November Trading Journals

***Been trading 8 years***

***I'm only averaging $250/day, but I'm also trading very conservatively. Those of us with ambition hope to one day run one of those large funds, which we cannot do with discretionary trading 100k shares per day.***

I don't mean to be a jerk but 8 year's worth of experience and $250 a day doesn't really match.

$250/day is only from my day trading, which I approach conservatively. I started as an EOD trader and have made a lot more from EOD trading than I have from day trading. This is my own investment capital and I assume 100% risk, not a firms. Regardless, how much I make or don't make does not lessen the significance of what I have to say. For everything I've posted I have provided explicit details and specific examples. If you want to refute what I have to say then deal with the *facts* and not by attacking the poster, as you seem to do a lot. First you said my opinions don't amount to shit unless I put my own money on the line. When I tell you that I do you respond by saying it isn't enough therefore my opinions still don't amount to shit.

I mean, I don't mean to be offensive, but I will be convinced when you average $500 a day

Well you are a jerk and I am offended. Others may like your "brutal honesty" but your constant theme seems to be "unless you make as much money trading as I do then you don't know shit about trading". Of course, I've noticed an arrogance and ego about one too many discretionary traders. I bet that senior trading desk manager who dropped $145k in one day and was escorted out of your firm was probably more arrogant than you.

neither I am convinced that system trading works at least based upon your numbers.

What does it take to convince you that a system works? How many years of successful trading results? Do you want to see my W2 from last year? Should I post a GIF of my brokerage statements? If I trade one system consistently for 3 years but did not trade size, how does that invalidate the system?

Also, please get off the high horse of "when you trade longer time frame and managing far greater amount of capital than a typical day trader", you ain't there yet, and even then, there are far more discretionary fund managers than systematic ones, and we don't know how much discretion is used by the "systematic" ones.

I think you are the one with the high horse around here with your "you aren't shit until you trade size" attitude. If you read carefully I was only saying that most systems traders are NOT trading on the same time frame as the discretionary type of trading that you, Stockbroker, Don, and others here are trading. Systems traders (that I know of) are not scalping in-and-out of positions and looking at the tape. The point was only to refute your statement that the only way to trade NYSE stocks intraday is to be a good tape reader. You can most definitely trade NYSE stocks intraday on 60m bars without needing to read the tape.

Regarding discretionary fund managers. I never ever said that there are more funds using discretionary trading than systematic ones. In fact I've said that there are far many more discretionary traders than systems traders and it will remain that way for a long, long time. I gave specific examples of large fund managers who have admitted that they use a systems-based approach only to support my statement, which you doubted, that there are large fund managers who do use systems-based approach. I never said it was 100% mechanical where they left the computer to make all decisions. "Systems based approach" does not equal "100% mechanical".

Obviously any one of us are a long, long ways away from ever managing a 1B fund. If we did, we wouldn't bother with hanging around here. It is extremely rare to ever get there, obviously. My only point is that those large funds are NOT scalping in-and-out 100k shares at a time. They may be, however, entering in 1000 S&P contracts at a time, but they are not tape reading. That was the point.

Look, I don't need to prove anything to anyone. I may not have been spilling my emotions about what I should've done or not done on here for 2 years, but in my short stay I have given explicit details to every thing I've said and answered all questions with very specific examples. I'm not always right, but if you think I don't know what the shit about I'm talking about or think my opinions are without merit, then address my assertions directly. If you doubt the statisical signficance of observing short-term price behavior around a specific setup of the RSI over 5000 samples then talk about that. If you think my approach to variable position sizing for variable stops utilizing optimal f is invalid, tell me why. But don't attack the validity of my statements based on your uninformed opinion of how much I've been trading and how much you think I know or don't know.

I have a lot better things to do than hang around here, I just thought I'd contribute to the systems trading community. I'll be sure to not do it in your thread.
 
