agreed - i was the same way. started out with 50k and made 25% in 3 months doing self-taught TA. I wish I would have known to protect my capital better as I have taken big drawdown this year from the commodities correction(May 11) and a tech correction at the end of January. live and learn. (back to TA I go!)
6. Focus 20% of my time on money management and position sizing research/analysis and 80% of my time on developing mechanical systems. ...as opposed to learning by experience with a discretionary trading approach and figuring out the money management and position sizing pieces only after a lot of trial and error.
Thanks, bl82. As someone relatively green at this, this is the path I've chosen after doing much of my own floundering about and experimenting with various styles from fundamental to technical, discretionary to mechanical. It seems much more consistent, logical, and scalable, and it suits my personality/programming background well. From speaking with other people who have traded for many years and are still struggling to find what's right for them, I feel fortunate for having sought this path.
I'd enjoy trading more ... not think about the money ... just enjoy what I was doing ... I'd paper trade alot more - have contests between different systems
Hi, This might be a little off-topic, but I wanted to add something about acrary's comment. I learned so many things from his posts, and I like to think that he would have been pleased to know that many traders were enlightened by him and continue to carry on. The way I see it, acrary's methods are very, very fine in sense that it is scientific(possibility of test/refute/accept), and in general turns out to be acceptable. We should not throw away ideas if they turns out to be acceptable, probabilistic truth(and what kind of truth is not probabilistic?) IMO, the thing he really wanted to say(to the other traders) is summarized by this: "I would trade 100% strategic and 0% tactical. By this, I mean I would diversify simple trading styles like trend, countertrend and rangebound over time and markets. I wasted too much time and effort on when to buy and when to sell. My time would've been better served asking; "should I be long, short, or flat?", for the simple strategies in multiple timeframes and markets. Rather than compounding I would add more timeframes or markets to build the account while continually lowering the overall risk." acrary's methods of exploiting edge is tactical. He finds and exploits these edges, then use correlation to win the war by winning little battles everywhere and making those battles count. Now, by being 100% strategic, you don't focus on winning little battles; you want to win the battles that count most, that could tip the scale and make you winner or loser. Other insignificant battles, you don't have to win, you don't have to focus as much. Put in a simple example it's like this: you could be a scalper who can turn 80% of daily range into profit, or you could identify day's direction and just long/short around open. Here the scalper has more advantage because he can turn 80% of daily range to profit no matter the direction, whereas the ORB player can go wrong direction and cost him some profit. But the point is, to be 80% scalper you have to put much, much more effort into this than just trying to be ORB player. Acrary found that he belongs to '80% scalper' in the above example; yes, he has been profitable, but reward to effort is much less than the other approach. Even worse, in his case the reward for both approach is the same, therefore relative loss for him even though he gets audited every year. In the end, he had his view of the market, and he was right on what he saw, but there were other side of the market that he did not see. I'm very humbled and somewhat inexplicably saddened by his admission... But, I think this is a great news for us. Even with limited view of the market he managed to earn a fortune. Think what you can do now! It'll be like the best of Warren Buffet and James Simons combined or something like that, you get the idea: less correlated methods combined. And I'm sure acrary has gotten his stuff together again, this time much more efficient than before.
I wished I had started as a scalper nearly 26 years, it would have forced me to concentrate 95% of my time on money management rules that where is best place to enter. What is most amusing, when I started way back when, if I made 75 cents in ES, that was incredible money cause it was one big S&P and $375, and now one has to trade 20 contracts for same bang. Back then retail fees was $25 and now $60 for 20 lot retail? Get people with small accounts to trade and charge even more in fees, the American way.
armed with experience and a shot from fountain of youth...hmmm tuff decision...YES!!! i'll do it all over again.