My trading strategy blows goats... should I change?

brty · 23 April 2009

TH, Prawn,

I'm trying to think outside the square here. Not saying it is the be all and end all.

I did a similar thing to Ivant many years ago (but not to the same extent), turned a few hundred dollars into a few thousand in a very short time. The only money I put into the account was the deposit required for one wool contract, $200 if memory serves me (it was 1980). I knew nothing about risk management (or for that matter anything else).
I also have a friend who turned a couple of thousand into ~$750,000 during the late '80's, over 2 years, before he got educated. He has never been able to get close to those type of returns since. In fact he now looks for such perfect trades with nearly zero risk that he rarely pulls the trigger. (lost all consistency)

What people do when they get educated about markets is usually along the lines of all the common themes...
1 let profits run, cut losses
2 risk no more than 2% per trade
3 be consistent, don't miss trades
4 have a plan that has positive expectancy over the longer term
5 trade what you are comfortable with
6 etc,etc

Yet it is the uneducated that seem to have the huge percentage gains in a small amount of time. It usually finishes when the market changes and they blow up. Then they seek education or quit.
Of course some ideas (of new traders) never get off the ground, they just lose and disappear.

If you think and act like most people, then you can expect the same results as most people. My understanding is that most people lose at this game.

brty

TH, why did you pull that post??

MS+Tradesim · 23 April 2009

brty said:
TH, why did you pull that post??

He moved it here.

ivant · 23 April 2009

Hey all,

I thought I'd post a quick one in response to some of the previous posts.

Having been through this situation once (building up capital from nothing), I would not do it again just for kicks. I was on the brink of being out of the game a lot. I used to wake up to a daily margin call. I was lucky a lot of the time. Is it statistical fluke? I don't know, but I would not say it wasn't. When Brad (beamstas) suggested he could plot it on a normal distribution graph, he was right that is going to be extreme. I don't think you can get an exact definition of where, because it is hard to predict how much I am risking, and how likely I think the market will be up (I have not had a losing trade since November, yet past performance means **** all). Nevertheless, provided you could waste a few hours or days and get a model together, it will still be on the end of the curve (although I could still argue there is a fat-tail when it comes to markets). Point is, I would rather say it was statistical fluke then do it again.

When I came to creating a trading model, it was all based on my psychology, my personal psychology. I hate losing, and have major difficulties taking losses. I didn't like day trading, and wanted to have as little screen time as possible, so that I could spend more time thinking about the future of the markets (the bigger picture). As a result of all that I chose a longer term strategy (I mean who holds a futures contract for up to 3 months, with an average holding time of 2 weeks, c'mon), where I effectively add to my losses. I add a LOT to my losses. Which gets me into trouble when my "worst-case scenario gets smashed in the head". I have always been very aggressive (not physically, lol), from my tennis days on the court, down to the markets, and I always took a lopsided risk/reward strategy, where risk outweighed reward. This is changing now, and I am risking less.

I am thankful to everyone who does visit this post, and I am still very apologetic to Family_Guy for stealing his post. If there are a few thing I can tell anyone to do in trading (I do not think I have been in markets long enough to really recommend anything to anyone), that is to have enough starting capital, make sure you believe in yourself, and make sure you question everything (like Cartman). Is the Earth really round, do we exist (Locke, Bishop Berkeley), who caused September 11, what were the reasons behind war in Iraq, and then take all sides of the story and make your belief based on it. We are never to know what is true and what is false, and our duty is to trade our beliefs. My biggest problem was stress management at the start. More capital helped me get away from the daily margin call messages on my phone. That is why I will not want to do it again.

MRC & Co · 23 April 2009

Agree with the posts of brty.

Think like the herd, get the results of the herd.

This is a case of a contrarian, with his own strategy to take advantage of that, which works.

Very simple, trouble is, most don't do it because it takes ballz, you will have big drawdowns when you get it wrong, but if you keep some risk management in place (which Ivan can now do), you will most likely end up in front IMO!

Well done Ivan! You said the markets would go up yesterday, LOL, another winning trade for you!