***$250/day is only from my day trading, which I am approaching conservatively. I started as an EOD trader and have made a lot more from EOD trading than I have from day trading.***

Do you still EOD trade? How have you been doing this year? Last time I checked whenever I talked to you about discretionary versus system I have always referred to intraday. I do not trade EOD so I can not judge your ability in that category. But if I survive in this business for 8 years and make $250 a day I would look for some serious troubleshooting.

***This is my own investment capital and I assume 100% risk, not a firms.***

No one is holding you back from going prep/pro, if you ever become a hedge fund guy you would be trading other people's money too. There is no difference between your money and other people's money, unless it is an inheritance (actually, even that won't take away one's RAW ability).

***Regardless, how much I make or don't make does not lessen the significance of what I have to say.***

This has EVERYTHING TO DO with what you have to say. We are traders and the only thing that determines trading success is the cold hard P&L at the end of the day. Whatever principle we speak of is backed up by that number. I still consider myself a small potato until I break out, and I look at people with less numbers the same way.

***You can most definitely trade NYSE stocks intraday on 60m bars without needing to read the tape.***

Ignorance, if you take two traders equivalent experience/size trading NYSE, one looks at exclusively chart, one looks at exclusively tape (yeah there are people who do just that), I would put my money on the tape reader every single time. Of course it is best to use them in conjunction, but someone who day trades NYSE and is not a good tape reader will never ever be able to go top tier. I think you need to give me a little respect on this particular vehicle, like I don't talk about how I can trade futures.

***I think you are the one with the high horse around here with your "you aren't shit until you trade size" attitude.***

You know what, I don't think I am any hot shot until I trade size, and I use that same ruler on everyone else. What do you have to brag about if you don't trade size? To make size you need to trade size, and I can tell you it is not just a matter of more capital, it takes a lot of skill to handle size. If stockkbroker starts to take on bigger positions and smoke my P&L on a daily basis, he will be someone I look up to in no time.

Mrs D makes fun of my size all the times, yet I accept it like a man and admits that right now she is very far ahead of me, and I make use of that negative energy so one day I can smack her down with superior numbers. When she told me that other trader was making 50 times my P&L, I was a little upset, but I can't argue with the truth.

***"unless you make as much money trading as I do then you don't know shit about trading"***

I have already told you what I rule myself with, until I make 100K a year I would not call myself a TRULY profitable intraday trader. Until I make 250K a year I would not call myself a GOOD intraday trader. Until I make 500K a year I would not call myself a GREAT intraday trader. Only when I make seven digit I would start to consider myself a legend (although knowing myself, by then I would probably demand even more out of myself). Those numbers will of course be adjusted higher if we go into another super bull market but assuming the market doesn't get too tough I would not lower it.

That is the standard I use for myself, and that's the standard I use on everyone else, whether it is at work, or on this board. If you notice when Sniper posted about his big hit I offered nothing more than a "you will make it back", because quite honestly I don't know shit about the game at that level.

Whenever I post about my style I don't just go over the advantages, I usually tell people flat out the critical flaws of my style (lack of specialization, and unlike bottom-up strategies, if the futures/sector is choppy, you are screwed), and whenever I see people posting about system trading I see a long list of advantages over discretionary, and zero weaknesses.

***If I trade one system consistently for 3 years but did not trade size, how does that invalidate the system?***

Are you kidding me? CONSISTENT profit on super years like 1999 and 2000 and you still can't trade size? What hell is holding you back? If you don't trade size, don't talk about it like you can, I sure as hell know I can't turn it on and off like a switch.
 
You have only been trading two years and are only 21, not that begin young means you don't have experience or are less likely to be successful, but treating everyone else like shit based on your rules is counterproductive. I know you've been a long-time member here and I know you try to be "brutally honest," but you can be "brutally wrong" as well.

If the only people's opinions you consider worth listening to are traders with a high P/L, and you consider everyone else as ignorant or stupid, then you've got a lot to learn. If you believe that everything a discretionary trader with a high P/L says is gospel, then you are setting yourself up for failure.

