Measuring success

Discussion in 'Professional Trading' started by CarlTiger, Mar 18, 2011.

  1. CarlTiger


    Hi all,

    I am a fairly new trader, only been trading live for a few months. I have some things a like to achieve on both short and long time frames. I am just curious, on you, more experienced traders, what do you strive for, what are your goals with trading?

    May seem like a very philosofical one, but it would be interesting to see what your ambitions are.

    All the best,

  2. My ambitions are simple. To make enough money from trading to live comfortably. While I'm still working my goal is to grow my account to make the first goal easier to achieve.
  3. Not a single losing year (no yearly loss) for 10 years to 15 years, is the true measurement for trading success. Trial by fire. My friend forex manager has achieved this success/goal.
  4. rwk


    In trading, it's the "pinball principle". When you win, your prize is that you get to play again.
  5. NoDoji


    I measure trading success the same as any business.

    First, you develop a business plan. In trading your business plan is based on research in which you define setups that provide you with a statistical edge that demonstrates consistent profitability in your preferred trading time frame through varying market conditions (bull/bear, trend/range, calm/volatile). Your plan needs to be well-defined with rules for position size, trade entries, risk management, and profit-taking. The rules should be such that you can easily instruct a programmer how to code them (automated trading system), or teach them to a 10-year-old.

    The less discretion involved, the easier it will be to attain consistent profitability in the long run:

    Good: Buy all new highs in an established uptrend (price is above a rising 20-bar moving average)

    Bad: Buy all new highs in an uptrend only on Tuesdays and Thursdays, never on the 3rd or 18th day of the month (or the nearest business day if those days occur on a weekend or holiday), only if price is moving at least 126.5 kph toward the previous high, Ben Bernanke is not scheduled to speak that day, and the moon is in its waxing gibbous phase, but not yet full.

    Then you launch your trading business by trading every appearance of your setup(s) and managing the trades according to the rules you determined will produce N profits over time.

    Your success is measured by a) your ability to follow your plan, and b) the plan's ability to produce profits very close to the results produced during your research/back testing phase.

    As with any business, the research and planning are critical before launch and the ability to follow the business plan is also critical.

    The greater the variety of market conditions you tested your plan through, the better the overall outcome and smoother your equity curve will be.

    There were businesses that thrived through the recession and traders who thrive through bull markets and bear markets.

    You must also be prepared to adapt. For example, our automated system automatically adjusts protective stops based on the price of the instrument it trades. This prevents it from getting stopped out of good trades just because price is now trading in a higher range and a larger stop is required because of the increased range of price action. Increased range of price movement means larger stops, but also larger profits, so the plan holds up under that new condition.

    Hope that helps!
  6. Shhhh......You giving away all our secrets.
  7. CarlTiger


    Thanks for the replies!

    It is always interesting to see how others make their approach and what they aim for. It has certainly been a fascinating journey only these first months and sometimes pretty much overwhelming when it comes to indicators and theories, not even to mention all emotions and attitudes of my own during trading. Feels though that I have cluttered my perception at times, with too much information, which I have worked on. But I am just happy coming to where I am now, since this is something that I am really enjoying and learning so much about.

    As for my own goal, consistency on equity and following my trading plan... (Hoping of course that the equity is not inclined negatively :)
  8. :confused:
  9. Here we are on the eve of the vernal equinox, A fullmoon that is the largest by 14% in 30 years.
    How can you not buy silver on the opening?