Personal intraday circuit breakers

C

chinook

I've been daytrading stocks on and off for about five years. I've been trading only NQ for the last seven months. I wish I had been trading e-minis longer! By following ES and NQ everyday, I'm learning something new about how markets move (or chop) and most importantly about myself!

I have couple of simple indicators that I developed based on price, volume and market breadth. I have my psychological, entry, exit and position sizing rules written down on a sheet of paper which I keep next to my PC. I know that if I obey these rules day after day absolutely without any exceptions, I will be able to become a full-time trader.

Some days once I start breaking my rules, I get out of control during the rest of that day. I feel as if "a second mind" takes control of me and I start taking risky trades and start overtrading. I usually do 3-4 roundturns per day. When I overtrade, I sometimes reach 10-15 roundturns! What I'm discovering is that somedays I can obey my rules 100% and somedays I just can't obey them even for a single trade.

The following two conditions push me into a self-destructive state and I start disobeying my rules:
1) A daily loss > $x
2) A daily profit > $y

I'm imposing two new rules on myself.
1) Stop trading for the day if daily loss=$x
2) Stop trading for the day if ( Max. Daily Profit>$y and
current profit < 0.75*Max. Daily Profit)

These are my personal circuit breakers. Basically, these two rules form a trailing stop for my intraday equity curve.

These are very simple rules and I've seen them many times in books and articles. I just can't believe that it took me a long time to realize that I absolutely need them!

I'm wondering what kind of circuit breakers other traders have.

Thanks,

Chinook
 
When I'm not trading well, I will cut my position size in half.

That helps me get back in the grove.

When my position size is small, I'm not worried about having a bad trade. It won't hurt me. Then little by little, I find myself myself trading for the trade, not the money.

That's what I'm attempting to do with my swing trades, which are new to me. If I traded size. I would experience fear and greed. My mindset would change, and I would act in a fashion that would almost certainly result in losing money.

When I'm not worried about the money, I will at least have a fair chance.
 
i trade intraday and recognizing dead zones is very important. i typically will get caught going into these zones. i have been improving, though, to the point where i will recognize them quickly and sit tight until the range is broken. being able to 'switch gears' is what makes a great trader from a good trader.
 
How would you feel if you follow your rules, take some losses, stop trading, and then the winning trades are on parade, by your rules..?

How would you feel if you don't follow your rules, take some losses, stop trading, and the the winning trades are on parade,
by your rules..?

I would follow the system instead of trying to band-aid a sucking chest wound (not following the system).

When you do this, you're gonna feel so good...
 
Quote from peterfigliozzi:

How would you feel if you follow your rules, take some losses, stop trading, and then the winning trades are on parade, by your rules..?

How would you feel if you don't follow your rules, take some losses, stop trading, and the the winning trades are on parade,
by your rules..?

I would follow the system instead of trying to band-aid a sucking chest wound (not following the system).

When you do this, you're gonna feel so good...
More...

Neat post! I agree. Many mornings I exceed what any prudent loss limit would dictate as reasonable. I'm then mentally forced into looking for lower risk setups. Sometimes a bad opening can be a prelude to a decent day. Conversely a windfall open can just as easilly lead to reckless overtrading. Euphoria has always been a bigger danger to me than fear.
 
I find that a cap on the daily number of trades (in addition to the daily loss limit) will prevent unnecessary churning:

Cease trading for the day should the daily loss equal or exceed X points (per contract).
Cease trading for the day once Y round turns (per contract) are reached.

Cease trading for the week should the weekly loss equal or exceed 2*X points.

Cease trading for the month should the monthly loss equal or exceed 4*X points.
 
A just had a two week winning streak, everyday I ended well into the green with better than average winning percentage.

And then in two days I wiped it out by going larger than normal. Money management and position sizing, obviously good survival skills to enforce.
 
Almost everytime that my trading volume is a lot higher than usual for the day, I can almost guarantee that it's a BIG losing day for me.
 
Quote from Mr Subliminal:

I find that a cap on the daily number of trades (in addition to the daily loss limit) will prevent unnecessary churning:

Cease trading for the day should the daily loss equal or exceed X points (per contract).
Cease trading for the day once Y round turns (per contract) are reached.

Cease trading for the week should the weekly loss equal or exceed 2*X points.

Cease trading for the month should the monthly loss equal or exceed 4*X points.
More...

Are you saying I should call it a career.:)
 
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