Systems do have drawndowns. That's why I am getting a bit nervous because my systems have been doing quite well for the last few months (backtested and in real life). So I guess some drawdown is likely to happen soon. Fortunately, I use 3 systems, so hopefully it will not be a big disaster for my account.
Yea, me too. Actually, if I had intended to scratch a trade and I "accidentally" make a tick or 2, I just write it down as 0 in my loser column.
Did you ever consider avg. in or out of these trades, i am swing trader from 2 days to four mos sometimes and have found that in this choppy market, a small position say 200 or 300 shares can be averaged every four or five points to better catch market top or bottom. Eg. short 200 CREE at 21.25, missed the top, added another 100 at 24.50, closed trade other day at 20.99. Also writing puts and calls against your positions can give an extra % monthly when trend goes wrong way. Not as exciting as trading the eminis, but profitable, up about 50% this year on 20K acct.
Remember that day that Iraq said they would agree to demands, let inspectors in and what not? That was a start of a losing streak for me....when that market ripped up..I had just finished putting on my 5th short of the day. Within seconds I had stops going off, P/L getting redder and redder.....then I had a few bad days after that. What I was doing is what I call "revenge trading". I let my emotions take over, tried to "get back at those bastards". LOL. The only reason I know this is because I took a bit of a break. And looked back on it. So maybe you need a break for a bit. Do the important things in life. Spend time with family and friends. Do things you like. Just forget about trading for a few days. A week, whatever it takes. You don't need to be in the game all the time. Happy Holidays!
Interestingly enough, I've been spending a lot of time reading others exit strategies here on ET. The most compelling I've read so far today was written by Silk under the "I know this is obivious but..." thread. Silk says you should enter with a small position and once you get some confirmation, you add to that position to catch the better part of the trend. I probably could have decreased my drawdown by 35-40% if I had subscribed to this theory.
For what it's worth, I don't think that a 16 trade losing streak is truly significant in the grand scheme of things. Remember, trading is a long game. No time limit. No sudden death or extra innings. It is endless. In this neverending "game" anything can and will happen. So, even if it is just "bad luck"....coming up with 16 tails in a row on a coin flip, whatever, it should not be given more significance than it deserves. Especially since, as you say, you are still positive overall. Also, as a "swing trader" in what sequence were the trades done? What relationship, if any, was there between the trades? A scalper makes 16 quick trades either in quick succession or even one trade a month for 16 months, and loses in all of them; well you would have to say this is an aberration and it is less likely to happen than 16 consecutive winners (basing this on there being some degree of planning involved in each trade). A swing trader who puts on positions that overlap and have a relationship to each other is more likely to see the positions go against or in favor of him or her. Even if the trades are both long and short. I can't begin to count the times as an overnighter that I lost on both sides going home mixed. So often do reversals occur simultaneously on both sides, that I have essentially stopped overnighting, because of exactly this. It is now easier for me to come in fresh each day and initiate trades rather than hope for the follow through that worked so well for so many years. There is no doubt that this has been an extremely difficult trading environment for a long time. Too long! Bottom line to me would be that the 16 consecutive trades, especially for an overall successful trader is just one of those things that you chalk up to experience (albeit a bad one). I was in a casino waiting to see Eric Burden a few years ago. I went to a $2 blackjack table with $35 in chips. Bet two dollars a hand with the intention of pressing 2, 4, 6, 10 (as was my "custom"). I did not pick up a single bet. So my only bets were $2. So, excluding a few pushed hands, I lost 17 straight. Had a dollar to give to the cocktail waitress It happens. (Eric Burden was great...at Arizona Charlies in Vegas.....very cool. Small "bar" show). I would not get discouraged. I always tell my guys to just cut down on size when you hit a bad streak. I myself always do. I don't trade huge size, but I have cut myself back 90%+ many times. I have seen guys that normally trade 20k share positions (and more) cut back to 100 shares to ride out the cold streaks. I have never had the ability to carry 20k share positions, but I have cut from 8k to 100. But more significantly, the buying power I use has been often less than 5% or so of what is available to me. I think that cutting back keeps you in the game and ready to accelerate when it turns for you. Cutting back to zero doesn't do anything other than give you a rest. Which is good, but shouldn't turn into an extended vacation. Don't want to lose your "feel". Hang in there! Peace, rs7
Everybody has losing streaks, and for me that is the perfect time to get your journal and trading log out and start looking for the culprit. Take a few days off (the market will still be here when you come back) and trade with smaller size till you build your confidence level back up.
Now that's what I'm talking about. I feel like I have done something to bring this on myself. Seriously, you could try to submit market orders for weeks trying to get out on the low of the day and not be successful. That's beyond bad luck. That's a curse