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My Path To Success
- Thread starter Lucias
- Start date
- Status
- Not open for further replies.
NET P&L: +$147
Net points: +20
I'm going to be doing something different going forward. As I stated, I'm currently undergoing a review phase for funding. As part of that process, I'm required (and glad) to be able to take sim trades and demonstrate my ability.
I determine that trying out for this funding should be my primary focus over the next several months. As part of that conscious decision making process, I will no longer be taking any trades in my real money Nadex account except for system trades -- with possible slight discretion. Likewise, I will be suspending my C2 discretionary account for the next 2-5 months. Today I turned a subscriber away. While having the gap in my record isn't desirable, it doesn't really matter and I'm not beholden to my record. I'm beyond to that. And I recognize that I may not get funding but that's okay too because I see this as a value building experience for myself.
I'm going to change my journal format to record the net points that I'm making every day or week. I'm going to record it per dollar ratio. If I have $1,000 whether that was 2 cars or 1 car then it's going to be 20 points. I primarily trade the ES but I'd like to get some experience with CL, as well. If I trade other instruments then I'll add those here as well.
My reasoning for this is that I want to keep focused on my progress but I do think there may be something negative about just focusing on the money because as Barry as said, if you know the value of a dollar you're probably not going to make as a gambler or as a trader.
And, so I'm going to just focus on points and not dollars.
I'm going to be pushing really hard to produce my best returns. I'll have a lot more ability to get in and out quickly of positions in the futures market. I'll have a lot less friction. So, it should be easier for me to shake off losing positions. That'll be key. I'll be building more systems... honing in my market read.
I'll be trading a fairly small account, and I'm going to push myself to the limit. I wouldn't have did this a year because just consistent winning has built my confidence to the point where I know I know what I'm doing and I know what it is. So, I'm not afraid to add to the secret sauce. I always have been. But, I feel I have the secret sauce down well enough that I can take the risk of adding to it. I have too really because the nature of this trading will be slightly different then my core competency. I'm not afraid of failure.
I think is going to be both a great challenge and a great learning experience.
Net points: +20
I'm going to be doing something different going forward. As I stated, I'm currently undergoing a review phase for funding. As part of that process, I'm required (and glad) to be able to take sim trades and demonstrate my ability.
I determine that trying out for this funding should be my primary focus over the next several months. As part of that conscious decision making process, I will no longer be taking any trades in my real money Nadex account except for system trades -- with possible slight discretion. Likewise, I will be suspending my C2 discretionary account for the next 2-5 months. Today I turned a subscriber away. While having the gap in my record isn't desirable, it doesn't really matter and I'm not beholden to my record. I'm beyond to that. And I recognize that I may not get funding but that's okay too because I see this as a value building experience for myself.
I'm going to change my journal format to record the net points that I'm making every day or week. I'm going to record it per dollar ratio. If I have $1,000 whether that was 2 cars or 1 car then it's going to be 20 points. I primarily trade the ES but I'd like to get some experience with CL, as well. If I trade other instruments then I'll add those here as well.
My reasoning for this is that I want to keep focused on my progress but I do think there may be something negative about just focusing on the money because as Barry as said, if you know the value of a dollar you're probably not going to make as a gambler or as a trader.
And, so I'm going to just focus on points and not dollars.
I'm going to be pushing really hard to produce my best returns. I'll have a lot more ability to get in and out quickly of positions in the futures market. I'll have a lot less friction. So, it should be easier for me to shake off losing positions. That'll be key. I'll be building more systems... honing in my market read.
I'll be trading a fairly small account, and I'm going to push myself to the limit. I wouldn't have did this a year because just consistent winning has built my confidence to the point where I know I know what I'm doing and I know what it is. So, I'm not afraid to add to the secret sauce. I always have been. But, I feel I have the secret sauce down well enough that I can take the risk of adding to it. I have too really because the nature of this trading will be slightly different then my core competency. I'm not afraid of failure.
I think is going to be both a great challenge and a great learning experience.
Coach:
How was trading today?
Me:
Very good... market read was good. I picked the lower overnight and got up. Took my profits good and fast. I only had a smallish position on and it could have easily been larger if all my limits had been hit. I took out $260 on 2 trades.