Scientific analysis of the markets allows me to explore the reality of market behavior for myself. I don't just accept someones opinion at face value, for example, "to enter on a continuation gap". Instead, I do research and discover that "for a 5-year period continuation gaps averaged a 11% move over 5 days on average of 220% increased volume on the first bar after the gap". Now I explore how I can apply this to trading. I develop a methodology and trade in real-time and based on my own analysis.

This is how I trade and this is what I'm sharing here. Dont' tell me "your techniques are shit until you can show me a xxxx P/L". Instead, tell me something like "Your RSI sample size of 5000 is irrelevant until you separate them into different market volatilities. Maybe its behavior is different in trending/range/high volatility periods that your results have averaged in."

I don't care what you think about my size. I'm sure there are a lot of traders here with account starting sizes around $100k who would treat $60k profits as awesome. Sure they may have made 2,3,4,5x more if they wanted to, but there are concepts called money-management and risk-of-ruin. Are all of them stupid and ignorant too? I'll take my conservative 60% and you can push the envelope. You may hit 7 digits in a year, then again you may be escorted out of your firm for dropping $145k in one day. Everyone has a different risk tolerance. If my $60k in profits using a strict methodology founded in rigorous analysis doesn't mean shit to you, then you'll never find a successful systems trader who will take the time to share their methodologies in depth here. Why would they dick around with a bunch of non-believers anyways?

It seems this type of chest puffing behavior is what separates many discretionary traders from the systems trader. I've never seen anyone say "you don't know shit" on <A HREF="http://www.wealth-lab.com" target="_blank">wealth-lab.com</A>, only specific reasons why someone's assertions may be wrong or can be improved. And yes, there are traders risking their own money on intraday systems traders at wealth-lab. Will they bring in $500k this year? I don't know. But I will treat them with every bit of respect.

Maybe I'm just on the wrong board here... I'd be happy to keep my positive contributions to wealth-lab and let you guys compare penis sizes all you want.
 
go to iasg.pertrac2000.com. its a list of hundreds of CTAs/hedgefunds. Sort by Assets managed. Crabel Capital Management has gone from $300K to $1B in the past 8 years. He is entirely mechanical. He is quoted as saying that he only really had bad years (1992) when he was discretionary. If you go through most of the hedge funds on that list more than 70% of them are purely systematic. There's a good reason for that.

For what its worth, I trade purely based on systems I developed using wealth-lab and I'm averaging $800/day since I started using only systems. Trading discretionary I lost a TON of money. I'm lucky my wife still speaks to me. The funny thing is, my discretionary technique seemed to be the same as my systematic technique. But as dottom pointed out, using computers you can find the statistical anomalies in the market that allow you to analyze which specific trades get a small enough edge to make it worthwhile.

I do think day trading is hard with system trading. Most systems I've seen that work really well are good for swing trades involving 2-3 days. If people would like, I'd be happy to post these swing/system trades as I make them just to see how it works. For instance, Friday I shorted HLIT at 10.56. I'll be in the position until next Wednesday unless the system tells me to exit earlier.
 
some quotes from fund managers. I gathered these up from the highest asset guys on iasg.pertrac2000.com. Note that this site is not just for system traded funds but for all funds. It just so happens that the most successful guys are system guys. All of these funds started at essentially 0 dollars managed.

BTW, I've definitely seen good discretionary traders who make good money. System trading is just a different, maybe easier (if you have the computer skills ) approach to trading.


Northfield
Assets Managed: $180M
“NORTHFIELD will make trading decisions pursuant to the Diversified Program, which was conceived, tested and refined by Douglas Bry and Philip Spertus. The approach is fully computerized and nondiscretionary.”

