A scary equity curve - what should I do now?

Discussion in 'Risk Management' started by Amnesiac, Sep 11, 2006.

  1. Amnesiac


    Ok, this is the equity curve of my futures trading account. As you can see, I did some stupid things in the first half of the year, i.e. increase size while loosing.

    So I just paused for a while and started again. I still trade the same futures (mainly ER2 and sometimes ES, YM, DAX). For some reason it's going a lot better now, although I obviously still overtrade.

    Do you think I'm just lucky to trade an easy market at the moment? What's your opinion on this? I don't want to boast with this - I'm just worried, that I might get too confident.

  2. Thats what they are suppose to look like when the lightbulb goes off. Now you have an equity curve in the price discovery proccess, looking for liquidity (which is your current profitablility threshhold). :D

  3. Make sure you take a screen shot of every trade and add comments as to what you saw and why you took the trade.
  4. Classic
  5. dont worry about the equity so much now as it is going up nicely !

    focus on doing what you are doing in the size you are doing

    in the markets that work for you in the time of day that it works for you in the edge you have now

    ( if trading smaller ... continue the path as best you can )

    try not to overtrade unless you are arb - scalping with low low commissions

    good luck !
  6. bjg


    Hopefully that's what mine will look like soon. The latter part. :)
  7. cashonly

    cashonly Bright Trading, LLC

    Chaos, did you just take a signal to go long on Amnesiac? :D
  8. lol, it's goign to take forever to re-coupe that almost 80% loss ^_^
  9. Player


    ? Wasn't it "re-couped" when he reached 0% ?
  10. amazing how equity curves present similar chart patterns to those of the markets. at some stage i put a 200MA on mine (in retrospect), to find out to my amazement that the curve did consolidate there for quite a while.

    i think since the markets basically represent natural cyclical/harmonic behavior of greed and fear of the masses, i guess the same goes for an equity curve - for an individual. so greed and fear are fractal.

    the good thing is that you can spot when you are due to a psychological avalanche and foresee when your curve may change trend, using classic chart analysis. then you can do something about it (e.g. reduce position size etc). i heard that a lot of institutions follow their traders' curves and force them to do that, ahead of them taking the foreseen large losses.
    #10     Sep 12, 2006