Successful Trading and Compounding - On Steroids
- Thread starter gmst
- Start date
Right there. I used to do that too, then I put a big sign: " I should have stopped. No set up."
Then 16 more trades. That's deadly.
everytime I break a rule ( a major rule), I take a day off, regardless if it was a win or a loss and hammer myself until I drive the point home. The next time I make the same mistake I add a day. That way you are forced to keep track of the errors and it instills discipline.
Take a day off and repeat that sentence all day.
My hat to you for posting it all out. Best of luck. Got guts, that's good. now add discipline.
Good luck with your return to trading and your new journal.
As you have already experienced, you attract a lot of negativity and criticism that is not always constructive when having a public journal on ET.
I would advice you to question the benefit of having a public journal and whether it adds or takes from your trading. Is it because you want to show people that you can do it? Or because you think this public journal will help your trading?
Earlier you mentioned that you were consistently losing in the ES market, but was consistently winning in the currency market. Why do you insist on day trading the ES then? Did you improve there as well?
Personally, I think ES is a poor market to choose if you are looking for a contract to day trade exclusively, unless you are in a position where you need the liquidity and really know what you`re doing. Until you get there, consistently more volatile markets may be a better bet. One possible solution would be to trade two markets, such that you have an alternative on those tight range days that happens frequently in the ES.
Happy holidays!
As you have already experienced, you attract a lot of negativity and criticism that is not always constructive when having a public journal on ET.
I would advice you to question the benefit of having a public journal and whether it adds or takes from your trading. Is it because you want to show people that you can do it? Or because you think this public journal will help your trading?
Earlier you mentioned that you were consistently losing in the ES market, but was consistently winning in the currency market. Why do you insist on day trading the ES then? Did you improve there as well?
Personally, I think ES is a poor market to choose if you are looking for a contract to day trade exclusively, unless you are in a position where you need the liquidity and really know what you`re doing. Until you get there, consistently more volatile markets may be a better bet. One possible solution would be to trade two markets, such that you have an alternative on those tight range days that happens frequently in the ES.
Happy holidays!
So you make 8 unplanned trades for every planned trade? Is this typical? Even 1 unplanned trade for every planned trade is a recipe for disaster since, I assume, the reason the trades are unplanned is because you don't have a strategy for managing them once they are entered and you are just "winging it".
Might I suggest you look at a couple of different approaches to trading because I think they will help you develop a "system" mentality. The first would be Elliott Wave. Notice how the wave theory attempts to classify ALL market action as being part of a larger context, forcing the trader into generating specific hypotheses for what the market should do next and reacting if it does or doesn't. The second is the ACD Method, which is the subject of a great thread right here on ET. This also will provide you with a broader overall context for market movements.
I'm not saying to adopt either of them (and definitely don't listen to any of the E-wave 'gurus' out there because they are all terrible market timers, but the theory can help you develop a certain set of habits of mind), but any system you want to work with long-term should have a similar "feel" to both E-wave and ACD, i.e. it should be "all-encompassing" such that little or nothing is left to chance in the course of executing your trades day to day.
I have one set-up pattern with 9 precisely-defined variations (each with 6 sub-variations) and 1 "wildcard" pattern, i.e. the "pattern" which doesn't fit any of the other variations. Between these 55 different structures, every tick of the ES can be accounted for and I can look at any ES chart and say whether the position should be long, short or flat, where the current exit should be and what it would take to open a position in the opposite direction. The entire thing is "mutually exclusive and collectively exhaustive". I would say that, if you want to really be a systematic trader, you would need to do something similar. Then, discipline will become second nature because you will know from experience which parts of your "mutually exclusive and collectively exhaustive" strategy provide positive expectancy and which don't. Right now, it seems like you have a number of disparate set-ups, but no overarching theme to unite them.
