"I'm not looking to shame anyone, but you may know who I refer to who was winning daily over a very long period. However, what was obvious to a trained eye was that he took massive risks doing so and often sat through deep drawdowns huge multiples of his average green day just to finish the day slightly green". -- Laissez Faire That profound statement by Laissez Faire is the key to the Holy Grail of trading. Find a winning strategy, then control fear and greed. Don't dupe yourself into thinking you are a great trader because you hit 100 consecutive days in a row with profits every day when 20% of those days you had extreme FOMO and averaged down, revenge traded, gambled with larger and larger position sizes to dig yourself out of a deep hole you dug only to barely turn a profit at the end of your FOMO session. That house of cards will eventually burn down. I know because I used to trade like that and blow up accounts over and over. In fact, I would guess that the vast majority of traders are still doing that right now. So, currently I am on a 46 green day streak. The trading account is up over 65% during that time frame. I'm taking about 25 scalp trades per day. And the key to it has been using tiny position sizes relative to the account size to reduce FOMO. The tiny position sizes combined with a tight mechanical stop loss of 20 cents per share create a situation where I am literally risking less than a tenth of 1% of my total account per trade. That's how I kill FOMO. I know the system I'm trading is profitable because it mimics the trading system of someone else who is very profitable, and I am seeing similar results. But my system has even stronger risk management built into it than his system because I don't want my equity curve to be so bumpy and don't like the extreme stress of feeling highs and lows all the time that comes with using mental stops and large position sizes. I also monitor my FOMO each day on a spreadsheet with my trading stats for day. There is a column to measure the FOMO that I felt that day with a numerical rating and notes on what caused the FOMO (a series of 5 losses in row, getting trapped in a rising stock that halts then gaps down, etc.), and then what bad actions or good actions I took as a result of feeling the FOMO (bad = averaging down on a loser, revenge trading with larger and larger position sizes, etc. Good = stepping away from my computer and taking a 1 hour break too see if market conditions become more favorable later in the day, or simply bagging a small gain for the day and calling it quits.). These FOMO notes are incredibly valuable because I can use them to tweak my trading system to prevent FOMO in the future. Two of the biggest tweaks so far have been that I no longer trade the pre-market and I don't trade for at least 5 minutes after the open to give stocks a little time to settle down. A good stock trading tracker that has built in metrics and good analysis tools makes a huge difference too. I spend as much time looking at my metrics as I do trading to find the strengths and weaknesses in my trading.
One of the key, if we follow the Cut losses short and let winners run, is to catch strong trends. Schizo also said ... Focus on buying pullbacks in a strong trends. LaissezFaire also said ... I don't care about losing small on this trade if I can win big on the next one. But we all know ... It's easy to lose small, multiple times. Enough for the next big win to only recover the DD. Still I think we need to guess what's realistic based on current Bias/Variance. Can't hope to make 5:1 Reward to risk if I risk 10pts when the usual move is 20pts. I can settle for a 2:1 maybe. If I buy early enough then I could catch 10pts and risk 5pts. Now ... If I am lucky ... Maybe the price will actually move 20pts in my favor. But to catch those extra points ... I need a rule to stay in the trade. Or even better ? A rule to add to the winners (SteveH). They say ... small losses, small gains, big gains. The edge here are the big gains. When most retail traders are more akin to lose 10pts than to earn them ... Our rules / system must allow for smaller losses and bigger wins. Not the reverse, smaller wins and bigger losses than usual. Luck plays a big role but it's tough to handle it. They're telling us to be convex. Minimize the left tail and Maximize the right one.
Uh No. I don't think that's a good strategy. It may look like it works but it's statistics if a 100 people do that then some will get lucky. I used to do that and it works sometimes but eventually would blow out accounts because of it. But from that I learn what risk management and how to use it as part of a holy grail system.
Good Morning ironchef, How you doing buddy? I have 1 question for you. What exactly and specific question do you want me to answer for you or help you with?
That is actually how I sim traded. If you look at the chart, first half I tried to let profit run and also no SL. Second half I put in a tight SL and traded like what you described.
You might ask, why don't you put in a SL and let profit runs? Because there is no free lunch, if I put in a SL, the majority of the time I got stopped out when I waited for a BO. If I put in a wide SL, then it is no different than no SL.
Good Afternoon ironchef, @ironchef please listen carefully to me and please do not take offense to what I am saying. But I do not want to lie to you or mislead you like others are doing. WORK YOUR ASS OFF to be an ES Master or STARVE. Listen please carefully: I WILL NEVER EVER EVER IN MY LIFE TELL you OR ANYONE on this PLANET how to trade the ES Market and Be an ES Master and make money. NEVER. EVER. EVER. If you want to be an ES Master like me, you have to figure it out ALL by yourself alone, just like I had to do, by myself with NO help from anyone. You and I are at competition trading. I will NEVER tell you how to trade, or my ES contracts will take FOREVER to get filled cause then you know my secret. Sorry, but its the truth buddy. You are ON YOUR OWN. Go figure out how to be an ES Master. You have NO idea the pain I went through to be an ES Master. ALOT of PAIN.
Hello ironchef, The last time I tried to help someone in the ES futures market in private message, @padutrader , he copied our private messages added to the ET public forum to embarrassed and shame me and make fun of me and cause me all type of bullshit. https://www.elitetrader.com/et/threads/here-is-a-trader-who-makes-200000-usd-a-month.381483/ So, nope, not helping no one anymore with anything related to trading. Work hard and figure it out yourself, like I am doing in my spare time.