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Risk
Yes there are instances when you won't be able to control your risk, but those are very rare. I've only ever heard of 2 flash crashes (I'm sure there's been more), and there was no warning (or was there?), so I don't think it would be wise to build your system around that. I'm not saying you shouldn't do what you can to mitigate it (see a bit further below), but that it shouldn't dictate whether or not to take a trade. I can't say what would happen in an earthquake / war scenario but if you are setting your stop loss at 1-3% of your account, one event like that shouldn't wipe out an entire account.
Risk is something you need to take into account, and you should do what you can to mitigate blowing up your account and mitigating losses, but it shouldn't be everything. If risk was everything, we would never get in a car because of the high likelihood of dying in a car accident.
Setting stop losses proportional and reasonable to your account (say 1%), is like driving safe, with a seat belt, and in a good state of mind. Yes, it may not do much to protect you from a drunk driver t-boning you and potentially killing you, but it should help / protect you in most day-to-day scenarios. You can't control whether there'll be a driver or not, but you can control whether you drive safe and wear a seat belt.
However, I think it's smart to talk to your broker and talk about what would happen in those scenarios, and do your best to mitigate big losses. Maybe @aquarian1can share his wisdom about some of the risks of a flash crash. I seem to recall him mentioning something about discussing this with various brokers and what is likely to happen during one of our chats, I could be wrong though.
Just my 2 cents around risk.
News
As for the news, I've honestly always felt comfortable trading the news. I love trading high volatility environments, and honestly my 'news-based' setup overall has been one of my most profitable ones from a Risk to Reward perspective. This is because during these kind of events I can go for 7+ Risk to Reward setups. They are very hard to trade psychologically though, but my system is based around high volatility.
Since I keep my risk constant, high volatile environments just mean I lose very fast, or I win big. There have been times when I have clicked the button to enter, and immediately got stopped out of a trade, and there have been times when I've walked away with 20:1+ trades.
I think the most difficult thing during most news scenarios is finding a good entry point, at least for my methodology. I feel that if you have a good understanding of the big picture and recent history, you should be very prepared for major news (FOMC, OPEC meetings, etc.). A lot of times the big news are relatively obvious about which way the long term players are going to go, the muddy areas I find are the high volatile periods right away which can seen random at times.
Of course with everything in trading it isn't that simple, but you don't need to always be right to walk away with some good trades.
But maybe I'm just okay with these events because I started by sim trading, and I would always increase the speed because I didn't want to wait the full amount. When I moved to trade live, I felt like outside of the first 30 seconds of the open, I was watching paint dry.
Yes, I'm a very impatient person.
Yesterday's excellence is today's standard and tomorrow's mediocrity
@johny1971
I agree with you on flash crash and I have chosen to trade short only.
Yes this limits you.
For those who do trade long I would suggest double limit stops OCO at the price banding amount less 1 point so that your stop when triggered does not get rejected as too far off the market.
see:
Very very interesting webminar. Thanks to Big Mike to have put some "advertising" on it. There is a lot to learn on the proper path to become successful.
A lesson learned: If I recall you said or wrote somewhere: Stop looking for the perfect journal. Begin
SoftSoap, could you post a blank canevas of your Excel sheet that you use to quantify your improvement. It may be useful to the comunity.
It's a paid product, so I wouldn't want to rip off the vendor by attaching it here.
I don't know if the price changed but it was ~$100 when I paid for it, and well worth it. I work a lot with spreadsheets so I initially wanted to develop my own, but I can tell you that this saved me a ton of time. I am in no way affiliated with them.
However, I have made a lot of changes to the spreadsheet to tailor to the things that I want to learn about myself.
Example - I wanted to see how my deliberate and intuitive trades did, so I created a section in there that would just focus on the deliberate and intuitive trades.
Yesterday's excellence is today's standard and tomorrow's mediocrity
I did bought it about 5 or 6 years ago. At that time the product was not was I was looking for and I end-up to not any trade report tool. I should look for it and see if I could tweak it to.
Since the webinar I've received a lot of great feedback from various members of Futures.io. I never thought I'd be able to have such a positive impact on the FIO community, so thank you.
Also, I've gotten a decent amount of people asking me for updates around when I plan to get back to trading, so I thought I'd share with the rest of you as well.
Trading is on pause for the foreseeable future as I'm not available during key market hours (and my most profitable hours historically speaking). I may not be working the 60+ hours I was doing before but the mornings always seem to be busy for me. This means I either have meetings, get calls / have to write back to emails, or I'm getting ready to leave and I'm not focused enough.
For me to trade successfully I need to be in a calm and focused state of mind. It's almost impossible for me to do that right now. And if I'm not in the right state of mind to trade, how can I expect to trade well? I thought about only trading on the very few days that I'd be able to dedicate all the time to it, but that would just be to satisfy my want to trade.
Trading is something that requires one to be in sync with the market. If I'm away for days at a time and only trade a couple of hours every few weeks or so, how can I be in sync with the market?
I'd like to think I'm a trading veteran who can come in after days/ weeks of absence and be one with the market. But I'm not , and I need to recognize it. I'm a trader who has seen some success in his first year of trading and still has a lot of improvement to go before getting to the 'unconscious competence' stage in trading. It's already difficult enough to become a successful trader as is, so why stack the deck against myself?
I also tossed around the idea of trading other instruments or after hours but I don't typically get home until ~9est and there are not many good opportunities until at least the EU open. Which is too late for me to stay up for.
I want to swing trade, but how can I swing trade when I'm not available during the the prime time for entering a trade? Maybe this is something I can figure out in the future.
Whichever way I sliced the information it seemed that the right answer was the same. If my goal was to trade as much as possible then the right decision would be to just find a way and time to trade, even if circumstances to do so aren't good. But that's not my goal, my goal is to be a successful trader and in this case it appears that the right decision is to put trading on hold until I can dedicate he right resources toward it.
Some people would see the 2 as being one in the same, but not me. There's doing things and doing them often, and then there's doing things well. I'm going for the latter with trading.
I love trading, and it's tough to keep it in the back burner for longer, but I guess I'm going to have to.
On a positive note, my management consulting business has started to gain some traction and I'm hoping to subcontract a few very people soon. Nothing is set in stone yet but things are looking good right now. I didn't expect this to happen at all this year so I'm very thankful for the opportunities. Hopefully things pick up even faster so I can get back to trading .
Talk soon
Yesterday's excellence is today's standard and tomorrow's mediocrity
Much appreciation young man. I was just getting ready to post about you continuing your journal, but you know as well as I that the bread and butter has to come first. I totally respect that, it's what enables you to pursue what you desire. Great journal, great webinar, great future. Press on!