Coach:
How did your system fair?
Me:
Not as good. It didn't adapt to the current market conditions. It didn't grab profit and took its largest loss today since I started tracking it in real time. Historically it only got hit with a couple losses this big. Kinda hard to believe that I had my best day on 2 accounts trading the same basic signal as my system. I had my best days and it had its worst days and it was all the same idea.
Coach:
What's the lesson?
Me:
A lot of lessons.. one big lesson and if I hadn't taken profits I'd lost another $200 today possible and maybe more. I think of the lessons is that for me I tend to be right a lot on my calls and I need to take those profits off in today's market.
One thing that I learned also that in testing new variations of my system that setting targets doesn't work the same that settings stops works. Targets if taken to extreme can be really bad, if taken too tight. But.. within a range they can really boost the win ratio without hurting the net profit too much. The global optimal isn't always the local optimal. I got too set in doing the optimal thing and I didn't want to trade bad. Today, I just grabbed those profits and it worked beautifully.
Coach:
How did you overcome and adapt given that has been so difficult for you?
Me:
Obviously it did take me a while.. certainly a few things helped me. I made new variations of my systems that took profits off and I seen they were very good systems and I really like the equity curve. So, that told that if I have an edge then I'm probably not going to kill the performance by taking profits. I may win more and not as much but I'll still win something. I think that played in mind.
The other big part is that I just you know trusted my market read and started to trust my market read. And, I realized some of the comments here about taking my sim accounts more seriously was right.
Again, the fact I was using the spreads at nadex was critical because they had the premium and while my entry actually would have been up a good amount today.. my spread would have been worthless. I guess it also goes into finally starting to understand that even though NADEX spreads are similar to futures they aren't the same. They have certain risky characteristics that I didn't understand.
I'll give a good example. If I go in and buy a low in futures market then I take a high tail risk usually -- if I'm wrong. I'll take a large loss. In spreads, I'll enter a spread at the same time and reduce my money at risk. But, my entry is poor and also I payed premium. I protected myself from the big loss but I expose myself to reversals especially late day reversals which combine nominal loss and premium loss. In futures, my entries are typically better and you know it could run back on me to the entry but with spreads even though I picked a bottom then I still may have payed a high premium.
I guess the primary difference was I got back to trusting my market read. I wasn't afraid to be wrong. I wasn't afraid to miss a move. I didn't care about breaking even. I just recognized that the market offered me something, and I took it.
Coach:
Great job. I agree that it seems that too much of a focus on perfection, on great trading, became a distraction for you. I think that as you start to trust your market read again that you're going to start winning a lot more. And, that's build going on itself.
How was trading today?
Me:
Very good... market read was good. I picked the lower overnight and got up. Took my profits good and fast. I only had a smallish position on and it could have easily been larger if all my limits had been hit. I took out $260 on 2 trades.
Coach:
How did your system fair?
Me:
Not as good. It didn't adapt to the current market conditions. It didn't grab profit and took its largest loss today since I started tracking it in real time. Historically it only got hit with a couple losses this big. Kinda hard to believe that I had my best day on 2 accounts trading the same basic signal as my system. I had my best days and it had its worst days and it was all the same idea.
Coach:
What's the lesson?
Me:
A lot of lessons.. one big lesson and if I hadn't taken profits I'd lost another $200 today possible and maybe more. I think of the lessons is that for me I tend to be right a lot on my calls and I need to take those profits off in today's market.
One thing that I learned also that in testing new variations of my system that setting targets doesn't work the same that settings stops works. Targets if taken to extreme can be really bad, if taken too tight. But.. within a range they can really boost the win ratio without hurting the net profit too much. The global optimal isn't always the local optimal. I got too set in doing the optimal thing and I didn't want to trade bad. Today, I just grabbed those profits and it worked beautifully.
Coach:
How did you overcome and adapt given that has been so difficult for you?
Me:
Obviously it did take me a while.. certainly a few things helped me. I made new variations of my systems that took profits off and I seen they were very good systems and I really like the equity curve. So, that told that if I have an edge then I'm probably not going to kill the performance by taking profits. I may win more and not as much but I'll still win something. I think that played in mind.
