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Zen & the Art of The Small Account


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Zen & the Art of The Small Account

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  #141 (permalink)
 PandaWarrior 
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boxi View Post
aztrader I like the simplicity of your set ups, what is the violet line on your charts, a moving average? Best of luck trading real money.

The purple line is the futures.io (formerly BMT)CMA available here on the forum. The standard ninja EMA set to 49 or 50 period is a reasonable substitute as well.

You can see all my indies in a previous post I think about 3-4 above this one.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #142 (permalink)
 David_R 
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aztrader9 View Post
Crazy day today....Got started with a nice winner, then 4 losers back to back....3 is my quitting point...But, I had been calling the direction right, just bad execution on the entries. Talked it over with my trading partner. Decided to try one or two more trades provided they were excellent entry setups.

I got two, the first one did not really have a logical place to put the stop, so I guessed. I got stopped out. But at the same time, I recognized the real entry, same direction as the last one but this time with a real stop location and it was the second move....as they say, the second mouse gets the cheese!

By this time, I was down $604.00, this represented most of the profit I've made in the income account in the last 8 trading days since I started it. But the last set up was a high probability trade with some serious downside potential. So I used a 30 tick target, once it got going, I moved it to 40 and then to 50. The trade stalled out at 40 and I got nervous so I closed it out with 37 ticks. My biggest trade ever if I remember correctly. This got me back profitable for the day. 30% win rate....ugly but effective.

Then, the trade moved another bazillion ticks in my direction....I left more than half the trade on the table. I guess I don't know how to feel about that. On one hand, it feels great knowing I got the call right. On the other hand, I should have held out for more. In the end, it was a winner, my biggest ever, and I am happy. Besides, who knew it would run so much...

One more day in the experiment and I am moving to cash. At this point, unless I get really stupid tomorrow and blow out the account, I cannot lose money this month. Even with 3 stops in a row, I am still profitable for the month.

I will add it all up and post the month's stats tomorrow.

Trading a small account is hard but doable......I have proved it this month....at least on sim. Next week with cash, we will see....but I am confident.


AZ,

You said you got nervous and exited the trade. Based on your chart it looked like you were good to go for some time more. I know it is in hind sight. What would you normally look for to tell you to exit. Or, did it just hit a mental target so you exited?


David

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  #143 (permalink)
 PandaWarrior 
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David_R View Post
AZ,

You said you got nervous and exited the trade. Based on your chart it looked like you were good to go for some time more. I know it is in hind sight. What would you normally look for to tell you to exit. Or, did it just hit a mental target so you exited?


David

Several things were wrong with that trade: 1. I had no experience actually trading for that size of target; 2. I had no idea what the target should be, I was just guessing; 3. I was under duress at the moment....my wife and kid were both in the room telling me it was time to leave...we were going somewhere I don't remember. 4. Did I mention I had no experience with that size of trade?

The point is that the trade was mostly luck. Yes, I saw the set up, the set up was a pretty bearish one and that has a good track record of running a bit, but I'd never taken one beyond 20 ticks for the most part. I had a potential target of the low of the previous day, when it got within 10 ticks or so, it stalled out and I figured it was over. After I closed the trade, within a few seconds it had hit the 50 tick mark and the low of the previous day, so my original target was valid but I had no way of know that. In hindsight, I could have just kept clicking the sell button all the way down and started taking them off once it crossed over my short MA. But that is hindsight.

One thing I am working on for August is finding these set ups, and a way to stay in the move longer without panicking when prices stall out or consolidate for a bit. My goal is one per week. I have an idea floating around in the back of my head on how to do this but it will require trading more contracts than I can comfortably. Ideally, I'd like to trade 6 cars, 2 off at my normal 10 tick target, 2 more at 20 and 2 more open ended with a trailing stop that gets progressively narrower as the trade progresses. I saw one in action once in a trading room with a 100 tick target and a trail stop that tightened up as the trade went past 50 ticks. This thing was pretty good. About once a week it would hit 100 ticks and about once a day it would hit 25-30 ticks. Trouble was, it was an auto trader and it took losses that were outside my comfort zone. It was three contract strat and the initial stop was 20 ticks or $600....not something I could live with.

So a long answer to a short question, but if faced with the exact same situation again on monday, I would probably take profits at 20 ticks and wait the move out for the next set up. As I develop a method for capturing these kinds of things, that target will get moved out. In truth, if you look at my charts over the last several days, you will see these kinds of runs often start well in advance of the break out. In fact, on that particular run, it was signaled way back when prices broke below the futures.io (formerly BMT)CMA. Putting a trade on there with a three position trade would have captured most if not all of that run provided the trailing stop was not to aggressive.

In fact, the move was 170 ticks from the first entry point below the futures.io (formerly BMT)CMA and the next entry would have been a long with another 120 ticks on the reversal. 290 ticks on two trades was possible if one had the internal fortitude to hold all the way and not give it all back on the reversal. But assuming only half that was captured, that's still 145 ticks on two trades.

I think once I can trade three positions, I will go into every trade assuming that particular trade could be the big one of the day. This could also help prevent over trading as your first trade could be open much longer than normal.

Anyway, I am rambling now, thinking out loud, and I've got to get going, but I did have an idea germinate in my head....thanks for asking the question, now I have a lot to think about!

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #144 (permalink)
 Twiddle 
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Hi AZ, great Journal.

