why can't I follow my system?

Quote from ymtrader:

Hello everyone,

I've been a long time visitor to elitetrader but have never started my own thread 'til now.

I have been trading ym & es futures for 4 years with some good months and some bad months, trying to learn as I go. I developed a system based on market observation and probabilities at the start of my 4 years in the market, and have since worked on back testing and forward testing it throughout the years.

Everything I have tested, shows that it makes money. I have not changed the system for 2 years, so the last 2 years I have essentially been forward testing what was previously only a backtested positive expectancy system.

The last 2 years it has continued to make money.

The problem is that I don't take every trade! It's killing my profitability. I know there are hundreds of threads on this board from people in the same boat as I, and maybe I just need to rant a bit, but I'm looking for any advice or processes that can help me trade one day at a time so I can realize my expectations.

A little about my system: I trade the ES, I know my login name is ymtrader, I used to trade only ym :) . And I usually average 12 contracts.

Statisitcs:
~82% profitable trades
average win ~$2000
average loss ~$4800
max drawdown ~25%

Over time my system does extremely well, it's the day to day fluctuations that are hard to deal with...it's our old friends fear and greed that befuddle me.

As you can see the my win/loss ration is only around .42, but this is how my system has been designed, but I also think that is why it is hard for me to take every trade.

Thanks for listening to my rants...

ym(es)trader :)
More...

OP, this is my last post on this thread because I have better things to do than trying to convince people that the earth isn't the center of the universe.

My final recommendation is to look at what real traders have actually done to make money, and use that as your guide... instead of taking the word of a bunch of people who pose as traders on the internet.
 
Hi Guys,

My how this thread has gone the last few hours. :)

I appreciate everyone's input, I heard some good and differring opinions, which is what I was hoping to get.

I am just a trader trying to better the system that I have come up with and try to earn some extra $$.

I will read and reread these posts and go forward in a manner that I see fit.

-chris
 
chris,

Welcome to ET :)


Quote from ymtrader:

Hi Guys,

My how this thread has gone the last few hours. :)

I appreciate everyone's input, I heard some good and differring opinions, which is what I was hoping to get.

I am just a trader trying to better the system that I have come up with and try to earn some extra $$.

I will read and reread these posts and go forward in a manner that I see fit.

-chris
More...
 
Hi Chris,

I highly suggest you get a copy of Mark Douglas’s “Trading in the Zone”. I haven’t read his first book so I can’t comment on that one. He definitely talks about how to overcome issues with pulling the trigger on every setup (edge).

He basically says in the beginning of trading you have to take every trade setup that comes along. Also you have to be able to write down what exactly is your edge. It can’t be subjective like “I go long when I think the market is going up” it has to be “when the 3 min bar closes above the 15 period MA I set a buy stop 2 ticks above the high of the bar that closed above the 15 period MA. In other words, something that either does or doesn’t happen.

Along with your buy stop you also have a profit target and a stop loss, and once in the trade you do nothing accept make sure either the target or stop gets hit, you don’t change or modify them. His big thing is doing a sample size of at least 20 trades and committing to doing those 20 trades exactly how your trading plan say to. As you know it is a lot harder than it sounds.

The idea is that by doing those 20 trades you are going to begin to face the reality of trading which is (drum roll please) although you have an edge you don’t know which trades are going to be winners and losers. It’s the uncertainty of the trading game that is difficult to manage. In a regular job you go to work you know you are going to get paid.

I would suggest using a system where you can trade just 1 contract, that should relieve some of the stress. If you have a 2-point stop that’s $100.00 on the ES plus commissions, worse case scenario over the 20 trades it cost you $2000.00 plus commissions. The chances of every trade being a loser are as likely as every trade being a winner. The point in doing this exercise is to be able to embrace the uncertainty and accept it.

Sometimes the problem is related to attaching our self worth to money. When we have a winning trade we are flying high, the inverse of course is when we have a losing trade even a spatula can’t pick us up off of the floor.

I am getting tired and am going to bed, I am writing this to both you and me, if you know what I mean.

Bruce
 
I didn't look back to check if anyone recommended this, but one book I find useful:

Exceptional Trading: The Mind Game by Ruth Roosevelt

The Trading Tribe by Ed Seykota.

Start with Roosevelts book first, its cheaper and more interactive.

She starts off with the premise that trades have limiting beliefs which limit their earnings and cause losses, in addition to the gyrations of the Markets.
 
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