The other big part is that I just you know trusted my market read and started to trust my market read. And, I realized some of the comments here about taking my sim accounts more seriously was right.
Again, the fact I was using the spreads at nadex was critical because they had the premium and while my entry actually would have been up a good amount today.. my spread would have been worthless. I guess it also goes into finally starting to understand that even though NADEX spreads are similar to futures they aren't the same. They have certain risky characteristics that I didn't understand.
I'll give a good example. If I go in and buy a low in futures market then I take a high tail risk usually -- if I'm wrong. I'll take a large loss. In spreads, I'll enter a spread at the same time and reduce my money at risk. But, my entry is poor and also I payed premium. I protected myself from the big loss but I expose myself to reversals especially late day reversals which combine nominal loss and premium loss. In futures, my entries are typically better and you know it could run back on me to the entry but with spreads even though I picked a bottom then I still may have payed a high premium.
I guess the primary difference was I got back to trusting my market read. I wasn't afraid to be wrong. I wasn't afraid to miss a move. I didn't care about breaking even. I just recognized that the market offered me something, and I took it.
Coach:
Great job. I agree that it seems that too much of a focus on perfection, on great trading, became a distraction for you. I think that as you start to trust your market read again that you're going to start winning a lot more. And, that's build going on itself.
Net points: +29
Had a great plan coming in for today but wasn't actually at my desk for the open.. even so having a good run. A lot of these are 1 point-2 point scalps.. I've never scalped. I was able to catch a good one with only about 3 ticks of risk.
I'm doing a lot more experimenting. One of my new experimentation is just to make a quantified market call and then stick with it. I usually do this on the 1-2 day time frame. Now I'm doing it on the like 5 minute-15 minute time frame.. same thing but just sped up.
Hopefully can keep this up..
Had a great plan coming in for today but wasn't actually at my desk for the open.. even so having a good run. A lot of these are 1 point-2 point scalps.. I've never scalped. I was able to catch a good one with only about 3 ticks of risk.
I'm doing a lot more experimenting. One of my new experimentation is just to make a quantified market call and then stick with it. I usually do this on the 1-2 day time frame. Now I'm doing it on the like 5 minute-15 minute time frame.. same thing but just sped up.
Hopefully can keep this up..
Net points: +39
I had a really amazing run tonight. In the past, I used a web based interface and had to type in my orders and didn't have the DOM or I traded @ NADEX where again I gave up 2 ticks per order. I also was taking trades for 1-2 day hold. Tonight, I was taking out much smaller measured moves using the DOM.
I was in a great flow and it felt really natural. I'm still experimenting and one night isn't proof but it felt like this was how I was meant to trade.
Of course, I'm on the simulator now. I was able to move really good like water, when I was wrong then I just right back in.
I feel really good though because my risk per trade was really low and my win ratio was very high. I was able to use tight stops of sometimes as low as 3 ticks. And when I got stopped out wrongly then I just got back in.. really great read. really fluid..
I feel this maybe is how I was meant to trade.. we'll see.
I had a really amazing run tonight. In the past, I used a web based interface and had to type in my orders and didn't have the DOM or I traded @ NADEX where again I gave up 2 ticks per order. I also was taking trades for 1-2 day hold. Tonight, I was taking out much smaller measured moves using the DOM.
I was in a great flow and it felt really natural. I'm still experimenting and one night isn't proof but it felt like this was how I was meant to trade.
Of course, I'm on the simulator now. I was able to move really good like water, when I was wrong then I just right back in.
I feel really good though because my risk per trade was really low and my win ratio was very high. I was able to use tight stops of sometimes as low as 3 ticks. And when I got stopped out wrongly then I just got back in.. really great read. really fluid..
I feel this maybe is how I was meant to trade.. we'll see.
I was up about 50 points and gave most of it back. Just experimenting with higher frequency trading.. not scalping but just shooting for minimum target, like 1 point.
I've considered it thoughtfully and believe that for ultra high return this is the way to trade. It has a lot of mathematical benefits.
It felt easy first night.. I made a ton of points. But I gave most back trying to trade the difficult volatile market today. I did that on purpose though to get more experience. I could have lost less with hot key in/out. Mouse was too slow.
I've considered it thoughtfully and believe that for ultra high return this is the way to trade. It has a lot of mathematical benefits.
