Taking today to read "the disciplined trader" by mark douglas. While I have much to work on in my trading, discipline and understanding what has kept me in this loop of doing well and then crashing is my focus this weekend. On Friday I again traded with fear tightening my stops and targets, not wanting to take a loss and acutally created that big loss that comes from a breakdown in discipline like many beginning traders. This book has been on my list of books to read for a while and am glad to be getting to it. I will edit this post with my thoughts on how the book has impacted me.

Not really wanting to post my results from Friday but here they are, desiring to move forward

Hi @Mightynorsman,

after going through all your remarks and posted stats I halted for a moment, wondering if I should put in my 2ct ...
If the combines are only a means to learning anything without having to put up real money (except some "course
fees"), you can stop reading here

But I guess, some thoughts about your approach could help - and show that your basic problem has only little
to do with discipline.


Try to see your trading and combine as your business. Doing that, you can easily derive from your daily stats and
even from those days when the results were positive (!) why your business proposal is warped. All in all your
trades exactly match a pattern why most retail scalpers simply bleed to death before seeing any sun.

Costs:
In terms of total fees and commissions you are providing a daily income between ~$200 and ~$400 per day to
others, i.e. $4000 - $8000 per month in your virtual business plan assuming 20 trading days per month on average.
Taxes, office, IT equipment, and all other real life facts aside ...

Income:
Only taking all of your >0 P&L days, the average was ~$300 after fees and commissions.

Interim result:
Before risk, your cost/income ratio is somewhere between 0.6666 and 1.3333.
I.e. your business before risk is basically providing a profit share of at least 1/3 with a floor of somewhere between
~$4000 and ~$8000 per month ... to others.

Regarding the interim result: Would you sign such a contract in real life?

Bonus question: Would you sign a contract that additionally allocates all other chances and risks whatsoever on your side?

(As an aside: A difference between the 2 answers measures the size of "hopium".)


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What business contract would you sign?

- What would be a fair profit share with someone who provides the money to start your business?
- What would be a fair floor that you guarantee to that person/institution during periods when you don't earn money?
- What would be the right scale considering these figures (at the moment you choose a virtual 100k line)?
- What is your leverage on income? == What do your see or know that others don't? == What is your edge?

How could you implement that?


Good luck on your journey!

Thanks again for your comments, it seems you are saying that the main problems in my approach are:
1) The high commission costs of scalping and how that seems disproportionate to my revenue
2) My recorded results are just not good enough to pay for the cost of doing business that way, especially when taking all the risk. Therefore I should change something (I think you mostly mean the style/length of my trades and reduce the number of my trades)

Whether I spend $10 a day or $1000 a day in business costs is irrelevant to me as long as my business is able to profit in parallel as my plan lays out.

1) As I said above it allows me to theoretically take smaller drawdowns producing a smoother, more consistent income
2) It fits my perceived edge and personality better at this time in my journey
3) It allows me to gain trading experience much faster as I am able to place many more trades per day/week/month than if I was trading as I have attempted in the past for daily or weekly time frames.

As far as my thoughts about Topstep Trader and the opportunity they present I believe it to be real and of value. ... It presents, in my opinion, a way to test myself and learn without risk of ruin but with some real risk in the "combine fee" and possible opportunity.

ad 1):
Right.

(will have to agree to disagree for now)

ad 2):
Even on >0 P&L days the average losses per trade are regularly (way) above the average gains per trade.
One obvious leverage would be to raise the selectivity of your trades (which would simultaneously lower
your costs).

(I agree that my losses are two big and this is mostly a discipline issue as far as I can tell. I also agree that one way to correct this would probably be to be more selective and precise in picking trades. Hopefully both of these areas will get better with work, knowledge, and experience.


That's what I meant with "hopium". A well-known cognitive bias.
(If you like some bedtime reading: Daniel Kahneman's "Thinking, Fast and Slow" devotes a full chapter to that bias: 24. The Engine of Capitalism)

(I think we are kind of misunderstanding each other on this point. I agree that I want my ideas to be realistic and I want to rule out cognative bias, at the same time when I say $100 or $1000 (which would be extremes) I also mean that each trade pays for commissions and profit. This style of trading definitely relies on discounted commissions but each trade figures in that cost. Therefore while I could benefit from weeding out some poor trades (and hopefully do), it really isn't because I am struggling with the cost of commissions, it's more to bring up the overall performance of my trading.

ad 1):
Only considering your plus days, that might be true (the stats didn't show the individual trades).
But your losing days exceed even swing and position trading standards.

ad 2):
In general, there's nothing wrong with personal inclinations towards short-term trading.
But the perceived edge is still improvable

(I will have to agree to disagree here, only because of those I talk with who are trading this way every day. I am in a few different chat rooms during the day and am able to talk with other traders. One room I have been in, off and on, for 7-8 years. In that room I talk to one trader in particular who has traded this way for many years and who does quite well. It is seeing others do it well and at times experiencing small success for myself that has allowed me to believe that it is not Hopium but instead just that I have more to learn and experience so that I can trade well this way.)

ad 3):
True as long as you don't adopt bad trading habits.

(Yes, definitely working to rid myself of any bad habits and build good ones. I see your point here and thank you for it.)

Fully agree. The fees are much lower than "real market tuition" would ever be for most traders.


Good luck!