Grinding it out, day after day

Quote from lescor:

For the sake of consistency, here is a wrap up of my year.

I ended up grossing $361,000 on 11.2 million shares traded. This would make my net somewhere around $325k. The year was downright discouraging for the first half. I was making money regularly, just not enough. I kept grinding away though and out of nowhere the last quarter of the year ended up being great. In fact 30% of my year was made in the last two weeks.

Profit by month:
JAN 27,619
FEB 9,843
MAR 4,100
APR 14,139
MAY 12,241
JUNE 23,692
JULY 32,802
AUG 18,553
SEPT (5,922)
OCT 35,904
NOV 66,602
DEC 121,557

Top 5 days
Fri, Dec 21 63,022
Mon, Nov 5 17,635
Thu, Nov 1 16,759
Mon, Jul 2 16,431
Fri, Sep 21 16,163

Bottom 5 days
Tue, Mar 6 (11,581)
Wed, May 30 (9,527)
Fri, Aug 10 (8,523)
Thu, Mar 22 (7,979)
Mon, May 14 (7,804)

Traded 244 out of 250 days
155 winning days, 89 losing days
Average winning day: $3,951
Average losing day: $-2821
Average per day: $1,481
Daily profit factor: 2.4
Cents per share traded: 3.2
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Standout points for everyone to note...

#1: One out of three days you lost money. And that's ok

#2: when market action sucks, it sucks. And you don't make money. Witness September and to a degree March and Fed.

#3: when market action is favorable, you make money. Witness most of the other months.

#4: when market conditions are prime, you make the bulk of your money inside brief windows of time. Witness 12/21 for 20% of your entire year and December itself for 35% of your entire year.

**

It's ok to lose small and win bigger. It's ok to tread water and remain patient, steady on course when price action sucks. It's imperative to hit some outsized gains when price actions is favorable to stellar in order to make a solid year overall.

Points of reference for every trader here to internalize.
 
Quote from lescor:

Just Excel
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a really good tool, that sure helps me analyze things anyhow, is Market Systems Analyzer...

http://www.adaptrade.com/MSA/index.htm

check it out, you mind find it of use... faster and better than excel... thought excel can be customized to do anything... but i am lazy at times... no sense on reinventing the wheel when I dont have to..
 
Quote from lescor:

For the sake of consistency, here is a wrap up of my year.

I ended up grossing $361,000 on 11.2 million shares traded. This would make my net somewhere around $325k. The year was downright discouraging for the first half. I was making money regularly, just not enough. I kept grinding away though and out of nowhere the last quarter of the year ended up being great. In fact 30% of my year was made in the last two weeks. The stats themselves are actually pretty good, similar to 2010. But I traded much much less volume than I have for several years. The markets are thinner, I'm trading less and the opportunity doesn't last as long when it does come around.
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I have been following your journal for a very long time and all I can say is that you are an inspiration.
 
Mental element - not 'caring' about money/'accepting' a loss trade/day as part of the game. How do you get there?

I've read your entire post to gather insight into my own trading for the new year. I'm not quite at the stage of being consistently profitable but I'm very analytical and have carefully studied my trading (and tracked all relevant metrics) and believe if I systematically plug all the holes in my trading, I'll eventually start being profitable. I'm hoping 2013 will be that year.

I think I have a system that works and as part of that system there are certain loss trades/days that I have to 'accept' (every system will have those). I've tested the system with small size and have confidence in it. In 2011 I went 'live' with bigger size and the results have not been good. I've since gone back to smaller size and it is working better now.

I've isolated the problem to be that I can't seem to 'accept' a loss trade/day and almost immediately enter bad trades afterwards even though I know it is a wrong trade (almost like a self-destructing post loss trade). When I trade with smaller size, I know I can accept a loss day/trade easier and don't make these blatant mistakes afterwards. I know you have mentioned this in the past (but I'm still unclear), how do you get to the stage of not 'caring' about the $ so that you can trade better? Do you just leave the room after a loss, rely on a more automated exit, trade small size forever until comfortable or what?

I really appreciate your great posts. This is my first post and I was very inspired by your postings, especially coming from a fellow Canadian.

Thanks in advance for any insight.
 
Quote from etuser:

Mental element - not 'caring' about money/'accepting' a loss trade/day as part of the game. How do you get there?
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Notes I took from a Mark Douglas interview: “There’s no way to know the sequence of wins and losses. If we want to be able to trade our methodology in an effective fashion, to be able to utilize this methodology in a way where we can extract the maximum amount of profit that it makes available to us based on the pattern that it identifies, we have to do it in certain ways. Our mind has to be free to be able to execute these trades without making trading errors and the trading errors come from believing that because the pattern is present, that it’s going to give me a winning trade on THIS one; THIS trade is going to be a winner. You can’t think that way. That’s the way the typical trader thinks. The typical trader thinks ‘I’m not gonna put on this trade on unless I think it’s gonna be a winner or why would I do it?’”

“Trading a technical methodology or a technical pattern does not have anything to do with being right or wrong. It’s just an odds game. You’ve got to be able to take every single trade because you don’t know the sequence of wins and losses. You’ve got to be able to identify what your risk is and that’s simply ‘How much am I willing to spend to find out if other traders are going to come into this market and bid it higher than my price or offer lower than my price if I sold?’”

The solution is to change your mind, to change the way you think. “[You’ve] got to eliminate the potential to think that the market’s going to disappoint you. And the way [you] eliminate the potential is by understanding that trading is not about being right or wrong. It’s a probability game.”

There are stages of development such as learning how to think in probabilities so the market doesn’t have the potential to cause us to feel emotional pain.

“When you put on a trade and it doesn’t work, all it really means is that some of the traders didn’t come into the market that had the same belief that you had, or the same conviction about this market doing whatever it is you thought it was going to do. You have to learn to walk away.”

We can’t predict collective human behavior. “The methodologies that we have access to, these mathematical formulas, do that for us. But you have to understand that there’s no possible way that these mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades. So when I get a signal from my methodology, at the most fundamental level what this is telling me is that the odds are in my favor that somebody is going to come into the market (this is what the pattern means) and bid it higher than here if I bought or offer it lower than here if I sold. That’s all that it’s saying. Now they’re either gonna come or they’re not, and so as a result I don’t look at this as being a ‘right’ or a ‘wrong’; I look at this as How much distance am I going to give the market to move away from my entry point to tell me that they’re either going to come or they’re not, and any further is not worth the cost of finding out.”

I can't speak for Lescor, but my guess is that he learned to attain this mindset before he became a master trader.
 
jnbadger, excellent reply, that post by lescor was exactly what I was looking for (that thread is great reading too).

NoDoji, thanks for sharing those notes. I understand the probability aspect of the game and reading those will hopefully (eventually) cause me to 'flip the switch' to accept it more in my trading.

lescor, I've actually read Mark Douglas's book ('Trading in the Zone' right?).

I guess factually I understand (or rather, know the existence of) the basic ideas necessary to overcome this mental aspect but not quite at the stage of implementing it all the time. Hopefully it's just a matter of practising it (time/repetition) for it to sink in so I do it consistently. (I suspect for me trading very small size until comfortable is pretty key.)

As a new member, I'm really impressed with the quality of the feedback here and feel optimistic about my trading this year.
 
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