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seattle washington
Posts: 75 since Feb 2019
Thanks Given: 11
Thanks Received: 29
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This is a few months later (months?!! Wow, time flies) and I figured out what I was doing, why it was losing my money, and believe I have corrected the problem and I'm preparing to go live on Monday May 10th 2021.
In a nut shell, I was taking my queues for trades from others and apparently would fool myself into thinking that the trade fit my strategy. That's on one half of the nut shell. The second half is that most of the people I was grabbing trades from were day trading and I find that I am a swing trader. In sort, I was not trading any set strategy. I just kept making up reasons why taking a position on a stock I saw in a chat room was a stock that fit my strategy.
The process is cumbersome but effective. I enter the desired entry into a spreadsheet that calculates my stop loss at entry, where to begin to take profit (I scale out) and when to adjust the stop loss to b/e. I set an alert on the chart and when I get the alert, I enter the trade and follow the spreadsheet. The following day I export/import the trades from the paper account into Trademetria (TM) which is an easy way to get metrics and graphs of profit/loss etc.
So the past six weeks or so I've stopped trading live and been paper trading. I took apart the trades I liked from the past and saw that I liked slow moving trades -- a trade that I hold for several days is fine -- and began to build a strategy around about the simplest concept I could find. I ended up investigating how I could profit from price actions from the resolution of Bull Flags that had pulled back to the D20ema. I enter the trades into a spreadsheet and follow the profit targets, scale outs, and stop losses to the penny. I enter about ten to twenty trades a day. At the end of the week I go over the trades to make sure there are no typos. At the end of the first two weeks, much to my utter amazement and to my chagrin, I found that 30% of the trades were totally wrong!! I'd NOT followed my written-out-and-calculated-in-a-spreadsheet strategy at all. No clue how I got away without following my strategy. It knocked me off my chair. I could believe data entry errors or of one to five trades where the entry was wrong by transposed numbers etc. But these trades were clearly fubar. In other words, I've been making up reasons on the fly as to why it's ok to forget the rules of my strategy and do whatever -- I'm basically lying to myself even when I'm not under the gun of live trading!!!!!!.
So I went back and re-configured my spreadsheet to include additional criteria about the trade so that I have fewer opportunities to fool\lie to myself. E.g. fool myself by deciding that $0.05 or even $0.30 from my entry is still an ok entry or that my exit could be pushed down to the next lower S/R line, or that I could delete a trade 'cause "I wouldn't do that when trading live." F !! I thought I had my shit together.
I am now still paper trading. I am checking my trades the morning after during pre market to make sure they are correct, and export/importing them into TM so that I know everything matches up.
This weekend I am taking all of the statistics gathered and will start looking for the cream of the crop of indicators -- i.e. do I get more profitable trades if I wait for price to break the D20ema or is it more profitable to wait for price to break the descending trend line on the back side of the flag? Is a 3.5% loss too much breathing room for a trade or not enough breathing room. I'll start with what appears to be the top two effective indicators and create a new spreadsheet that includes them. I'll live trade at least one and no more than five stocks at any given time using a full size of 60 shares. Scaling out will be 30, 15,15 shares. Once I have the statistics from forty trades, and assuming the metrics are improved (duh!) I'll take another look at what, if anything, might change to make the strategy more profitable or less risky.
This is a great site so I will check back in a few weeks and close the loop on this adventure. Futures.io, however, is geared toward a very different side of trading then I trade so I'll not be a daily contributor. Good hunting, stay safe, and above all, have fun.
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