Looking for Advice

[Gazillionaire]

Practice this test first. If you can't pass it with a 10% edge, do not start trading.

https://gamesfortraders.com/coin-challenge/

 

[benten]

As others have noted, you’re trading randomly, which even at 50% is a losing game because you still are paying the bid/ask spread.

My advice:
- quit trading for now, focus on unlearning what you’ve taught yourself
- start reading about financial markets from a professionals perspective (efficient market hypothesis, assumption of no arbitrage and no trading frictions)
- learn the tools that will help you analyze markets (data analysis and econometrics, focusing on testing causality)
- try to get a job in the industry to learn from actual practitioners
- figure out if you are more qualitative or quantitative in your approach and stitch together a process that builds off it
- try to trade again

Good luck.

Agreed to all your points buddy!

 

[newwurldmn]

Background:
I have traded on and off for four years. This October makes it literally the 4th year. I am a losing trader. Was always in the phase of break even in 3.5 years but this past 0.5 years I made explosive gains followed a significant loss in capital putting me in the red. I have never recovered financially from this loss.

Trading Style:
The way I trade is based on price. My theory is self taught although bits and pieces may have been taken by different information I have taken. I trade naked charts except for price levels, this means no trend lines or volume. I just trade price, the only variable I assumed to be significant. I will step you through my daily process.
I trade only SPY options. Meaning I buy calls/puts.
Premarket:

• I go from Daily -> 1 Hour -> 5m looking for areas of importance. Essentially making a price ladder of certain spots to trade.
• Already in the back of my head because I have been consistently trading I am aware of the phase of the markets. I learned to trade the V of the spy drops. Essentially on the way down and on the way up but intraday(From writing this I can see sometimes I made bad trades now that I look back by trading periods that are not within the V).

Market:

• When market opens price should be between two important levels. If not in the case of a gapup, I fail to understand where to trade.
• Let us assume the market is in the phase of dropping. Signs of this are attempts to go higher failing multiple times. Someone wants out, and this in effect causes others who ware wanted to sell to test the limits of the other sellers. They will essentially wait if price can go higher, if someone is selling at a certain price and I also need to sell, I do not know his size, therefore I wait to see how much he is willing to sell. If he keeps selling and starts dropping the price, which he does not want because it will lose him profits. This shows he knows someone else is willing to sell, or that from my perspective someone else not just the guy is selling. Meaning there are 3 sellers in total. Me, the guy I was testing, and a third. The more people who want to sell the more dramatic the drops will be, essentially leading to a inflection point where selling besets selling. This is the way I trade. I will get in on a range betting on breaking out or breaking down and trying to get the best price to ride the wave. In so getting the best price I also reduce my risk of losses if price breaks against my bet.

But I fail to do so. I do not follow my plan. Reducing risk is well but overtrading leads to losses, and losses lead to more losses for me. Maybe it is the environment, maybe it is that I need to prove myself. I don't know but I always seem to destroy my gains and some more. I increase my size, I hope instead of selling for a small loss.

All these actions seem to point to me wanting to be right. I know to be a trader one has to be willing to accept his losses. I think, I have all my hopes riding on trading. I am still in university and I am not doing well mentally. I trade for my ego not for profits, and I think that is what is killing me. I feel frustrated because in a lot of my trades I make good calls on tops and bottoms and it feels great. I just can't seem to stay disciplined. My environment has changed, I have also changed in doing so. Maybe I just need a break. I started trading 1k in my college apartments, over the past 4 weeks I made $270 on trading on only a size of 1 options contract. Then I made a mistake. I was up $60 on one contract, and I never sold. I watched the gains disappear and I lost and extra $30. This began the journey of me losing my capital throughout the next few days. Eventually leading to me being down 300 from my initial 1k.

I would appreciate any advice. I do want to be a trader and I know it is possible, I have no doubts. But I feel like I have been in this cycle for way to long. Maybe it is my system it might have never had a positive expected value I don't know how to test this. The fact is I know I make mistakes and I can't keep myself from doing so. I try to prevent it, but I am human. I have thought of ways to prevent this. I take breaks after exiting 1 trade. I read my plan before the market open. I always make mistakes.

I just can't seem to grasp onto this dream.

Best,
rarefarefroghorn

P.S. I currently do not trade. I am focusing on school.

work on your emotional balance.

 

[sandy_s]

If I read your post correctly, you say you know how to place wining trades but is a loser due to lack of discipline.

If that is the case...

First, at your age very few people will have the discipline that is needed of a discretionary trader.

Second, you know the problem which means you are already ahead of the game...

May be you can keep a profit target. Say if you are up by $40 for the day, close the position and stop trading. And if down by $20-30 close position and stop trading for the day. If your strategy is good - over time you will make a nice kitty and get into a good trading habit.

Once that is sorted you will be able to work on maximising profits, etc.

 

[notagain]

You are focused on reversals but what about continuations. BollingerBands are a good dividing line between noise and direction.

 

[toucan]

i look at my system 1-2 times per year and if needed tweak something. its usually something that needs to be changed because the market changed and is a small change to my system. but, i do evaluate the parameters of my system weekly and if needed, change some of those parameters. sometimes there are a lot of parameter changes, other times there are very few. and sometimes i quit trading something because that symbol's parameters don't meet my requirements. for example, this is the first year that i haven't traded currencies because they don't fit my trading parameters.

toucan

 

[traider]

i look at my system 1-2 times per year and if needed tweak something. its usually something that needs to be changed because the market changed and is a small change to my system. but, i do evaluate the parameters of my system weekly and if needed, change some of those parameters. sometimes there are a lot of parameter changes, other times there are very few. and sometimes i quit trading something because that symbol's parameters don't meet my requirements. for example, this is the first year that i haven't traded currencies because they don't fit my trading parameters.

toucan

How do you know what are the right parameters to use?

 

[smallfil]

In your very long post, you did not once, mention of having a trading journal. I have a trading journal and I add notes as needed. What a trading journal accomplishes is show you trading mistakes that you do over and over. It also, calculates my win rate, average gain vs average loss, expectation (whether you have an edge or not). By knowing your mistakes, you can avoid it and become a better trader. Losing $300 on a $1000 account shows you have no proper risk management. This is statistical but, to avoid risk of ruin and blowing up your account, you should not risk more than 2% on each trade. $1,000 x 2% is $20.00 per trade. If you are risking more than that per trade, you will blow up your account. Last piece of advise. Simplify things. Remember the KISS principle. The simple things are, the more easily to avoid confusion, ambiguity and numerous mistakes. I have simplified my trading system and use it to swing trade and trade following stocks. Whatever trading system you have, you should simplify it.

 

[toucan]

How do you know what are the right parameters to use?

a couple of my parameters are : My trading process relies on trend length (ie volatility) and initial risk... for example, weekly I evaluate/analyze trend lengths and if the trends are running less than 3 times my initial stoploss then I Look to see if changing trend parameters will help, if not then I don't trade that symbol. I set the 3 times my initial stop loss as a minimum for this parameter because I seldom get in at the trend start and seldom get out at the trend end. You know how it is. I adjust risk by adjusting the number of contracts I trade up to a maximum of 10 contracts. If my risk with 1contract is more than I am comfortable with I won't trade this symbol.

Hope this helps

 

[Bad_Badness]

honestly, perhaps you've just read half of his post. He's a college student trading a 1k account. There is no way on earth anything comes out of that unless he gambles on a shitcoin and hits the jackpot. Completely underfunded

Mea Culpa, I just assumed no one would be attempting to trade with less than the PDT minimums. It is true TLDR it all. It was a "post reply while compiling" situation over here.