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

  #31 (permalink)
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papa14 View Post
AZ
I really am looking forward to this thread. After reading it last night, I went and read your elite journal as well. It really wet my appetite.

I know most people would like to have a large account to start, but the fact is if you trade poorly on a small account, you don't lose as much as you do on a larger account; it is the percentage loss in the account that hurts. If you lose your discipline and don't cut a bad trade, it can really cause a lot of problems. (Been there done that) Most folks just take on too much risk regardless of account size (the more in the account, the more contracts they trade).

I left NinjaTrade in late Feb or early Mar (read about too much instability on NT 7 and NT 6.5 was giving me some minor problems). I put my futures money at Thinkorswim (free charts, low cost, and best of all will run on any platform and I switched to Ubuntu) and one of the things ToS does is require full margin on futures. I looked at all the margins and migrated to 6B since it has low margin (about $2500). It trades $6.25 per tick so it takes more ticks for a given dollar amount, but it allows quicker ability to trade multiple contracts. I am using it to develop my overall skill before moving to other contracts.

I need to work on my discipline at maintaining my setup constant for 2 weeks at a time as you did in the elite journal. That was good.

Anyway, keep up the good work.
Papa14


Papa14, I read your journal yesterday.....I like the reason for your screen name! Looking forward to when you change it!

I'm glad you found value in what has been written so far in both this thread and in my regular journal. Hopefully, you will continue to do so and also participate. Its community that really makes the difference and without people like you, community dissolves.

Keep your journal up to date with your progress, it will help all of us.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
 
  #32 (permalink)
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aztrader9 View Post
I am about 20-25 pounds to heavy, out of shape and miserable. Nothing fits anymore. Over the last couple of years, I've seen it coming on, this place I am today.

Here's to a healthy and happy trading week. Tomorrow I will have a confession to make....stay tuned.


Try this: . Used to do this on a regular basis, must wait until September, before I try again. Although Monday @ 9 am will be starting the stretching part.

Today, I climbed down a steep ravine to see a concert at Stern Grove. Super hard, but did it.

Getting fit is important.

R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
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  #33 (permalink)
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Defense wins championships!


So I felt like crap this morning. Something to do with my blood sugar dropping real low I think. Anyway, took a trade even though I felt bad. Thought better of it and got out at BE and went back to bed for an hour.

With a small account, defense is the name of the game. Protect that precious capital.

Fast forward 90 minutes, trading but not really seeing anything, still don't feel real great. I check out and take my kid to swimming lessons.

Back in a hour, now I feel better....a little anyway....see a trade set up....take it, wait patiently, take 5 ticks of profit even though I know 10 is doable. Defense again. Left at least 5 ticks on the table. Oh well...there is more where that came from.

One more trade, 10 more ticks. After a terrible start, I end up 15 ticks richer at the end of the day.

All in all, I am glad for the sickness this AM, it forced me to think. I did what was right, came back later, traded conservatively and made money.

My chart tells the story.

Tomorrow, if the first trade is profitable, I will be in a position to add a second contract per my trading rules. If that goes well, I'll let you know.

This account started with $1000 of sim money, tomorrow it will have (hopefully) $1500 after the first trade and then we will see.


Tomorrow if I feel better, I will talk about honesty. In trading and in life. I think its the key to success.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
Attached Thumbnails
Zen & the Art of The Small Account-21-june-2010_1.jpg   Zen & the Art of The Small Account-21-june-2010_2.jpg   Zen & the Art of The Small Account-21-june-2010_3.jpg   Zen & the Art of The Small Account-21-june-2010_4.jpg  
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  #34 (permalink)
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I use 1 contract approach with cash. Very difficult. Trade off CL chart, entry is with QM for risk control. Its about getting the trade correctly and managing the risk. If you get the trade correct the money will follow.

1. Right trade location
2. Right amount of target points (40 or 50+ target CL)
3. Right entry
4. Right stop <10 ticks CL
5. Right exit +20 ticks CL

If the target is less than 40 ticks, I don't even consider it. 50+ and I'm looking for an entry. It has to be a measured move. I have no intention of reaching the target but it has to exceed my exit to improve the chances of profit. Make sense?

