Successful Trading and Compounding - On Steroids

Quote from gmst:

Too many responses so its hard to reply individually. Basically, I moved to a larger account after trading a very small account and I got hit before I could settle myself.

I normally trade ES and FX. My biggest single trade loss came post AAPL earnings release. I miscalculated leverage on NQ without using a spreadsheet and market moved real quick. Lost 25% of my account within 2-3 minutes. I was already down 10% over the last 2 days from other trades. My risk per trade is 3% to 6%, depending upon the setup.

This kind of thing would never have happened in an institution. Because one spends first couple of weeks setting up to trade in an institution. However, working alone led me to start trading before I was completely setup - on monitors, spreadsheet, allowed products to trade etc. etc.

It is my guess that posting on ES Journal has been detrimental to my trading.
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don't feel bad, same thing happened to me. I increased size just before incorrectly assuming the qe3 move (I thought it was already priced in.)

20% loss in less than ten minutes

the good thing is, I built the account up to where it was large enough to increase size

and since that disaster I have built it back up to about where it was

I don't stray very far from what got me here, but no doubt about it, I have hit some very hard bumps in the road. I aint loyal to my positions, but I am very loyal to my techniques.

Almost nothing you can think of when you are of sound mind and body can wipe you out if you just stick with it consistently.

The road to ruin is when you keep abandoning a strategy at the depths of drawdown and piick a new good looker (at a reduced account size.)
 
Quote from gmst:

I am doing tightening on multiple fronts, including a lot of points covered in the book "Prince of the Pits" about the trading setup:

1) Getting a new monitor - one monitor will be for research and another for trading.
2) I will unlock my trading platform only when a trade presents itself. This will make sure that no unplanned trades get taken.
3) A buddy is joining me for next few weeks. Talking to someone during the day will keep me balanced.
4) I have setup a visualization and self-talk schedule (wherein I sit calmly away from my desk and meditate and visualize for 5-10 minutes every 3-4 hours during the day. Again, to keep me balanced.
5) Since I will be working out of my home, I have established a dress code and am creating a office like atmosphere around my work-place. This should also help in more responsible and balanced trading.
6) Am setting up a neater, cleaner, more organized desk.
7) As a reward after ensuring 4 weeks of zero mistakes operation, I will get myself a new chair.
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C'mon man open your eyes, none of that has to do with your trading approach, assumptions, risk.
 
Quote from Laissez Faire:

Traders need great discipline to discriminate between prudent risk-taking behavior and gambling.

Traders who gamble can sometimes be identified by their enthusiasm for trading and by their inability to clearly articulate their reasons for trading."
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Seriously consider this quote for a while, gmst.

Dressing up in suit and trying to take things seriously are fine, but I don`t think it is the core of your problem. To me, it simply seems like you lack the proper methodology and trading plan. If you had, you could be trading in your boxer shorts.

How would you characterize your current plan? Model? Approach? Can you explain it to us? Could you give it to someone else to trade?

Are you trading from the seat of your pants or do you have an actual plan? Is it written? How are your signals generated? Is it largely discretionary?

If you trade with live money next week, I`m confident that you will lose. The exact same thing happened to me earlier. Learn from my mistakes. Taking a loss of the magnitude you just did does something with you whether you like it or not and it will affect how you trade.

Regards,

LF
 
Quote from Laissez Faire:

Seriously consider this quote for a while, gmst.

Dressing up in suit and trying to take things seriously are fine, but I don`t think it is the core of your problem. To me, it simply seems like you lack the proper methodology and trading plan. If you had, you could be trading in your boxer shorts.

How would you characterize your current plan? Model? Approach? Can you explain it to us? Could you give it to someone else to trade?

Are you trading from the seat of your pants or do you have an actual plan? Is it written? How are your signals generated? Is it largely discretionary?

If you trade with live money next week, I`m confident that you will lose. The exact same thing happened to me earlier. Learn from my mistakes. Taking a loss of the magnitude you just did does something with you whether you like it or not and it will affect how you trade.

Regards,

LF
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Hi LF and Phoenix trading,

Wanted to reply after giving it some thought. Good points all around. I have a plan, I have found it hardest to stick to it in the heat of the moment. And as I am discovering, dressing up nicely (not really a suit, just a Tee and Jeans and definitely not boxers) is helpful. Another thing that really helps is setting up an office kind of atmosphere for home traders - helps in bringing in seriousness.

Every trading desk in every bank has a well structured methodology (either options trading-delta hedgin or systematic trading) and traders there do stick to the plan. Because they are not working in isolation and if they do not stick to plan, they will get transferred to IT/risk department or in worst case will be fired. This is a critical difference when someone is working from his home as an independent.

Its important to remember that trading is a very independent business compared to most other businesses where you have to deal with people everyday. In the individual isolation, its pretty easy to miss-execute well-made plans.

Not sure how else can I explain it better. I think Prince of the Pits book puts a great emphasis on these things especially for independent traders.
 
Breakeven week.
Anyways, I traded this week - shortened by Sandy. Made money on Wednesday and Thursday and lost on Friday to finish the week at breakeven. I largely sticked to my plan and as a result my trading was very controlled this week.

