Welcome to my Shit Show

[Millionaire]

Is your "process" tested to be absolutely reliable and profitable? If yes, just trade "the process". It's not that difficult. Unless you don't trust "the process". Then that's a different story. Sounds to me you don't trust "the process" so you feel there is always a need for you to interfere and deviate from "the process" and put in your own discretionary trades.

It is not that traders don't trust the process. It is that living through long draw downs requires a lot of discipline.
For example, one very strong temptation during a multi month draw down is to do research and find better automated trading rules or parameters and switch to those instead.
And you reason with yourself that you are improving your trading and not losing discipline.
Everyone knows improving your system is a good thing right?
What happens next is that soon after switching over the old rules start working very well again and outperform your new rules in terms of getting out of the current drawdown.
It may actually be the case that the new rules will be a bit better in the long run, but switching over at that time keeps you in the current drawdown for many more months.

Jerry Parker, hedge fund manager and turtle trader for last 50 years sums up the above by saying:

"You're tempted after a certain period of underperformance to tinker with your systems and call up research. Then as soon as you implement the new research you find out, well the older system would have performed better"

He actually says doing the above has cost him *alot* of money over the years.

 

[TheDawn]

It is not that traders don't trust the process. It is that living through long draw downs requires a lot of discipline.
For example, one very strong temptation during a multi month draw down is to do research and find better trading rules or parameters and switch to those instead.
And you reason with yourself that you are improving your trading and not losing discipline.
Everyone knows improving your system is a good thing right?
What happens next is that the old rules start working very well again and way outperform your new rules in terms of getting out of the current drawdown.
It may actually be the case that the new rules will be a bit better in the long run, but switching over at that time keeps you in the current drawdown for many more months.
That is just one common example of how a trader can convince themselves to lose discipline at exactly the wrong time, there are many others.

I thought when he said "the process", he meant his own trading system. But regardless, if you know with 100% certainty that your trading system or "the process" works and the drawdowns is just part of the system, you won't need discipline to follow it. The fact that you still have to discipline yourself to follow it means you are still not sure your system or "the process" works. If it's really just a discipline problem, there is a very easy way to remedy it. You just program the computer to trade your system or "the process". That way you won't even need to look at it and the machine will trade for you. Why doesn't the OP do that?

 

[Millionaire]

But regardless, if you know with 100% certainty that your trading system or "the process" works and the drawdowns is just part of the system, you won't need discipline to follow it.

Discipline is easy when you are making money or losing small amounts of money because you are only risking small amounts.

When you have real money on the line, at a decent risk level, and going through a long drawdown, maintaining discipline for months and years on end isn't so easy.

 

[TheDawn]

Discipline is easy when you are making money or losing small amounts of money because you are only risking small amounts.

When you have real money on the line, at a decent risk level, and going through a long drawdown, maintaining discipline for months and years on end isn't so easy.

The guy has a million+ in liquid assets and four million in illiquid assets. The guy's got money and he can definitely afford to lose small amounts of money as part of "the process". So maybe what he needs to do is reduce his trading size so he's only risking a small amount of money until he can prove to himself that "the process" works assuming that it does work. But if he's having drawdowns lasting months and years on then "the process" or his trading system is not working. LOL

So he needs to go back to the drawing board to redesign his trading system to make sure it's profitable.

 

[Matt_K74]

Is your "process" tested to be absolutely reliable and profitable? If yes, just trade "the process".

Initially I thought we had a language barrier cause I didn't understand your statement for obvious reasons - but you may be on to something.

Bottom line is looking back I knew my systems worked well in a low volatility environment with very low interest rates. Now that that changed I guess I don't really know how well or if they will work at all - based on the Ytd P&L one can argue they don't.

 

[taowave]

Hi,what exactly is "thetagang" ??

If its short gamma/vol,you are simply in a very trying market..

What's your way of delra hedging and how levered are you??

 

[nooby_mcnoob]

whose daughter is majoring in social work and Islamic studies

 

[SunTrader]

Wiki sez that 1.1% of U.S. population is Islamic, making it (after Christianity and Judaism) 3rd largest religion.

 

[M.W.]

What's your point? People engage in Christian studies if they want to become Bible scholars or pastors. The same I would assume with Islamic studies. Otherwise such major is a complete waste of funds and time. Same as social studies. And that was the point that was made here by someone. You missed the point again as you do so often.

Wiki sez that 1.1% of U.S. population is Islamic, making it (after Christianity and Judaism) 3rd largest religion.

 

[Matt_K74]

Hi,what exactly is "thetagang" ??

If its short gamma/vol,you are simply in a very trying market..

What's your way of delra hedging and how levered are you??

Def short vol and a trying market - the long bias of my systems doesn't help either.
When the delta of my long (long stock or short puts) is > 75% of my shorts (short calls) I sell more short calls or roll the existing ones down - this is all automated. The trades are typically put on with a 2 long to 1 short ratio (e.g. 40 deltas on a short put vs. 20 deltas on a short call).

I'm not sure how to quantify leverage - some positions are larger than others obviously - e.g. gold and emerging markets are big losers and therefore getting larger. As far as $$$ goes - the portfolio margin accounts have about 320.000 in buying power left - if you add up the PM accounts [and the futures account] they are roughly 910.000. So one could say I'm 2/3 levered. I do have dry powder in savings accounts though that I would put to use if I run out of buying power.