Which real live future trading room I should choose?

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The particular strategy I'm referring to has been backtested to be profitable over time. However, it is not necessarily profitable every month or every quarter.

The reason to trade it is because it is profitable over time (in backtesting, although there is no guarantee of success in the future).

I figured that if I could stick to the strategy I would make money gradually over time.

However, today I broke the rules and traded without a stop, and added to the position as it went against me. In addition I got emotional and I flipped long near the top .

However, after today's (costly) episode it would appear I have a problem on my hands (me). I let my emotions get the better of me and threw the rules out the window and it cost me.

Based on backtesting, I believe that particular system would be profitable over time if I were to just trade it and not break the rules. It would not necessarily be profitable every month or every quarter though. EDIT: In back testing the draw down is relatively low.

Would it be a mistake to continue with such a system if I could manage to stick to the rules and always use a stop-loss?

EDIT: the system is for a different index future than ES
 
Quote from Jreality:

The particular strategy I'm referring to has been backtested to be profitable over time. However, it is not necessarily profitable every month or every quarter.

The reason to trade it is because it is profitable over time (in backtesting, although there is no guarantee of success in the future).

I figured that if I could stick to the strategy I would make money gradually over time.

However, today I broke the rules and traded without a stop, and added to the position as it went against me. In addition I got emotional and I flipped long near the top .

However, after today's (costly) episode it would appear I have a problem on my hands (me). I let my emotions get the better of me and threw the rules out the window and it cost me.

Based on backtesting, I believe that particular system would be profitable over time if I were to just trade it and not break the rules. It would not necessarily be profitable every month or every quarter though.

Would it be a mistake to continue with such a system if I could manage to stick to the rules and always use a stop-loss?

EDIT: the system is for a different index future than ES
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A few things:

1. Practicing on a sim is not about practicing the system, it is about practicing your EXECUTION of the system. You obviously are not executing this system properly, and THAT is what you need to practice. If you can trade this for 3 months and make consistent profits, then go live.

2. You have not done any forward live testing on the system, only backtesting. That is not good enough. You need to forward test the system with a small amount of real money (1 contract) to make sure that it actually works. Just because you have great backtest results, doesn't mean that you have a solid system. Even then, be aware that systems will break as market conditions change. You seem to be expecting to follow this system like some kind of cookbook recipe. Go read my earlier post from today about how the market is like a poker game, and how any system will eventually break. You can't just take someone else's system and use it unless you are intimately familiar with how it works, and how you may need to change it if the market changes.

3. You need to develop more confidence. You are causing yourself psychological damage with these losses, and that is going to hurt your chances more than anything. You need a break to repair your mind, which right now is severely broken. Take a break and heal, take a look at your mistakes, and PRACTICE.

4. I am at a loss to understand how this system may not make a profit PER QUARTER, and yet you seem to be trading it as an intraday system. That doesn't seem to add up. If you are trading intraday, your system should be giving you enough signals that you are profitable on at least a monthly, if not a weekly basis.

5. If and when you ever decide to go live with a system for the first time, NO WAY IN HELL should you be trading with more than one contract at a time until you see that it is working. You are obviously trading with way too big of a position at the moment.

6. Trading without a stop is a very bad idea. Never, never do that. What if some unforseen catastrophe happens? The market can move so far so fast in the blink of an eye that your account could well be wiped out before you can even do anything about it. Always have a disaster stop in the market. ALWAYS.
 
The system is relatively simple. It only usually gives 2 trades per week on average. If the market goes up a certain percentage of the average true range (relative to the prior close) it goes long. If the market goes down by that percentage it goes short. There is a stop loss at a certain percentage below the entry (if long) or above if short.

EDIT: there are one or two simple filters that would prevent a trade from happening under certain conditions.

If you have a gain beyond a certain small percentage the stop gets raised a tiny percentage above break even. The position is closed at the end of the day (or when stopped out).

Sometimes the system can call for more than 1 trade in a day if stopped out, but that is rare.

I've back tested it over 5 years and it has a relatively nice and smooth equity curve. It usually has a profit every quarter, but, if I recall correctly, I think there were a few quarters that were flat.
 
Wow. I sincerely hope that there are new participants reading this because JR and FB are discussing what could possibly be the most important aspects of the emotional component in trading EFC. Both deserve accolades.

+10
 
Quote from Jreality:

The system is relatively simple. It only usually gives 2 trades per week on average. If the market goes up a certain percentage of the average true range (relative to the prior close) it goes long. If the market goes down by that percentage it goes short. There is a stop loss at a certain percentage below the entry (if long) or above if short.

EDIT: there are one or two simple filters that would prevent a trade from happening under certain conditions.

If you have a gain beyond a certain small percentage the stop gets raised a tiny percentage above break even. The position is closed at the end of the day (or when stopped out).

Sometimes the system can call for more than 1 trade in a day if stopped out, but that is rare.

I've back tested it over 5 years and it has a relatively nice and smooth equity curve. It usually has a profit every quarter, but, if I recall correctly, I think there were a few quarters that were flat.
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Let me ask you: Do you understand, on a gut level, exactly WHY this system works? Or is it just a magic black box that someone gave you?

If you don't understand the system, and WHY these trades make sense (or do not make sense), then you are not going to be able to follow it, because you won't really trust it at a gut level.