I got a new 20 inch monitor, so now my work space has 14 inch laptop + 20 inch monitor. Really helps.

I have around 5 ideas to test on the ES market - just some little little market tendencies that experience suggests could be useful. I plan to test these out over the weekend. Also, will write out a step-by-step procedure to follow before taking any trade - like checking for multiple conflicting set-ups, ranking them, putting in size in the calculator and then pulling in the trigger. Basic stuff, but very important and should help in following the plan.
 
Quote from Laissez Faire:

I recently read the book "Trading And Exchanges" by Larry Harris. I recommend it.

Traders who gamble can sometimes be identified by their enthusiasm for trading and by their inability to clearly articulate their reasons for trading."
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I lost some dollars today due to over-enthusiasm. It appeared that a set-up was getting formed and I entered the trade to pre-empt the set-up, thinking I will get a better price and my win amount will improve. In the end the setup never came, and I ended up losing dollars.

So, it can be said that I experienced this quote today in some sense. I was definitely excited at that time and was thinking of the dollars that I will make if that trade had proven successful. I am sure my heartbeat would have been faster then. Maybe continually monitoring the pulse rate and displaying it as a graph on the computer with a line showing over-bought level will be a good tool to flash a warning that trading could be close to becoming uncontrolled as a trader might be close to losing his balance.
 
Greetings G,

I believe that you missed the essential message from LF and PT. If you are going to be relying on external forces (i.e. other traders and such) and their presence, to provide you with internal control (i.e. discipline and consistency), your premise is very sadly mistaken, and in grave error.

Discipline and consistency are “internal states of mind”. These are facts. They are states of mind that have at their core, certain “ways of thinking” about the market, and what is subsequently done in the market, as a direct result of that thinking. It is these “thinking methodologies” that allow professionals to consistently and successfully navigate market waters on a daily basis.

They think and act differently then the average trader. This game is played inside of your head. The market just transmits ticks! It is up to your own thinking to turn these ticks into a "Pattern Probability Game" that you can win, most of the time. This is a “way of thinking” about the market. These actions are not driven by some external forces, neither are they driven solely on technical analysis. And this “way of thinking” is where you need to expend your valuable time and resources to explore and study, and not on useless externalities.

In the mind of the trading professional, these thinking methodologies have been honed and developed into sets of mental skills. These skill sets allow the trader to effectively operate with internal control. Contrary to popular belief, it is this internal control that allows a trader to successfully operate in the market environment.

At present, you have just recently survived a head on collision with the market’s reality. And most unfortunately, it is simply just a matter of time before you will inevitably create another head on collision. This is a given my friend, and not a question of “if” it may happen.

The consistency you seek is in your head as a way of thinking and being. It is expressed in the market as a “conscious” act of will, not happenstance brought on by some external forces. You bring your “consistency” to the market, you don’t get consistency from the market. You bring your “discipline” to the market, you don’t get discipline from the market.

You can change your external environment, as well as your clothes as often as you like, but it will not, and can not change your downward spiraling circumstances. You must change on the inside, before it can be expressed and reflected on the outside. Please think about this for your own personal sake, and close out your real money account before it happens again.

At the rate you are going, the only thing you will accomplish right now, is to transfer the remainder of your account, to those in the market who already know, understand, and OWN these principles of successful and profitable trading.

This my friend, is the real "Secret of the Markets" that you seek and desire.

KDASFTG
 
Quote from gmst:

Hi LF and Phoenix trading,

Wanted to reply after giving it some thought. Good points all around. I have a plan, I have found it hardest to stick to it in the heat of the moment. And as I am discovering, dressing up nicely (not really a suit, just a Tee and Jeans and definitely not boxers) is helpful. Another thing that really helps is setting up an office kind of atmosphere for home traders - helps in bringing in seriousness.

Every trading desk in every bank has a well structured methodology (either options trading-delta hedgin or systematic trading) and traders there do stick to the plan. Because they are not working in isolation and if they do not stick to plan, they will get transferred to IT/risk department or in worst case will be fired. This is a critical difference when someone is working from his home as an independent.

Its important to remember that trading is a very independent business compared to most other businesses where you have to deal with people everyday. In the individual isolation, its pretty easy to miss-execute well-made plans.

Not sure how else can I explain it better. I think Prince of the Pits book puts a great emphasis on these things especially for independent traders.
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Are you sure that's the right title, I can't seem to locate it on Amazon?
 
The market doesn't deserve to give you a damn nickel. It doesn't give a damn that you dropped over 80K and over 3 years of your life.

You're insane. The definition of insanity is doing the same things over and over again expecting the same results.

LOL! :D :D :D You lost 50% your first week!:D :D :D You haven't learned anything! You don't deserve anything!

You're no different from a gambling fiend asking for money from their friends and family to support their habit.

You really should be ashamed of yourself. You are a sick delusional individual that really should get some help.

Thank the heavens there are people like you trading. :p :p :p

I feel sorry for your friends and family. :mad:
 
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