Auto trading almost back to where it started the year. Here are today's result Auto Trades: -2561 Everything else: -685
So you stopped trading now? When you're up for the year like that and then pulled back like that till you're flat or negative for the year, what process do you go through? Just continue or stop and rethink because what you did stopped working?
I'm doing a couple of things. I'm reducing my size significantly and I'm also taking a lot of money out of the account. The 2nd part is just a feel good, it's nice to have money show up in your bank account for once, no real long term benefit though. The 1st part is to somewhat clean the slate and build confidence. I'm not really changing too much on the strategy side, however I did reduce the risk of the auto-trades significantly. I had over 230k @ work on that strategy, now I'm at 10% of that. The number of positions is smaller but mostly the size of each position is smaller as well (less than half).
I can understand reducing the size of positions commensurate with the now smaller account size so it scales accordingly. The idea is if the strategy works over the longer term, the bad streaks should statistically weed out and you should still come out on top. What does taking money out of the account do? Unless your plan is to quitting trading for a while as a hiatus or for good? I was thinking if the strategy no longer works, then one would halt trading that strategy, leave it in cash or in a savings account earning interest, while work on refining or developing a new strategy. But if you still intend to trade for a living, but you've both reduced position size and took money out of the account, how can you ever dig out of the losses you've accumulated? It will take even longer to make back all the losses with a smaller account and smaller positions.
Like I said, taking money out doesn't have a real benefit and is just a temporary feel good effect, just like eating a piece of candy from time to time when you're on a diet. The issue is not so much how can you recover from the losses and get back to break even; the challenge is more around how can you preserve capital while in a slump so that your long term survival is not impacted. It takes a day to move money into TD, it takes about a week to move it back into IB. If I exclude my current positions and look at my remaining buying power I can still put on risk for another 250k in capital in these accounts which if I leverage it up I can hold stock north of 1.3 million overnight (both accounts have portfolio margin). There's definitely enough left to get me back in trouble or take advantage of an opportunity.
I see. Yeah its good to take a break in a horrible losing streak. When I was in a losing streak and huge drawdown I basically kept the trading positions going and lightened up positions. I think Stanley Druckenmiller said when he was on a downtrend during what became of the dotcom boom & bust, where he lost a lot of money going long while he was managing money with Soros, he took a small break, reanalyzed his views of the market and positions, and then went short the market and made back the money. I guess just gotta keep your head up high and look for opportunities to enter another good trade. There is always a good trading opportunity in the market every single day. And every time you took a directional position you lost money in, you could have made money if you got the direction right. So maybe realigning your views to better get the right direction might be a way to sort out the losing streak.
Stick with your successful, automated system. Stop your other trading; just stop...Keep tweaking your automated system/s(you have a gift/talent: use it and don't take it for granted). Give 1/4 of the money you would normally lose to charity. Buy an appreciating asset, you know, something that you enjoy and that makes you happy(classic cars/art/gold,bourbon, etc)with 1/4. Spend the other half on your family(buy a pool, take a trip, rent a cottage, go skiing). You may become wealthy beyond currency measures...you will feel better, be working on what actually works while not being bothered by all this nonsense...and the rest will heal itself. I believe the odds are on your side and that this will be the best trade(and the LAST) you ever make. This is your edge. Regret: The one thing that no man can ever afford. I wish you well. Peace to you, my friend.