R.G. Niederhoffer Diversified
Assets Managed: $270M
“R. G. Niederhoffer Capital Management employs a computerized strategy to make short term trades in global equity, fixed income, currency, and commodity markets”

Crabel Capital Management
Assets: $1B
“Tobey Crabel has made a 180 degree turn from discretionary to systematic trading. In the early days, he used discretion to devise the system-generated signals and to decide whether or not to take the trade signals. "However, I have now come to the conclusion that systematic trading is more suited to me," he says. Since 1992, all signals from the system are traded even if they balance each other out in the long run and are contradictory. "It's only one in 500 or so cases that we do not trade a signal because of execution problems or some other technical reason," he adds.

Dunn Capital Management
Assets: $900M
“In short, Dunn's Standard program can be described as a technical, long term, major trend following, reversal system. Dunn's proprietary computerize programs are responsible for all decisions.”

Rotella Capital Management
Assets: $400M
“The set of trading "rules" are derived from an extensive, quantitative study of a large database of historical futures prices. Together, these rules form a computerized model. The rules are designed to predict short-term, intermediate, and long-term market moves. Only rigorously tested, statistically significant rules that meet certain risk and reward criteria are implemented as active trading rules.”

Eclipse Capital
Assets:$300M
“Eclipse Capital's trading program is systematic and trend-following in nature, with the objective of capitalizing on intermediate and long-term price trends. Eclipse Capital makes all trading decisions pursuant to its proprietary trend identification, capital allocation and risk management models.”
 
Well, what a good debate, and here's my 2cents.

Dottom,

I don't think a good trader can rely on one and only one system to be successful. If you think that you can devise a system that can be fully automated to trade, then you are totally wrong. All you new traders out there have to realize that the market is traded by HUMAN BEINGS not machines, not super computers. There is no logical explanations as to why the market does what it does, IT JUST DOES. Just because the market sells off today, doesn't meant that it will sell off tomorrow. Just because the S&P broke a certain resistance point yesterday doesn't mean anything TODAY, because the market moves on information TODAY.

i.e. Let say MSFT generated a great signal for you to go long and your system says that you should be long X days or until X support is violated and if everything looks good, you go long and the stock did exactlly what the system said. You then go on your 2 hour lunch or whatever, and in the mean time, let's say Bill Gates got caught with a hooker in a cheesy motel. MSFT sells off really hard, can your system predict that? Can your system cut your losses quick enough? What if you come back from lunch and you saw that MSFT went down 1.8 points, but has not reached the X stop loss that your system generated, would you sell and get out?

If you say that the anomalies will correct itself, because according to your system , you should be long for X days and since your stop is not violated, and your time frame is longer, you choose to ignore it and might even go longer. What if tomorrow, in the middle of trading day, when you are out to lunch again, Bill Gates are forced to resign and MSFT went down another 10 points?

You would have lost a bunch of money depending on your size. But if you were discretionary, you would have caught the news and flip your position and go short instead, you would have been FLEXIBLE, and you could have save yourself a lot of trouble. I belive the same thing goes for futures.

JUST BECAUSE SUGAR ALWAYS GAPS UP ON X DAY AND THIS HAS HAPPENED 10 YEARS IN A ROW AND YOUR SYSTEM TELLS YOU TO GO LONG, DOESN'T MEAN SUGAR IS GOING TO GAP UP THIS YEAR!!

And you said that you can trade NYSE on 60m bars without reading the tape???? You are crazy ... Where is your entry, your exit? What if the market is not trending? What if there is a big seller in the stock, a big buyer? LOOKING AT CHARTS WILL NOT TELL YOU THAT!!!

And just because RSI says a stock is overbought, doesn't mean anything if some big funds wants to unload their position, the stock will tank.

Just because the stock is down 50% doesn't mean it cannot go down another 50% REGARDLESS OF WHAT YOUR SYSTEM SAYS, the market will do WHATEVER the market wants to do !!!!!!!!!!!

