Smacking the ER2

Quote from jessop:

TNG,

Thanks again for the link ……an interesting read indeed.

What was a surprise to me was:
1) The simplicity of their entry criteria
2) The losses they must have racked up in the process of finding those large trending winners (i.e. a low win/loss ratio compensated for by a massive reward/risk ratio)

The section that was not surprising, but did get me thinking about how I am doing following my rules
1) The turtles who failed were the rule non-followers – either not taking entry or exit signals

I have never managed to take all my signals in any session in the last 4 months (my average is around 20-25%). For those trades that I do take I close them using my documented exit signal about 50% of the time.

Therefore, in cold statistical terms, I fully follow my trading rules for 10-12% of my signals. This is a huge inhibitor on my expectancy. I really need to up my game significantly on this core statistic..

Just as a matter of interest, I’m assuming you guys are up at the 80-100% end of the spectrum in terms of entry & exit signals followed?

Cheers J
More...

Hey Jessop,

Yeah, things were much different back in '83 I think (I wasn't trading then). I don't think you could get those returns today with that strategy. The biggest part that I took away was how many people couldn't follow the rules. I don't remember if it was in that article or in some posts I read by Curtis Faith (one of the original turtles) about how most people just simply coulnd't do it. It was astonishing to me, and as a result I'm redoing my logging process to look at how much I conform to my own guidelines... I bet I'll be surprised.

One thing I believe, however, is that anyone can follow their own rules, if they take the issue seriously and create a plan for getting there. As much as your statitistics might look dissapointing, it's pretty clear from reading this journal that you are taking it seriously and have created a plan for getting there.

I can't speak for others, but I'm going to guess I'm certainly not in the %80-%100 range myself. However, given my trading system, I'm not aiming for %100 anyway, but I should be over %80.

Good luck!

- The New Guy
 
TNG,

I know that desire will get me there in the end.

I have improved 200% as a trader from when I first started live in May.

I know my rule compliance % sucks at the moment. So I am trying to punish myself for any rule breaches i.e. the non-signal entries I close early even if they start going my way etc.

After reading the Turtles piece this has given me a new spur to improve my hit rate.

Thanks
 
Quote from jessop:



After reading the Turtles piece this has given me a new spur to improve my hit rate.

Thanks
More...

Nice! Any advice for me now? ;) I got my butt handed to me today in the last hour or so. I was very, very long some very, very bad choices... :(

- The New Guy
 
Fred,

All very good questions….here is my personal view on why I miss some of my trades?

Before I started live trading I was so confident in the signals and my experience Sim trading that I thought by Christmas I would be trading 5 contracts, averaging 2pts per day and bringing in $1k. So I was already building pressure on myself, and setting myself up for a wholly unrealistic expectation.

When I started live trading I wanted it all so bad – the life of the independent pro trader. But its not really the money I’m after ($1k is about 50% of what I earn at the moment, so I'm not in this for the $$$$ alone) but the challenge of the markets and the enjoyment of being my own boss.

I am not challenged anymore by my IT career after 20 years of the same stuff. Trading is a passion but I’m realising that it is focus, discipline and emotional control that separate the wannabees from the real thing.

Anyway what I think all this means for my particular ‘fears’ are:

1) I have a lot of self esteem riding on this being successful. I've clearly discussed this plan with friends and family too. Initially I also had a deadline of end of the year too !!

2) My fears are mainly about failing - not really about being wrong or losing money

3) Sometimes my concentration is poor and I just miss a trade, but this is focus/discipline thing I know I can fix.

The bottom line is that I know that I need to follow my rules consistently and control that fear of failing. I also need to stop thinking I must prove I can trade in the next ‘n’ months or that’s it. I’ve read various posts on ET saying its years to learn this game, but as a newbie you don’t want to hear that. So I’m now looking for steady consistent progress rather than n contracts, n points per day by a certain date.

BTW - Fred, maybe you should start charging me for the time I spend on the virtual couch :D

Cheers
 
Got back from work at 7pm (2pm ET) and the impressive 10 pt sell-off was just getting going.

I initially wanted to jump into a long trade around 7:15, but the signal just wasn’t there, in fact it all said weakness. With no short signal to play I was just a spectator. At least my patience held because I was desperate to get in with only 2 hours to go.

