This is why you stick to your rules

S

Swole15

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Woke up long with an unrealized gain of $800. Data comes out at 10:30 and I get stopped. I am now sitting on a realized loss of $450. I get short twice and get stopped twice for a total realized loss of $1300. I am now flat for the month. I am not happy. I keep following my rules even though I am scared to. I don't want a losing month. I get long around 11:30 and get out at 4pm for gain of $1900 and a daily realized gain of $600.

Did I want to keep trading after that horrible start? Of course not. Was I scared. Of course I was. But I manned up and believed in myself and in the edge that I have found in this market. So as much as I didn't want to I kept pulling the trigger and I ended up with a good day.

Moral of the story? Believe in yourself and stick to your rules. If you truly have an edge, the law of large numbers has your back.
 
Yep, that's the no. 1 problem for discretionary traders - executing their strategy in real-time!
 
Swole15 said:
if you truly have an edge, the law of large numbers has your back.
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Everything is correct !

But,

First, the problem that traders have is not knowing if they truly have an edge... In most cases they do not have it, but it is not readily apparent...

Another thing: The law of the large numbers...

How large is large? Nobody knows. It can be any number.

Which means it is possible that even when having an edge the day may come and trader will incur huge number and dollar amount of loses over prolonged period of time, after which he would have no money, no time and no patience left to wait when the law of the big numbers will eventually compensate him...

Considering those two aspects together it is not clear at what point, when and how one should get indication that there is no edge in his method (or whatever is there is not enough)? After what number or amount of loses it should become clear that this is not just a law of the big numbers playing against the trader but the method is not efficient enough...

Just thinking out-loud, not expecting somebody to tell the answer.... but comments are welcome.
 
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i960 said:
Why are you trading RBOB outright? That's a ridiculous market to play that game in.
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i960, my stops are tight, my ten year back-testing is rock solid, what issues about RBOB am I not aware of?
 
wwatson1 said:
Bit wild, don't know how long your sanity will last with this system:wtf:
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It's not for the faint of heart but if my actual results are even half as good as my back-testing I will be thrilled. First live month closes tomorrow and so far I have a 5.72% net gain.
 
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