If you really trusted the system at a gut level, you would just execute it, wouldn't you? Your mind knows that you _should_ trust it (or so you think), but your gut doesn't seem to go along with that... and when the heat is on, we always go with our gut.

You need to have a system that you have internalized so completely that you have no hesitation whatsoever about trusting it. I don't get the feeling that this is the case with you and this system.
 
FB123,

The general principle of the system (in my mind) is that if certain indices make a certain degree of a move in a direction within a day (relative to the prior close), the index tends to move further by EOD more frequently than the index tends to stall out or reverse.

This system works best in backtesting on a certain index. It works on the S&P too, over time, in backtesting, but there can be months and months where it is flat to negative. I've stopped trading it on the S&P for the time being.

There is one sector ETF that I have traded this system on (with different parameters) and I have actually some made real money, with it so far, except that my position size is equivalent to 1 /ES contract and so I have been less likely to get emotional and stop breaking the rules.

There is another index ETF that I trade it with (with different settings) that has worked great over the past 5 years (in backtesting), but it is now in a multi-month slump (relatively flat performance) with a few percent drawdown). Tweaking it hasn't helped. I've reduced the position size when trading that particular ETF.

On the index future that I trade it with, it worked great for a few weeks, but it went into a mult-month slump in the summer. (EDIT: and I had one very bad day where I broke the rules and held the position over night without a stop as it went against me.) I've since tweaked it and improved it. For example, the stop was originally a 1.6% stop, but I've tweaked it in such a way that it can use a 0.5% stop. There is another rule about raising the stop that also improved it. There is another filter I added that improved it overall. The problem is that it still can get into periods where it has a string of losers and I sometimes try to avoid those by taking smaller positions and closing trades early.

Today, I somehow let my emotions and beliefs about the market get the better of me and broke all the rules in a dangerous way. Basically I lost control completely and was relying on hope and luck. What would have been a 1300 loss (if I followed the rules) turned into a 10K loss.
 
I agree that when trading system like this, there is a fear that it could stop working. When it gets into a string of losers I tend to ask myself "what if the market changes permanently and this system will be a permanent failure if I continue to trade it" or "what if it goes into a 6 month slump with record drawdowns."

The fact that it was profitable over a 5 year period doesn't mean it is profitable in the future, and doesn't mean there can't be very rough periods. That is a big concern of mine.
 
Quote from Jreality:

FB123,

The general principle of the system (in my mind) is that if certain indices make a certain degree of a move in a direction within a day (relative to the prior close), the index tends to move further by EOD more frequently than the index tends to stall out or reverse.

This system works best in backtesting on a certain index. It works on the S&P too, over time, in backtesting, but there can be months and months where it is flat to negative. I've stopped trading it on the S&P for the time being.

There is one sector ETF that I have traded this system on (with different parameters) and I have actually some made real money, with it so far, except that my position size is equivalent to 1 /ES contract and so I have been less likely to get emotional and stop breaking the rules.

There is another index ETF that I trade it with (with different settings) that has worked great over the past 5 years (in backtesting), but it is now in a multi-month slump (relatively flat performance) with a few percent drawdown). Tweaking it hasn't helped. I've reduced the position size when trading that particular ETF.

On the index future that I trade it with, it worked great for a few weeks, but it went into a mult-month slump in the summer. I've since tweaked it and improved it. For example, the stop was originally a 1.6% stop, but I've tweaked it in such a way that it can use a 0.5% stop. There is another rule about raising the stop that also improved it. There is another filter I added that improved it overall. The problem is that it still can get into periods where it has a string of losers and I sometimes try to avoid those by taking smaller positions and closing trades early.

Today, I somehow let my emotions and beliefs about the market get the better of me and broke all the rules in a dangerous way. Basically I lost control completely and was relying on hope and luck. What would have been a 1300 loss (if I followed the rules) turned into a 10K loss.
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Alright... well for starters one of your problems is obviously trading with too much size. The reason people trade with too much size is because they are impatient. They want to make more money faster, so they scale up too fast, and can't handle it. That's when emotions come into play. Had you been facing a $130 loss instead of a $1300 loss, you probably would have just taken your stop without hesitation, so if you do continue to trade real money, reduce your size significantly.

This is often very tough to do after a big loss because the tendency is to want to make it all back right away, but I can assure you that if you succumb to the temptation to get it back fast, you will lose even more.
 
Quote from FB123:



Some people say that you should jump straight into live money trading without first practicing your ass off on a sim. Those people are, to be blunt, a bunch of fucking idiots.

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Exactly!

By the way, TradeTheMarket, TTM is one place that seem to be against "paper traders". I guess they may not like the fact that "paper traders" are more careful with money. Paper traders are putting in their time to learn on their own instead of putting faith in their pricey indicators.

If you want to join their $295 live room, u may not be be able understand what they are doing w/o buying some of their special indicators.

Their free video newsletter is quite good - that is one good thing about them.
 
Last year I had a really good year, but all my gains are now down the drain. My loss for the year is huge (in my mind), since it is equal to 17 months salary, but the loss is probably still only reallly 6.5% of my total liquid net worth. However, I need to get profitable (or stop trading) soon before the frustation I'm feeling eats me alive. I don't want to lose any more money from trading. It hurts too much (whether I could afford it or not).
 
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