That shows you don't understand the cycles in either market. Euro was weak and you should not have been buying there...AUD is ready to buy bigger picture but needed another test of the lows and you got caught in a sucker gap. You do not want to be chasing the market and entering at very unfavourable prices. To achieve your goals precision is required on every entry.
If unplanned = unsignalled you are doing something badly wrong. Why allow yourself 16...why not stop at the earliest indication that you had started to deviate from your strategy?
Back to the drawing board for you. A bad session due human error or unanticipated factors can happen, however as many as two losing sessions is an indication you do not know sufficiently what you are doing.
Work out why you are losing and don't trade until you have the answers. Make the most of the long weekend working 15 hours a day on strategy.
Quote from Laissez Faire:
Good luck with your return to trading and your new journal.
As you have already experienced, you attract a lot of negativity and criticism that is not always constructive when having a public journal on ET.
I would advice you to question the benefit of having a public journal and whether it adds or takes from your trading. Is it because you want to show people that you can do it? Or because you think this public journal will help your trading?
Earlier you mentioned that you were consistently losing in the ES market, but was consistently winning in the currency market. Why do you insist on day trading the ES then? Did you improve there as well?
Personally, I think ES is a poor market to choose if you are looking for a contract to day trade exclusively, unless you are in a position where you need the liquidity and really know what you`re doing. Until you get there, consistently more volatile markets may be a better bet. One possible solution would be to trade two markets, such that you have an alternative on those tight range days that happens frequently in the ES.
Happy holidays!
Hi LF, Nice seeing that you are reading me
With my experience of previous journal, I strongly think every trader (especially when he is learning to trade) should keep a journal. I will list the usefulness of a journal reporting weekly equity here for everyone's benefit:
1. First, you are forced to compute stats for your trading performance. In my case, before I started the last journal, I never kept any stats. Knowing your win%, win:loss ratio, PF, DD, RoI etc. is a "pre-requisite" for "sustained trading success".
2. Knowing that I am going to bare it all about my trading here on ET has helped me few times to avoid going on trades on a whim.
3. A journal forces one to think carefully about his whole trading plan and writing it out crystallizes the learnings even more.
4. At times, one gets very good feedback from others that helps in uncovering some blind spots. And blind spots are blind spots, analysis alone can't uncover them. Sometimes, you need someone to point them to you. Also answering other's questions helps in making one's thoughts clearer.
5. My last journal made me more methodical about my trading and I started paying attention to very different things like largest loss and defined my setups both of which really helped.
Consider this: Let us assume for a minute that running a successful trading operation is akin to running a successful restaurant. Performance stats are like cash register, well defined setups to trade are like menu items. Largest loss analysis is like analyzing profitability for different food items on menu. Have we seen any restaurant being run without a cash register or without a menu? Answer is we have not. But we see people trading without having these basic processes in place all the time. Failure is obvious. I myself did all such things for 2 yrs. The journal helped me get over all these stupid mistakes. Yes from time to time, you do hear negativity, but in my experience, the benefits of a public journal (when you are anonymous on ET) far outweigh the negatives.
About ES, finally I have managed to come up with few setups that seem tradeable. I completely agree ES is a hard market to trade - primarily because of its chunky movements. Movements in ES are not smooth like they are in FX. I actually plan to add more markets down the line, once I get time to research them. First might be Crude followed by bonds/Gold.
Yes, I shouldn't have been in Euro and Aud both - so highly correlated. That was a mistake. I haven't done any analysis of cycles in markets. Most of my trading is around intraday setups.
Why allow yourself 16 - This has been a problem for a few months, but I have overcome this problem to a large extent now. I am confident I won't do such a thing ever again in future.
Actually, I plan to take it easy the weekend. Having worked my ass off for last 1 year, now as I have finally got a plan, its time to just let the damn thing cruise. BTW, 40% win rate is not bad considering my win:loss ratio. With time this win rate will improve.
Hi Logic_man - Very useful post. Thanks indeed.