Nero64 · 23 April 2009

Yet it is the uneducated that seem to have the huge percentage gains in a small amount of time. It usually finishes when the market changes and they blow up. Then they seek education or quit.
Of course some ideas (of new traders) never get off the ground, they just lose and disappear

I agree. I was making $6000 a week for about a month from a few 2-3 Index mini contracts. I read about risk but would avoid it in most circumstances and hated losing money. Then the market changed and I was Long and widening my stops. About a week before the market recovered (March 2008) back to 6000 I pulled the plug, to take a $32000 hit. Never made that back and never had that same luck again. however with the market recovering 600-700 points since mid march I see how Ivan could've made money pyramiding to positions. That's not trading skill that's just a market recovery. The tough part is keeping it and without using stops it is very hard.

Bobby · 23 April 2009

ivant said:
Lol you are on to something my friend. By not being a real person I am an alien . I closed my shorts out yesterday (as I mentioned a few posts ago, a few hundred posts ago lol), I thought we got a little short-term oversold. I have a small position riding long. I am a little unsure at the moment, this movement isnt very convincing to any direction IMO. Probably more to retest the highs then to the lows. Nevertheless, will be interesting to see. If there will be some confirmation of a continued fall (i am very very bearish still), i will reenter. Good gut feel though so far!! Well done

Its kinda funny that when I treat it as a points game & not take it so seriously it all just falls into place more often

See your in-tune with your above analysis , Yep see that big picture then play your hand , even not playing is good .
I don't like the look of things tonight so far , could be one of those rare times I stay out .
But in saying that if the bunnies push it to far in one direction I'll play maybe
I'm trying figure when to hit with size on the short side very soon , willing to risk big on that play !!

Have Fun ..... I am .

Cartman · 23 April 2009

MRC & Co said:
Think like the herd, get the results of the herd.

Very simple, trouble is, most don't do it because it takes ballz, you will have big drawdowns when you get it wrong, but if you keep some risk management in place (which Ivan can now do), you will most likely end up in front IMO!

Well done Ivan! You said the markets would go up yesterday, LOL, another winning trade for you!

actually --- well done to you too Mirc --- i note that you were giving Ivan wraps for his content way b4 most of us ---

Nero64 said:
I agree. I was making $6000 a week for about a month from a few 2-3 Index mini contracts. I read about risk but would avoid it in most circumstances and hated losing money. Then the market changed and I was Long and widening my stops. About a week before the market recovered (March 2008) back to 6000 I pulled the plug, to take a $32000 hit. Never made that back and never had that same luck again. however with the market recovering 600-700 points since mid march I see how Ivan could've made money pyramiding to positions. That's not trading skill that's just a market recovery. The tough part is keeping it and without using stops it is very hard.

not sure i agree with the not being skill bit, but i get your point Nero ---

how does the spiel go from the spin doctors ---

its the time in the markets that counts, not timing the markets (or something like that) -----

nothing like feeding the average punter with bull market kerfuffle to keep him at a disadvantage ---

timing is everything (if your trading !!) in my humble opinion

ps g'day Bob

Bobby · 23 April 2009

tech/a said:
That gut feel indicator has to be one of the most used on the planet.Perhaps there should be a thread for "Trading Mavericks".
My analysis tells me they wont be posting in 6-12 mths.
Seen plenty come and plenty go.

Well you are right about seen plenty come & go , bet you would think twice about having a wager against Ivan ?
The thing I like about you Tech is your tenacious mind !
Take that as a compliment

MRC & Co · 23 April 2009

Nero64 said:
600-700 points since mid march I see how Ivan could've made money pyramiding to positions. That's not trading skill that's just a market recovery. The tough part is keeping it and without using stops it is very hard.

How is waiting for extreme oversold conditions, and then buying off support levels on the way down, luck? It's called using the markets ebbs and flows to your advantage. If it's oversold, it has to make at least a lower high at some point. Vice-versa for a bullish scenario.

Yes, risking your entire net worth is too much, but when that amount is small, your entries need to be tigher and your size smaller. As you grow, you can now up both and still keep money away for a rainy day. In the end, what is the difference between this and a market neutral strategy such as pairs trading like in the example here in the general chat area? Both need big contributions per trade, and both are likely to be right, if your wrong, both could be costly. But the overall % win makes up for that big downer.

Too many here proclaim a lower % win and higher returns (letting profits run) as the gospel (probably due to Adaptive Analysis). It's just one way to look at it, but the herd will flock where the herd will flock.

