Hi all, fellow traders. New to this forum, but not new in trading. So, a question to the more experienced, if I may: I am a technical day-trader (FX), tried what not, suck at discretional trading, hate the predicting paradigm, so the way to go was to follow the price action in a more mechanical fasion. After some mind-boggling research for 2 years I came up with an edge I'm happy with: 1 to 5 pips on average per trade (for dull or hot market's phase), 1-3 trades per day in the most volatile time window (live in Bulgaria and catch the best of Europe/US sessions). Unfortunately, these trades are not anywhere near evenly distributed. The equity curve on a fixed lot size basis moves in short chunks of upward bursts and quite long flat meanderings. Not much of a drawdown, but no progress either. No objection, since I'm in trading for the long haul, and, in what I've seen, any mechanical way (if not curve fitted) has a similar nature. My aim is to geometrically grow an account to a certain multiple, applying the Optimal f method by Mr. Ralf Vince (the best bang for the buck I've found so far, MM-wise). The new Europian trading regulations keep me well off to the left of the Opt f peak, so the drift of Opt f point does not bother me much. The problem is (and I suppose not only mine): 4 to 6 days in a month I'm off the markets for my other job gigs, and it is quite possible to miss out some hefty 40-60-90 pips trades, and probably much more smaller losing trades will be missed. Two solutions came to mind (to keep the exponential growth, even with lesser slope): 1. Let the missed winners/losers even out in the long run. 2. Use some allocation technique, like 75% active account, 25% buffer account. Any missed trade's money go in/out of the buffer account and re-allocate at 10% buffer account (these are arbitrary levels for now). What do the experienced traders think, assuming the automated execution is not an option?
%% Another solution is get a broker that lets you plan/pre-enter orders+ stops. BUT pre-entered stops on stocks , usually get hit. BUT that can also help- if you plan on it. Missing one week a month could be a very good thing, as long as you get to pick the week/6days.
What is your biggest tool-to-bear on your trading results? Is it your brainpower to supervise entry/exit/MM? Then don't enter any trade without you're being 100% present. (This includes, BTW, having a trade on and constructing a bracket exit to take you out at some later date/hour.)
Thank you murray t turtle, good suggestion. My fault, I wasn't clear enough: by "day-trader (FX)" I ment intra-day trading the Forex Market, no over-night positions. Some might call it scalping - plenty of opportunity, precise sizing, aggressive recapitalization of profit => faster compounding. The question is how to continue with optimal sizing after missing winner/loser trades, as the optimal sizing was derived from an uninterrupted long sequence of consecutive trades, by the optimal f/fixed fractional f method (Ralf Vince). In other words - how to not get under/over sized after missing a trade in a winning/losing streak.
If you're off on your other job gigs then don't worry about what you did or did not miss in the markets. It's a waste of emotional energy and creating anxieties are a trader's worst enemy. You are only accountable for the time you spend active in the markets. I would advise against leaving stop orders for brokers in the FX markets for market entry - the order will likely get butchered and then open trade management becomes the concern. It would be quite disheartening to string together a great month and then have a brokerage desk take it away from you while you were gone. (Don't ask me how I know - I was much younger and it is a painful memory)
By far the biggest tool-to-bear on my equity curve growth is the trade size, which in my case is a function of my account size and the distribution of the trade results of the entry/exit method I use (it is a positive expectancy of course, for now). Given that this distribution is more or less stable and that occasional random trades from "the pool" WILL be missed, is there an optimal solution to account for the missed trades without sacrificing much of "growth rate"?
You might be quite right. To simplify a bit for illustration: Suppose I have missed a loser. Since this is an unrealized loss and since the size of my next trade is a function of my account size, for the next trade I'll be a little oversized, if I do not account for the loss in some way. But then, since the last trade was a loser, the probability might has shifted a little bit towards a winner for the next trade, to "compensate" for the over-size. These might level out in the long run, or...? Any statisticians around here?
%% Something that works in the stock market Akh,; but i got the idea from 2 different derivative traders[One ran his own fund/market making + position trading+ the other worked for a big bank/big profits] Cut back size or get out after a certain number of losers; they must have a better than average hit rate. Other wise ,may just as well keep pulling the trigger, if on can afford to do that.The derivative trader of the two that earned the more [ many millions] got out, rather than cut back.......................................................................................................... The reason that works in the stock market , is certain number of few losses, indicate almost always a trend change/wrong side of trend.
Just my experience and opinion - you are needlessly overthinking this to excess. Increase your sizing after actual realized account equity gains. Decrease your sizing after actual realized account equity losses. Leverage will kill you quicker than anything. Especially unearned but "assumed" leverage.