You can't stick with any "style" that pits you against the market month after month. At some point you need to recognize what is happening in the market is much more important than your style. You either adjust or you suspend your trading until the market reverts back to what you consider normal.
Half way through life and not close to being consistent
- Thread starter gamblingman
- Start date
I guess I look at trading as playing poker (which based on laws is considered gambling).
You're making an educated guess based on your analysis and if you're convinced enough that you have an edge you put on the trade. Once the trade is on though all bets are off and you're hoping for the best within your exit/loss parameters.
Thanks for the help, like I said I take any help I can get, so don't look at my response as anything but that.
Yes we've had a decent pull back (roughly 6%) in February and after that month I was up about 70k. However had I known that we would just turn around right after that and rally another 200 points I'd have covered my positions but I was assuming we'd go sideways or slightly further down (1700) for a while, so that's what I had in my positions and when we rallied back up and to new highs the profit evaporated.
Swan, I don't have that ability (I'm missing that skill and have little hope to ever master it), yet I do believe in buying low and selling high as this has worked for me for many years.
Just like there's trend and mean reverting indicators and they don't do well in the wrong market and it's an art to know which ones to use when, it's the same recognizing the market condition.
We're obviously in a strong bull market with a strong up trend, so based on that you should be long the S&P. But then again they don't send you a memo when this changes, so if you were to buy now it may go down and you'll have to deal with the losses.
As an example I started shorting bonds in 2011, by the end of that year I was at my risk limit and it was the worst trade for a long time. In summer of 2013 (I had a super painful main position for over 18 month) all bonds funds had huge gains and everyone was putting money into them left and right, Bill Gross/Pimco was at the top of the universe and people kept telling me, the government will keep rates low forever so you'd have to be an idiot being short bonds. Well, I was that idiot. 9 month later things resolved themselves and being a contrarian eventually paid off. Now nobody is talking about Gross or Pimco other than one of their guys left.
My experience has been that switching trading styles too much results in lots of whipsaw, so unless you really master it you may as well just focus on one. I did reduce my trading size significantly already, so I guess you can call that "adjusting" to the market conditions.
Learning to determine the current market environment is vital. I would not say it's easy though. Even if one does manage to determine the current trend properly then one still requires the ability to remove emotions from trading which can be very hard for most.
Am I right in thinking that you were up 70k USD....... and that you then GAVE THAT PROFIT BACK TO THE MARKET...........?
Please tell me that I have missunderstood you.
Please tell me that I have missunderstood you.
No you had it right the first time.
Now to put this into perspective, I just assumed we'd have a larger sell off or at least a sideways market. You have to have some kind of assumption/conviction where the market is going, not just be focused on the $$$ amount. Otherwise I may have closed my position at 30 or 50k profit and never reached the 70k. Obviously it didn't go where I was thinking it would go, so it's irrelevant what I was thinking since it was wrong.
OK, here's what I would do:
1 Stop trading.
2 Do a thorough analysis of all your trades over a decent period, say 4 years, catagorising trades by, for example:
Hour of entry
Duration of trade
Trend or counter trend
Long or short
Market traded.
etc etc
Then look at which categories have been the best performers, and which have been the worst.
Now exclude the poor performing types of trade from your plan, and focus on the best. If shorts have been poor performers, then do not trade the short side.
Repeat the process every week or month.
Of course, you may have already done this, I don't know.
Gotta go, the markets opens in 10 mins
1 Stop trading.
2 Do a thorough analysis of all your trades over a decent period, say 4 years, catagorising trades by, for example:
Hour of entry
Duration of trade
Trend or counter trend
Long or short
Market traded.
etc etc
Then look at which categories have been the best performers, and which have been the worst.
Now exclude the poor performing types of trade from your plan, and focus on the best. If shorts have been poor performers, then do not trade the short side.
Repeat the process every week or month.
Of course, you may have already done this, I don't know.
Gotta go, the markets opens in 10 mins