Wise words. I think counter trend trading can be OK as as long as you always use a tight stop loss and avoid trading high volatility markets. Counter trend trading without a tight stop loss can be deadly to an account.
It does assume you can find a good counter trend method in the first place. Having both a trend and counter trend method can provide a better combined system. Than just trend on its own.
Slow and steady. Trading is supposed to be boring. u lost nearly 15% on one trade. It's a slippery slope you are going down. Read your own journal and wake TF up!
Nobody knows simple math anymore.... [shaking head] Neither you nor Neke can make a simple analysis, he also said: "That deflated my confidence for the rest of the month." His sentence is simply not true. If we break down his P/L before and after the big loss, he was slightly negative (-400$) until the big loss, and HUGELY positive AFTER that. (about +10K) So you advising him to take a break in the middle of a winning streak and him thinking that he had low confidence are just simply not true. If that's how he trades with a low confidence, he should try to be in that state of mind all the time... I advised him earlier that someone should analyze his trades (beside the obvious) and maybe there is an easily recognizable pattern that could be avoided in the future (like not trading on certain days or so)
In a sense you are correct. A big drop in my account due to overriding my system is sure to cause a drop in confidence. That makes me sober and want to adhere to rules, besides taking everything into consideration before deciding on the trade plan. That is something one is bound to lack when confidence is very high. I am probably not speaking for myself alone. Consider that SCTY trade. Placed an order plan to short 1000 shares @ 42.60 which got filled shortly after the market open, after reviewing the news that SolarCity was offering 3.4M shares, of which the CEO was buying a bunch. I did not see that news justifying the pop. Afterwards as the stock zoomed against me, I re-checked the news and found to my amazement that there was a bigger news: SolarCity was raising significantly its guidance for 2014. I felt trapped, and unwilling to accept a loss, and in damage-control mode and seeking to exit at break-even, averaged down (after shutting off my automation) until I had a total of 5000 shares short. Well the rest is history. Was it not over-confidence that made me put a trade plan before reading/considering all the facts? So yes, I wish I could continue with low confidence for a long while.
I think your above statements say it all, after your loss you stuck to your plan...you would have been positive for the month otherwise... perhaps you should somehow stop yourself from doing discretionary trades.. no idea what, but you seem to be better off... long ago I had a similar thing happen to me with a stock(CMGI I think) that was being acquired by doubleclick but I didnt know at the time... same thing, missed the simple news that it was being bought out, I was caught short 6K shares and wiped out most of my account... if your auto trading system works, why are you messing with it? stay away from it, clearly discretionary didnt work for you for the past 3 years... auto seems to be working, let it be... my 2c, for whatever they are worth.
I have so been there, looking to get out break even and so focused on that idea that I cannot see what's in front of me and simply take the smaller loss. Pa(b)st Prime once posted here: âBeing disciplined in the past isnât good enough: on each and every trade you must be disciplined. Forever. Like a drunk in a program you can NEVER slip off the wagon.â It's a morning prayer for me.
But why are you still second-guessing your system. It could be either, deep down you don't really trust the results and don't consider the system worth trading or, you're psychologically incompatible with trading (now) and should think about letting someone else do the actual trading with ironclad discipline. If you trust your methodology then after a good day/week/month, you should be more concerned about the future, not less. One point here might be that your job is providing you a solid income and the thought of earning just 5% per month off your $90k account is simply too little money, therefore you take on more risks to justify time spent on developing your methodologies. A person earning 200k annually from his job, trading a 50k account for a 40% annualized return and focused on returns, and not the intellectual fun of trading, would be unsatisfied with this and eventually would take on unjustifiable risks resulting in losses.