Hello fellow traders, I've lurked here for years and want to share my success story with the crowd.
I started trading stocks in 2005 and made all the newbie mistakes. I am a computer programmer and I created some really cool systems but I was a bad trader. I took a very analytical approach but in the end my trades were haphazard and unorganized in retrospect. At first I limited my universe to stocks on the IBD 100 and I tracked them all looking to trade breakouts.
After a few years of unsuccessful stock trading I switched to trading the sector spiders ETFs. I thought "Ok, this stock stuff is too hard, let's just trade the sector ETFs". This didn't work out either, horrible trading, typical newbie stuff.
I then switched to trading options on the SPY. I actually though that my problem was that I didn't have enough leverage. Laugh. This did not go well. I overtraded like mad and lost a bit of money. After a few blow ups I had to stop trading options. My strategy would be to just buy ATM calls and puts in the SPY in the direction I thought the market was going. As typical newbies do, I would let my losers go for too long and cut my winners too quickly.
It's now several years later, maybe 2008. I needed a change, let's try futures trading with TOS. This seems really nice. I had convinced myself I needed something 24 hour so I wouldn't get ugly gap downs. I traded futures unsuccessfully for about a year. I would overtrade to the downside and take my winners immediately. I was starting to lose confidence in my ability to manage a trade.
In this time I'd read many trading books, all the classics and some lame ones. However, I read "The Futures Game" and it really sparked me. It's a truly excellent trading book. It taught me to think about positive expectancy. Don't worry about THIS trade, just worry about whether you have a strategy that should work over the long run.
I built an Excel spreadsheet with all the parameters that went in to trading: stop loss, limit, entry, probability success, spread, position sizing etc. I wanted to limit all the parameters and have my probability of success be the only free variable.
I now trade where I always enter the /ES market with an OCO stop loss and limit order and my position size is (balance / 2 / ES margin) rounded down. The stop loss is always -5 and the limit is always +7 (swapped if I am going short, of course). This has brought tremendous order to my trading. I never end a trade based on my judgement, I just let the stop loss or limits hit. I have been tempted, but I have never fallen victim. This has forced me to think about my trades. Do I think I can make 7 points before losing 5? If so, I go for it. If not, I wait. The results have been incredible. I have long winning streaks which boost my confidence enough to survive a few losing streaks. My balance has never been healthy and I am much calmer.
I just wanted to share this with everyone because I have made the transformation from lousy newbie whim trader that wanted to give up to a disciplined trader. There is hope for all.
I started trading stocks in 2005 and made all the newbie mistakes. I am a computer programmer and I created some really cool systems but I was a bad trader. I took a very analytical approach but in the end my trades were haphazard and unorganized in retrospect. At first I limited my universe to stocks on the IBD 100 and I tracked them all looking to trade breakouts.
After a few years of unsuccessful stock trading I switched to trading the sector spiders ETFs. I thought "Ok, this stock stuff is too hard, let's just trade the sector ETFs". This didn't work out either, horrible trading, typical newbie stuff.
I then switched to trading options on the SPY. I actually though that my problem was that I didn't have enough leverage. Laugh. This did not go well. I overtraded like mad and lost a bit of money. After a few blow ups I had to stop trading options. My strategy would be to just buy ATM calls and puts in the SPY in the direction I thought the market was going. As typical newbies do, I would let my losers go for too long and cut my winners too quickly.
It's now several years later, maybe 2008. I needed a change, let's try futures trading with TOS. This seems really nice. I had convinced myself I needed something 24 hour so I wouldn't get ugly gap downs. I traded futures unsuccessfully for about a year. I would overtrade to the downside and take my winners immediately. I was starting to lose confidence in my ability to manage a trade.
In this time I'd read many trading books, all the classics and some lame ones. However, I read "The Futures Game" and it really sparked me. It's a truly excellent trading book. It taught me to think about positive expectancy. Don't worry about THIS trade, just worry about whether you have a strategy that should work over the long run.
I built an Excel spreadsheet with all the parameters that went in to trading: stop loss, limit, entry, probability success, spread, position sizing etc. I wanted to limit all the parameters and have my probability of success be the only free variable.
I now trade where I always enter the /ES market with an OCO stop loss and limit order and my position size is (balance / 2 / ES margin) rounded down. The stop loss is always -5 and the limit is always +7 (swapped if I am going short, of course). This has brought tremendous order to my trading. I never end a trade based on my judgement, I just let the stop loss or limits hit. I have been tempted, but I have never fallen victim. This has forced me to think about my trades. Do I think I can make 7 points before losing 5? If so, I go for it. If not, I wait. The results have been incredible. I have long winning streaks which boost my confidence enough to survive a few losing streaks. My balance has never been healthy and I am much calmer.
I just wanted to share this with everyone because I have made the transformation from lousy newbie whim trader that wanted to give up to a disciplined trader. There is hope for all.
