Redneck, I always enjoy your wisdom. My lesson: Ignore the news. No, this time it is not different--ignore the news.
That is definitely one of the biggest lessons I learned this year. I know when the news is due to be reported and usually avoid trading right into a news report, but one of the best things I learned was to not even bother finding out what the news actually is, because everything you need to know is contained within the price action. What finally drove this home for me was seeing our automated system (based on pure price action) trade right through major news events week after week and never suffer a measurable blow to profits during those reports.
Look at where the CL future closes on Wednesdays (API-DoE), and where the TY future closes on the first Friday of every month (Civ Unemploy). If you can ignore the first 30 minutes of noise after the initial market reaction to the number, the settlements are remarkably sublime given the daily vol and ATR for each market. In fact, you could make the case that the dollar index, gold, and ES are much bigger correlators/market drivers on the CL than DoE and PAD inventories these days. For me, at least, it seems that the market reaction to an economic release frequently does not follow what 'conventional wisdom' might dictate - almost a 'buy the rumor, sell the fact' kind of thing. It truly is all about not trying to think beyond that last price print in terms of what I personally think something should be worth - everything known about that contract is distilled in that last price print.
I know everyone says that you have to trade in a way that fits your personality, but sometimes a successful method just finds you when you aren't even looking for it. It would be pretty stupid to discard it if it could potentially make you a lot of money. I have been doing discrectionary trading for the last 2 months and it has been going extremely well. This really chaps me because I am a very analytical, math-brained person, but I'm not going to fight it if it is working this well. I can't reduce what I'm doing to any kind of mathematical equation, and I'm learning that that is ok. Yes I have objective signposts (S/R, dow theory, buy/sell volume) that I use, but I am basically trading by feel (that is painful to say). This is my most important lesson of the year. Don't try to impose your view of what the market "should" be doing on your trading. Learn to see what it IS doing. I am getting away from trying to build mathematical models to predict the market and just learning to flow with the market. Not only has it been profitable (and I still have much to learn), it is very zen and very satisfying to feel in tune with the market. I'm sure there will be plenty of new and "exciting" lessons in the year to come.
- Never stop to research new instruments to apply your strategies. Don't be afraid to drop a long time buddy instrument if you find another one with an objectively better edge. Keep your portfolio dynamic. - Our business or part of it can be shut down overnight, be it by your country of residence laws, the exchange country laws, the exchange rules or your broker policies. Especially if you are profitable, as the best edges are sometimes in gray areas. Enjoy every day you can trade. - If you are not a programmer and decide to hire people to write a quite high-end ( fast ) program, keep the number of persons involved really low. Not even for the eventual idea theft, but more because it is super difficult to get a large group of people working on each others' computer codes ... This one is not from my personal experience , I was just the witness of another guy's nightmare during fall.
When I become emotionally destabilized due to a succession of losses (some would say, 'unhinged'), it is uncanny how poor a trader I then become. But I still find it hard to walk away and stop trading. If someone was sitting next to me during those moments they could make a fortune trading the opposite side to me! The other 98% of the time I am not so bad.
All good and valid points. Did you have an account shut dwn on you? I agree with the first part very much. I have stopped working a system that was working to add a new system. Never do that, if it is working just add contracts, dont end it. Or add the new system to your group of systems. If it is working , dont mess with it.
Self control self control self control When the brain is scrambled you couldnt hit the side of a barn with basketball. NO\ot saying just you, but "you" as in me as well. None of us could. BEst to stop and walk away. BEtter setups down the road.