Taking 103K to 1.2million by Year End 2008
- Thread starter neke
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Neke,
Every now and then I think thoughts like... "hmmm if I do 40 contracts on DRYS I could double my account in a week"... This thinking gets stronger as you drift further away from you goals.. The cruel irony is the loss caused by this thinking strengthens the thinking... luckily I let it pass these days..
This will DEFINITELY affect your decision making... Try just for 3 weeks or so.. POST YOUR TRADES HERE THE MINUTE YOU MAKE THEM.... I doubt you would have made those trade trades knowing all of ET was watching... or post them to someone else that could objectively question you.
I asked a while back what your "system" was... What is it? I don't see one..
Good Luck
Every now and then I think thoughts like... "hmmm if I do 40 contracts on DRYS I could double my account in a week"... This thinking gets stronger as you drift further away from you goals.. The cruel irony is the loss caused by this thinking strengthens the thinking... luckily I let it pass these days..
This will DEFINITELY affect your decision making... Try just for 3 weeks or so.. POST YOUR TRADES HERE THE MINUTE YOU MAKE THEM.... I doubt you would have made those trade trades knowing all of ET was watching... or post them to someone else that could objectively question you.
I asked a while back what your "system" was... What is it? I don't see one..
Good Luck
Neke,
I have been following this and last years post on and off for some time. Overall, I find it one of the most interesting here on et. Thank you for sharing so openly with all of us.
I thought I would jump in here with a couple of comments. Last year, while I personally thought you were taking way to much to much risk, I did notice that you always seemed to address any risk concerns and were quite convincing that you indeed had a good concept of risk management. And, I certainly could not argue with you net results last year.
This year so far seems vastly different and at least for myself, your trading looks like something more recognizable to me. So please understand that these comments are from my vantage point and I by no means pretend to understand anything other than what I know which may or may not be similar to what you are doing. So here goes.
Neke, I still think you are taking to much risk but at the same time not seeing the big gains. I have not analyzed your data, but I have noticed that you take many losing weeks. Maybe this is necessary to achieve a 10 times return, but simple math tells me that if you can have 3 or 4 losing weeks in a row, you could have 3 or 4 more and that seems that it would be devastating to your account. Particularly at the loss levels you appear to tolerate of 10-20% a week. I admit I only know a handful of successful daytraders including myself the last year, (I lost the first 3 years), but one thing we all seem to share in common is a losing week is rare. And a 18% loss week is well, huge and not tolerated.
Also, a while back you made a comment about 1% loss vs 2% gain with an equal chance is low risk, and 10% loss vs 20% gain being high risk but able to have a much bigger positive effect on your account. Neke, would you really allow 1 trade to take 10% of your account? And if you did, would you do it for a measly 20% possible gain. Both of those trades are 2 to 1 risk reward and with a 50% chance of working they really are both the same trade. I often refer to a high risk trade as a trade where I may risk 1/2% of my account to possibly capture a 10% gain, (20 to 1) even know it may only happen 20% of the time. Thus having an 80% chance of loss but when it works the reward is huge. My point here is that a 2 to 1 risk to reward trade is still 2 to 1 regardless if you are risking 1% or 10%. The expectancy is still the same.
Once again, thank you for the fabulous post.
I have been following this and last years post on and off for some time. Overall, I find it one of the most interesting here on et. Thank you for sharing so openly with all of us.
I thought I would jump in here with a couple of comments. Last year, while I personally thought you were taking way to much to much risk, I did notice that you always seemed to address any risk concerns and were quite convincing that you indeed had a good concept of risk management. And, I certainly could not argue with you net results last year.
This year so far seems vastly different and at least for myself, your trading looks like something more recognizable to me. So please understand that these comments are from my vantage point and I by no means pretend to understand anything other than what I know which may or may not be similar to what you are doing. So here goes.
Neke, I still think you are taking to much risk but at the same time not seeing the big gains. I have not analyzed your data, but I have noticed that you take many losing weeks. Maybe this is necessary to achieve a 10 times return, but simple math tells me that if you can have 3 or 4 losing weeks in a row, you could have 3 or 4 more and that seems that it would be devastating to your account. Particularly at the loss levels you appear to tolerate of 10-20% a week. I admit I only know a handful of successful daytraders including myself the last year, (I lost the first 3 years), but one thing we all seem to share in common is a losing week is rare. And a 18% loss week is well, huge and not tolerated.
Also, a while back you made a comment about 1% loss vs 2% gain with an equal chance is low risk, and 10% loss vs 20% gain being high risk but able to have a much bigger positive effect on your account. Neke, would you really allow 1 trade to take 10% of your account? And if you did, would you do it for a measly 20% possible gain. Both of those trades are 2 to 1 risk reward and with a 50% chance of working they really are both the same trade. I often refer to a high risk trade as a trade where I may risk 1/2% of my account to possibly capture a 10% gain, (20 to 1) even know it may only happen 20% of the time. Thus having an 80% chance of loss but when it works the reward is huge. My point here is that a 2 to 1 risk to reward trade is still 2 to 1 regardless if you are risking 1% or 10%. The expectancy is still the same.
Once again, thank you for the fabulous post.
Sorry about your week Neke 
FWIW, I think that when trading out of the money options that are about to expire you have to seriously consider the possibility of them expiring worthless (or quickly dropping to near zero before you have the chance to sell them). Therefore, as Target0 points out, those trades are probably only worth even considering when the R/R ratio is 20 to 1 (or 1 to 20 for the purists).
IMHO, considering that you put on the line over 75,000 USD you may be better off by considering that you were lucky to **only** lose 21,000.
You're a tough cookie, I'm sure you'll get back on track.
Best trading,
FWIW, I think that when trading out of the money options that are about to expire you have to seriously consider the possibility of them expiring worthless (or quickly dropping to near zero before you have the chance to sell them). Therefore, as Target0 points out, those trades are probably only worth even considering when the R/R ratio is 20 to 1 (or 1 to 20 for the purists).
IMHO, considering that you put on the line over 75,000 USD you may be better off by considering that you were lucky to **only** lose 21,000.
You're a tough cookie, I'm sure you'll get back on track.
Best trading,
You are right. There are some trades I would not mention to someone I am taking at the point of entry... because there is no sound reason for the entry, probably vengeance or something...that happened in POT.
As for system, yes I have a system I SHOULD follow. I have given that in broad outline before:
"Buy Panic Short Exuberance, Buy Credible Strength, Sell Credible Weakness". The particular details are worked out by me, and not for general disclosure. I won't fit it into any well-known TA indicator.
Oh sure I would allow 10% loss of my account for a trade that has 20% upside with the same chance over a short time frame (say a day). The truth though is that when I suffer a draw-down or losing streak, I lower my risk tolerance. This is because I do not want to end the year lower that what I started with! I still do believe one should maximize an edge when it is there, subject to availability of a buffer. In my case, I would consider the amount above my starting balance (103K) as the buffer. The greater it is, the bigger the risk I could take (subject to not exceeding the optimal size for the strategy). The problem for me is that when I have a winning streak, I stray away from the core strategies altogether, and stake the bigger bets on untested or actually negative expectancy trades -- recklessness in entry should not be condoned under any circumstance.
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