It felt easy first night.. I made a ton of points. But I gave most back trying to trade the difficult volatile market today. I did that on purpose though to get more experience. I could have lost less with hot key in/out. Mouse was too slow.
I want to lay out the case for why higher frequency trading is way to go. First, I can predict market. I usually predict it for 1 day or 2 days. I never seriously try to predict it on shorter time frame because I didn't have software or fee structure to execute on it.
* Not enough points in the market on open-close basis to make mega returns. The market simply doesn't move enough.
* All "edges" are weak. Any trade can go bad. Must keep risk per trade low. If risk is low then profits will be low then will need MANY trades.
* Since I can predict market 1-2 days in advance I should be able to predict in a few moments in advance. More predictions = more profit.
* Why wait for a great setup that is only 55% chance to work -- many are. If I can predict market in advance...
--
It sounds great in theory. But, in practice it remains to be proven if I can do it. I'll have a bigger write up.
But some traders only want to take 1 or 2 trades with big size.. that's okay but then you lose statistical benefits that come from trading small.
I've always traded big and didn't think higher frequency trading could work. I'm not sure that it can but it is the only way *mathematically* to make huge returns.
I dunno much about what Jack says but he's right, in essence except that you have to predict each movement constantly. He's right that the big profits in theory lie in taking out every leg of a movement.
* Not enough points in the market on open-close basis to make mega returns. The market simply doesn't move enough.
* All "edges" are weak. Any trade can go bad. Must keep risk per trade low. If risk is low then profits will be low then will need MANY trades.
* Since I can predict market 1-2 days in advance I should be able to predict in a few moments in advance. More predictions = more profit.
* Why wait for a great setup that is only 55% chance to work -- many are. If I can predict market in advance...
--
It sounds great in theory. But, in practice it remains to be proven if I can do it. I'll have a bigger write up.
But some traders only want to take 1 or 2 trades with big size.. that's okay but then you lose statistical benefits that come from trading small.
I've always traded big and didn't think higher frequency trading could work. I'm not sure that it can but it is the only way *mathematically* to make huge returns.
I dunno much about what Jack says but he's right, in essence except that you have to predict each movement constantly. He's right that the big profits in theory lie in taking out every leg of a movement.
Remember Lucias, different strategies work better in different markets. Do not let performance during a crash represent performance during different types of markets. It is easy to get excited at times like this. Though, I still think taking profits will help you in any market, just don't let this type of market get to your head. It is easy to develop bad habits if they are getting paid in this environment.
I want to continue about the theoretical advantages of small bet trading.
"Small bet trading" - Higher frequency
Advantages/Theory
* Any advantage in the market has a large degree of uncertainty. Any technical indicator, market call, etc is only going to be right some of the time. It doesn't make sense to place big bets.
* Low risk per bet
* More opportunities.
* Stronger statistical results. A method that generates 300 trades per is much more significant then a method that only made a few trades.
* Low risk per bet
* Assumes there is also a small advantage.
* Casino model. Also, this is why professional poker player can make more then I can trading even though my edges are often better. They can play thousands of hands. This is also how many quants trade the market, i.e using many trades.
Disadvantages
* It assumes there are tons of opportunities in the market. If there are only rare opportunities then this won't work. Most scholars agree the market is efficient.
* With only small bets, it will be difficult to best capitalize on best trades
* Churn. High cost of business.
"Big Bet Trading" High leverage/lower frequency trading
Advantages/Theory
* Market is mostly priced right most of the time but sometimes rare deals are available.
* Capitalize on best opportunities by trading larger and placing big bets on these best opportunities. Limit losses and churn by not placing mediocre trades.
* Assumes there are times when market can be called with high probability
* Cited by Dr. Steenbarger.. focus on best trades. Not making more trades.
Disadvantages/Problems
* Even best opportunities will fails sometimes. Creates for volatile returns. Method is subject to high serial correlation risk, as well.
* High risk per bet. Obviously one is placing big bets that can go bad
* Limited opportunities to profit.
--------------
I have in past went strongly with the big bet philosophy. I believed small bet philosophy wasn't possible for the retailer. This was further reinforced by high costs of trading for many retail traders. Small bet trading is largely governed by cost of transaction.
