Road to financial freedom

F

freedom

My trading background is a history of booms and busts. I started trading in late 90s during the dot com boom, and, unfortunately, doubled my money on the first trade in two days on one of the hot internet stocks. I was hooked, but, as one might expect, money was all gone in the next several months. I subsequently wiped out a number of small trading stakes, making the typical mistakes - small capital base, overtrading, no stops etc. As I have never made any money trading until 2007, one can say that until 2007 it was a series of busts. Since 2007 I had a series of great runs (200 - 300% in 6-9 months) that were all subsequently wiped out. I have never lost 100% of my capital since 2007, but had 70% draw downs.

As I am in the middle of the drawdown right now, and my capital is significantly depleted from a high level of ~$100K six months ago, I am coming to this board for help and am opening a public journal in hope that more experienced traders can point out my flaws. Also I hope that the journal will keep me disciplined.

I will be publishing my trading activity at the end of the day with screenshots of account balance, daily executions and my rationale for all the trades.

My account is with Interactive Brokers, and the exact balance is $36,389.00; statement is attached.
 
Statement
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Attachments

Hi M. Freedom :)

Can we have a quick description of your current type of trading.

No need for specifics just general stuff

thanks,

Totantaz
 
Quote from freedom:

My trading background is a history of booms and busts. I started trading in late 90s during the dot com boom, and, unfortunately, doubled my money on the first trade in two days on one of the hot internet stocks. I was hooked, but, as one might expect, money was all gone in the next several months. I subsequently wiped out a number of small trading stakes, making the typical mistakes - small capital base, overtrading, no stops etc. As I have never made any money trading until 2007, one can say that until 2007 it was a series of busts. Since 2007 I had a series of great runs (200 - 300% in 6-9 months) that were all subsequently wiped out. I have never lost 100% of my capital since 2007, but had 70% draw downs.

As I am in the middle of the drawdown right now, and my capital is significantly depleted from a high level of ~$100K six months ago, I am coming to this board for help and am opening a public journal in hope that more experienced traders can point out my flaws. Also I hope that the journal will keep me disciplined.

I will be publishing my trading activity at the end of the day with screenshots of account balance, daily executions and my rationale for all the trades.

My account is with Interactive Brokers, and the exact balance is $36,389.00; statement is attached.
More...

Stop the insanity. You've lost two-thirds of your account in six months. There is no way in hell you should be trading with real money. Practice with your IB simulation account until you can show a consistent profit, then practice with real money. Start by posting a trading plan that will cut your losers early, let your winners run, and get you out of the market when you're on tilt and low on discipline.
 
Quote from Retief:

Stop the insanity. You've lost two-thirds of your account in six months. There is no way in hell you should be trading with real money. Practice with your IB simulation account until you can show a consistent profit, then practice with real money. Start by posting a trading plan that will cut your losers early, let your winners run, and get you out of the market when you're on tilt and low on discipline.
More...

I regret to say Retief is absolutely correct.
Carry on as normal and it looks like it will be another wasted account
 
Quote from Retief:

Start by posting a trading plan that will cut your losers early, let your winners run, and get you out of the market when you're on tilt and low on discipline.
More...

Do you have a trading plan?

If you want help, start out by explaining how you managed to take 100K to 36K.
 
Quote from Totantaz:

Hi M. Freedom :)

Can we have a quick description of your current type of trading.

No need for specifics just general stuff

thanks,

Totantaz
More...

Are you sure you really want to know, considering the experience described above?

On a series note, when I thinking clearly, and not doing idiotic things the method that I use is as follows:

1. Identify intermediate term trend (ITT) using 15 to 60 min charts. I leave time frame as a range on purpose as time frame of ITT needs to be adjusted based on the market speed or volatility. In extreme volatility as last week, I can even use 5 min to identify trend direction. I only use support, resistance, trend lines and P&F charts for this step.
2. Based on 1. above ITT can be either Up, Down or Consolidation. I sometimes define trend as "Consolidation" when I get I am not
3. When ITT is up trade only on the long side, when down - only on the short side, in consolidation either stay in cash or trade on both long and short sides
4. Enter into trades on pullbacks or reactions withing ITT.
5. Exit rules are numerous to list here, but I will describe later as I go along

I hope this helps
 
Quote from Retief:

Stop the insanity. You've lost two-thirds of your account in six months. There is no way in hell you should be trading with real money. Practice with your IB simulation account until you can show a consistent profit, then practice with real money. Start by posting a trading plan that will cut your losers early, let your winners run, and get you out of the market when you're on tilt and low on discipline.
More...

