Successful Trading and Compounding - On Steroids

Shanb · Apr 6, 2012

Quote from gmst:

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.

Hey GMST! Discipline and trading, man I could write a book on that myself lol. for the past year or so I've struggled with that problem. for a good period of that time I knew I had that problem. Willpower worked about 70% of the time and then I would screw up again. Bad habits took over. Not being totally disciplined and not even being profitable yet is not acceptable. The market is as hard to learn about as it is you don't need any more obstacles.

Now I know you've heard this from some other people so far. Enough of the criticizing. Here's something that has helped me a TON these past 3-4 months. Visualization. At the end of the day I went through every one of my trades, looked at mistakes that I made in reading the market and executing. Identifying the mistakes and then visualizing how I should've executed and reacted.

Before every trading session, and before I went to sleep. I would visualize my day and how I was going to trade that day. Visualizing all of these things helped break these bad habits faster then any other strategy i had used before. My implusive trading is all but gone and my trading has improved as a result.

Shanb · Apr 6, 2012

Quote from gmst:

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.

Do you realize how much more discipline is required with an approach that is correct 35% of the time. You have a couple things working against you. The higher risk of ruin and commissions will grind you alive!

gmst · Apr 6, 2012

Many Thanks Shanb about the visualization tip. Its a very practical and concrete advice. When I was in high school, I used to do it and it proved to be very useful. You just made me remember that.

Btw, I don't have any problem at all regarding my discipline about trading all valid signals. Its very rare that I miss any signal and that is always due to not being at the desk at that moment. This is a rare problem. And in my assessment, it won't really have any material effect on my trading if I miss say 5 trades out of 100 setup trades.

Historically, the much bigger problem has been the lapse in discipline to not take any unplanned trades. This is where I have lacked in past and am promising to stop it completely.

Shanb · Apr 6, 2012

Quote from gmst:

Many Thanks Shanb about the visualization tip. Its a very practical and concrete advice. When I was in high school, I used to do it and it proved to be very useful. You just made me remember that.

Btw, I don't have any problem at all regarding my discipline about trading all valid signals. Its very rare that I miss any signal and that is always due to not being at the desk at that moment. This is a rare problem. And in my assessment, it won't really have any material effect on my trading if I miss say 5 trades out of 100 setup trades.

Historically, the much bigger problem has been the lapse in discipline to not take any unplanned trades. This is where I have lacked in past and am promising to stop it completely.

So you mentioned some spreads? Curious to see what you are doing there.

gmst · Apr 6, 2012

Quote from Shanb:

So you mentioned some spreads? Curious to see what you are doing there.

Not doing anything currently. Will share once I spot something. Will be mostly intermarket spreads so like CL against ES kind of stuff.

dom993 · Apr 6, 2012

Discipline ... here is what I am doing ... and it works pretty well:

* for each discipline error resulting in a loss, I transfer that amount from my bank account back to my trading account.

Rationale: 1) my trading account still reflects what my P&L should be
2) pulling money out of my bank account is way more material than when the loss remain "hidden" in my trading account balance

* for each discipline error resulting in a win, I transfer that amount from my trading account to my bank account, and from there to a charity.

Rationale: 1) my trading account still reflects what my P&L should be
2) I don't benefit of my discipline errors, which quickly translate into "what's the point (of taking an unplanned trade)"

tiddlywinks · Apr 6, 2012

Quote from dom993:

Discipline ... here is what I am doing ... and it works pretty well:

* for each discipline error resulting in a loss, I transfer that amount from my bank account back to my trading account.

Rationale: 1) my trading account still reflects what my P&L should be
2) pulling money out of my bank account is way more material than when the loss remain "hidden" in my trading account balance

* for each discipline error resulting in a win, I transfer that amount from my trading account to my bank account, and from there to a charity.

Rationale: 1) my trading account still reflects what my P&L should be
2) I don't benefit of my discipline errors, which quickly translate into "what's the point (of taking an unplanned trade)"

So let me get this right.
1) You bail yourself out when you "wrongfully" lose.
2) You get a tax benefit assuming you're in the US, along with the "feel good" associated with giving when you "wrongfully" profit.

I think you are better suited to a political career in the US.

dom993 · Apr 7, 2012

Quote from tiddlywinks:

So let me get this right.
1) You bail yourself out when you "wrongfully" lose.
2) You get a tax benefit assuming you're in the US, along with the "feel good" associated with giving when you "wrongfully" profit.

I think you are better suited to a political career in the US.

1) no bail-out there ... my bank account goes down with every discipline error, which has a direct impact on my lifestyle - contrary to keeping the loss hidden in the trading account.
(and those money transfer never show-up as realized P&L nor performance in my trading account statements)

2) believe me, I would burn that money if it wasn't such a waste doing so. This is just to ensure I have *NO* reason to be undisciplined - and again, it is working pretty well for me.

You gave me a good laugh with your conclusion

HurricaneUS · Apr 7, 2012

Quote from dom993:

Discipline ... here is what I am doing ... and it works pretty well:

* for each discipline error resulting in a loss, I transfer that amount from my bank account back to my trading account.

Rationale: 1) my trading account still reflects what my P&L should be
2) pulling money out of my bank account is way more material than when the loss remain "hidden" in my trading account balance

* for each discipline error resulting in a win, I transfer that amount from my trading account to my bank account, and from there to a charity.

Rationale: 1) my trading account still reflects what my P&L should be
2) I don't benefit of my discipline errors, which quickly translate into "what's the point (of taking an unplanned trade)"

that's a little overboard don't you think?...

zdreg · Apr 7, 2012

Quote from dom993:

Discipline ... here is what I am doing ... and it works pretty well:

* for each discipline error resulting in a loss, I transfer that amount from my bank account back to my trading account.

Rationale: 1) my trading account still reflects what my P&L should be
2) pulling money out of my bank account is way more material than when the loss remain "hidden" in my trading account balance

* for each discipline error resulting in a win, I transfer that amount from my trading account to my bank account, and from there to a charity.

Rationale: 1) my trading account still reflects what my P&L should be
2) I don't benefit of my discipline errors, which quickly translate into "what's the point (of taking an unplanned trade)"

you end up fighting the market.