What I'm Struggling with - Execution of the Edge

[Smart Money]

I would say the biggest struggle I have at this point, is the confidence in the edge's I have designed and created. (I mostly trade directional stocks and commodities through options and the underlying security. I trade some spreads on the SPX, but my real alpha is through directional positions in things that move, those are the edges I have issues with).

What I struggle with is confidence in my edges, and patience with them.

I've spent about 7k hours building edges, and like them very much. Just having a little bit of trouble executing them.

Anyone have any advice, sure this is a common issue out there.

Divide your money into thirds. Play with one third at a time. You shouldn't trade in fear because you're not risking your whole egg. Then slowly size up over time.

By the way, it's worth saying that the market just went through a really long period of time where it was extremely bullish and most any system would have worked. Make sure you're using a system that works when the market is going sideways too.

 

[d08]

Been active for 3+ years. I've had my struggles in the past, but as long as capacity allows, I don't see much change in performance using my techniques.

You talked about having no losing months, whatsoever. So you have not had a losing month over 3+ years? Yet you only mentioned this year. General consistency is a different topic and is not so much about the lack of losing months but a smooth curve and high profits.

 

[profitlocker]

In my trading account, no negative months. I've had many lower performing months under 1-2%.

 

[d08]

Then that's quite impressive. Personally I go for risk adjusted returns as when the year ends, that matters more to me.

 

[Victor Newman]

One of his video AMrk DOuglas said that edge probability is not the isue. Richard dennis had %95 loser to %5 vinner ratio on his edge system but he was available to make %5 vinner is huge vinner.
Problem mostly lie under psychological factors. For example for me it was hard to except risk that's why for a long time I do not use stop loss. I told every possible story to myself to not use stop loss even I should have defansive article here in this form on it. But I was wrong. Being right is another of my problem. I had to be right instead of making money.
TO not enter your edge when it gives signal in my mind could have a few reason.
First one; maybe you are planning size wrong. I mean if you can not enter posisiton with 10 contract (I am futures trader lets talk on this way) why not to try to enter with 5 even 3 or starting with 1. I am not huge fun of pyramid but next trade you can make it higher. You would find yourself being greedy but you have to got balance and undesrtand that it is not one night making millon business this is marathon.
Second option; Maybe you can not be agree with that there is no system in the world can give %100 result. Richard Denis made amazing things with %5 My system has %73 another guy has %60 maybe %85 but there is no system on the earth can give %100 result. That means if your system gives signal to enter 100 times it is not possible to have 100 winner. Also there is no way to understand which trade will be winner which one will be loser. firsth trade is going to be winner or loser you can not know but if you tested your system you would know that in 100 signal some part will be winner.
And my last opinion; maybe you do not have trust on your own system or maybe you stick with sytem more then necessary.
As I beleive our mental atitiude more important then our system or probability rate. You must study on your mental atitude and believes. Mostly trader comes this pont after 2-3 years then understanding the problem work on it and solve it tooks another 2-3 years. so it is mattter of time and willing to be succesfull on this area instead of feed our emotions.

 

[wrbtrader]

I would say the biggest struggle I have at this point, is the confidence in the edge's I have designed and created. (I mostly trade directional stocks and commodities through options and the underlying security. I trade some spreads on the SPX, but my real alpha is through directional positions in things that move, those are the edges I have issues with).

What I struggle with is confidence in my edges, and patience with them.

I've spent about 7k hours building edges, and like them very much. Just having a little bit of trouble executing them.

Anyone have any advice, sure this is a common issue out there.

Excellent feedback to my original post. I greatly appreciate it.

I'm having a breakthrough year in trading, just trying to work out the kinks.

You said you're trying to work out the kinks...make sure you do not make changes to your trade method considering you're having a breakthrough year. Also, the way you wrote that implies your lack of confidence may be due to you having your "first profitable year" or your "first big year of success".

Simply, success is new to you but you still have doubts it can last because this type of success is still new to you or maybe you made the mistake of listening to someone that planted a seed in your head that profitable trading is luck, not possible, only the pros can do it or maybe you have some none trading related pressure at home that's your real source of doubts.

That's one of the dangers of social media. You got to dig deep down and not allow the naysayers get inside your head and plant those seeds of doubt. These seeds may not even be from other traders which is why I mentioned it may not be trading related. It could be someone posting messages about economic doom, the company you're working for having financial problems, a spouse not yet a believer, someone you personally know that has undermined anything you've done in life and is starting to do the same again with your trading whenever theirs family gatherings or anything else that has absolutely nothing related to your trading.

This is one of the toughest situations to resolve because so many of us make the mistake of believing it must be something involving the trade method when in reality its something outside of the trading. I've seen people go around in circles with this issue until it becomes destructive and they go from consistent profits to consistent losses when they could have looked outside of their trading to see the real source of their doubts.

Doubts will always be there...we just need to be able identify the source that's causing it and then manage it so that it no longer impacts the trading or its impact is minimized.

Now you know why many traders are such disbelievers in their trading results (good or bad) because they're lost in the psychology. Our brains is not wired for success and its very difficult to reprogram it so that we are the real edge. Its why so many of us find psychology so easy to ignore and allow ourselves to get the wrench out to start twisting screws in the trade method instead of our head (behavior finance, trader psychology).

This is your last chance. After this, there is no turning back. You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes. - Morpheus (The Matrix)

 

[Handle123]

Then that's quite impressive. Personally I go for risk adjusted returns as when the year ends, that matters more to me.

Handful of years ago, I "grew up" only way I could think of saying it and changed my thoughts of who am I and what can I do to settle more of my life. Now I am one who seldom ever trades unless something is deeply back tested many years, I went from looking for the greatest profits which caused ragged drawdowns but did make ragged new equity highs to much more calmness direction dealing with risk, so I changed how I viewed risk. Instead of trading for profits, I trade more in terms of risk, this has given me much smoother equity curve, far less wild drawdowns. I went to thought processes of if I am not losing often, account will either go sideways or up, and for most part it has except for overnite bumps, markets generally don't do fat finger plays, and if you are doing long term trading, whatever happens in most days and even during a bad report, should not dramatically hurt portfolio if well balanced, i.e. different sectors. And after backtesting past 6 six years, have made few percentage points more than going for the gold type approach but far less drawdowns.

Is this the case of those who do aggressive styles of trading? I think so few of making huge returns exists by those who attempt to make them and I think personality of those who do catch huge winner will eventually lose everything trying for more.

The bottom line and sleeping well all that really counts for me now...zen like, acceptance.

Hypnosis for me has helped me for years in trading and other areas of my life, it is a few sessions till next time, I try to remember to go every 3 months or so, tough to remember when life seems to be going by nicely.

Good trading all. Always enjoyed your posts d08.