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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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  #331 (permalink)
 Big Mike 
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az, let me ask another short question. No disrespect here, but I am curious for your answer.

Do you think your sim success was a fluke?

I ask because you've added/changed a lot of behavior, yet the sim month was a success. Do you think you could repeat the success you saw on sim? Do you think you could repeat it consistently?

Mike

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  #332 (permalink)
 jagui 
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aztrader9 View Post
Finally, I needed a step by step plan ... it will take me five months to get to ten contracts. And only be putting on about 3% risk at that point.

Good to have a business plan. I have one, I will share it one of these days. My plan is just less dictating than yours. I tried several times with exact plans, only to fail at the very first planned step. I learned to not anticipate every details, and program in terms of boundaires and not exact goals.



aztrader9 View Post
Eventually, my hope would be to gather a group of like minded traders each year in a nice resort area in January to share business plans, best practices, war stories and play some golf. Like a mastermind group.

Great idea! I'll be there, if you don't mind

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  #333 (permalink)
 PandaWarrior 
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Big Mike View Post
az, let me ask another short question. No disrespect here, but I am curious for your answer.

Do you think your sim success was a fluke?

I ask because you've added/changed a lot of behavior, yet the sim month was a success. Do you think you could repeat the success you saw on sim? Do you think you could repeat it consistently?

Mike

No disrespect taken:

Part of the success was a fluke. The part that succeed in spite of what I did not know. The part that was a success was the consistency part. I think it could have been MUCH better given a couple of things happening differently. One was the revenge trading day. That blew out $1800 in one day. But it was real so let it stand.

The other things I have addressed in the trading plan.

Lets look at one of them: Stops. I used a hard stop and in light of the "don't change anything" rule, did not really move it or change it all. This led to full stops I did not need to take and it led to stops that had they been placed properly, would not have been hit at all. So I think you were the one that said look for the natural stop location and then if price action says the reason for that stop is no longer valid, exit early. Trouble is this, if a system is purely rules based, then the stop should be left alone and hit. Otherwise how do you accurately measure the success of a rules driven system? The downside to this is if the short signal I just took is now invalidated by a long signal, what do I do? A rules system says exit short, enter long correct? Where is discretion in this? Is the short really the valid trade and the long is a fake? Or did I manufacture a short when a long is the real one? Who knows. What I do know is this, discretionary trading must leave room for "feel", intuition or whatever you want to call it. Otherwise, buy a robot, turn it on and go fishing. It will follow the rules no matter what and assuming you bought it at the right time in its life cycle and it wasn't too badly curve fitted, you may make some money.

So changing my stop method is growth, not change for change sake. I have also made some slight modifications to the charts. Mostly for aesthetics. All the major components are still there. Some settings have changed slightly to produce smoother results but overall, the plan really deals not with charts and set ups but with philosophy, money management (which I did almost none of in July), mental and physical prep, there is some legal stuff in there as well.

In terms of R:R. I did not measure at all. So no worries adding it to the mix. I think its important. I've also added a better targeting method. Which I did not have before. I used fixed targets. That's ok but suboptimal. Now they are dynamic based on short term S/R but with an early exit signal if the target has a chance of not being hit.

So overall, the changes are minor in nature, in line with what I would consider growth and born from hard won intelligence from trading live money for more than a month.

Do I think I can duplicate the sim month? Yes, and I think I can do it with live money to boot. I've basically taken the system I traded in ignorance, added some realism to it, adjusted my thinking on stops and targets and now ready to give it another run. The progress hopefully will be more methodical and a little more predictable in terms of weekly results. I was trying to win every trade then. Now I am trying to win every week. We'll see how that plays out.

Going forward, I have one day per month to make changes. The first Friday of every month. Any changes made before that will be due to trading the edge and it not playing out. Of course no way to know that until at least a 100 trades have been made.

Onward and upward........

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 PandaWarrior 
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jagui View Post
Good to have a business plan. I have one, I will share it one of these days. My plan is just less dictating than yours. I tried several times with exact plans, only to fail at the very first planned step. I learned to not anticipate every details, and program in terms of boundaires and not exact goals.




Great idea! I'll be there, if you don't mind

Plans must be flexible, they really are just a road map without detours listed. There will be detours, but at least you have a general idea of where you'd like to go and some direction on how to get there.

You are in Italy right? I've always wanted to pretend I own a Lambo....maybe we can get the factory to let us drive one for free! Failing that, maybe Croatia, the Almalfi Coast, Turkey or Spain. All places I'd love to visit. Or just three hours from here in sunny California on the beach at my favorite hotel resort in Huntington Beach!

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #335 (permalink)
 TheWizard 
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Lets look at one of them: Stops. I used a hard stop and in light of the "don't change anything" rule, did not really move it or change it all. This led to full stops I did not need to take and it led to stops that had they been placed properly, would not have been hit at all. So I think you were the one that said look for the natural stop location and then if price action says the reason for that stop is no longer valid, exit early.

