Successful Trading
- Thread starter rs7
- Start date
A firm I worked for did ongoing studies. The vast majority of profits did indeed come from a very small percentage of the trades. Based solely on relative strength, almost ALL the money was made in positions taken in stocks showing relative strength over 80 in longs and under 20 in shorts. The weird thing was that the next best positions were exactly converse. Buying the weakest and selling the strongest made money as well. But then again, this kind of contra trading was only permitted by the most proven traders, so perhaps their timing was a factor. But clearly playing the "middle of the road" stocks was a losing proposition..
This strategy has not been as effective recently. Relative strength and momentum have worked less successfully lately. So as I said so many times before, the successful trader ADAPTS! This is why I have tried so hard in this thread to avoid talking about successful styles, and really tried to express the mind set and discipline that I feel are more important than "systems". Systems work, then they don't. If there was one system that always was successful, there would be no market. The market exists because of the different perspectives of it's participants.
I have mentioned in this thread a few things I found to have worked more often than not. But never did I claim to know of anything that would do this over a prolonged period of time. THis is why I took such great issue with the likes of "superego" who claimed to have a teachable system. I think that such approaches are a waste and dangerous if someone puts too much faith in a "system". I stated early on that most beginners have (IMO) rules about trading which really are meant to control losses while they learn, and not to provide a winning strategy, system, whatever....the learning comes from experience and mistakes.
Well a lot has transpired since I last made an entry into this thread.
Seems like I was unable to follow my own advice.
I tried trading my own money. For one month. It did not work.
I found a flaw in my premise. While I still think that my "accountability" approach is valid, I failed to take some things into account when I entered a "partnership" in which to trade my own funds with the leverage of a "prop firm".
One fatal mistake was putting myself at the mercy of the risk parameters of the firm.
I found two major faults in my arrangement. First I came from an environment in which large numbers of dollars were common in my daily P&L swings. This was not possible in the new arrangement. It took me only one or two negative days to delete my portion of the equity I started with.
The second fault was having to play by the rules of whoever managed "risk" at the firm. They had a maximum dollar a day loss amount, which is fine, but forced me to get flat when I hit that dollar amount. Prior to this, where I traded previously, if I were down a certain number of dollars (unrealized) I had to start booking loses, or at least not let them get worse. But here, I had to book them all. So naturally, what happened was I got out at the worst possible moment of the day. Several times.
And since I could not open new positions, I could not trade my way out of a bad day. In the past, if I was holding bad positions, I could get on the other side of the positions I was in (ie: if I was long, I could put on shorts or vice versa). This way, I could actively manage the account and go with what was working, and lighten up on what was not. I was comfortable with the knowledge that I could trade out of anything. With this last situation, I was just done for the day.
Today was a perfect example. I had only 4 positions, which I had over the weekend. 4 longs. The market opened weakly, and I was forced to close out the positions at the low of the day. Naturally, 4 out of 4 positions went positive after I booked the loses. Had I been able to hedge them, I may have still lost, but certainly not as much as I did. In all likelyhood, I would have actually added to them when I had to get out. Why? Because they were all showing relative strength compared to the market.
So now, sadly, I am done trading at that place. I thought they were interested in having an experience trader. But all they really were interested in was a customer. I should have known better!!
Anyone know of any real firms hiring real FIRM traders? This "partnership" thing does not work for me.
Peace to all,
RS7
Seems like I was unable to follow my own advice.
I tried trading my own money. For one month. It did not work.
I found a flaw in my premise. While I still think that my "accountability" approach is valid, I failed to take some things into account when I entered a "partnership" in which to trade my own funds with the leverage of a "prop firm".
One fatal mistake was putting myself at the mercy of the risk parameters of the firm.
I found two major faults in my arrangement. First I came from an environment in which large numbers of dollars were common in my daily P&L swings. This was not possible in the new arrangement. It took me only one or two negative days to delete my portion of the equity I started with.
The second fault was having to play by the rules of whoever managed "risk" at the firm. They had a maximum dollar a day loss amount, which is fine, but forced me to get flat when I hit that dollar amount. Prior to this, where I traded previously, if I were down a certain number of dollars (unrealized) I had to start booking loses, or at least not let them get worse. But here, I had to book them all. So naturally, what happened was I got out at the worst possible moment of the day. Several times.