Those unplanned trades were a blunder. I am confident that I won't take any such trades going forward.
I dipped my toes into E-W theory 2 yrs back but left it after working on it for a week or so. Currently, I am going through logical trader, and I do find it very useful. I am certain in future, I am going to overlay this framework upon my current trading practice.
From the way you describe and going forward if it works, what you have achieved is truly a masterpiece!! You are correct in saying I have disparate set-ups but no overarching theme to unite them => leading to discipline issues. Actually, last night, I have started thinking about classifying trading days into some groups - at the start of a day - so one classification for one day. The approach is pretty rudimentary right now, and I am hoping that overtime, I will be able to evolve it into something useful. However, its a very lofty goal indeed.
Let me ask you a question regarding your classifications into 55 different structures. Do these classifications change with intra-day data - so at 1000 EST, ES market might fall under one group and at 1100 EST, it might fall under another group OR is the classification fixed for the whole day? IMHO, classification fixed for daily data will be much easier to accomplish compared to classification that changes with intra-day data. If your classification does change intra-day, how many times on an average day, do you change the group under which ES falls? Thanks for your wisdom.
If this is true then you have severely limited your context and will be playing most days as if they are the same when they are not. This is the root of many hit or miss approaches to the market; treating what appears to be similar on the surface as the same condition, when it is not the same condition. Following from this, "setups" which work until they don't, which is insufficiently accurate.
What has changed? Why will you act differently in the future? What have you put in place mentally to achieve this outcome? Stated differently, I am sure you have made such commitments before but ended up repeating old mistakes. What have you realised this time which allows you to break the cycle? This will be very helpful for other aspiring traders with similar difficulties to learn.
My personal take on the above: you get out of this business what you are prepared to put in. You'll do better than 40% win rate playing roulette. Why you think it is "not that bad" to be incorrect on over half your trades is beyond me. Why would you expect improvement when you already feel you are good enough and that how hard you think you have worked is justification for taking it easy?
To achieve big success, you must do what is required and only what is required regardless of what you have already done or how hard you feel you have worked.
Why do you need to have so many losing trades? It isn't necessary. You should be trading only what you understand.
1. Zen, do you have some reference text for cycle analysis? If yes I would be interested.
2. I have heard from 8 different people that I did 16 unplanned trades on Thursday. I have put a stat to measure number of unplanned trades I did. I have stated resolutely that I am going for a 'Zero tolerance policy' towards doing unplanned trades going forward. These are sufficient measures to break this habit. Feel free to show me mirror by pointing me to this paragraph in future if you see any unplanned trade going forward Btw, I won't cheat on my stats.
3. My winrate will increase in future. It is still early days. Look at turtles - they had 35% win rate. There are multiple ways to trade the market, I have settled on one and I don't plan to modify it just because some one tells me that it is not a good method.
Good Trading.
Edit: Currently most of my trading is focused on getting skewed R:R setups like 2:1,3:1, and even upto 6:1. This kind of R:R profile typically has a low winrate, if you know what I mean. Its obvious that you have a different trading method, which is fine.
2. I have heard from 8 different people that I did 16 unplanned trades on Thursday. I have put a stat to measure number of unplanned trades I did. I have stated resolutely that I am going for a 'Zero tolerance policy' towards doing unplanned trades going forward. These are sufficient measures to break this habit. Feel free to show me mirror by pointing me to this paragraph in future if you see any unplanned trade going forward
Btw, I won't cheat on my stats.3. My winrate will increase in future. It is still early days. Look at turtles - they had 35% win rate. There are multiple ways to trade the market, I have settled on one and I don't plan to modify it just because some one tells me that it is not a good method.
Good Trading.
Edit: Currently most of my trading is focused on getting skewed R:R setups like 2:1,3:1, and even upto 6:1. This kind of R:R profile typically has a low winrate, if you know what I mean. Its obvious that you have a different trading method, which is fine.