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Zen & the Art of The Small Account
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Zen & the Art of The Small Account

  #371 (permalink)
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aztrader9 View Post
I finished the week with a net loss. Got caught in the chop twice. Stopped trading each time. I think this may not be a good strategy. A friend said you're not a real trader until you have the mental strength to dig out of a hole. Ok so I think both ideas have merit. The first one: Stop when you are losing is good as it preserves capital, but it does not really strengthen your mental muscles. Instead it sets you up for the false expectation that all trades will be winners. If the edge is right, you have money in your account, keep trading. On the other hand, if you are in a mental fog due to the losers, stop. Otherwise, I think my friend might be right. Subject to a daily max of course which I hit today but not the other losing days. Those days, my daily stop was just mental distress at losing.

So over the weekend, I'll revisit my daily stop limit. Adjust if needed and then just trade until my daily goals are hit or my daily stop is hit. That simple.

I am also moving back to CL permanently. Been trading TF for a while only because the margin requirement is a little looser and I hate it. Its not smooth like CL and there are far fewer opportunities there as well. I think this is perhaps one reason I've struggled this week is I just hate the instrument and its hard to do something you hate. This may be pure conjecture on my part but it sounds good anyway.

Since I've been away from CL for a few weeks, I will be simming for at least a week to get my CL legs back. I have been reviewing it every day but thats not the same as trading. I'll let you know when I go back live on CL.

I'll post my CL results on sim every day next week.

Cheers and have a great weekend.

Aztrader,

Good job in keeping up your journal. Sounds like you're getting things figured out.

I also am always fine tuning something, like you mentioned about losing days. I agree that a max loss for the day is necessary to preserve capital. I also do that. I would just suggest further the possibility of a number of losiing trades in a row, for example - if I have 3 losing trades in a row, I quit for the day. Sometimes I am just out of sync or start the day with a wrong bias and can't get my head turned around until it's too late. Just something to think about.

Keep up the good work. Have a good weekend.

Mahlon

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  #372 (permalink)
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max loss thoughts

i dont agree with the max loss idea. if you are trading live money it is because you have an edge; a quantifiable winning strategy proven through sim trading. Lets say that you have a RR of 1:1.5 and a winner hit rate of 65%. I am not great with math, but i know that if my first set of trades are losers, then so what, the winners are coming, if i stop each time i am down, then i never have a chance to get on the winning streak and make my money back, and i put myself in a position that my first trades must be winners always (thats crazy) What trader can guarantee his first one a winner...if that were the case give him your money...if you stop because you have a couple of losers it means you have not assumed that losses are part of your trading plan or you just dont have the confidence in your edge or your edge is not really proven.

i agree you should stop trading if you are not trading your plan that is a different topic, there was a long time when i was doing just that...i found that i needed a max stop loss, simple because i was not really sure of my edge.

the other day i was down 5k, my boss was not happy. i could have stopped, i mean i was trading 10 cars and each trade was 1k of risk...but i knew i had an edge, and even though i was not doing the best job, i got settled, called a friend, asked for some help, and then proceeded to make it all back. i ended up down 500, and with bro 1500, the next day i made it all back and then some.

the point i am making is this, either you have an edge that you believe in, or you dont. spend time working on the edge in sim, so when you switch to live money and the emotions kick in you can really rely on your numbers and push forward and not do dumb things.

each time i trade a signal that turns into a loss i get mad and i start to question myself, and if i do something stupid like pass on the next signal, that next signal would be the winner, and now i am even more mad and i cant focus and i miss the next signal and maybe the next one, but then i get it together take the 4th signal and it is a loser...wow now i am pissed, so what would have been net 2 winners is now net 2 losers...you get the picture...create an edge, sim it, and then grow a pair and trade it.

this is the journey i am on with you guys, you can make it work and the best thing to do is set a daily money target, create a system that can accomplish that goal, sim trade it for a month and NEVER change anything.


Last edited by trippenlatin; October 2nd, 2010 at 12:48 PM.
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  #373 (permalink)
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trippenlatin View Post
Lets say that you have a RR of 1.5:1 and a winner hit rate of 65%. I am not great with math, but i know that if my first set of trades are losers, then so what, the winners are coming, if i stop each time i am down, then i never have a chance to get on the winning streak and make my money back

Exactly right, if you remove psychology from the equation and just look at pure math.


