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

  #41 (permalink)
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Very good AZ. I too for a long time was shooting strictly for the long ride. Not now. I'm using the 13 tick two car strategy. Stops to 13 on two cars. T1 13, get on base, T2 to breakeven and use your instincts to ride this one and get as much out of it as you can. Today I did 10 for 12, maybe it was 11, but getting filled on that first small target is such a good feeling. Basehits are great. Only takes a few to get what you get on the longer ones anyways. And there is a hidden bonus. Eventually your runner is going to go really far. I broke my system today and watched a runner go from 10187 to 10087. I took a 3 tick loss on that one because I chickened out. Tomorrow, the chickens meat the mechanical meat separator.

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  #42 (permalink)
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aztrader9 View Post
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.

I've been reading a lot lately that says your mind looks for ways to end the pain, relieve the stress, etc. This might simply be a way of saying that going to 2 contracts is too stressful right now. Give it more time. If you continue to make money using 1 contract, there is no rush, no impending sense of doom to get to 2 contracts in a hurry. Don't let greed take over.

You might even consider moving your 2 contract goal posts a bit. Instead of $1500 maybe make it $2000, and see if you can then get past the $1500 barrier with 1 contract.

The reality is, there is no right or wrong answer, it's just about going through the motions. The journey is what is important and your actions on the journey are what make the outcome. So I would focus on "the now", and de-emphasize the importance of getting to 2 contracts.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #43 (permalink)
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aztrader9 View Post
Small accounts suffer more when you have bad trading days.

It's simple really. You are trading against other traders. If their account is bigger, if their money management superior, their risk better, their experience greater, etc -- you will be at a disadvantage.


Quoting 
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.

This is not uncommon. This is why I always say journaling will force you to be a better trader, and why I advocate full disclosure. If you commit to posting charts every day, then you will think twice before you start placing stupid trades. At some level, you knew those trades were stupid yet you did them anyway. What you need is what Dr. Brett calls "the minds eye", if I remember right, so that you can step back and see yourself making these mistakes, then catch yourself in the midst of it, and finally stop yourself from continuing.

By committing to a journal, it's a good place to start. I also talked to Beth the other day about cash vs sim trades, and I said to try something quite simple. A big yellow post-it note on your monitor "WHAT TO DO IN A CASH TRADE". You might need a post-it note "WHAT TO DO IF THE LAST TRADE WAS A LOSER" or whatever will most equate or align with your feelings that triggered you to over trade. Some things that might be useful on the post-it note are "Take your hand off the mouse. Put your rearend as far back in your chair as it will go. Close your eyes and focus on absolutely nothing except breathing deep breaths for 60 seconds".

It may sound silly. I will be honest, if someone told me to do that stuff 2 years ago I would laugh and then move on. But, no more. This is the real deal. You need to be a better trader than those surrounding you in the market. You need more focus, more discipline, calm and relaxed thoughts and thinking. What you absolutely don't need is frustration and anger.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #44 (permalink)
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aztrader9 View Post
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?

Hey, anything is possible!

And trading is not always about money. In fact, I make less trading than I did as an executive in my last job. But, I enjoy trading far, far more. To me, trading is so much more than just money. Now, don't get me wrong, I'm always trying to improve my bottom line net profit because I do have goals and ambitions, but the freedom that trading allows me is actually far more important than money.


Quoting 
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 Iíve said before, many of us donít 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.

Not trying to disagree here on purpose, but to me it's not so much that you can't succeed with a small account (less than 10k), it's that you are extremely unlikely to start with an account that size and then have that end in success. I choose to look at it more as the cost of education. Let's say you have 100k account, I would say something like 75k is your college education expense, and 25k is your trading account once you get your degree. If you start with 10k or less, your likely to never get your degree, you'll get kicked off campus for not paying your tuition.


Quoting 
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, thatís ridiculous. Of course I can do 2 ticks a day. But when you really stop and examine the logic, it makes sense. Itís why so many people fail. They canít even get 2 ticks net a day!

I look forward to your journey. I think you are in for some surprises I've been through this exercise before. It's not hard to make 2 ticks. Or even 2 points. What is hard is doing it consistently over a long enough period that it is statistically significant. Let's say even on the extremely short side, can you do it for 3 months straight? You might be on to something if so.

The next question is, what was your risk in proportion to your return? If your peak-to-valley drawdown is 100 ticks, but your 3 month average is +2 ticks per day net profit, then that is one helluva wild ride, right? Can you reach the same +2 ticks per day net profit over a 3 month period with a peak-to-valley drawdown of only 20 ticks? etc.

If you keep following this line of thinking, and you are like me, you'll soon be stuck in a series of difficult questions to answer. Like, do you stop trading if you are +2 ticks on the day? When do you stop trading if you are down for the day? Let's say you establish a limit of 4 ticks down for the day, that means you can't stop at +2 ticks on winning days, because long term unless your winning-day ratio is more than 75%, you will lose money. etc..etc..

