Crushed

Yes, my discretionary losses today equaled about 8 discretionary wins. To net 8 discretionary wins in my system will take weeks (only one or two trades per day, usually), so its weeks of effort down the drain in one day.

Live and learn...these events cause me to get a little more conservative and a little more adherent each time.

 

Well Sir FWIW

The next level will be to manage losers (and winners) on and individual basis – and not let them slow you down... (or speed you up)

IOW – Get to the point where each trade is independent of all other trades – take em as they come win or lose – then move on to the next


Successful Journey Sir

RN

 

Thanks Redneck - that is definitely something psychologically I am not capable of yet. Without a doubt I am still considering everything within the context of a single day to be related, and on big losing days that is leading me to bad decisions.

Thats why rules like "only two losses per day" are helpful now, but you are absolute right that I need to be able to execute each trade completely independently of all others. I know my system wins 65-70 percent of the time, so its all about consistency and taking advantage of the percentages. I believe it was Homer Simpson who said "a good manager always plays the percentages."

I shall go and meditate on this and see if i can't make a breakthrough by focusing on exactly that shortcoming.

Thanks for crystallizing it...

 

What trendy said... How long have you been trading and what?

 

Started dabbling in 95, trading in 99, completely amateur until i would say some time last year. Two complete wipeouts during that time.

Now i develop and trade mostly using systems. I currently trade one intraday ES futures system that is more or less mean reversion, and one equities based swing trading system that i would refer to as "buy the dips"...


I don't know how anyone is waiting on this situation as a short....you would have to be a position trader and i would assume if you've been "waiting for the right time to short" there would have been a lot of wrong guesses by now.

Anyway, its my discretionary trading that is problematic, and that is mostly intraday. The thing is I believe I can sense that some discretionary input would take my trading to the next level but i need to eliminate these psychological mistakes that happen 3 or 4 times per year.

 

Mean Reversion - the fatal flaw is outlier days. Russian Roulette - w/ 99 empty chambers and 1 bullet.

ways to save ur ass:

1. fixed dollar loss-
and get out of everything - have some $ amount that when hit you exit everything, lick your wounds and fight another day. sure your biggest days would normally come when you are max loaded and the turn/reversion happens, but the outlier days it doesn't can take you out.

2. hedge-
ie. when u get to either some dollar loss level or exposure start directional betting w/ an index to hedge - like 50% of your dollar exposure

black swans happen, and one day a black tyrannosaurus rex might show up too

 

Or develop another system which flourishes under extreme volatility so (extreme) drawdowns are minimized. Easier said than done of course.
Personally I started with mean reversion systems and was religious about them, now doing almost only trending.
(Yes, I was the "bag holder" with mean reversion shorts during the last 6 month rally .

 

so now the trend up trade is over and your advocating a trending system when odds bet is we are going to enter a profitable mean reverting system phase?

you are paying good traders for xmas gifts for their kids

 

My biggest temptation is to place stop market entry orders on the ES for 20 cars just before the employment report tomorrow morning and hope to catch a wicked move for 10 points or more that puts me back to even in one fell swoop.

But i won't...i'll just slog it out for the next 4-6 weeks until im back where i was yesterday. Fun.


My prediction -- the employment report is released, the market swings in one direction by 5-7 points before violently swinging back the other way for 15+ points, all in about 3 minutes.

 

Yeah me2 i was wondering the same thing. Trending would have seemed to work better over the last 6 months.


My mean reversion system actually works against strong intraday trends in a normal environment....but if you look at todays chart there was no reversion to the intraday trend.

What looks like a strong trending market on a 6 month basis actually can support mean reversion well intraday.

Its relentless buying and selling intradays that are killers.