Through the Looking Glass

[NoDoji]

Quote from illiquid:

It's so easy for me to go the other way and double down on a loser, all it takes is a millisecond of self-delusion and an itchy trigger finger -- by then it's twice as hard to do the right thing.

The way I trade can be taxing at times. I wait patiently for a setup, I get distracted by something, news across the wire, a phone call, bathroom break, whatever, and the move is underway without me. I learned that chasing can work, but I don't like to do that.

I've been testing average down tactics in my sim account for months, because it's easier to see a setup forming, start in on a position, average down if necessary, then reap the reward when the expected price move transpires. It works great. But I've conditioned myself pretty hard to never do that in my live account. The fact I keep testing in sim is worrisome. I will likely try it live at some point because it's been incredibly profitable and only a disaster stop is in play, far from the price zone I'm working, so I don't get frustrated by stop out, try again, stop out, try again. It "seems" more fluid.

When it works.

You're right, though, averaging down means you've formed a strong opinion and it's very hard to do the right thing in that state of mind.

 

[schizo]

Quote from illiquid:

It's so easy for me to go the other way and double down on a loser, all it takes is a millisecond of self-delusion and an itchy trigger finger -- by then it's twice as hard to do the right thing.

I apologize in advance if this sounds crass, but has it occurred to you that flipping in the other direction might be more profitable?

 

[illiquid]

Quote from NoDoji:

I've been testing average down tactics in my sim account for months, because it's easier to see a setup forming, start in on a position, average down if necessary, then reap the reward when the expected price move transpires. It works great. But I've conditioned myself pretty hard to never do that in my live account. The fact I keep testing in sim is worrisome. I will likely try it live at some point because it's been incredibly profitable and only a disaster stop is in play, far from the price zone I'm working, so I don't get frustrated by stop out, try again, stop out, try again. It "seems" more fluid.

When it works.

You're right, though, averaging down means you've formed a strong opinion and it's very hard to do the right thing in that state of mind.

It's a slippery slope to go down that road, cuz no matter how much you backtest or how incredibly profitable it may be, the one time all hell breaks loose like on 5/6 your stops may not be able to save you at all. But like anything else, there are appropriate times to do it and usually has more to do with one's own account/cushion/mental state than what the market is doing, at least that's my superficial take.

Like you I prefer to avoid the frustration of repeated stop-outs, so many times the compromise I make to myself is allow a no-stop position so long as I never average down on it. Just another lame excuse to hold onto a loser? Maybe, but I've seen what I can do with the avg down and it sure ain't pretty . . .

 

[illiquid]

Quote from schizo:

I apologize in advance if this sounds crass, but has it occurred to you that flipping in the other direction might be more profitable?

Yes, it's something very difficult for me to pull off but I'm getting better at identifying when it's the right play. That given, I've also lost incredible multiples of ATR flipping back and forth losing positions, so it's definitely not something I actively try to implement.

If trading setups you need to question if a failed setup is worth going the other way or if you should just move on to the next trade. When you're primarily a discretionary trader you need to be doubly careful about flipping -- I remember losing 22 trades in a row in euro futures doing just that, still have the printout somewhere.

 

[ammo]

tl's can give points to short or buy into,if you think of them as areas and avg into the price,not going all in at once,i dont consider it doubling down,not looking for an argument,been trading this way so long, i would probably tune it out,i;m just saying that as another way to look at averaging, you can add to winners or losers if you have enough evidence to support your direction, when the evidence starts falling apart ,you take a loss,the higher the volatility,the faster the evidence changes and the faster you need to crunch the info,that's why i suggested using stops in high vol

 

[~~~]

Quote from illiquid:

It's a slippery slope to go down that road, cuz no matter how much you backtest or how incredibly profitable it may be, the one time all hell breaks loose like on 5/6 your stops may not be able to save you at all. But like anything else, there are appropriate times to do it and usually has more to do with one's own account/cushion/mental state than what the market is doing, at least that's my superficial take.

Like you I prefer to avoid the frustration of repeated stop-outs, so many times the compromise I make to myself is allow a no-stop position so long as I never average down on it. Just another lame excuse to hold onto a loser? Maybe, but I've seen what I can do with the avg down and it sure ain't pretty . . .

