A few changes I am making...I am getting rid of reversal and range trades, as these are countertrend. I am going to stick with the trend trades until I have them down cold and can trade them under any circumstances. Only when I am well ahead will I even consider countertrend trade. I've added some rules to my system that will keep me out of flat markets. I'm going to post a summary of each morning here with my paper trades and annotations. I'm not doing this to show off or anything, I just want to get some feedback on my methods. I'm going to try and limit myself to 3 trades a morning, as I have found more than this I am usually overtrading.
I'm trying to keep this as realistic as possible, so I am writing down trades in real time. No trading today, crappy volume. A few breakout attempts, but no participation. My new filters worked great to keep me out of it. Calling it a day early and heading to work. Hopefully when the money is on the line I will recognize days like this as easily. I think these next two weeks or so should be very valuable. I haven't looked at the market from such a detached point of view in a while, and this is what I need. Have a pleasant weekend.
Judging from your posts, IMO you are focusing on the wrong area. You need to really examine why you allowed yourself to blow out. What was going on in your mind when you were down a $500.00 and you didn't stop yourself. Whatever it was it will need to be rectified or you will repeat this. Forgot making changes to your trading rules, forget papertrading for now, you are in denial about what the real issue is. You have to come face to face with the belief that allowed you to self destruct, if you are honest with yourself it has manifested itself in other parts of your life. Don't place a Band-Aid on this by making some changes to your trading program, paper trading for a couple of weeks, and then thinking it will all be better. I will look into your future, if you choose to start right back up with papertrading and then live trading without going through the painful process of why all of this happened in the first place, your trading will go very well, in the beginning. Because this wound is so fresh you will not deviate from your trading plan one bit, you will only take high percentage trades, you will execute them almost flawlessly, until you get to a point where the pain of this episode starts to be replaced with how well you are doing trading. Thats when you become susceptible to start walking down the path that got you here in the first place. Its human nature, we all do it. Its not easy to examine why we did what we did, but if we don't we will repeat it. regards, Bruce Hawkins
Was something wrong with the way you were trading? From what you wrote in this journal, the problem was not sticking to the system, not the system itself. If you can go back at look at your trades, and quantitatively identify something that's not working, then get rid of it. What was your P/L for range trades and reversal trades vs. your trend trades? Was any poor performance due to the method and its execution? Was it applied to market behavior it was not designed for? Those are some good questions to answer. Before you fire one of your "employees" have some evidence of shit performance on paper and know why it happened. You said you doubled your account before you blew it. Which method(s) were responsible for the doubling? Was the doubling from "legitimate" trades, i.e., trading by your methods?
Sorry for you but hopefully the damage is limited. Now I guess you understand you cannot catch every market turn. As candletrader says (and it's my experience also, I am trading for more than 10 years) very good traders will average around one point per day per system and excellent traders can maybe double that figure. You say you are going to stick to trend trades. Be aware that pullback trading is not as easy as it seems at first. In one of your previous posts, you claimed that pullback trading was good for a 5:1 RR with 70% winrate. Forget about this. Try to find a setup with a 2:1 RR AND 50% winrate. It's more than enough to make money and certainly not easy to find.
The range and reversals did OK, but they were also the source of some big losers. I think I will be better of just going with the flow, rather than trying to pick every move. For example, today I didn't take any trades with my improved system. Before yesterday, I would have been wasting time and energy to maybe pick up 50 bucks or so. My system was working fine, but it can always be improved upon. I'm not worried about the discipline issue. I got upset about a loss and tried to make it up. In the future I will accept my losses, keep them small, and keep a detached perspective. If I get emotional again I will just turn of the computer, as was suggested earlier. I think I have a great system, and I will take a few weeks to reassure myself. Then I am back into it with a whole new respect for the game. Most importantly, I am going to spend the next few weeks getting into a "detached" mindset and then maintain this when I get back into it with real money. Thanks for the suggestions.
Yes another excellent point. I've come to realize that if I can steadily average 1pt a day soon I will be fabulously wealthy. That is why I've decided to drop some trades and focus on my favorites. I'm confident that my trend following trades can do this and maybe exceed it. If nothing else it will make for much calmer trading and lower commissions. I've been averaging $100 in commissions a day, many of those trades for small gains. I've decided to get away from this and cherry pick my trades. I'm going to take the next few weeks to make this transition.
I think this is the best journal I have read. I am sorry you let your self blow up but it was inevitable. (Plus it makes for a great journal) You were lucky it was a small acount. Develop some anti blow up rules like max dd for day, week whatever. I look forward to reading your progress. I personally just hate to see my money disappear so much that it causes me to exit. I did have a large loss once, but I kind of lost according to a plan because I had just had a big win streak and stepped up to 12 minis. Of course bad news came out and I got beat.
Again, until you write down in columns the P/L for each method, and figure out how you doubled your account, you are still operating on feelings. From your posts it is not clear you have objectively evaluated the performance of your several systems. How the heck do you know in one day if it is an improved system or not? How about comparing 30 days of paper trading to the past results of your system? And that's just part of it. The why is also important. You need to view each system's performance along with the market conditions it operated in.