I appreciate your feedback. Paper trading does not help me. It is heat of trading real money that I am struggling to overcome. I believe that I do have robust method that works over long time, but I lack discipline, and start doing stupid things after normal draw downs.
 
Quote from freedom:

I appreciate your feedback. Paper trading does not help me. It is heat of trading real money that I am struggling to overcome. I believe that I do have robust method that works over long time, but I lack discipline, and start doing stupid things after normal draw downs.
More...

Yes, there is a trading plan - see summary above.

Here is my story from 2007, a short version.

As I mentioned in the first post, I have never made a dime trading until 2007. After losing a number of trading since my first trade at the end of 90s, I took a break from trading in 2004. I continued studying the markets on part-time basis, first trying to find profitable mechanical trading system, then looking into discretionary technical analysis, and finally deciding to concentrate on discretionary price action trading (P&F, support / resistance, trendlines).

At the end of 2007 I decided to start trading again with $30K speculative account using PA only. I concentrated on risk management religiously and traded Nasdaq 100 futures only (NQs) with reasonable margin - MER of ~ 20 - 30%. My account was up to $92K, helped partially by short positions during the beginning of crash of 2008. In the beginning of October, I was convinced that the sell off was close to being over and that the situation was similar to 2002 / 2003 time frame. In summary I was convinced that the market was at absolute bottom. I decided that active trading could no longer beat "buy and hold" and bought $125K (yes, I used margin) worth of stocks that dropped the most of "quality" companies with high earnings potential to hold for a year or two ... by the end of November, account was at $27K - 71% drop. Some of the quality stuff that bought for my long - term investment is no longer listed.

I sold all the stocks, and started aggressively trading 3X ETFS, mostly FAS and FAZ using my old methods. Most likely by luck or because my method works well in volatile markets, I caught all major FAZ / FAS uptrends from the end of November of 2008 until April of 2009. I was taking on crazy risks - my stop loss as % of equity was 7-10%, but somehow it worked. By the end of April, the account was at ~ $150K. I only had 3 losing trades during that whole period. As the market became choppy, the leverage caught up with me fast and in a couple of weeks the account was down to $100K.

I stopped trading to reassess the situation and decided that trading leveraged ETFs was no longer wise as the volatility and the serial correlation will most like disappear. At that time my wife and I happen to find a house of our dreams at a great price, so I pulled $70K out of the account to add to a down payment of the house. This is the only positive outcome of my market operations.

To be continued ...
 
Continued ...

It was July of 2009 and I had $30K in speculative account to play with. Still under the influence of a run that I had with ETFs and craving the same returns, I started trading NQs again using very high leverage - MER of 75% - 100%, which amounted to 10:1 notional to equity ratio. Markets were very friendly for my methods (or I was lucky), and I had ~ $100K by the end of November. During the choppy markets of the first half of December, I lost ~ 30% of the account, as I had a series of 11 losing trades in a row. This is when the demise began - I became fearful. For the first time in many years , I was actually experiencing fear of loss before I put a trade in place. I am discretionary trader, and the fear started impairing my decision making ability. I started skipping signals that felt uncomfortable (and which turned out as great trades), and taking signals that produced marginal or losing results. Through the rally at the end of December, decline in January and mega rally from February lows to approximately mid-March, I made no money trading. My account fluctuated around $70K with $10K range. In frustration and outrage at my inability to trade, I took a macro view on the markets. I reasoned that Greece situation had to be reflected in US equity markets at some point and we had to have a significant correction. I went heavily short in mid-March with combination of NQs, QQQQ April and May puts, expecting imminent correction.

By the time we got a correction, I neither had capital nor balls to trade after heavy losses on the way up. I got out of positions before the crash with $36K remaining at the end of April, and decided to stop trading because after losses like that I had no decision making ability left.
 
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