My Trading Journey - Thoughts, Ramblings, Live trades

[_eug_]

I will post my thoughts, progress, maybe some live trades if time allows during the day. Ultimate goal is to trade as a primary source of income.


Background

I have been index investing since 2010. I was convinced that profitable trading was not a real thing and that buying indexes for long term is the only way to interact with the financial markets. I owe that to books like A Random Walk Down Wall Street and Four Pillars of Investing. 90% of my net worth is still in long term investment accounts. I am only trading with a small portion of my net worth.

Last summer I left my Mortgage Sales Job because I was burned out and was not happy with what I was doing as a career. After some searching I started reading books about trading. After reading multiple trading books and playing around with Sim trading I decided that this is what I want to do from now on. Trading is my main focus right now and I plan to make it work and understand the learning curve that is required. I am going at this alone I have no mentors and don't buy trading education. All my knowledge is from online or library.

Trading experiences so far

I have been alternating between live trading and sim trading since December 2016. To be honest I cant make consistent profits on sim or on live. Consistent losses is more like it. I had 3 weeks or so of rising equity curve but after that its been down hill. The rising equity was on US small cap stocks but I really dislike trading them due to the massive spreads and the HFT games with penny jumping when you try to bid or offer with limit orders. Also I gave back all my gains in that market. I decided to trade a liquid instrument where you can buy on the offer and sell on the bid without getting killed on slippage. So SPY is where I have been day trading. For 2 months now, just SPY. I like this instrument and once I "get it" I can move on to ES or SPY options to make some actual money.

My discipline has improved over the months. I don't add to losers and I take my stops where I entered them. I still struggle with cutting the losers before the actual stop is hit when its somewhat obvious that the trade is not going as planned. I guess hope is whats driving that. I am still undecided about trading with bracket profit taker or just taking profits discretionary based on price action.

Looking at my stats, its obvious that I don't have an edge yet or at least I cant execute properly and at the right time. I take trades based on market structure, key levels, and price action around levels. I have a moving average on my chart but it doesn't effect my trade decisions, its just a visual guide to the trend I guess. I also watch Time and Sales to look for absorption and try to figure out if there are other signs in there. At this point i am usually wrong with my market analysis but I understand that it takes time to be good.

I keep a detailed trade journal, p&l tracking, and psychology journal. Also write my ideas about price action and market structure as the trading day unfolds.

Part of me wants to keep grinding out on live trading and taking losses while learning and "paying tuition". I don't know if I am being stubborn and if this is the way to go to learn this game. Or do I go back to trading SIM and grind it out there until I can at least prove that I can have a positive expectancy.

The thing is that I am discretionary trading so obviously emotions play a role. Will success in sim trading translate to live? I don't want to waste my time there but at the same time don't want to blow my capital.

I listen to a lot of chat with traders interviews and it seems that most who succeed did go through the process of blowing up accounts so that is what keeps me trading live even though I lose consistently.

I am making this journal to interact with other traders and also as a place to think out loud. There is a lot of negativity on ET and I fully expect people to tell me that I wont make it but I am putting it out there anyway.

 

[beerntrading]

I have been alternating between live trading and sim trading since December 2016. To be honest I cant make consistent profits on sim or on live. Consistent losses is more like it.

Being a consistent loser is better than being an inconsistent winner. If you're consistent at losing, all you need to do is flip to the other side of the market (unless you're getting eaten alive by commissions)

For what it's worth, I can't call price direction well enough to make money, so I trade in options...I'm still sitting on very healthy profits.

 

[_eug_]

Being a consistent loser is better than being an inconsistent winner. If you're consistent at losing, all you need to do is flip to the other side of the market (unless you're getting eaten alive by commissions)

For what it's worth, I can't call price direction well enough to make money, so I trade in options...I'm still sitting on very healthy profits.

A lot of losses are from getting chopped up in trading ranges or being wrong about market direction right before a big move. When I am right I usually catch a move but its just not enough to cover all the losses since volatility is pretty low. I thought about fading myself but I cant really figure out about how to do it. If I know I'm gonna fade myself, then will I even think the same way?

