Return To Reality

Discussion in 'Journals' started by baggerlord, Oct 30, 2011.

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  1. This title is an invitation for many of you. I returned to reality about 3 years ago and life is much better here.

    The first thing you have to do is accept that you are a part of the bell curve. For trading, especially daytrading, that bell curve is 90-98% losers depending on who you get your statistics from. You, no matter how smart you think you are, probably fall in the with the bulk of the curve that will end up being a losing trader.

    My background: 7 years as a full time online poker player making about 110k a year. Near the end of that I spent about 2 years seriously attempting to daytrade, mostly stocks and some emini futures. I studied a ton, was very dilligent, and the last 6 months was making consistant profit as a stock daytrader.

    That was when I realized that I needed 100k minimum plus living expenses to make it worthwhile.

    The fact is that if you can make 40% a year you are among the best in the business. People dispute this but the people that disupute this are not running hedge funds. They are usually running a prop group or something else in the industry. They are selling shovels instead of mining, although some of them may mine on the side. They came to the same realization I did a while back and decided to get on the business side of things instead of switching careers altogether like I did. If you make 40% a year you will be in the poor house after paying taxes unless you live with your parents.

    Here is the checklist for all you would-be pros.

    1. 100k bare minimum and that is if you have a huge edge where you can at least double your money every year.
    2. A REAL edge. It is amazing when you realize that most people don't even know if they have an edge or not when they decide to go live with money they can't really afford to lose.
    3. The ability to devote the working day to trading, and still be able to pay your bills if you have a rough stretch. They will come.

    I'm sure I'll talk more about this as my journal develops. Back to 3 years ago, I decided to get completely out of the gambling world for a while and get a real career going. So i joined the army. I'm currently a medic, and near the beginning of the pipeline to become a special forces soldier. I've been through SFAS (2 weeks in hell was the overdramatization of this phase) and still have most of the training ahead of me. I share this because for me this is a lifelong dream that my obsession with trading and poker kept me from pursuing for years. Maybe it will inspire you to go after something you dream of instead of staring at charts for endless hours.

    You are probably wondering why I am starting a journal if I think trading is a time drain and a waste of a young persons energy. Well I still like charts lol. And I need to invest some money. So this journal will be about trading around a busy working schedule. My trading goals are as follows:

    (In order of importance)

    1. A minimal amount of time.
    2. 10% or greater return a year.

    My plan so far is to trade the AUD/USD. I like how this moves and the market opens at 1900 my time so I can make my decisions and act at a pleasant hour. I am going to mostly be entering positions near the beginning of the week and letting them run for a day or two.

    I am trading a volatility breakout style based on ACD. I'll get into it more later.

    My edge comes primarily from the fact that I don't need to trade. I will take only A+ setups and sit out the market when things don't look ideal.

    I hope this journal will show that career + casual trading > full time trading for the 98% that will not be wildly succesful. The power of compound interest is great, especially for those that can make regular contributions to the account from a profitable and fullfilling career not related to trading. Those that trade full time will experience the opposite of compound interest as they are forced to continually withdraw to pay bills even through drawdowns. This can put one in a position where it will take years to return to all time equity highs. I have had this experience several times at poker.
  2. Shanb


    Hey bud,

    What have you been working on with regards to ACD? We def need to share some ideas...seems like you are catching on fast!

    I didn't pass my series 56(by two ?'s) So ill be out of luck for the next month for trading equities. Its a shame because I think I really have found something that is working for me.

    Going to have to get some money wired over to fund that futures account. Different instrument, different behavior. Here's some of the most important conditions that I have seen can effect the follow through on an A-signal:

    -location of the pivot
    dont fade the pivot!

    -Or size
    ATR acts as natural resistance barrier
    Tighter OR= more cleaner moves/follow through(stops triggered etc.)

    -Time of day
    A signals earlier in the day tend to have more follow through
    Pivot first hour high/lows
  3. Well for me I'm not looking at a daytrading period. My main goal will be to trade monthly a ups and downs for my biggest trades with the weekly levels as my faster timeframe. I don't intend to look at charts more than once a day. Weekly pivot ranges will be a big factor. This is really an experiment as I have never traded on longer timeframes before. My actual entries and exits will be in my pre-acd style as we know acd is just a tool. I am going to run some daytrading stats too once I get some time just for fun. Will post some charts this week as things develop.
  4. Shanb


    Oh I see...the above principles still hold true on all time frames. The cycles just become larger!
  5. I'm not using A levels. I'm using something called noise levels. I believe they were invented by a guy name Fat Tails on another forum. They are the smaller of open-low and high-open, averaged over a certain period. They work similiar but I believe they are more dynamic and can also give good info on which products are better to trade.

    For example, here are the monthly stats for May-Sept on the AUD USD.

    0.0082 0.1143 0.071741032
    0.0051 0.1138 0.044815466
    0.0167 0.0555 0.300900901
    0.0088 0.0384 0.229166667
    0.0050 0.0570 0.087719298

    0.0087 0.0758 0.146868673

    The first column is noise level in pips, 2nd column is range for the month. Last one is noise/range. Bottom row is the average. This gives a noise % of only 14% which is really low from what I have seen and indicates a product worth trading. Average for a choppy stock seems to be more like 25%. This would indicate we should trade this product in Oct and it turned out to be another killer trend month. The stats will be even better for next month so it should be traded again.

    Here is a daily chart with the Oct levels plotted. As you can see they are plotted off the open price and not an opening range. I don't think it makes a huge difference.
  6. Chart

    The month started on that vertical dashed line.
  7. Here is the 4hr chart with the weekly pivot range and monthly A levels still plotted.
  8. Here are the last 5 weekly values.

    0.0078 0.0232 0.336206897
    0.0062 0.0258 0.240310078
    0.0005 0.0564 0.008865248
    0.0206 0.0491 0.419551935
    0.0161 0.0364 0.442307692

    0.01024 0.03818 0.28944837

    Notice that even during an extremely trendy month the weeks themselves had higher noise percentages. This means at least the way I see it that it is most profitable to focus on the monthly moves and try to establish a position as close to the breakout level as possible and let it run. It also seems to me that it makes sense to try and enter on a failed weekly A down if the a monthly A up has been made based on the larger weekly countertrend moves.
  9. KBaines


    I am always a skeptic when I hear of someone claiming to average $110,000 per year as a poker player. Even more so when they give that line of work up and become a medic and wanting to trade for a living.
  10. You fail miserably at reading comprehension. I will go in depth at some point on the benefits of being employed and gambling part time vs being a self employed gambler. For now please make sure you understand the content of a post before responding, at least in my journal. One more time and I will just block you. I'm not really doing this to give reading lessons.
    #10     Oct 31, 2011
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