Profitable on paper, losing money live! Fear plays a big role.

[qlai]

Whatever rules you start using as a discretionary trader...backtest it to determine if hypothetically profitable or loser. I

Agree with you on most things, but not this. If I could back test my discretionary rules, I would simply automate it and forward test it. It's too much context dependent. I can automate parts of it (mechanics like smarter trailing, etc), but I still need to make go or no go decision based on what I see/hear/feel at the moment.

It is really cool that people on this forum take time to write down advises and share their own experiences!

Good attitude. I hope I didn't sound condescending. The reason this thread is attracting attention is because this is real issue for a trader at ANY level. If it's not, they are either in denial or simply not pushing themselves out of their comfort zone, imho.

 

[Overnight]

Don't know much about trading spreads, but isn't the whole point of it to actually trade the spread itself(like spread gets too wide/narrow)? It sounds like you are proposing to trade one instrument and hedge with the other. Is that the intent? What's the point of that? What if they go in opposite directions or get out of sync momentarily? What if you get slippage on both? Sounds over complicating it with no obvious edge to me. What am I missing?

Yes, he seems to be talking about hedging correlated instruments, and capturing the difference in movement between the two. I.E., close the winner when it has moved farther than the loser, and capture the difference. This is a dangerous strategy and doomed to fail, because of said correlations.

There are rare times when two highly-correlated instruments diverge, usually in the case of the NQ vs YM. This has happened a few times this year and last year, but God help you if you have both legs going in the wrong direction against each other.

I do not think it is a strategy worth pursuing.

And yes, the idea of spread trading has to do with trading the actual spread instrument, not spreading individual legs intra or inter instruments. (I learned that from @bone). It can work, but it is unwieldy and gross. I've messed with it, and especially during volatility like these past 3 months, fugheddabouddit.

 

[qlai]

Yes, he seems to be talking about hedging correlated instruments, and capturing the difference in movement between the two.

I played around with capturing /ZB spread while hedging with 2 /ZN. The idea was that I will either capture the spread or I will close out both positions. The reason I wanted to hedge instead of simply taking a stop, is to hedge against a sudden adverse move. Hedging is expensive

 

[fube]

I have never understood why the account size is important. Losing consistently $300/day is awful regardless you have a 5k or 500k account

Account size is everything. Setting up risk parameters should be contingent on account size. Losing $300 a day, in general, is bad--sure. But, losing $300 on a 5k account and losing $300 on a 25k account is a massive difference. The former risks 6% of your account and the latter risks 1.2%. Psychologically this plays a crucial role.

Also, if you have a setup that's 1:3+ then the psychological game becomes easier + if you risk less than 2% of your account. For me, this has helped me on the psychological aspect a lot. But to say that losing X amount is awful regardless of account size means that you do not have (don't take this personally) a good idea about risk management in general. Your understanding and statement alone shows that you need to work on your risk management understanding/skills and that will naturally improve your psychological problems being faced at the moment.

 

[Chewy]

I suspect that on most machines doing non-money practice trades. the computer uses the last or present price for the fill. but in real trading you get the next fill and a one tick bid ask spread. it cost you 1 tick on entry and 1 tick on exit in real trading. that is money that is not profit but loss. at 100 round turns that is 200 ticks @ $5 is $1000. you are giving up $1000 to the house every day. there is your problem.

you are giving up $1000 every day for the privilege of trading. that is heavy cost. plus commissions etc. you are in trouble. that is $5000 a week. $20,000 per month. $240,000 per year you are paying for the privilege of trading. you must be rich. you have a most expensive hobby. I dont know anyone who can afford paying so much for this hobby. well you will not be affording it for much longer. you need to talk to a lawyer and ask him how much he wants to handle a bankruptcy and leave that amount at his office as retainer. tell him you will be back soon. you are prepaying for your bankruptcy. good luck trading.

 

[schweiz]

I suspect that on most machines doing non-money practice trades. the computer uses the last or present price for the fill. but in real trading you get the next fill and a one tick bid ask spread. it cost you 1 tick on entry and 1 tick on exit in real trading. that is money that is not profit but loss. at 100 round turns that is 200 ticks @ $5 is $1000. you are giving up $1000 to the house every day. there is your problem.

The problem is that the system sucks. If your profit depends of 2 ticks slippage in a trade you have no system. A good system generates points, not 2 ticks per trade.

OPM said:
50-100 trades a day, profits 2K.
So average profit 20-40$ per trade.
Even taking away 2 ticks per trade will leave him some profits.
If he tells he has only $150 a day real trading then he only makes $1.50-3.00 per trade.
Things don't add up. There is something wrong in his story. From an average paperprofit of 20-40$ per trade he goes to real $1.50-3.00 per trade. The difference between papertrading and real trading is much bigger then the slippage. Even doubling the slippage does not explain the difference.

According to his postings:
GREEN is the papertrading zone of profits
RED is the real trading zone of profits

 

[ftrexx1]

Account size is everything. Setting up risk parameters should be contingent on account size. Losing $300 a day, in general, is bad--sure. But, losing $300 on a 5k account and losing $300 on a 25k account is a massive difference. The former risks 6% of your account and the latter risks 1.2%. Psychologically this plays a crucial role.