I am just wondering where (which broker) one could trade with a $1,000 account. I am a newbie to trading and am just sim trading at present, but most of the brokers I have looked at, the margin requirements are much more than $1,000 for the initial. I plan on trading with an Account size quite a bit larger than that, but would l to start small first to learn the ropes of trading live.

Cheers

 
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  #145 (permalink)
 TheWizard 
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Twiddle View Post
Hi AZ, great Journal.

I am just wondering where (which broker) one could trade with a $1,000 account. I am a newbie to trading and am just sim trading at present, but most of the brokers I have looked at, the margin requirements are much more than $1,000 for the initial. I plan on trading with an Account size quite a bit larger than that, but would l to start small first to learn the ropes of trading live.

Cheers

Twiddle,

Sorry, don't mean to butt in here, but daedalus was kind enough to reply to a request I put out on the forum the other day, for a friend who isn't flush at the moment. Here's the response I got:

"I opened up an account with 1500.00 at Infinity a couple months back, and 1000.00 would've been possible. Talk to Anthony ( Infinity Futures ).
He's the guy who helped me out and he's a great guy."

Not to confuse initial balance to open an account with "margin" requirements.
Ex: You can open an account with a minimum of $2500 with MirusFutures and they offer $500 margins. ($2500 / $500 margin = 5 contracts). If one were to open an account with Mirus for $25,000.00 for example, one could, in theory, trade up to 50 contracts with that account balance ($25,000.00 / $500 margin = 50 contracts), based on the $500 margin requirement. I would not recommend this for anyone just starting out. Although it's possible, it's also a fantastic way to empty an account very quickly.

After all, it's what you learn AFTER you know it all, that counts!
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  #146 (permalink)
 Big Mike 
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Twiddle View Post
Hi AZ, great Journal.

I am just wondering where (which broker) one could trade with a $1,000 account. I am a newbie to trading and am just sim trading at present, but most of the brokers I have looked at, the margin requirements are much more than $1,000 for the initial. I plan on trading with an Account size quite a bit larger than that, but would l to start small first to learn the ropes of trading live.

Cheers

I think you are confusing two things here. Brokers have their minimum initial deposit or minimum maintained deposit, and then separate from that you have margins. Initial margin is better described as overnight margin, in my opinion. It means if you plan to hold across the RTH -> ETH session, you need that much per contract. But if you are flat when RTH ends, then you have 23h59m of trading (until the next RTH session ends) where you just need 'day' margin.

That said, you should try to use the 2% risk rule. You should also look at risk of ruin info for a losing streak. Long story short, I don't know of any futures you can trade with a $1,000 account without an almost certainty of going broke. You might consider swinging stocks instead, where you can better control your risk by buying a small number of shares. Even just 1 contract on index futures is going to violate your 2% common sense risk stop with the volatility of most futures, whereas if you swing stocks (more than one day, to not require 25k day trader rule) you could find some cheaper stocks and just buy very small amount of shares to control your risk. Once you prove you have positive expectancy, you can scale up.

Mike

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  #147 (permalink)
 Twiddle 
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That clear things up, thanks a bunch The Wizard and Mike.

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  #148 (permalink)
 trippenlatin 
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Hope your day goes great...you have done an awesome job all month, I know you can carry it on...upwards and onwards my friend.

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  #149 (permalink)
 PandaWarrior 
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Well, I wanted a to have a spectacular day today, but I kinda felt like it might be a tough one. I woke up with my mind telling me to avoid pain. Stay in bed a little longer, take some more time in the shower, take a longer walk, anything really to avoid trading.

I recognized that trap and avoided it.

However, it was tougher trading today as I suspected it would be. I knew I wanted to get the first trade out of the way quickly, otherwise it might take all day and that was not something I wanted to repeat.

Just after I sat down, a classic pattern emerged for a short, I did not take it though, and passed on the next one as well. Then I got a tad impatient and took one that was not a true set up in that I did not have a good place for the stop. So I punched out with 3 ticks loss and waited for the next one. The punch out was a smart move as the trade did move against me and would have taken out my ATM's 10 tick stop. The next trade followed shortly thereafter and it also was a great short set up, this time with a good stop location. I passed on this one as well.

At 7AM, there was news which pushed prices the long. The first entry on the chart for a long was too fast, I could not have trade it anyway, so no worries there. The next couple of long entries were picture perfect, and also passed on these.

Then, prices stalled out, kept looking for a break up, took a break of some resistance and had a stop out, and then took a short signal but was too early and got stopped again.

This was a classic example of what I have done in the past, not take the trades I knew were good ones in favor of what I knew were questionable trades. That will not happen tomorrow. I conquered this issue in sim and I can conquer it live.

Three losses in a row. I quit for the day. As I began to wind it down, another great short set up, this time it was really nice, I put a sim trade on there but had to wrestle with not taking it live. I suppose I could have taken it, reduced my losses somewhat but I needed to honor the no trading after three in a row rule. Otherwise, I can just break any rule at will and that will lead to all manner of unpleasantness. ....by the way, the trade I put on in sim just after my third loss in a row is now up 25 ticks....lol

So first net loss day in a while. I'm not happy about that but I am happy I had the jitters only on the first trade. After that, it was almost as calm as sim trading.

I just executed poorly today due to fear. I recognize it for what it is and understand I will need to battle that out over the next few days.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #150 (permalink)
 trippenlatin 
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good discipline in closing down the platform...that is always hard for me to do when i am down...glad you got the first day out of the way...i read a comment today by rotter, the great day trader, "i trade, i dont analyze" i thought that was great. you have good risk reward so just trade.

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