Note: I don't trade like this, but it does work.

Everything works and everything doesn't. Find your own niche.

Bobby · 23 April 2009

Trembling Hand said:
Why put yourself into such a silly state

Hello TH ,
Its all about having some fun , not sure if you mean trading when pi**ed or going overnight without stops ?
Both are really funny to do life is short enough so why not create some extra thrills along the way :

Cartman would love this style of play ? Hi Cartman

ivant · 23 April 2009

Bobby said:
Its kinda funny that when I treat it as a points game & not take it so seriously it all just falls into place more often

See your in-tune with your above analysis , Yep see that big picture then play your hand , even not playing is good .
I don't like the look of things tonight so far , could be one of those rare times I stay out .
But in saying that if the bunnies push it to far in one direction I'll play maybe
I'm trying figure when to hit with size on the short side very soon , willing to risk big on that play !!

Have Fun ..... I am .

I think that was one of my major difficulties, as size increases so do profits. I think you have to look at points, and concentrate on points. Otherwise you start getting greedy/scared, both equally bad in huge amounts (however in toleration both together are powerful, be greedy and be scared someone once said [does anyone know who?? escaped me]). im on the sidelines at the moment, as i said i closed the longs (which was a small greedy trade). the more it moves up the better off i am. if we can move up 40 points or so, ill start going short again, which will mean my entries will be better than my previous shorts.

Cartman said:
actually --- well done to you too Mirc --- i note that you were giving Ivan wraps for his content way b4 most of us ---

not sure i agree with the not being skill bit, but i get your point Nero ---

how does the spiel go from the spin doctors ---

its the time in the markets that counts, not timing the markets (or something like that) -----

nothing like feeding the average punter with bull market kerfuffle to keep him at a disadvantage ---

timing is everything (if your trading !!) in my humble opinion

ps g'day Bob

I agree man, timing is crucial. Remember a good year with Russell Crowe? what is the secret to comedy? ... [pause]... timing. Without timing you can be very right, but very broke. I experienced that before. Obviously in the above example, sent by Nero64, the same happened. Nero was right, but the timing was off. That is a painful loss. I got wiped out like that once.

Bobby said:
Well you are right about seen plenty come & go , bet you would think twice about having a wager against Ivan ?
The thing I like about you Tech is your tenacious mind !
Take that as a compliment

Haha, I don't think that future results are in the bag. In a previous reference to adjusting to what the markets are doing, I try to analyse what will be happening. I will be trading a different strategy once we are in a bull market and the volatility dies. That's why backtesting is so hard. Different conditions will give you different results. RSI maybe the best indicator over a volatile period, but useless over a quiet bull. It is skill to pick the right set of tools in the right market. That's where the pros live and the amateurs die. I will let you know in 10 years if i will be alive

MRC & Co said:
How is waiting for extreme oversold conditions, and then buying off support levels on the way down, luck? It's called using the markets ebbs and flows to your advantage. If it's oversold, it has to make at least a lower high at some point. Vice-versa for a bullish scenario.

Yes, risking your entire net worth is too much, but when that amount is small, your entries need to be tigher and your size smaller. As you grow, you can now up both and still keep money away for a rainy day. In the end, what is the difference between this and a market neutral strategy such as pairs trading like in the example here in the general chat area? Both need big contributions per trade, and both are likely to be right, if your wrong, both could be costly. But the overall % win makes up for that big downer.

Too many here proclaim a lower % win and higher returns (letting profits run) as the gospel (probably due to Adaptive Analysis). It's just one way to look at it, but the herd will flock where the herd will flock.

Note: I don't trade like this, but it does work.

Everything works and everything doesn't. Find your own niche.

Everything and nothing, an album by David Sylvian. Severely oversold conditions in a bear market are awesome little tools. They usually create bear market rallies. So strong they go that you shed a tear. Your own niche for your own psychology!

