2012: The Battle for Survival

Net P&L is after or before taxes ?

 

Weekly Update for week 1/50 ended 1/21/2012

Bad start to year, down 14K (7%), 3K via automation and 11K on discretionary trades.

Too eager to start of with gains. Back-fired after taking on a couple ill-advised trades.

Code:

Opening Balance:               	    	203,729
Net loss for the week 		        (14,450)
------------------------------------------------
Net Balance:                   		189,279

								

 

here we go again.................

 

Either :-

1. You are getting worse at trading due to
a. old age
b. carelessness
c. other comitments
d. boredom
e. some other reason

2. The competition is improving faster than you
a. improving computer EAs
b.fewer mugs and amateurs
c. other

know thy self brother and your limitations

 

Is there a reason that your discretionary trades are not automated?

 

How do you automate discretion?

 

This year will be excellent for you neke, even if the waters here in the first quarter are going to be jerky... just all the more fun!

Here's my best insight: $100k+ is a ton of money - you can easily bring that past 7 figures as early as this year. Be proud that you still have huge capital, even though your worst year happened recently. There's really nothing in your way still, you can pick up your PnL like nothing even happen in just a few consecutive months.

I really, really think you should be spending a large portion of your time system building new and solid ideas, and also paper trading your discretionary trades (along side your live trades). Systems are not events, they're processes. So longs as you have a couple of different systems running to diversify your drawdowns, and so longs as you constantly keep up with the "10k hour" rule and keep pursuing new algorithms, you'll sidestep the biggest problems of technical intraday trading: drawdowns and system degradation. Have the idea that you should ALWAYS be running your processor at 100% for back-testing some data; if you're not optimizing, you're wasting precious CPU time. I know it can be frustrating to always get curve-fit data, but sooner or later you will perfect an idea where it will sidestep the downsides of curve-fitting. No matter how big your draw-down is (and it sounds like your system you keep using is all but kaput now - remember the 10k hr rule?), you should not change your mental skills. Don't think of it as a fight with the markets, because it is NOT. It's a ride. The market is always correct, and it takes no consideration for what you do, whether it be kids at private schools or a new car. Get away from the "oh, if it moves in this direction a point my life will be all better" mantra!

 

My advice will be to go through selection process with a reputable firm to test your ideas. One does not have to work at a prop firm but get DOSE OF REALITY and COMPETITION. I am copying case of a trader from SMB capital blog as an example. SMB capital equity traders trade stocks with a catalyst like news event, earnings, etc.. I have no affiliation with SMB and i do not trade stocks. I trade Crude Oil futures. I read SMB blog to get ideas about trading in general.

Advice from experts may be more helpful . All I can do is point in the right direction.


I am copying this from SMB capital blog. It may help some traders.

Is it time to quit trading?
Jan 7th, 2012 | By Bella | Category: Mike Bellafiore's (Bella's) Blogs
Hey Bella,

I’m a longtime reader of the SMB blogs. Trading from a home office, I miss out on all of the trading floor banter that I had when I was starting out. It is good to “connect” with other traders, even if it is only virtual. I read your book One Good Trade, while I was on Christmas vacation and there was a passage that shot right through me. The hairs on the back of my neck stood up, so I felt compelled to write you. The quote was:

“You do not slip from trading successfully for five consecutive years to being unable to trade profitably anymore. That is, unless you get in your own way. But your skills are there. Now it’s time for you to compete.”

Let me summarize my approximate net results:
2004: +$10k
2005: +$90k
2006: +$125k
2007: +$175k
2008: +$240k
2009: +$9k
2010: -$3k
2011: -$2k

I applied to the SMB desk in late 2010 and interviewed with GMan & Steve, but was not selected for your desk. I had been hoping for a chance to get back on a trading floor. After that confidence-crusher I spent most of 2011 on the sidelines (I have a 2 & 3 year old which kind of forced my hand, day care being so expensive). So, to sum up, I was totally knocked flat on my butt.