And since I could not open new positions, I could not trade my way out of a bad day. In the past, if I was holding bad positions, I could get on the other side of the positions I was in (ie: if I was long, I could put on shorts or vice versa). This way, I could actively manage the account and go with what was working, and lighten up on what was not. I was comfortable with the knowledge that I could trade out of anything. With this last situation, I was just done for the day.
Today was a perfect example. I had only 4 positions, which I had over the weekend. 4 longs. The market opened weakly, and I was forced to close out the positions at the low of the day. Naturally, 4 out of 4 positions went positive after I booked the loses. Had I been able to hedge them, I may have still lost, but certainly not as much as I did. In all likelyhood, I would have actually added to them when I had to get out. Why? Because they were all showing relative strength compared to the market.
So now, sadly, I am done trading at that place. I thought they were interested in having an experience trader. But all they really were interested in was a customer. I should have known better!!
Anyone know of any real firms hiring real FIRM traders? This "partnership" thing does not work for me.
Peace to all,
RS7
Originally posted by Commisso
RS7
Nice to see a pure act of trading benevolence from a seasoned vet such as yourself... I suspect the market and the universe will pay you back 3 fold
PEACE and good trading,
Commisso
Well it seems your forecast has yet to be realized. But I have hit rough spots before, and I have weathered the storms.
I remain positive (but frustrated).
Rs7 (still smiling despite it all)sounds like you just bet too large to me. Everybody has bad months in terms of win/loss ratio, but its only really a bad month when you bet too large, as in 10:1 prop firm margin. Is that what happened ?
rs7,
Sorry to hear that you had such a disappointing experience. It sounds like trading with such a strict loss-cutoff risk management policy is quite hard/unpleasant to do, whether those limits are imposed by a firm or are imposed by oneself. I wonder if some scheme for budgeting intermediate losses would have kept you in the game. If one sets intermediate, flexible loss limits that are well inside the stricter limits, then there is more room let positions turn-around or trade out of the hole. The strict limits help ensure that one doesn't let losses run to far. Admittedly, the flexible limits would force the trader to be more conservative (to not run afoul of the stricter hard-limits), but maybe being more conservative is a good thing.
Anybody here use flexible per-trade loss limits that fit within a broader per-day hard-cutoff?
Hoping you find a trading situation that suits you better.
Traden4Alpha
Sorry to hear that you had such a disappointing experience. It sounds like trading with such a strict loss-cutoff risk management policy is quite hard/unpleasant to do, whether those limits are imposed by a firm or are imposed by oneself. I wonder if some scheme for budgeting intermediate losses would have kept you in the game. If one sets intermediate, flexible loss limits that are well inside the stricter limits, then there is more room let positions turn-around or trade out of the hole. The strict limits help ensure that one doesn't let losses run to far. Admittedly, the flexible limits would force the trader to be more conservative (to not run afoul of the stricter hard-limits), but maybe being more conservative is a good thing.
Anybody here use flexible per-trade loss limits that fit within a broader per-day hard-cutoff?
Hoping you find a trading situation that suits you better.
Traden4Alpha
Originally posted by rs7
Well it seems your forecast has yet to be realized. But I have hit rough spots before, and I have weathered the storms.
I remain positive (but frustrated).
Commisso still has faith in you RS7
Well I suppose an argument could be made for me having "bet too large". However, what is the purpose of getting 30:1 leverage (as I did), when it essentially means that if you lose 3% you are done? Especially if the firm is taking a percentage of profits in addition to commissions.
I guess I was naive to think that we were in this together. I thought I would get some breathing room. So what if I went into their money (which I did not)? They knew I had a very long and very strong track record. What did I get for agreeing to give them a percentage of my profit?
I am totally disgusted with myself for being taken for a fool.
But thanks for the responses...all of you guys. And I ain't done yet. I will take a little break, and find some real investors or backers and make them a lot of money. That will be my retribution. These guys could have benefited greatly by giving me a little more rope. But they had no balls, and took no risk. I didn't lose that much and they didn't make a dime of profits from me, and the commissions they missed out on would eventually have been millions. So screw 'em!
Peace to all,
rs7Who is Publias???
As for the fantasy football there were not enough people willing to participate BUT if I am not mistaken I believe Yahoo allows leagues until next week... If your still down to do it then I am and we just need to find some others (8 to be exact)...
Why not start a thread Rs7, people seem to like you around here and I am sure you can get more than I could
We can do a live yahoo draft on weds or thurs!