Bobby said:
Hello TH ,
Its all about having some fun , not sure if you mean trading when pi**ed or going overnight without stops ?
Both are really funny to do life is short enough so why not create some extra thrills along the way :

Cartman would love this style of play ? Hi Cartman

Haha I trade under the influence, however I do have predetermined entries and exits if I know I wont be a 100% fit. same as if i am closing out something in the night when i know ill be asleep. too hard to wake up and close something out in 30 seconds after an alert. going in overnight without stops is interesting. i obviously do it for the moment. mostly due to IG playing their game. extra thrills are great if you are making money my friend!!

Bobby · 23 April 2009

Enjoyed all the replys !
Thankyou .

PS . This is a most interesting thread

Family_Guy · 23 April 2009

Bobby said:
PS . This is a most interesting thread

Your welcome ................i think :dimbulb:

Bobby · 23 April 2009

Family_Guy said:
Your welcome ................i think :dimbulb:

Pleased you are amused , do tell us about your trading ?
Whoops sorry , do you do any ..

Family_Guy · 23 April 2009

Pl

eased you are amused , do tell us about your trading ?
Whoops sorry , do you do any ..

Yes i trade. Successfully not. I tend to only spruik when i make some profit so here are my losses off the top of my head.....and a quik look back at my spreadsheet.

Um......
RIO, thought the price was too good when it hit $90....i sold at $38
BHP, thought the price was too good at $36, sold at $23
BNB, bought at 15c 3 or 4 days before it went and sold at 43 or something and then again at 36c just 15 or 30 mins later only to see it halt that night.....just waiting for Bell to remove it from my portfolio list
GSF......had been riding some nice cycles between 2c and 3c and got on last at 1.1c and it's current highest buy is .4c.......thats gone.
OZL at 1.37, sold at .58
FLT is a current one i got at 6.49
SUN is another current i got at 6.50

CXG, CTX, both i bought too high, sold at a loss and have re bought close to lows and made my losses back over the last few months, but initially lost a bit.

Oh and check this for some dumb siht........
Got BRM at 1.05, MCR at 1.275, MOL at 1.375, QOL and sold them all at 50% or more loss, BRM i bought back in at 45 or 50c............and there were other, GFF for example. It was looking shabby come December, but somehow, i made it all back in Jan/Feb/Mar. So i end my first year as i started, just richer for the experience, a couple of friends, square eyes, and an appreciation for fresh air. I only trade shares, not into derivatives yet......but really keen to learn.

Anyway, i have learnt a valuable lesson in my first yr of serious trading (if thats what you can call it)....its called a stop loss....and greed.

Edit. I put all that on here to shut myself up sometimes i just get carried away with the gains, but losses bite and need to be learnt from.

Carry on, as you were.

Bobby · 23 April 2009

Family_Guy said:
Pl

Yes i trade. Successfully not. I tend to only spruik when i make some profit so here are my losses off the top of my head.....and a quik look back at my spreadsheet.

I only trade shares, not into derivatives yet......but really keen to learn.

Anyway, i have learnt a valuable lesson in my first yr of serious trading (if thats what you can call it)....its called a stop loss....and greed.

Gee FG you sure have done it tuff , what a year to start .
I've stopped share trading & just keep a limited portfolio , moved on to derivatives as I can control profit & loss on a 24 hour time table .
Do wish you better luck in the future

ivant · 23 April 2009

Learning from positives is even better than learning from negatives. You remember what you do right, and continue doing it again

Bobby · 23 April 2009

ivant said:
Learning from positives is even better than learning from negatives. You remember what you do right, and continue doing it again

Hello Ivan ,

Its the big stuff-ups I remember best

No way I can do a trade so-far tonight

ivant · 24 April 2009

Bobby said:
Hello Ivan ,

Its the big stuff-ups I remember best

No way I can do a trade so-far tonight

yea everyone does! lol the big losses are the ones. I can't do a trade either. pretty unpredictable at the moment. I'd consider selling DJIA at 8040-8050 with more positions coming in at 8100ish. i think that they will struggle breaking the 8100

Bobby · 24 April 2009

ivant said:
yea everyone does! lol the big losses are the ones. I can't do a trade either. pretty unpredictable at the moment. I'd consider selling DJIA at 8040-8050 with more positions coming in at 8100ish. i think that they will struggle breaking the 8100

Be careful , I'm not following the DJIA
Going to get some sleep , always tomorrow .
SPI just started to mimic the DOW , hope you clean up later.

My trading strategy blows goats... should I change?

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