I'll keep an eye on the thread

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

The following 6 users say Thank You to Big Mike for this post:
 
  #45 (permalink)
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BTW,

Perhaps I should have offered up some more details. For me, I do have daily profit targets and daily stop loss limits. I have weekly and monthly ones, too.

I have learned my daily profit goal must be higher than my daily stop loss limit. In the beginning, I think I tried to do this in reverse. I would "allow" myself a "bad day", say 2x the size of a winning day. That doesn't work, I ended up breakeven or worse.

If your goals or stop losses are very tiny, like 2 ticks, I think it's pretty impossible. At least, impossible for me. When trading CL, I tend to go for about 50 ticks per trade with 3 targets, or so. I've shared more details on my thread. There is no static number, its based on price action. I try to position myself so that if I have one good trade, I can meet my daily goal and then stop for the day. If I have two or three good days, I stop for the week, etc.

I tend to be quick to stop trading if I have a couple stops in a row. Even before my daily loss limit, usually well before it in fact. I've just learned to have patience. Let price move out of the range that is giving me trouble. Wait for another day. Whatever, I am in no hurry to lose money

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

The following 11 users say Thank You to Big Mike for this post:
 
  #46 (permalink)
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Big Mike View Post
I've been reading a lot lately that says your mind looks for ways to end the pain, relieve the stress, etc. This might simply be a way of saying that going to 2 contracts is too stressful right now. Give it more time. If you continue to make money using 1 contract, there is no rush, no impending sense of doom to get to 2 contracts in a hurry. Don't let greed take over.

You might even consider moving your 2 contract goal posts a bit. Instead of $1500 maybe make it $2000, and see if you can then get past the $1500 barrier with 1 contract.

The reality is, there is no right or wrong answer, it's just about going through the motions. The journey is what is important and your actions on the journey are what make the outcome. So I would focus on "the now", and de-emphasize the importance of getting to 2 contracts.

Mike

I will do this....and I agree with your assessment. I've been there before....I recognize it now and know what to do......thanks for the advice....

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
 
  #47 (permalink)
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The Blind Leading the Blind

Today I hit my daily loss really quick. I quit trading my "live sim" account and just started to practice.

I noticed early on I wanted to short every thing. But the market wanted to be long. Funny thing, my chart and set ups told me every thing I needed to know, but I refused to listen.

So this weekend, I am doing a mental reset. I've been here before on other issues. I know how to do the mental reset. It normally takes me two or three days and at other times, its taken getting away from the work or issue at hand. I can't do that this time around so it will be just ignoring the trading for the weekend. No charts at all. Just decompress.

I was Mr Mom today, thats much harder than I thought it would be!....once trading was over, no time for debriefing, chart mark up or even posting charts....that will have to come later, maybe monday after noon.

Anyway, my new challenge is not going well so far. But I think I can reset my short bias this weekend to a neutral one and hopefully that will fix the issues I've had this week.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #48 (permalink)
 R.I.P. 1960-2010 
 
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Learning to be totally honest about what the market is saying is one of the hardest things about trading.

You must be brutally honest in the assessment of all moves. You are fantastic at identifying important price levels. What you can't know is what the market will do at those price levels.

That is why it is essential to watch price action on the closest level that you can get: The DOM, at important price points.

It works.

R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
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  #49 (permalink)
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25 June_2

Here are my charts from yesterday.....This in only in the interest of complete disclosure per BM.

I have no real interest in showing you these. They are embarrassing. I am actually better than this, or at least I would like to think so.

What happened here was I have had a long term short bias against the Euro and I have allowed that to blind me to the occasional short term trend to the upside.

What really needs to happen is for me to have a neutral daily bias and trade the rules.

On this chart, my rules say to BUY support if prices get down to the ADXVMA line. Instead I tried to ANTICIPATE prices going lower below the line. Those were bad trades. The short term trend is clearly long......just go with it.

For confirmation, I could have waited until prices crossed and held above VWAP. (Purple line) Even waiting till then would have provided many good long trading opportunities.

But obeying my rules would have produced my daily profit just buying at the ADXVMA and holding through 5-10 ticks each time.

Lesson learned (hopefully)

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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Zen & the Art of The Small Account-25-june-2010.jpg   Zen & the Art of The Small Account-25-june2010_2.jpg  
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  #50 (permalink)
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Required Reading


Calling all small account holders!

You must read the the following posts: No excuses. Read them now. Your trading career depends on it!

https://futures.io/psychology-money-management/47-trading-psychology-how-mind-works-i.html

https://futures.io/psychology-money-management/88-trading-psychology-how-mind-works-ii.html

https://futures.io/psychology-money-management/200-trading-psychology-how-mind-works-iii.html

https://futures.io/psychology-money-management/329-trading-psychology-how-mind-works-iv.html

I say, no more trading until you've read them. Its that important!

Then watch this:

http://www.traderinterviews.com/content/MentalPrep.php

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris

Last edited by PandaWarrior; June 26th, 2010 at 08:47 PM.
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