But if you were a hedge fund guy and you want to buy of sell stocks in the million shares range, of course you don't do it in one shot!! You have to go in 100K or 200K a clip and you HAVE to rely on fundamentals and technicals for you to do that, but still hedge fund guys do REACT and they DO GO WITH THE FLOW! and sell 1 or 2 million shares of a stock if they think they are going to make money. I think they key to trading is to be FLEXIBLE, all the systems and signals work some times or another but NOTHING works ALL THE TIME.

because THE MARKET IS TRADED BY HUMANS WITH EMOTIONS!! THAT'S WHAT ALL THE RESISTANT AND SUPPORT IS ALL ABOUT, FEAR AND GREED. If you don't believe in this, then you are not understanding the whole concept of the game.

As far as using systems to help traders, of course. We cannot humanly scan the whole market with our brain. We have to rely on technology to generate the buy and sell signals, but that doesn't mean that we should trust it blindly, we still have to use our instincts and skills.

As far as averaging $250 / day. Well I find it a little hard to believe if you have been trading for 8 years and you trade futures as well. If you were doing this part time, I would understand but for someone who does this full time for 8 years?? I am scratching my head.

AND FOR ALL OF US,

But the thing is, this message board is for all of us to better ourselves, so that we can share and exchange ideas freely, and use it to our advantage to improve and make money. I think the whole point of this message board is to HELP each other and not to use it to stoke our own ego. If makes no difference is you believe in what dottom has to say or offer, take whatever you think is good and discard the rest. However, do care about other people's feeling, as some might take it the wrong way, and shut off the communication lines.
 
I gotta vote for the discretionary route, for similar reasons listed by Stockkbroker.

Dottom, nice to have you here... you add to the debate and that is fine. But I would appreciate it if you showed a bit more respect to Hitman in terms of your tone... OK, you may not like his style, but Hitman is an old-timer on these boards (who happens to be popular for his journals), and I would personally prefer to see less friction from you to him (things like calling Hitman a jerk on his thread serves no useful purpose).

Anyway, as you yourself have said:
"I have a lot better things to do than hang around here, I just thought I'd contribute to the systems trading community. I'll be sure to not do it in your thread."
I totally agree with you, will hold you to your word, and I look forward to your thoughts on Systems Trading on another thread (perhaps you can start your own thread). Now let's have some harmony on this particular thread, which is primarily concerned with Hitman's Trading Journals.

Good luck, Dottom, with your $250 a day (like others, I am somewhat perplexed given your 8 years of experience but, hey, if you are happy on $250 a day thats great).

Just my 2 cents,
Candle
 
Its an established FACT that a lot of people make money trading computerized systems. You guys talk as if your style of trading is the only option. I've only been trading for a couple of years but I have seen enough to know there are as many ways to make (and lose) money as there are traders. How can those of you who have absolutely no experience with computer trading systems condemn them out of the box? One thing I do know for sure is that it is important to keep an open mind.
 
It seems like both approaches are correct.

Stockbroker: clearly if Bill Gates is caught with a prostitute and MSFT starts to tank then you are probably correct that using discretion to get out will result is lower losses.

However, before statistics was invented, the following question had a different answer than it does today:
Question: what's the chance that Bill Gates is caught with a prostitute tomorrow?
Answer: 50%. It either happens or it doesn't.

While the future cannot be predicted, statistics does allow you to make inferences with a high degree of probability. Hence the reason insurance companies survive and do well even after major disasters like September 11. Hence the reason I am willing to bet Bill Gates will not be caught with a prostitute tomorrw. Hence I am also willing to bet that the S&P 500 will not be lower than 700 tomorrow.

When a system goes long on MSFT it does so with a variety of tools at its disposal. A. It knows that MSFT tends to go up 60% of the time after situations X, Y, and Z occur. And B, it knows that extreme events that effect the MSFT chart in extreme manner do not occur that frequently. Hence, it makes a bet.

Yes discretionary trading can make a lot of money. But using a correctly backtested system (one that does not over-optimize, one that is tested in a variety of markets and time-frames, one that allows for slippage and commission, etc.), I know everytime that I make a trade, the odds are on my side. That's all I ask.
 
Dottom

please do not let a handful of guys discourage you from posting here. I'm sure there are a lot more who find your posts very interesting. They are just not as vocal.:)
 
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