Improving My Performance

H

Hurricane

I love the feeling I get following a successful trade, no matter how small the profit. But sometimes the need for a "high" causes me to set unrealistic goals, get in over my head, etc. My trading performance 2006 year-to-date is as follows.

WINNING TRADES = 525 for $87.5k
LOSING TRADES = 11 for ($58.2k)
NET TRADES = 536 for $29.3k

I work full time and trading is a hobby. So objectively I can sit back and say I'm happy with where I am at. But the losses still hurt and sometimes lead to excessive risk taking, poor decisions and getting away from a trading plan. How do I take the losses in stride and change my behavior that leads to the occassional big loss?
 
You have a 98% win rate but it seems you are either using to large of stops or are having trouble letting profits run both possibly stemming from a fear of not wanting to lose.
 
The important thing is that you're profitable. According to your "numbers", you have many small profits and a few big losses. You're a perfectionist. You eat like a bird and defecate like an elephant. If you eliminated some of your huge losses, your profitability would be so much better. Then again, I'm willing to bet that you took a lot of "heat" on many of your profitable trades. You have to focus on being consistent. Similar to what some of the other guys said, use tighter stops to limit losses and expand your time horizon in order to maximize gains. Focus on markets that seem to be trending strongly.
 
Can you provide details on the largest losing trades? Such as the date, time, where you bought/sold & exited? etc...
Let's examine why you took those hits Hurricane. The year to date total is informative, but too generic, so let us analyze it, it makes perfect sense, you just might gain insight on what you're doing wrong.
 
Quote from volente_00:

You have a 98% win rate but it seems you are either using to large of stops or are having trouble letting profits run both possibly stemming from a fear of not wanting to lose.
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That's the problem with these figures -- unless you have very strict size and/or stop rules that you adhere to, you cannot get a clear picture of your performance. If you are of the "can't take a loss" type trader, and are averaging down into losers constantly just to get out even, it's difficult to even say whether your methodology will continue to be profitable or not.

You must realize that being "profitable" cannot take priority over trading "properly".
 
Quote from nazzdack:

The important thing is that you're profitable. According to your "numbers", you have many small profits and a few big losses. You're a perfectionist. You eat like a bird and defecate like an elephant. If you eliminated some of your huge losses, your profitability would be so much better. Then again, I'm willing to bet that you took a lot of "heat" on many of your profitable trades. You have to focus on being consistent. Similar to what some of the other guys said, use tighter stops to limit losses and expand your time horizon in order to maximize gains. Focus on markets that seem to be trending strongly.
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Nazzdack has correctly read a lot from limited information. I can't stand the thought of passing up a quick profit and some of my best trades have started out with big losses. I do need to learn how to slow down and let the trades fulfill their potential.

I'm doing some stock trades, including pairs, but mostly currency futures. The technical suggestions like stop losses are fine, but there's a reason why I put this post in the Psychology forum. How to overcome the emotions that go with trading? I have something working for me now but need to avoid holding on at any cost. This past Friday was not a good day.
 
I know it sounds crazy but get a psychology trading coach. Most people dont realize that 50% of your time allocation should go towards the psychological aspect. It easily makes up 40-60% of your peformance, some people more like 80%. Most people would disagree with me, but its the truth. Most large hedge funds have a psychology coach... why would they have one even if they were great traders? What do you think happened at amaranth? If you want to make consistent gains in this business at some point you will have to understand your emotions.
 
Quote from apex82:

I know it sounds crazy but get a psychology trading coach. Most people dont realize that 50% of your time allocation should go towards the psychological aspect. It easily makes up 40-60% of your peformance, some people more like 80%. Most people would disagree with me, but its the truth. Most large hedge funds have a psychology coach... why would they have one even if they were great traders? What do you think happened at amaranth? If you want to make consistent gains in this business at some point you will have to understand your emotions.
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Amen to what he said.

Here's one source:
http://www.tradingontarget.com/

and here's another:
Enhancing Trader Performance

While it is not easy, but it is possible to develop a good system which wins far more than it losses, the system is mechanical, but we most definitely are not.

Best Regards,

JJ

edit: I have found through my direct experience that what apex82 said is true, so I also use self-hypnosis to condition my subconcious to take (and only take) my system trades, and trade as if I were an employee of the system (and my compensation is not directly to the trading results :p ).

Once you crack this nut, you won't be working for too much longer - unless you really want to, that is!
 
Quote from Hurricane:

I'm doing some stock trades, including pairs, but mostly currency futures.
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If you are trading currency futures with the attitude where initial losers become your biggest gains while you consistently take small winners -- you will blow out eventually, it's virtually guaranteed.

Look back over your records -- are your profits actually the result of your trade timing? Or are you just getting away with trading small enough so you can keep averaging out of trouble? If 2% of your trades equate to losses of more than 50% of your profits, you are just playing russian roulette. You might get away with this trading opm, but with your own funds the clock is ticking against you.

To really get a clean picture of whether your methodology is actually profitable, you must be able to maintain a consistent position size/use of leverage for the duration -- it's the only way to get an objective picture. Losses that raise the propensity for "increasing risk" is EXACTLY how blow-outs happen.
 
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