Multi contract is the way to go. I guess we have to earn it.

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  #35 (permalink)
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Honesty

Yesterday I said I would talk about honesty.
Today, I am less inclined to do that. The reason? I would rather lie about todayís results.
Truth is, I had a terrible day today. This is the second time around Iíve been close to adding a second contract to my position sizing. Its also the second time Iíve been denied by bad trading.
Today was a range bound day early on in 6E. Thatís ok, I have a method for that. Trouble is I could not follow it today. I was totally out of sync.
Now, I have to go back to 1 contract probably for at least 2 days. If tomorrow is a profitable day, I may do it sooner, as I think I have some momentum and you should strike while the momentum is on your side.
I also let a couple of small winners turn into complete losers. This is easy to do on a range bound day. Especially if you make the mistake I made today of trading in the middle of the range instead of doing as Al Brooks said yesterday, to trade the extremes of the range and take smaller targets. I have a rule about turning winners into losers. I broke that rule today.
How quickly we forget.
So my fictitious account with $1000 in it went to $1500 and now back to $1000.
Here is where the real honesty comes in. I am tempted to blame the market or my method and even begin to mess with my charts. I want to curve fit my trading style to how the market behaved today so next time it happens, I am in the chips. As soon as I do that, it will be a trend day and my range bound method will get killed. Better to leave well enough alone and simply adapt on these kinds of days.
Instead, I have elected to acknowledge it was my fault I got killed today. I failed to recognize the range bound day and trade the extremes as I know how to do. I know this because in my post trade debrief, my method generated plenty of good signals, I just could not see them.
Now is the time to maintain discipline. The Marines say the only way they can lose is if they break discipline. Otherwise, they are unstoppable.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #36 (permalink)
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23 June 2010- Defense

Small accounts suffer more when you have bad trading days. Like yesterday. I was too embarrassed to actually post my charts. I took WAY to many trades, did not quit at my daily stop loss and numerous other rule violations. I think the only one I did not break was blowing out the account entirely.

Today, back to normal. Only two trades. I forced myself to be selective. Total of ten ticks of profit. I passed on 2 trades due to indecision. Of course those turned out to be good trades, but better to pass than to take the trade and regret it. Yes, there is regret over not making the money, but defense is a better strategy when your account is small.

I did have a perfect set up and ninja froze. It was a 20 tick winner but again, no regret. These things happen.

My set ups produced 65 potential ticks before the fed announcement which I was away for. That is more than enough for me.

After yesterday's disaster, I am much happier with today's performance.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
Attached Thumbnails
Zen &amp; the Art of The Small Account-23-june-2010_1.jpg   Zen &amp; the Art of The Small Account-23-june-2010_3.jpg   Zen &amp; the Art of The Small Account-23-june-2010_4.jpg  
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  #37 (permalink)
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Vice versa for me. Yesterday calm, today doubt.

It only took 2 stop outs on my small cash account to instill doubt back in my mind. I know my strategy works and my trades were correct. I followed my single contract method, but the volatility was looking for my stops before reaching my target. This makes me realize that small accounts can't handle consecutive losses.


My sim account (+$650) Here I could ride out 2 consecutive losses.

cash account (-loss $250) Here I had to stop.

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  #38 (permalink)
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A little off topic

AZTrader
I left NC yesterday. We are currently in a heatwave (mid to upper 90's, high humidity). We flew Southwest to CA for the birth of #15. Our stop was in Phoenix.(first time I been thru there, interesting looking from the air). Temperature when we landed was 108. The walk thru the jet-way was a shocker. You must be some tough dudes to live in those conditions. (But my daughter lives at Edwards AFB and the temperature in the summer gets very hot also.) LA was a cool 68. I like the time difference as it kills any thoughts of gap trading since I don't get up early enough for that.
Papa14