Right now I am trading tiny size. Last month was 100 Shares SPY. This month 50 Shares spy. So ye commissions eat up pretty much most of my profit but at this time I am just looking for consistency and collecting stats to support a size increase or leverage.

 

[beerntrading]

A lot of losses are from getting chopped up in trading ranges or being wrong about market direction right before a big move. When I am right I usually catch a move but its just not enough to cover all the losses. I thought about fading myself but I cant really figure out about how to do it. If I know I'm gonna fade myself, then will I even think the same way?

I do option credit spreads for exactly that reason. If I'm a lot right, I get a big winner. If I'm a little right, I get a solid winner. If I'm a little wrong, I get a little winner. If I'm totally wrong, I get a tax deduction...

 

[_eug_]

Here is how today's trading day went. I got killed in the chop in the morning and was slow to take profits on trades that did go my way. Also traded more than usual. Normally I only take 4 -5 trades a day.

 

[beerntrading]

Yeah...that looks about like how I do on price movement exposure. Again, that's exactly why I trade options and do so with 5-7 positions to diversify. It slows the gains, but also slows the losses...and turns some into gains. I have about a 60% win rate, with a better than 1:1 gain to loss ratio when comparing average lots to average gain...if you except my hedges that I hope to be losers, my win rate is mid-70s.

 

[_eug_]

For the month of April I had 38% winner / loss rate and an average profit factor of 1.38 before commission and 1.12 if you factor in commissions but I am using tiny size so commissions wont be as bad once I do real size. Max consecutive losers 11 and max consecutive winners 6. Took about 100 trades in April.

Goal is to increase accuracy and profit factor.

Right now I am trading with 1 entry and 1 exit. I am thinking of maybe doing 1 entry and 2 exits. First profit exit at 1 times risk and the rest let it run based on price action. Or maybe take first profit target at the next price pivot based on the chart as things tend to slow or reverse around these. This should help as I do have trades that turn back on me pretty often. Its just with the tiny size I will be getting killed on commissions even more. Something to review and think about for me.

In regards to options, I have zero knowledge about them at this time. Main focus right now is on learning to read charts in real time.

 

[birzos]

A lot of losses are from getting chopped up in trading ranges or being wrong about market direction right before a big move.

Over 1,000 words used and you already have the answer, the wonders of the normal distribution. Make more perfect trades by waiting longer, but that needs more capital and more perfection which means something very unfortunate, it's not palatable for your, nor 99.9% of aspiring traders, view of "how it should work" for their situation. The markets don't care.

 

[beerntrading]

For the month of April I had 38% winner / loss rate and an average profit factor of 1.38 before commission and 1.12 if you factor in commissions but I am using tiny size so commissions wont be as bad once I do real size. Max consecutive losers 11 and max consecutive winners 6.

24% commission (IN A MONTH!!!) Is insurmountable. That tips the odds ridiculously out of your favor. Put it this way, you're starting with .76, but have a break even of 1.00... 33% gain just gets you to the starting line. That's something like 3050% annualized, compounded just to break even.

It may be worth while to pay to learn, but I think you're learning the wrong instrument.

 

[_eug_]

Another losing day today. That makes 7 red days in a row. I am going to go to sim for the next while and practice a method with 2 lots and scaling out to see if it makes a difference. I struggle with focus when sim trading because there is no money on the line. Trading small size of 50 shares really doesn't effect me emotionally since the losses are tiny. I may as well sim and save on the commissions and losses while learning the price action.

Last time I went to sim it lasted for 2 weeks. Lets see how it goes this time.

In terms of studying, I finished reading Adam Grimes - Art and Science of Technical Analysis yesterday. Really like the stuff that he teaches about market structure. I can see it in the charts after the fact but cannot react to it in real time. I am always second guessing myself or jumping in at the wrong moment. I also struggle with anticipating moves vs waiting for confirmation.