taking fewer trades usually brings better results. It is important to wait patiently for good opportunities. SIM trading is prone to over trading. Live trades tend to be more in line with my rules, as they scare you, and you think twice before taking them.
My RRR has always been pretty good, north of 2:1. It's the percentage wins that lack. They need to be taken together.
My point is that I do not think a trader can be successful if price doesn't get to 1R more than 50% of the time, irrespective of whether or not they are still in the trade. I would like to see at least 65% to 70%. I believe every struggling trader should know their percentage to 1R. It represents potential. If the potential is not there no amount of psychology or money management will help. They'll just lose slower. Once the trader realizes that price moves in their favor more often than it moves against them they'll begin to develop the confidence to execute and manage trades properly.
I do not think that statistic how often you get 1R is that important. If you have good winners, your success rate for reaching 1R can be below 50%. It is actual RRR in combination with success rate that makes the difference. So rather than just watching how often you reach 1R, take into account big winners. Point of my previous comment was, that it is much easier to "let the winners run and cut losses", than complicate your entries, overthink your system, trying to achieve high success rate.
Second example, shows market passing 1R only 45% of time. Still beating the previous example.
Loss -8
Win 25
Win% 45%
EV 6.85
Also systems with good RRR tend to have smaller downswings. One good trade can cover 3 losses. Such situation is much mor easier on psychology then 30 trades fight of climbing out of the hole.
Interesting results - I came to similar conclusions as you did. I trade stocks (swing trade to longer term) so my background is a little different, but in the current market environment there is a lot of chop. Trends don't really continue that well, and trades get stopped out more often than in the past. One way to avoid serious damage to the account is to trade smaller - yes, I had pilot positions where I only invested 1% of my capital in a trade - or to not trade at all until things become less choppy.
Something else that I noticed when reviewing past trades was that several times a position would be stopped out and then the stock would continue moving upwards. Individually these might not be great winners, but all of these combined would have a very measurable effect on my equity curve. My way of dealing with this was to use protective puts, i.e. I have locked in a maximum loss when I enter the trade, but I am giving the trade a certain amount of time to work. Downside is that it adds to the cost of the position and some options either are just too expensive (GOOGL, AMZN, PCLN) for me to place trades in the stock.
This change made my win % jump to just over 50% (previously 30%), but my ave loss increased in size. However, the net effect on my equity curve is definitely positive. An unintended benefit of this is that I am staying in trades longer and this is part of the reason for the increase in the win%, but I am also much more comfortable walking way from my desk.
Good luck and thanks for visiting the journal