AZ,

I have not reply-posted until now, but have been following your journey very closely. I must agree with your "stop" approach. Many times I've been asked "How many ticks away do you place your stop". I respond "I place my stop where it's logical to place it". I know this doesn't give them they magic answer they were looking for, but it's the truth. If you always have a hard and fast rule to place a stop "x number of ticks away" it may very well get hit - and frequently. As I've advised others - the purpose of a stop is to prevent you from losing your trading account. It's not to make you profitable. You don't want it to get hit if at all possible. If it looks like the trend is changing - as you stated - exit early. Another bus will always come along.

Happy & profitable trading & best wishes to you on your journey, as the journey, not the destination, is the truly important part.

"Smile, breathe and go slowly." - Thich Nhat Hanh, Vietnamese Zen monk, author and peace activist. "

After all, it's what you learn AFTER you know it all, that counts!
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  #336 (permalink)
scamen
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TheWizard View Post
Lets look at one of them: Stops. I used a hard stop and in light of the "don't change anything" rule, did not really move it or change it all. This led to full stops I did not need to take and it led to stops that had they been placed properly, would not have been hit at all. So I think you were the one that said look for the natural stop location and then if price action says the reason for that stop is no longer valid, exit early.

AZ,

I have not reply-posted until now, but have been following your journey very closely. I must agree with your "stop" approach. Many times I've been asked "How many ticks away do you place your stop". I respond "I place my stop where it's logical to place it". I know this doesn't give them they magic answer they were looking for, but it's the truth. If you always have a hard and fast rule to place a stop "x number of ticks away" it may very well get hit - and frequently. As I've advised others - the purpose of a stop is to prevent you from losing your trading account. It's not to make you profitable. You don't want it to get hit if at all possible. If it looks like the trend is changing - as you stated - exit early. Another bus will always come along.

Happy & profitable trading & best wishes to you on your journey, as the journey, not the destination, is the truly important part.

"Smile, breathe and go slowly." - Thich Nhat Hanh, Vietnamese Zen monk, author and peace activist. "

what are parameters/variables one looks before placing the fixed stops, IMO, if they are placed at obvious places then the greater the risk that they would be run into and moreover the magnitude also many a times helps to miss the long route bus. but again it all depends on the context like the instrument one is trading, volatility etc.

just my 2 cents.

as u say the journey is important not the end/destination.great words sir.


"Smile, breathe and go slowly." - Thich Nhat Hanh, Vietnamese Zen monk, author and peace activist. "


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 PandaWarrior 
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TheWizard View Post
Lets look at one of them: Stops. I used a hard stop and in light of the "don't change anything" rule, did not really move it or change it all. This led to full stops I did not need to take and it led to stops that had they been placed properly, would not have been hit at all. So I think you were the one that said look for the natural stop location and then if price action says the reason for that stop is no longer valid, exit early.

AZ,

I have not reply-posted until now, but have been following your journey very closely. I must agree with your "stop" approach. Many times I've been asked "How many ticks away do you place your stop". I respond "I place my stop where it's logical to place it". I know this doesn't give them they magic answer they were looking for, but it's the truth. If you always have a hard and fast rule to place a stop "x number of ticks away" it may very well get hit - and frequently. As I've advised others - the purpose of a stop is to prevent you from losing your trading account. It's not to make you profitable. You don't want it to get hit if at all possible. If it looks like the trend is changing - as you stated - exit early. Another bus will always come along.

Happy & profitable trading & best wishes to you on your journey, as the journey, not the destination, is the truly important part.

"Smile, breathe and go slowly." - Thich Nhat Hanh, Vietnamese Zen monk, author and peace activist. "

Hi Wizard,

I've noticed you have been reading and glad you took time to make a comment yesterday.

Thanks for the kind words. Its just now I'm really getting what stop is for in my world. Some use it as a worst case scenario. I get that and I agree with it. But that should only last for a little while. If the trade is good, the stop should be able to be moved if even just a bit. Depending on your target, that may be enough, if the target is larger, then moving the stop to the next logical place is the right action. Hopefully that locks in some green. If not, continue to monitor price action very closely until you can lock in green by moving the stop to a new logical location or your target is hit. I am working on this very closely now. In fact, I think it will be a huge focus for a bit. Not to close, not to far, just right.....like Goldilocks and the Three Bears.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #338 (permalink)
 torroray 
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Hi AZ,

Been reading with interest.

Quite number of trade you taken. Commission must be huge.

With a small account and the trade you took wouldn't your broker classify you as pattern day trader and restrict your trade?

I ask bcoz I trade FX.

 
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  #339 (permalink)
 Big Mike 
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Pattern Day Trader rules (25k account) do not apply to futures.

Mike

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 torroray 
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Hi Mike,

Thanks.


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