Question for Traders Who's Main Income Comes From Trading

[Deadwood]

I couldn't agree more with oldtime regrding profits, but I'll go further.

If you are taking small profits just to take them you WILL lose over time I guarantee it 1000%. Taking small profits suggests you are trading scared, btw. Good traders learn to love small losses, not small gains.

Simply put, your profits need to be on average AT LEAST double your gains. Even on a 2:1 ratio you can b/e being right just 1/3rd of the time.

The key is to know what your willing to lose. That will tell you position size, what your target profit is, and often times whether it's even worth the effort.

One more thing..If you trade the same size all the time you will lose. Sometimes I wonder why I even trade unless I'm willing to go crazy on size since those trades make me most all my money. Unforetunetly those "all in", "hey, Mr broker I need more margin for a few hours" setups don't occur all that often.

The bottomline is you can take small profits for 6 months straight then lose all those gains and more in 3 days if you play the game that way. Been there, done that.

 

[oldtime]

Quote from sheda:

And how much of that would you do in real life? Not governed by the consideration of capital loss but just in general as you being a professional trader? ( professional in your own right - its your income right? ) Why waste the time?

Well, I'd rater waste time than money. If I run out of time it's no big deal. I can't pass it on to anyone.

If the food on your children's table depends on your next trade and 3 losses wipes your account out Then I understand, the pressure for results are to intense and you are either over-leveraged or have an account that's way underfunded.

Yep, that's just the way I used to do it. Water bill comes in, I need 3 ticks. Electric bill? A full point. Then start working on the mortgage. Get lucky? We all go out to dinner at your favorite restaurant.

I would bet a lot of the males here had their psychology warped by a beautiful women in their teens.

No, back then, teachers were hot, but not loose.

Trading is boring.

For every thousand dollars I made I probably lost a week off my life expectency. Getting paid is boring.

 

[JRL]

Quote from sheda:

http://www.amazon.co.uk/Evolve-Your...=sr_1_1?s=books&ie=UTF8&qid=1312342959&sr=1-1

This is a book I suggest all read, at first I thought he was a quack but I was wrong, it explains in scientific terms how each thought and state of mind we have has a specific chemical make up acting in the body to create the feeling of that state.

The cells become accustomed to this chemical stimulation and a feedback loop is created that enforces the state, subconsciously driving our behaviour and directing our thought patterns towards its creation.

Check it

Sounds cool. Will probably buy. Thanks.

 

[JRL]

Quote from Deadwood:

If you are taking small profits just to take them you WILL lose over time I guarantee it 1000%. Taking small profits suggests you are trading scared, btw. Good traders learn to love small losses, not small gains.

Simply put, your profits need to be on average AT LEAST double your gains. Even on a 2:1 ratio you can b/e being right just 1/3rd of the time.

I'm not taking small profits all the time, just when I'm not as confident in the direction. I still don't see how this is at all a flawed strategy. If you're up, you're up. As long as you keep the same discipline when things don't go your way, and keep capital preservation top of mind, I don't see why/how you could possibly "guarantee 1000%" that I will lose.

Also, regarding "trading scared". What's wrong with that? Acknowledgement of the fact that I could be wrong, and that it could go strongly in the other direction, is helpful. The longer that your movement is consolidating, and NOT going in your direction, probably the more risk that exists of it going the other way. Getting out, taking your profits, and not exposing yourself to this risk any longer seems pretty smart, to me.

 

[JRL]

Quote from forsalenyc:

Everyone in this business is in this business b/c they made killings in those paper trades. I've seen dozens of trainees making good profits everyday for 2 weeks, and nearly all of them lose money when they go live. good percentage of them actually blew up in less than a month. That is the reality you'll face once you start trading. You may feel invincible at this point and your confidence thru the roof, but this is a very dangerous stage b/c most of newbie traders hit the deck in few days. You, too, will face what everyone faced. There's no exceptions. Good luck!

I don't feel invincible at all, nor is my confidence through the roof. I don't doubt that things will be different when I go live, hence the point of this thread.

But if it's mostly emotional, and if what I'm trading is an accurate portrayal of market data/behavior - which it seems to be, short of slippage - that gives me confidence.

 

[drm7]

Look at your simulator trades closely. You said you use limit orders. How does Strategy Runner fill limit orders in sim? Some simulators don't simulate your actual position in the order book and fill you if the price touches your price limit.

You need to assume that the price trades THROUGH your limit price to get filled.

I would also recommend logging all of your trades, and tracking the cumulative statistics:

Win %
Average Winning Trade
Average Losing Trade
Largest Losing Trade

That should help you better understand your performance over time. Also, look at each of the 10 days. Were most of them trendy? choppy? Did you perform equally well in both environments? If you do well in trendy days, a couple of choppy days in a row can ravage your account very quickly. (and vice versa)

 

[justrading]

Quote from ElecEquity:


When you're down on the day on sim, you probably keep swinging as if it's no big deal...that may change when you go live. You may 2nd guess yourself, your mind may start to only focus on negative possibilities, etc... Everyone is different. You may end up trading exactly like you do on sim....but I doubt it.

Very true.

 

[Deadwood]

Quote from JRL:

I'm not taking small profits all the time, just when I'm not as confident in the direction. I still don't see how this is at all a flawed strategy. If you're up, you're up. As long as you keep the same discipline when things don't go your way, and keep capital preservation top of mind, I don't see why/how you could possibly "guarantee 1000%" that I will lose.

Also, regarding "trading scared". What's wrong with that? Acknowledgement of the fact that I could be wrong, and that it could go strongly in the other direction, is helpful. The longer that your movement is consolidating, and NOT going in your direction, probably the more risk that exists of it going the other way. Getting out, taking your profits, and not exposing yourself to this risk any longer seems pretty smart, to me.

Trade with real money for a few years and all this will make so much more sense. Regardless the key is big winners/small losers.

 

[jack hershey]

Quote from JRL:

I'm not taking small profits all the time, just when I'm not as confident in the direction. I still don't see how this is at all a flawed strategy. If you're up, you're up. As long as you keep the same discipline when things don't go your way, and keep capital preservation top of mind, I don't see why/how you could possibly "guarantee 1000%" that I will lose.

Also, regarding "trading scared". What's wrong with that? Acknowledgement of the fact that I could be wrong, and that it could go strongly in the other direction, is helpful. The longer that your movement is consolidating, and NOT going in your direction, probably the more risk that exists of it going the other way. Getting out, taking your profits, and not exposing yourself to this risk any longer seems pretty smart, to me.

You should try very hard to work out a plan for quitting the idea of trading. Until you succeed in getting a qutting plan really complete and believe it, you will be in trouble.

At first, I thought I would suggest a drill for you to try. But I figured you wouldn't understand its meaning and then not do what you need to do.

What is tough about figuring out a plan to quit is that you simply do not know enough to put such a plan together. I made two lists about you. One for trading and one for quitting. The quitting list is a lot shorter.

Didn't several people tell you that you can't trade (Luckily, you never have so far) and that you are going about it totally the wrong way?

There are two paths: one is to learn how to make money; the other is to learn how to learn to trade.

If you came to our office and I had to assign a coach to you, I would have to pass because I wouldn't want to put such a burden on the coach.

Give selling medicare products a shot. It is a rule based system where you just memorize some facts to tell other people so they can make a fair decision. As the years go by you can work your way up the sales line; there is little risk to manage. My guess is that you would be fair to old people and not screw them up because you could just sell the best product available.

 

[Swan Noir]

This could be the quote of the decade!

Quote from oldtime:

If you're an accountant, emotions should be no problem when you switch to real money.