How to bounce back?

[renegade trader]

i traded pairs during 2000-2004 for some guys at the cme great times. i was doing great until mid 2003 then could not make any money. that was horrible. Then i went on my own and traded and all i was doing was losing money with commisions(trading pairs).
pairs trading was a great way to make money back then, IMHO pairs trading died when the new york stock exchange went to decimals. also at that time the markets were dead no volatility.
i am actually looking to back into trading pairs since everyone is in the futures game.
EDGE is great thing but the only people who have any edge at all are the guys that trade on the floor of the exchanges and the scumbag specialists at nyse. the rest of us are outsiders. what i used to do with pairs was i would follow anywhere from 3-5 pairs and just trade those. my strategy was more of a spread trader not a pairs trader. i would sometimes execute one leg of the trade sometimes just completely take off one side and let the other go unhedged and it worked but i was trading tons of shares. once there was no action in the markets the commisions killed me.
so i switched to futures trading e-mini. but again as a non member of the exchange i had no edge because my commisions were to high. so i had to go back to my old job which is running a grocery store and working 50 hours a week usually more. so now i am looking to start full time at pairs again i still trade futures in the morning but just position trade. try it again but keep your job so you dont lose discipline. this trading gae is an addiction just like heroin.
for you to be on these boards means you are really thinking of coming back to the wild side.Like HENRY HILL SAID. "Now when i order pasta with marinara i get egg noodles with ketchup." that sucks. so dont rush in

 

[stock_trad3r]

Quote from Yisterwald:

I've suffered a huge reversal in my trading over the last two years, and it has (almost) completely broken me. I know I'm not the only guy in this business to find himself in this position, and since I've been an off-and-on lurker on these boards for years now, this seems like as good a place as any to begin looking for a way back. Here's the story:

I spent seven years as a consistently profitable equity pairs trader, after paying some first-year dues learning the game. I'm not a trader who can boast no down months for seven years, but I had fewer than 10 in that time, and my up months were always much larger, and losing months were scattered events -- usually due to simply building an inventory of positions.

As market volatility compressed, so did my rate of return and income. It reached the point where I was unable to support my standard of living (which had risen somewhat, though not crazily) on trading profits alone and I began to dip into savings to supplement. I was reluctant to bail on a profitable strategy that was just in a slump, or so I thought, so I soldiered on trading, waiting out the lows for the upswing I was sure would come.

After a time my returns were near zero, and I was borrowing to survive. Depression began to set in, and my trading was affected accordingly. Then I took a fairly substantial loser, and was taken out of the game. My trading partner and I decided to call it quits, and our financial backers, though remarkably patient and encouraging throughout, concurred. We closed up shop, I liquidated assets -- including my home -- paid off creditors, and sought treatment for the depression.

Fortunately I was a carpenter in my previous life, so I could go back to work earning a living almost immediately. That helped me get a sense of forward motion again, and the release of pressure was terrific as well. Now, eight months or so after the bomb, I feel ready to get back to work, yet at the same time wondering how to proceed. I feel good about my background and discipline as a trader. I'm not prone to wild trades, taking gambles, or behaving irresponsibly. I'm clear-headed again and can still make decisions under pressure. I want to be back.

And yet the strategy that served both me and my partner for so long is still nothing like it when when we first developed it, and I'm mindful of the fact that, despite long, long nights and many hours of brainpower, when I understood that my system was falling down I was unable to adapt it to the current market.

Couldn't adapt? That's a negative on me -- a big one.

So where do I go from here, guys? How did you do it? (assuming you have) I have a wife, kids, a job, and very little capital. I also have a good reputation among the people I've traded and done business with, and an absolute need to have not been beaten. Any ideas?

Jesus was a carpenter. Who better to follow in the footsteps than Christ?

 

[showyouwang]

You understand that the years volatility dried up 2003+ was all in a rampaging bull market right?

You could've simply abandoned pairs trading for long-only directional trading. You could bought anything and earned a profit.


In my opinion there is no such thing as finding a profitable system and just continuing to trade it. You give into one system and you stop learning.


In the words of Livermore... “There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily – or sufficient knowledge to make his play an intelligent play. I proved it.”


Keep learning and keep an open mind. If a market neutral strategy like pairs is not working... must mean the market isn't neutral anymore. If anything, the money is better in a trending market than trading a neutral strategy in a neutral market.