However, as a theory I've started to believe small bet trading has better theoretical grounds in terms of risk management. I like it in THEORY. However, most successful traders that I've KNOWN made money from big bet trading. Also, small bet trading does seem to be more at odds with EMH then big bet/rare opportunity trading.
What my current experiment/goal is to determine if I can translate my predictive ability.. "big bet" style into small bet higher frequency trading. I'm not very confident that I can do this.
Most traders I've known were successful because they were ACCURATE and not because they were PRECISE. Look at Don Miller, he's ACCURATE but hes' not precise. I'm extremely ACCURATE in predicting the market but I'm not extremely PRECISE. Dr. Steenbarger, like myself, only used a large/catastrophic stop. He was ACCURATE but not precise. Gary Smith again was ACCURATE but NOT PRECISE.
I've always felt when I tried to be too precise that I lost good opportunity.
It is kinda of a test of my beliefs too. I'm very strongly wanting to make it work. But, also, if I do fail then it will kinda just be a confirmation as to the limit of my abilities.
Anyway, I hope I can make it work. I'd rather make money without taking big risks. I'm just not sure it is possible. This prop opportunity has directly led to my exploration of these ideas. I'm hoping I can make it work.
@KSMETA
When I run tests against my system, I seen that many methods were profitable. It is a tradeoff. Smaller targets increases the win ratio while decreasing net profit. large or no targets decreases win ratio while increasing net profit. For me.. I'd rather give up some theoretical profits when risk is high.
"Small bet trading" - Higher frequency
Advantages/Theory
* Any advantage in the market has a large degree of uncertainty. Any technical indicator, market call, etc is only going to be right some of the time. It doesn't make sense to place big bets.
* Low risk per bet
* More opportunities.
* Stronger statistical results. A method that generates 300 trades per is much more significant then a method that only made a few trades.
* Low risk per bet
* Assumes there is also a small advantage.
* Casino model. Also, this is why professional poker player can make more then I can trading even though my edges are often better. They can play thousands of hands. This is also how many quants trade the market, i.e using many trades.
Disadvantages
* It assumes there are tons of opportunities in the market. If there are only rare opportunities then this won't work. Most scholars agree the market is efficient.
* With only small bets, it will be difficult to best capitalize on best trades
* Churn. High cost of business.
"Big Bet Trading" High leverage/lower frequency trading
Advantages/Theory
* Market is mostly priced right most of the time but sometimes rare deals are available.
* Capitalize on best opportunities by trading larger and placing big bets on these best opportunities. Limit losses and churn by not placing mediocre trades.
* Assumes there are times when market can be called with high probability
* Cited by Dr. Steenbarger.. focus on best trades. Not making more trades.
Disadvantages/Problems
* Even best opportunities will fails sometimes. Creates for volatile returns. Method is subject to high serial correlation risk, as well.
* High risk per bet. Obviously one is placing big bets that can go bad
* Limited opportunities to profit.
--------------
I have in past went strongly with the big bet philosophy. I believed small bet philosophy wasn't possible for the retailer. This was further reinforced by high costs of trading for many retail traders. Small bet trading is largely governed by cost of transaction.
However, as a theory I've started to believe small bet trading has better theoretical grounds in terms of risk management. I like it in THEORY. However, most successful traders that I've KNOWN made money from big bet trading. Also, small bet trading does seem to be more at odds with EMH then big bet/rare opportunity trading.
What my current experiment/goal is to determine if I can translate my predictive ability.. "big bet" style into small bet higher frequency trading. I'm not very confident that I can do this.
Most traders I've known were successful because they were ACCURATE and not because they were PRECISE. Look at Don Miller, he's ACCURATE but hes' not precise. I'm extremely ACCURATE in predicting the market but I'm not extremely PRECISE. Dr. Steenbarger, like myself, only used a large/catastrophic stop. He was ACCURATE but not precise. Gary Smith again was ACCURATE but NOT PRECISE.
I've always felt when I tried to be too precise that I lost good opportunity.
It is kinda of a test of my beliefs too. I'm very strongly wanting to make it work. But, also, if I do fail then it will kinda just be a confirmation as to the limit of my abilities.