I have really been struggling with a confidence issue. This is why your quote struck me. I’m not sure if it is all in my head or if I am just chasing past years. On a deep fundamental level, I KNOW that I didn’t just get lucky in those years. As you say, I had some skills that allowed me to post those results. And yet now it feels so elusive. I can’t help wondering if it all was luck.

I guess my question, if there is one, is how do you KNOW there “is always an escape”? Maybe my head is just a basket case and I need to get it sorted out. I read once that when you get knocked out of the game, it is difficult to come back because it destroys your “mental & emotional capital”. Such intangibles are difficult, if not impossible to get back. I can identify as I most definitely feel like a failure. But how long is too long to sit and net scratch for an entire year? 1? 2? 3? It is getting old. Maybe I am a washed-up has-been. In some ways it would be much easier if I could point to a single blowup trade where I blew out my account. At least then I could walk away. But I didn’t make a huge mistake. I didn’t go down swinging. In some of the most volatile markets I kept my risk controlled and never blew up. That’s what makes it so hard for me to decide to walk away from trading, and why I haven’t yet. How can I quit when I haven’t struck out yet? I was patient and waited for the next pitch. Well, it seems I am still waiting, years later.

Sorry to clog your inbox with my nonsense. But I felt compelled to write and I feel better for having done so. I really enjoyed your book.

Bella

If you have made money consistently from the market in the past you can make money now and ten years from now. Particularly you. And my argument is all about how you define skill.

You do not slip from trading successfully for five consecutive years to being unable to trade profitably anymore. That is, unless you get in your own way. But your skills are there. Now it’s time for you to compete. One Good Trade

The skills that I refer to in One Good Trade are not just the trading skills you developed. You have a more important skill. You have the personal skill of being able to be successful. This is a skill far superior to chart expertise or advanced tape reading.

You did not start during the easiest of times to begin your career. 04 was not a great trading year. It was not 07 08 99 2000. Yet you found a way to succeed. With no trading skills you were able to learn how to build the skills to make money. This is extraordinary. You were the 5 percent.

I have written often in the past that many are capable of becoming a successful trader. There is work to do that builds trading skill and if you do that work then you will find out how good you can be. The slogan of SMB Training is: How good can you be? Not: We will make you rich. This is a game of elite performance. Honestly very few will have a passion for trading to sustain the energy required to do the work necessary to play at the highest level. You are not a bad person, untalented, unintelligent, or lazy if you fail as a trader. It is just not your thing. Or better said- the trading you did, at that time of your life, at the place you did it at, was not your thing.

Given your past results you should have made more in 09. This coincides with the best thing that could ever happen to you, your new child. But also a gift that brings more responsibility, less time to work on your game, and more pressure. Did you lose your passion? Have you made the adjustments necessary from this life change to continue your trading success?

We teach our traders very differently than we did in 07 and 08. The momentum trading that was so effective in 07 and 08 is deemphasized. We ask our traders to create their own trading playbooks of set ups that make the most sense to them. We encourage SMB traders to expand their time frame and concentrate on trending stocks. Have you made adjustments to your trading as this new market rewards different set ups?

It is up to you when to call it a career. And how you manage your family is not for this blogger from afar. Since your wrote to me, personally as someone recently married who hopes to have children, I would not be 3 years into being a father without making money- unless my wife and/or I were independently wealthy. Trading is not worth financial insecurity for your family.

Having said all that, there is going to be a new path to being a sustaining, successful independent trader that is more than just the development as an intraday equity trader. The days of sit down and JUST learn to be a discretionary intraday equity trader are gone for almost all. This is still the best place to start your trading career for many reasons. This is still the best way to build your trading foundation. But this will not be the beginning and the end anymore for the new and developing trader.

The trading world has changed. It’s both harder and more opportunistic. I will write more about this in the coming months.

Bella
One Good Trade



I

 

1000% return in a year is easy?

 

Don't forget he started with $5k. I also said as early as this year. Yes it's possible.