Knowing others is intelligence;
knowing yourself is true wisdom.
Mastering others is strength;
Mastering yourself is true power.

from ~Lao Tze (Dao De Jing)

 

[~~~]

Quote from ammo:

tl's can give points to short or buy into,if you think of them as areas and avg into the price,not going all in at once,i dont consider it doubling down,not looking for an argument,been trading this way so long, i would probably tune it out,i;m just saying that as another way to look at averaging, you can add to winners or losers if you have enough evidence to support your direction, when the evidence starts falling apart ,you take a loss,the higher the volatility,the faster the evidence changes and the faster you need to crunch the info,that's why i suggested using stops in high vol

The words of truth are always paradoxical.

also from ~Lao Tza (Dao De Jing)

 

[illiquid]

P/L for week 5/28: -4k on 660k shares

+5, +5, -6, -5, -3

A frustrating week of overtrading. Evidently I did not lose enough on index plays (SPY, SQQQ, UPRO) the prior week to keep my promise to myself to stay away from them, but I think I've finally finished my tuition for that lesson. Playing the market itself simply is not necessary for how I trade; the best "pairs" trade for me is always buy strong, sell weak, and let the market do what it wants.

I think when I'm honest with myself, I'm basically paying a decent amount of money every week to entertain myself with seeing a trade through "to the finish" -- in other words, maximizing the gain rather than optimizing risk/reward. I think besides the money, I'm seeking a certain satisfaction to finishing a position based on some nebulous logic that's actually quite expensive. Making sense and making money are often two different paths altogether; more and more I realize that my profits tend to be quickest and fattest when trades are more accidental -- being there at the right place, right time -- rather than premeditated. But the former are just somehow less satisfying to me, so much so that I can never just walk away from a windfall first trade or overnight gap that goes my way; it feels as though I've not "worked" hard enough to deserve it. Hence, my predilection for holding "all day" trades and overnights rather than just the easy meat. All weaknesses that need to be addressed, hopefully without the need for large and painful losses.

P/L for the month: +28k

Not satisfied at all with the way I traded for this tumultuous month, I feel like my "margins" so-to-speak are razor thin for whatever crap I'm pushing. Would like to see daily gains that are cumulative, and weekly gains that reflect a more consistent approach, rather than constant coin flips between disaster and victory. Volume should really die down for me next month (you heard it here first!), as should my expectations.

 

[~~~]

Quote from illiquid:



P/L for the month: +28k

u did a good job, don't be too hard on yourself.

 

[illiquid]

P/L for week 6/4: -32k on 250k shares traded

+10, -32, -2, -8

Well it was bound to catch up to me, there were just too many days last month where I needed to fight back from a severe drawdown -- this was finally the one that really got away. And so I throw my hands up in surrender for a certain type of trading, one which I need to shelve for the forseeable future. You all remember the PTJ interview in MW where he asks himself, "Mr. Stupid . . . why not make your life a pursuit of happiness rather than pain?" Well this is my own wake up call. I won't go into details. But yes it was ego. Yes it was disrespect for risk on a fundamental level. Yes it was irresponsibility, immaturity, and flat-out hubris. No, I'm not giving up. But I am giving up a part of myself, at least a part of what I thought trading was about -- at least for now. I'm giving up that slice of pie-in-the-sky for a mouthful of dirt, and I'm going to savor it like fucking moist devil's food cake. Who needs that other shit anymore? Not me. You can all have it, I've nothing left to prove to myself cept punching the clock, day in and day out. So be it if it's just a few hours a day, that's all I really need anyways to get the job done -- fuck the rest. I think I'll rate my week from now on with how many crappy hollywood movies I can squeeze in before the bell. Just to show you all how much "effort" and "dedication" and "passion" is worth in this game. Surprise! It's a big fat fucking zero. You either guess right or guess wrong, you got enough balls and bank you can guess more wrong than right until maybe you finally learn something real. And "guess" what that might be?

Hah, I think I've watched too many dark knight reruns lately -- tune in next week, same bat time, same bat channel!