Quoting 
i agree you should stop trading if you are not trading your plan that is a different topic, there was a long time when i was doing just that...i found that i needed a max stop loss, simple because i was not really sure of my edge.

Well said. Plays to the first part perfectly. There is the factual/math based side of things, then there is the reality that includes emotion, psychology, and execution. You must recognize them independent of one another while using them together to form the end result.

Mike

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  #374 (permalink)
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The Edge

So this weekend, I spent some time in market replay on an instrument I had not been following. This time I decided to follow something I have been thinking about and seeing over and over but not really paying attention to. The idea of transitions. Turns out its a good thing to look at. Nothing new on the charts, just a more disciplined approach to reading price action. From this exercise, I learned (again) the second mouse gets the cheese and the first mouse gets a headache or worse.

Trading with this idea in mind, I did 20 trades over the weekend with one contract: 13 winners 7 losers. All losers were from not reading the transition correctly. Net $1000. Two of the winners were for only 1 tick each as the stop was BE+1. This was not a good strategy as both of those would have paid the entire profit target had they been left alone. All stops were smaller than the winners. This is how I want to trade. Smaller stops than the winners, more winners than losers. You know the drill.

So tomorrow, I'll be back at it, but with a high degree of skepticism for those first "entries". Since my system is MA based, the second entry nearly always is the one that pays. And oddly enough, the filter charts confirm the second entry as well...go figure.....

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #375 (permalink)
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Target filled!

My two favorite words: I hit my profit target real early. But not until after it took me 45 minutes to get my fib lines to work on NTb22 after upgrading per NT' strong suggestion over the weekend. Turns out it was just a setting issue in the number of days I load on the chart....I knew this but forgot. Again.

Anyway, after getting everything back up, I filled my first profit target within a few minutes, and then filled the next couple a few minutes after that. I am taking taking my first trades live until my daily target is filled, then to sim to work on expanding my ability to trade for more.

For now though, real happy with how the day went.

CL is so much more fun to trade than anything else out there.....glad I went back.

Oh, one more thing....it was the second entries that paid today......

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #376 (permalink)
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aztrader9 View Post

Oh, one more thing....it was the second entries that paid today......



Excellent!!!


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #377 (permalink)
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ok, that was rough

Took a pre market trade, up ten ticks.....then a sim trade, up ten ticks....then proceeded to demonstrate that I am still a beginner. I am getting better and better at price action, but today on CL, I think I got it wrong 60% of the time. Turns out I was trading against the trend and did not notice. After looking back at it, it was up, but slowly and so I had about the same number of shorts as longs. the longs were 50% and thats enough for me to break even or make some money. But the shorts were only about 20% and those did me in. I netted on sim (after live) -24 ticks. Without the shorts or trading against the trend, I would have at least broken even or made a little bit of money.

I think the difference between pros and amateurs is this: They know when they are trading against a trend and they find a way to make money on days like this:

I took a look at TF just a few minutes ago, of course it made new high after new high....oh well. Thats how it goes.....

Glad all those stops were in sim and I was done early otherwise it would have been a nasty day. I'll be spending the rest of the afternoon looking at the day's price action and seeing if I would have traded it any differently in hindsight.

Cheers.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #378 (permalink)
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Jonny Hindsight

SO after looking at the chart in hindsight, I think my mistake was not paying attention to my trading plan. I see a certain set up over and over again. And in July I took the trade over and over. I had forgotten this and passed on several trades that were carbon copies of some of my trades in July. I won't make this mistake again. There were plenty of trades that met my criteria for a nice HPE with room for my profit target today. I was just blind to them.

Another thing I messed up was trading what I THOUGHT should happen and not what WAS happening. This is probably something traders battle their entire careers. To combat this, I will be taking a 15-20 break half way through my trading session and if I am winning, focus on those things I am doing right. If losing or struggling, then see what I need to do reset my mindset or focus and perhaps see things from a different perspective.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #379 (permalink)
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Its a good day

Its a good day when you can make your money early. I was done inside an hour, had time to wake my kid up, spend time with her and in general not feel the pressure of having to sit in front of the computer for 2-3 more hours.....

I do like CL.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #380 (permalink)
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aztrader9 View Post
Its a good day when you can make your money early. I was done inside an hour, had time to wake my kid up, spend time with her and in general not feel the pressure of having to sit in front of the computer for 2-3 more hours.....

I do like CL.

that is a great feeling...specially on a Friday !!! Early welcome to the weekend !!!

GT
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