A shoulder to cry on

We agree on something at least mschey. I am up over 60% (small size account) this year and have found plenty to trade (infact I have missed several opportunities as I can't cover everything in time) but I am not fixed in my time frames (trade time frame can be anything from a few hours to a few months) and have found that I have had the most success in the week to two week time frame trades in stocks and currencies (futures) and a few days in the bonds (30 year futures). Have had very poor success in the index futures this year vs. a banner year last year.

I just trade any opportunity I see (with an appropriate strategy) and don't really pay attention to this year and that year, if I ever end up questioning my basic premise that somewhere there is a trade worth taking I will quit but as long as there are free markets I don't see that happening. Good trading all.

 

How much you manage...that may be the reason...

 

I'm always amused to read a post like this. What it says to me is that you started at some point that you "assumed" would remain the same for the remainder of your trading life....but it didn't. So you became "embittered" with your chosen profession, and you preach this "bitterness" to others.

First let me just say that I made my first trade in 1966. There were no listed options, no index futures. Commissions were huge so no one that I knew day traded.

Oh yes, then the market peaked in 1968 and commenced to trade in a range for the next 16 years or so. Can you imagine the guy who started in let's say 1955, who believed that the market would stay the same, what he might have to say about 1978?

Then too we had no bond futures, gold futures back in the 60's, but eventually they started. Gold at one time was a commodity that I day traded. I haven't daytraded gold in a couple of decades I think.

I have been trading the index futures from the beginning...first with the Value Line, then later the S&P futures when they started. I thought the S&P was a private ATM when it first started. Then the market got a little more sophisticated and I had to learn a few new tricks.

Guess what? I've been learning new tricks since I've been in this business. This business is exactly the same as it's always been. You need to shift, adjust, understand that no technique, no method lasts forever. But people have been making money in the stock market for well over a century. That hasn't changed at all.

I'm having a great year this year. I'm not trading the same way that I did when the index futures first started. I'm not sure that I'll be trading the same way next year that I do this year.

But what I'm confident about is that the stock market will still be moving around, just like it always has. It's my job to figure out how to make a buck out of it. Whining about how it "changed" is not going to help me in that task.

I think this business is a great business...but not an easy business. This is a business where a guy can make a fortune starting with a small amount of money. The first thing though you have to do is to learn the business of speculation. That takes some time and alot of effort.

To the original poster....I'd back away for a while if I were you. A loss of 19% is alot for 3 weeks. You sound like you're trading a small account, or trading too big of a position for the capital that you have. You need to look over what you're doing BEFORE you start trading again. You need a plan. It sounds like you're trading way too emotional. Until you have some type of plan that you can assure yourself works, I wouldn't trade again.

OldTrader

 

Wow...that is EASILY the best post on ET i have ever read. well said OldTrader.

 

Thank you for the implied compliment. The tremendous proliferation of hedge funds has canibalized the game. In short, there is too many sharks at the table and not enough pigeons. At the same time, the authorities have sought to level the playing field aggressively by eliminating the old boys network of insider edges (ie. IPO allocations, wide spreads and trading increments, mutual fund timing, first call- Reg FD, etc. etc.). Furthermore, the Greenspan Fed is too smart and credible to make major mistakes leading to significant market volatility. Hedge Funds have dramatically dampened volatility by adding significantly more two-sided flow into the game thereby creating natural bidders on downdrafts and sellers into rallies. Hedge Funds are now a benchmarked product and are being asked to achieve the impossible (make money in all types of markets, post outsized returns, have reduced volatility, mitigate directional risk, and don't have down periods when your peers are positive). Somebody has got to pay the piper for this to occur. Hedge funds can no longer afford to have a down month when the hedge fund index is positive nor when the equity market is positive for the month. Furthermore, investors ask hedge funds to post outsized returns with lower volatility all the while mitigating the directional risk which has allowed mutual funds to survive by capitalizing upon the upward drift associated with equities. Naturally, hedge funds have become very whimpy unable to step out of the box and take a swing. There is currently no big supplier of edge to feed all of these hungry traders and funds looking to accomplish the impossible. Hedge Fund returns need to come from somewhere especially if Funds cannot ride the wave of the rising equity market like mutual funds do. To pronounce trend-following dead, is to suggest that human nature has somehow changed. It has not. However, markets have big moves because people are wrong-footed, not correctly positioned. We need some economic/global volatility to allow significant trends to re-emerge. The biggest near term hope in my mind is the changing of the guard at the Fed. If the new Chairman screws up a bit it may bring some much needed uncertainty back into the game.

 

Fortunately, I agree with this too

 

I hate to state the obvious... but if the market isn't following through much as of late, isn't it appropriate to fade moves? It is possible to make money daytrading doing nothing more than selling new highs of day and buying new lows of day. A few refinements can make that a very profitable game. Give it a shot and see what you think, but I'm telling you from experience it IS possible to make money trading today.

 

Adopt the George Costanza method of trading. Whatever you think you should do, just do the opposite.

 

One thing I've realized recently is that I only need to capture a fraction of the opportunities offered by the market in order to succeed at a level far beyond I'd ever imagined capable for an individual trader. The potential rewards offered by the financial markets far exceed the needs of any single trader; it's a thought that is at once both vastly encouraging yet utterly intimidating. But don't pay too much heed to those who say there is little opportunity left for us -- the liquidity is there, believe it.

 

You have no discipline yet you continue to trade! As if continuing to make the same mistakes is going to help you learn discipline. It is easy to become upset and frustrated when you don’t follow your rules and then end up handing cash out to people who can. Even worse, you kick your own ass after you don’t follow through with your plan. Telling yourself that you will be a disciplined trader and stick to your plan is NOT sufficient in becoming disciplined. Your trading should come to a halt asap (if you fill the need to put your money in the market because you may miss out, you can send me a check and maybe I will double your money, then again maybe I won’t). You need to go back to paper trading. There isn’t any emotion involved, as you can’t lose anything. I doubt you will do this because of the urge to be in the market. Obviously if you can’t take a little time out of the market to develop your skills, in a week or two, you’ll be out of the market anyways. If you can halt your trading, you are on the right path towards becoming disciplined. While you are paper trading, see if you can follow your rules. Start the day with making only one trade. If you follow your rules with that one trade, put on another. As soon as you don’t follow your rules, you must quick paper trading for the day. Don’t even allow yourself to watch the market after that. Once you can make 50 paper trades following your rules, I would think about starting to put money back into the market, small, very, very small. Once in the market, your goal is to make trades according to your plan. Profits don’t matter at this point, as your only goal is to follow your plan and learn to be disciplined. Again, follow the same rules, as soon as you don’t follow your plan, you’re done for the day. Don't allow yourself to increase your size until you do 50 trades following your plan.

Some of the other posts blame your hardship on the market, whether it be the summer days or hedge funds manipulating the market, I don’t buy it. The only person to blame is yourself. The only person who can change your behavior is you, well to a point. I guess if other traders and institutions take all your money your behavior in terms of trading will extinquish. Better start doing something different.