2012: The Battle for Survival

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Neke,

Are you going to stop these withdrawals?

If not then perhaps withdraw all of next years money in one go say during the xmas period.

Then start the new year with 50K and see how you can grow that.

A growing account will give you more confidence.

At the moment your account is going down and down and the withdrawals are compounding the negative psychological vibes that gives off. Even if you make 50% next year your ending balance will still be lower than where you started after withdrawals. Will be really frustrating.

Just something to think about.
 
Quote from southall:

Neke,

Are you going to stop these withdrawals?

If not then perhaps withdraw all of next years money in one go say during the xmas period.

Then start the new year with 50K and see how you can grow that.

A growing account will give you more confidence.

At the moment your account is going down and down and the withdrawals are compounding the negative psychological vibes that gives off. Even if you make 50% next year your ending balance will still be lower than where you started after withdrawals. Will be really frustrating.

Just something to think about.
More...

Suppose I did that and realised 50% next year. Guess what? I would still need to bring out 60K at the end of next year, leaving 15K balance. I think those sudden jolt (110K->50K, and 75K->15K) would be even more psychological draining that the current slow decline. Besides, at 50% annual rate, I might just survive with the current balance; with the suggested approach I wont last beyond next year (assuming the 60K annual withdrawal).

Yes, I understand the damage the withdrawal is doing, but if/when I steady the monthly P/L (like a 6-month turn around that looks like a credible permanent change in trend) I might find a way to cut back on the withdrawal so growth of balance does not get stifled.
 
Quote from neke:

Two ill-fated trades using same strategy lost 7.3K, and wrecked the week. Market seems to change on a dime.
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Neke, you've made it very clear in the past that you're not a technical trader, but you don't seem to have an edge with the strategies you're using. Sure they work at times, but they don't work more often than not over time; if they did, you'd positive at least from month to month.

Technical price action tactics work through all market conditions: strong trend, channeling trend, and range. They work in bull markets and bear markets, and they work during periods of low volatility as well. While you test and hone your current strategies further, you could be generating a nice steady $500/day on an account your size. It's not home run material, but it will pay the bills and slowly build up your account.
 
Quote from neke:

Yes, I understand the damage the withdrawal is doing, but if/when I steady the monthly P/L (like a 6-month turn around that looks like a credible permanent change in trend) I might find a way to cut back on the withdrawal so growth of balance does not get stifled.
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Just wondering why can't you cut-back the withdrawal now instead of when you have a 6-month turnaround in your trading?
 
Quote from gmst:

Just wondering why can't you cut-back the withdrawal now instead of when you have a 6-month turnaround in your trading?
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On the one hand somehere would want me to pull ALL money and stop! Continuing at 5K is a middleground between pulling it all and leaving all behind to lose
 
Quote from neke:

On the one hand somehere would want me to pull ALL money and stop! Continuing at 5K is a middleground between pulling it all and leaving all behind to lose
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Why get influenced by what ET posters (including me) think. You have to judge it yourself. I just can't understand the logic behind withdrawing 5k now but stopping after your trading has turned around. If you want to put in 4 or 6 consecutive months of profit before you decide that your trading has turned around, then maybe you should withdraw 50k right now, put it in the bank, and trade with only the remaining amount - once you are sure that your trading has turned around then bring back that 50k into the account.

Otherwise, it makes no sense to continue withdrawing 5k from your trading account to finance your lifestyle and stop withdrawing when your trading has turned around. Just tell your family that your trading has not been working out and you won't be able to withdraw 5k every month to finance the expanded lifestyle. Just cut the expenses ruthlessly for few months and see. Thats what I would do. Cheers mate. You have been here for so long that almost everyone wants to see you win in this game. Maybe some sacrifice is in order at this stage. My 2 cents.

Edit: Btw, your biggest problem is your low profit factor, which leads to large periods of drawdown and huge swings. We have discussed this before when we were talking about taking only best trades and leaving all others. I am positive if you can work on this aspect, everything else will fall in line. After all, you are in trading business for more than 10 years now - enough experience. No reason why you can't make a million before 2015 end, if you can get your act together.
 
Quote from neke:

Weekly Update for week 42/50 ended 11/3/2012


Horrible week, down 5.8K (4.8%). Two ill-fated trades using same strategy lost 7.3K, and wrecked the week. Market seems to change on a dime. Have used this strategy since earnings season started and got 6.4K over many trades, seeing it lost in two trades is just too startling. ........]
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Geez, watching your struggle is really painful.You have lost 6% of your account in just two trades. Does your trading plan allow for such a high risk ? Something is seriously wrong here. I thought that you wanted to rebuild your account, not to destroy it.
Why don't you switch to the paper trading for at least a month ? This way you will gain some perspective and detach from the real money. As discussed many times in this thread focus on fixing the mistakes you made in the last few months and come back to the real money trading when your confidence is back.
If you can't take a break for at least a few weeks you are probably addicted to the rush of trading and the market will teach you the lesson you should have learnt when you were starting and your account was still small.
Hope this helps.
 