 
  #39 (permalink)
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papa14 View Post
AZTrader
I left NC yesterday. We are currently in a heatwave (mid to upper 90's, high humidity). We flew Southwest to CA for the birth of #15. Our stop was in Phoenix.(first time I been thru there, interesting looking from the air). Temperature when we landed was 108. The walk thru the jet-way was a shocker. You must be some tough dudes to live in those conditions. (But my daughter lives at Edwards AFB and the temperature in the summer gets very hot also.) LA was a cool 68. I like the time difference as it kills any thoughts of gap trading since I don't get up early enough for that.
Papa14

As we often say here in sunny AZ, "its a dry heat"! Its still hot no matter how you try to downplay it. I have to say though, I HATE humidity. I was in Boston for the 4th of July in 2000. OMG......I told my wife we were never going back to the east coast. That was the most incredibly miserable time of my life. Those few days we were there were unbearable. I think it was 90 degrees and 90% humidity. And to make it worse, it seemed like the only place to find air conditioning was at the grocery store. The people we stayed with had no A/C and they told me many people in the east don't!

We also went to Plymouth MA to see where the Pilgrims landed and that was even worse. I think if I had been Pilgrim landing there in the summer, I would get back on the ship and go back to England!

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
 
  #40 (permalink)
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Turning Molehills into Mountains


Turning a molehill account into a mountain of an account in one short year? Is it possible? Probably not, but its sure nice to dream about right? Why else do we trade if not to make a million?

The pundits and gurus say not to trade without at least $10,000 and many say $20,000 or more is necessary before you even begin. Fundamentally, I agree but as I’ve said before, many of us don’t have that luxury. We have to begin where we are.

We may not be able to make a million dollars with our small account in one year but if we follow simple money management techniques, we can double our account if we remain disciplined and focused and then take it from there.

I was reminded of this last night when I got an email offering a free video about money management. It was only 6 minutes long but those were some valuable minutes.

The presenter is Marcus Heitkoetter from Rockwell Trading. He has a simple way of presenting things and this money management video was no different. I’ve linked to it down below.

He also included a free calculator to figure out how to double your account based on your individual circumstances.
His premise was this, if you only get 2 ES ticks per day, net of commissions, in one year you can double your account. My first reaction was 2 ticks, that’s ridiculous. Of course I can do 2 ticks a day. But when you really stop and examine the logic, it makes sense. It’s why so many people fail. They can’t even get 2 ticks net a day!

One of my trading buddies agreed this morning, he said “we must focus on singles and doubles and forget about the home runs and guard our precious trading capital from foolish mistakes”.

Simple, but not easy!

So I decided to dedicate the next couple of weeks to this challenge for my small account.

I will attempt to make $100 net each day and add to the position at every $500 delta. This is an attempt to prove Marcus right. No more shooting for 20+ ticks a day at least for now. I want to see if I can do what Marcus says is possible.

My rules will be these during this next two weeks:

First trade will be a 5 tick target. Assuming a win, I will look for a 10 tick trade. If both of these are winners, done for the day.
Assuming a loser on the first trade, then look for 3 more five tick winners and be done for the day.

Assuming a winner on the first trade and a loser on the second, I will be BE on the day. Then look for 3 more five tick trades.

Overall, I will try to take only 5 or fewer trades a day. Over trading will kill a small account. I know, I am break even today in terms of the number ticks up or down but the transaction costs have me in the hole about 8 ticks.

So the trick is to quit when you hit your daily stop and keep practicing on sim.

I realize these rules are fairly restrictive. But I am attempting to average $100 per day over the course of a week. If I have a losing day, then a couple 2 trade winning days in a row, then I’ve balanced my week out and hopefully, the week will be profitable as opposed to having to have every single day profitable.

Take a look at the video, download the excel spreadsheet right below the video and see how this might apply to your small account.

Beginning tomorrow, I’ll post the results daily of this challenge.

Here's the link: The Power Of Money Management

Come back here after watching the video and tell me what you think.

Also, check out Don Miller's blog, he trades a million dollar account and blogs about it every day. This one is interesting in terms of hitting lots of singles. Here is that link: http://donmillerjournal.blogspot.com/2010/06/thursday-notes-act-like-youve-been.html

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris

Last edited by PandaWarrior; June 24th, 2010 at 07:43 PM. Reason: formatting
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