Also, if you have a setup that's 1:3+ then the psychological game becomes easier + if you risk less than 2% of your account. For me, this has helped me on the psychological aspect a lot. But to say that losing X amount is awful regardless of account size means that you do not have (don't take this personally) a good idea about risk management in general. Your understanding and statement alone shows that you need to work on your risk management understanding/skills and that will naturally improve your psychological problems being faced at the moment.

I really don’t understand the account size thing.

I suspect that on most machines doing non-money practice trades. the computer uses the last or present price for the fill. but in real trading you get the next fill and a one tick bid ask spread. it cost you 1 tick on entry and 1 tick on exit in real trading. that is money that is not profit but loss. at 100 round turns that is 200 ticks @ $5 is $1000. you are giving up $1000 to the house every day. there is your problem.

you are giving up $1000 every day for the privilege of trading. that is heavy cost. plus commissions etc. you are in trouble. that is $5000 a week. $20,000 per month. $240,000 per year you are paying for the privilege of trading. you must be rich. you have a most expensive hobby. I dont know anyone who can afford paying so much for this hobby. well you will not be affording it for much longer. you need to talk to a lawyer and ask him how much he wants to handle a bankruptcy and leave that amount at his office as retainer. tell him you will be back soon. you are prepaying for your bankruptcy. good luck trading.

The problem is that the system sucks. If your profit depends of 2 ticks slippage in a trade you have no system. A good system generates points, not 2 ticks per trade.

OPM said:
50-100 trades a day, profits 2K.
So average profit 20-40$ per trade.
Even taking away 2 ticks per trade will leave him some profits.
If he tells he has only $150 a day real trading then he only makes $1.50-3.00 per trade.
Things don't add up. There is something wrong in his story. From an average paperprofit of 20-40$ per trade he goes to real $1.50-3.00 per trade. The difference between papertrading and real trading is much bigger then the slippage. Even doubling the slippage does not explain the difference.

According to his postings:
GREEN is the papertrading zone of profits
RED is the real trading zone of profits

View attachment 196126

the difference between the paper trading and the live trading is how you manage the trade once you are in and the enter timing. I usually use 50 tick PT and 30 SL so the 2 ticks in/out don’t really matter here. The problem is how the fear makes you move those Stop and profit target once you are in a trade. When the trade move against me, I start doubting about that trade and sometime i close it giving up a small loss and then watch the price going in my direction.

 

[qlai]

The problem is how the fear makes you move those Stop and profit target once you are in a trade.

Stop trading for money.

 

[Sprout]

1 or 2. Maybe 3 a couple of times. In some trades when the price approach the stop loss, I double the contract in the attempt to close to breakeven, so sometimes I have 4 contract in play.

This is part of your problem. You’re too focused on the p&l and not on a consistent process. A supportive process is part of an overall system. If you can’t quantify it into sets of contextually relevant instructions, it’ll be difficult to isolate where to improve.

Also without posting an annotated chart, it’ll also be difficult to receive contextually relevant suggestions for improvement.

A couple of the more common stumbling blocks transitioning from sim to live is:
1) Bars go through a sequence of transformations prior to lock-in and prior to EOB. The initial context at the beginning of this sequence is often the opposite from the end.
2) that the market one is observing isn’t the real market in current time. You’ll notice resting limits/stops being hit that are away from the Bbidask. Given your trading frequency, and being discretionary there is latency arbitrage that you are at the effect of unbeknownst to you.

There are things beyond your control and things within. Best to focus on those that are within and increase your level of discernment.

 

[oraclewizard77]

This is so true. What you need to do if you actually want any advice is to post a chart with your entries and exits for the day using real money. If you are looking to lock in 2 ticks of profit like others have said, then you are trading wrong and 1st need to develop a new system.

For example on ES, the smallest profit you should ever take is 1 point. You can also look to average into a trade a 2nd contract depending on your strategy.

A system that takes less than 1 point only works if you are developing a HFT AI system that is run automatically off of a co-located server and does 100's of contracts at a time.

Also, when you do SIM trading, it's for testing out ideas on how you would be trading in real life. For example, if the max you are going to do in real life with real money is 2 contracts, then you need to do just 2 contracts in Sim.

A good sim system is Ninja Trader since it can automatically give you reports on your trading for the time period that you specify. It will show things like win% and other statistics.

Finally, you need to get over your fear of getting out of trade for example at .50 because you are scared once you are starting to get profitable on the trade, price will reverse and stop you out. You need to test, how far price will normally run on a profitable trade before it starts to reverse to get over this fear.

Also, whenever possible try to do limit orders to get in and out of the market. Obviously if something is moving real fast and you want to hop on, then you can do a market order.

This is part of your problem. You’re too focused on the p&l and not on a consistent process. A supportive process is part of an overall system. If you can’t quantify it into sets of contextually relevant instructions, it’ll be difficult to isolate where to improve.

Also without posting an annotated chart, it’ll also be difficult to receive contextually relevant suggestions for improvement.

A couple of the more common stumbling blocks transitioning from sim to live is:
1) Bars go through a sequence of transformations prior to lock-in and prior to EOB. The initial context at the beginning of this sequence is often the opposite from the end.
2) that the market one is observing isn’t the real market in current time. You’ll notice resting limits/stops being hit that are away from the Bbidask. Given your trading frequency, and being discretionary there is latency arbitrage that you are at the effect of unbeknownst to you.

There are things beyond your control and things within. Best to focus on those that are within and increase your level of discernment.