Anyway, I hope I can make it work. I'd rather make money without taking big risks. I'm just not sure it is possible. This prop opportunity has directly led to my exploration of these ideas. I'm hoping I can make it work.
@KSMETA
When I run tests against my system, I seen that many methods were profitable. It is a tradeoff. Smaller targets increases the win ratio while decreasing net profit. large or no targets decreases win ratio while increasing net profit. For me.. I'd rather give up some theoretical profits when risk is high.
Very frustrated.. after my good luck run with scalping. I've been losing, losing on it. The worst/best part is I can predict the market. It is very frustrating because I'm extremely good at what I do-- just unreal good. And, it seems I'm on this path to try return more and more because I can't get the capital. But the more I try to do.. it just seems I'm not getting anything for it. And I could be making money just doing what I do.
I'm doing this project to get funding. However, I do not seriously believe it is enough funding. It is a very small capital amount which is why I'm working new techniques.
I knew this was an experiment but it really starting to eat at me. Setting little tiny stops. Getting stopped out over and over and then seeing market do exactly what I predicted.
The market jumps 1-3 points in a second. I know some claim to use tight stops but I just don't see it. In the after hours, if you get lucky sometimes. I'm thinking a 3 point to 6 point stop is the minimum for my ability level.
I'm just treating it as a learning experience. I'm confident in my abilities. I think ? my backer understands my abilities and I'm experimenting to return more. I hope so or I'll likely be cut pretty soon because I don't have an edge when using tiny stops.
It is just really getting difficult. I've also lost at least one subscriber to my system since I shut it down. It was just starting to attract interest. I'm hoping I made right decision in focusing on this funding.
The truth is that everyone wants a risk free way to make money in the market. My abilities are very strong but they aren't risk free and to make good returns then one will take a lot fo risk. I don't see any other way.
Likewise, my goal with this project is to take out $500/day trading futures with a small account. I am dubious this is possible. My prediction abilities probably return 30% to 100% with reasonable risk. My trading strategies can do 50% to 100% with high risk. These are great returns. I'm already better then many professionals I know. However, it isn't $500 or 1k per day. It isn't consistent. It isn't possible without taking some big bets.
I'm really starting to doubt the people who claim to be making $500 or 1k per day trading small accounts. Nobody offered me mentoring and nobody who made these claims ask me what I was willing to pay to show the proof. Nobody ever took Gary Smith up on his offer either.
Anyway, I'm just going to keep working and try to stay positive. Try to keep learning... I am gaining new experience.
I'm doing this project to get funding. However, I do not seriously believe it is enough funding. It is a very small capital amount which is why I'm working new techniques.
I knew this was an experiment but it really starting to eat at me. Setting little tiny stops. Getting stopped out over and over and then seeing market do exactly what I predicted.
The market jumps 1-3 points in a second. I know some claim to use tight stops but I just don't see it. In the after hours, if you get lucky sometimes. I'm thinking a 3 point to 6 point stop is the minimum for my ability level.
I'm just treating it as a learning experience. I'm confident in my abilities. I think ? my backer understands my abilities and I'm experimenting to return more. I hope so or I'll likely be cut pretty soon because I don't have an edge when using tiny stops.
It is just really getting difficult. I've also lost at least one subscriber to my system since I shut it down. It was just starting to attract interest. I'm hoping I made right decision in focusing on this funding.
The truth is that everyone wants a risk free way to make money in the market. My abilities are very strong but they aren't risk free and to make good returns then one will take a lot fo risk. I don't see any other way.
Likewise, my goal with this project is to take out $500/day trading futures with a small account. I am dubious this is possible. My prediction abilities probably return 30% to 100% with reasonable risk. My trading strategies can do 50% to 100% with high risk. These are great returns. I'm already better then many professionals I know. However, it isn't $500 or 1k per day. It isn't consistent. It isn't possible without taking some big bets.
I'm really starting to doubt the people who claim to be making $500 or 1k per day trading small accounts. Nobody offered me mentoring and nobody who made these claims ask me what I was willing to pay to show the proof. Nobody ever took Gary Smith up on his offer either.
Anyway, I'm just going to keep working and try to stay positive. Try to keep learning... I am gaining new experience.
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