S1 (S) – at work
S2 (L) – at work
S3 (L) continuation long signal - at work
S4 (S) – on way home from work

Points today nil pts (not including comms)

Onwards and upwards……….
 

Attachments

Wow after a session like this I could turn into a bear for life. Got back from work early today and hit two out of three signals for home runs. Wasn’t sure how long I could hold the S3 long for because it looked such a weak move, but pretty pleased with the results. This is the kind of day I love. But I need to ensure I don’t get too cocky….

S1 (L) – at work

S2 (S) – continuation short signal - at work

S3 (L) – got home just before 5pm and saw the S3 signal brewing – entry at start of 17:15 candle 652.6 – I struggled to hold it given the general weakness and got an exit signal to close at 656.3 – although it did go another 1.5 pts I was happy with the result.

S4 (S) – failed to take – hesitation and then a fast move started in the 18:30 bar so I had to leave it.

S5 (S) – continuation short signal – I was worried I was going to miss the slide until S5 appeared and I got in short at 19:30 (655.40) and found it relatively easy to hold without any panicky exits. Got an exit signal to close at 648.7. What a result…my best trade live or Sim on ER2.

Signal
S1 - n/a
S2 - n/a
S3 - 2/2
S4 - 0/2
S5 - 2/2
Rules Hit Rate = 4/6 = 66%
Points today +10.4pts (not including comms) ….yes my first $1k day

Onwards and upwards……….
 

Attachments

Hi jessop,

With my trade methodology i have to take every setup that presents itself. The reason is that the one i dont take will be the big mover. I suggest that this is an approach you will have to consider following, Nervousness and hesitation suggests that you are possibly not wholly convinced by your trade method. This emotion needs to be detached by your having faith in what you are doing.

I would also suggest that you have to trade multiple contracts to control your risk tightly - if you dont understand how this works - let me know and i shall explain. It may seem odd that my risk in trading 4 or more contracts is lower than yours, when you trade one.


Kevin
 
Kevin,

Totally agree on both counts (sorry Fred!!).

It just highlights how far ahead you are of me in your trading maturity and emotional control. On the two points you raise:

I must take every setup that presents itself – period. The fact that I don’t do it 100% is my current challenge. I know I need to tackle the fear and think robotically in probabilities alone.

I know what you’re saying regarding multiple contracts and risk. I did a lot of work on 2 and 3 contract exit strategies but in the end I couldn’t control my emotions enough and just panic exited with 2 or 3, more often than I would with 1 contract. So I am trying to get myself to feel comfortable with taking all my entries and exits with 1 contract first and then build up from there.

I think my overall performance is on an upward trajectory – however, I did start from a very low base!!

Thanks for the feedback.
 
Kevin,

Sorry I forgot to add that I would be very interested in hearing about the risk management approach you use.

I started off 4 months ago on 1-2 minute timeframes and had 15-20 signals a day - so I reckoned on initial stop 0.6pts, once 0.6pts in profit take one contract out, after 1pt in profit take another contract out and move stop to b/e + 0.1 and then manually exit the last contract on my exit signal.

Now I'm on 5 minutes - it would look something like this if I could emotionally handle 3 contracts (not a problem in capital terms) - initial stop 1pt, take one contract out after 1pt in profit and move stop to b/e + 0.1, after 2 pts profit take another contract out and move stop up to b/e +1, then exit the last contract manually.

However, there is a part of my brain saying 'greed is good' and that if I had 3 contracts to run them all to my exit signal, and just move my stop up.

Interested to hear your thoughts......

Cheers
 
Hi Jessop,

Only been trading a year myself. What i do is take half my contracts off at first minor support or resistance - this can be as much as 7 ticks or as little as 2 ticks. However, this is not for profit. It adjusts my cost base so that i am frequently in a free trade as the average risk is a 5 to 7 stop loss. If i am not at breakeven - my downside risk is very small in comparison to my initial risk.

The advantage of this is that it means that you can assess the strength of the move as it develops and allow your contracts to run much longer than say with just 1 contract. My rule would mean that i would exit at first resistance in an uptrend which could easily be the 20ma. I would make little money.

With 8 contracts you can make three or more exits - i look to run two contracts to the end of a trend.


Kevin
 
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