Quote from mutluit:

Hi neke, did you know that:
http://en.wikipedia.org/wiki/Gambler's_fallacy
Maybe it has something to do with it...
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This guy is getting raped by the markets because he hasn't adjusted to change in market regime. His primary system is a atrocious losing system to begin with, buying options 3 days from expiry hoping to get a big move in underlying. Unfortunately with current markets low volatility even if underlying moves in his direction, the move is not big enough to offset the horrific decay in the last few days. As someone already pointed out, he should be willing to pay the premium for far itm options to take advantage of the comparatively larger moves with miniscule moves in underlying.

His real strategy should be doing exactly opposite of what he is doing now. He shoukld be selling naked calls and puts few days before expiry to generate steady income. With current account size he can easily generate 5K in monthly income. 90% options expire worthless, the other 10% moves against him, he can always take the loss and close out the position before expiry.
 
Quote from badvestor:
This guy is getting raped by the markets because he hasn't adjusted to change in market regime. His primary system is a atrocious losing system to begin with, buying options 3 days from expiry hoping to get a big move in underlying. Unfortunately with current markets low volatility even if underlying moves in his direction, the move is not big enough to offset the horrific decay in the last few days. As someone already pointed out, he should be willing to pay the premium for far itm options to take advantage of the comparatively larger moves with miniscule moves in underlying.

His real strategy should be doing exactly opposite of what he is doing now. He shoukld be selling naked calls and puts few days before expiry to generate steady income. With current account size he can easily generate 5K in monthly income. 90% options expire worthless, the other 10% moves against him, he can always take the loss and close out the position before expiry.
More...
This is extra for Neke: here's a low risk options construct using 2 months ITM options (actually a Strangle): Using a normalized basis of 100 (ie. just convert for your underlying), buy the following legs:
Call leg: Strike=98, Allocation=87.73
Put leg: Strike=103, Allocation=100.00
The risk is less than 1% (actually 0.83%; --> P/L% in the last column below):
Code: 
  10.00  110.00:    44.44
   9.75  109.75:    42.42
   9.50  109.50:    40.43
   9.25  109.25:    38.47
   9.00  109.00:    36.55
   8.75  108.75:    34.66
   8.50  108.50:    32.81
   8.25  108.25:    31.00
   8.00  108.00:    29.22
   7.75  107.75:    27.49
   7.50  107.50:    25.79
   7.25  107.25:    24.14
   7.00  107.00:    22.53
   6.75  106.75:    20.97
   6.50  106.50:    19.45
   6.25  106.25:    17.98
   6.00  106.00:    16.55
   5.75  105.75:    15.18
   5.50  105.50:    13.85
   5.25  105.25:    12.58
   5.00  105.00:    11.35
   4.75  104.75:    10.19
   4.50  104.50:     9.07
   4.25  104.25:     8.01
   4.00  104.00:     7.00
   3.75  103.75:     6.06
   3.50  103.50:     5.17
   3.25  103.25:     4.34
   3.00  103.00:     3.56
   2.75  102.75:     2.85
   2.50  102.50:     2.20
   2.25  102.25:     1.61
   2.00  102.00:     1.09
   1.75  101.75:     0.62
   1.50  101.50:     0.22
   1.25  101.25:    -0.12
   1.00  101.00:    -0.39
   0.75  100.75:    -0.60
   0.50  100.50:    -0.74
   0.25  100.25:    -0.81
   0.00  100.00:    -0.83
  -0.25   99.75:    -0.77
  -0.50   99.50:    -0.65
  -0.75   99.25:    -0.46
  -1.00   99.00:    -0.21
  -1.25   98.75:     0.11
  -1.50   98.50:     0.49
  -1.75   98.25:     0.94
  -2.00   98.00:     1.46
  -2.25   97.75:     2.04
  -2.50   97.50:     2.68
  -2.75   97.25:     3.39
  -3.00   97.00:     4.16
  -3.25   96.75:     5.00
  -3.50   96.50:     5.90
  -3.75   96.25:     6.86
  -4.00   96.00:     7.88
  -4.25   95.75:     8.97
  -4.50   95.50:    10.11
  -4.75   95.25:    11.31
  -5.00   95.00:    12.57
  -5.25   94.75:    13.88
  -5.50   94.50:    15.25
  -5.75   94.25:    16.68
  -6.00   94.00:    18.16
  -6.25   93.75:    19.69
  -6.50   93.50:    21.28
  -6.75   93.25:    22.91
  -7.00   93.00:    24.59
  -7.25   92.75:    26.32
  -7.50   92.50:    28.10
  -7.75   92.25:    29.92
  -8.00   92.00:    31.79
  -8.25   91.75:    33.70
  -8.50   91.50:    35.65
  -8.75   91.25:    37.64
  -9.00   91.00:    39.67
  -9.25   90.75:    41.74
  -9.50   90.50:    43.84
  -9.75   90.25:    45.98
 -10.00   90.00:    48.15
PS: the above values are for vola=20% only, PM me for different params...

For more info see this discussion in the the Options forum:
http://www.elitetrader.com/vb/showthread.php?threadid=252595
 
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