The financial year is over! How did you do?

[Zaxon]

With the last day of trading for this financial year over, the ASX/S&P 200 gained 6.8% for the year. What was your return? Did you try something new this year? Did it work. What mistakes did you make? Are you changing how you invest/trade for the next year?

Here is the market's year graphed below. So tell me about yours.

 

[tech/a]

Trading good enough given the time available.
Business wise down on last F/Y.
Got back into property about to buy my second for the year.

I expect alround improvement in all areas this coming year.
Optimistic

 

[Zaxon]

Got back into property about to buy my second for the year.

Well, the interest rates are certainly great for buying property, so that sounds good. Residential or business property?

I expect alround improvement in all areas this coming year.
Optimistic

Excellent.

 

[tech/a]

One of each
The latest will be residential.

 

[captain black]

What was your return?

My returns exceeded the target I set so all the bills were paid and I get to trade again next year.

Did you try something new this year?

I've begun to use an adaptive type of trade management in my futures trading systems this year. It's something I've been working on for several years but finally used it in live trading this year. It adjusts the trade risk management according to whether the market is trending or sideways etc.

I'm now looking at using it in share trading systems. So rather than trading multiple non-correlated systems there will be less systems using adaptive trade management.

Did it work.

Much better than I expected.

What mistakes did you make?

Several. None of them fatal

Are you changing how you invest/trade for the next year?

Always learning new things so will introduce some different systems next year, but how I go about building and modelling systems wont change.

 

[Zaxon]

Did you try something new this year?

I've begun to use an adaptive type of trade management in my futures trading systems this year. It's something I've been working on for several years but finally used it in live trading this year. It adjusts the trade risk management according to whether the market is trending or sideways etc.

Most system work best (or even only) in a certain type of market, so sounds like you're taking it to the next level. Something we all should think about.

I'm now looking at using it in share trading systems. So rather than trading multiple non-correlated systems there will be less systems using adaptive trade management.

OK. So you're feeling adaptive management reduces your risk, so you can decrease the overhead of having to follow so many asset classes.

 

[tech/a]

Captain
What’s your timeframe for futures?

 

[captain black]

Captain
What’s your timeframe for futures?

Most of the signals are based on 2-minute bars but there are some market conditions where the system switches to 1-minute bars.

 

[captain black]

Doing some work on tick bars (20 tick , 40 tick, 60 tick etc.) but it's getting into the realm of the high frequency traders at that level and I can't compete with them. 1 and 2 minute bars is where I've found my niche.

 

[tech/a]

3 min for me and the DAX

 

[captain black]

3 min for me and the DAX

I've tried the DAX a few times on different timeframes but it's a bit too volatile for the way I trade. My risk model works well on highly liquid markets like the Nikkei, ES, Bund etc.

 

[tech/a]

Never tried them
Been looking at minis

 

[So_Cynical]

I had another good year, Net worth at an all time high, will pay the tax man about 4 or 5K and will sell
a heap of winners next week re-positioning for the coming recession and retirement 19 months away.

 

[Zaxon]

I had another good year, Net worth at an all time high

Job done then!

a heap of winners next week re-positioning for the coming recession and retirement 19 months away.

Are you taking the "I'm about to retire, so I had better put everything into safe, interest bearing assets" route, or the "I could live for another 30 years, so I need to be invested in high growth assets" approach?

 

[Gringotts Bank]

Improved. Combining a mechanical system with discretionary assessment of sentiment. The mechanical system itself is about as tweaked as I can make it, though I'm always looking for a higher win rate. For me, getting my WR high requires some trawling through HC posts assessing sentiment. Ideally I'd like to systematize this step, but manually trawling through HC posts still seems to be more accurate.

So to optimize my manual sentiment analysis, I am continuing to work on aspects of psychology. Getting in a flow state is hard to do, but is the holy grail, imo.

 

[Zaxon]

Combining a mechanical system with discretionary assessment of sentiment.

I hear of some value investors who combine that with sentiment, to try and improve their performance. But you mentioned win rate, so you're more of a trader?

 

[Gringotts Bank]

This video is still one of the best for understanding the psychology of trading, and worth re-posting. There is so many clues in it. Every aspect is covered - beliefs, motivation, self-worth, self-sabotage, flow state, confidence.... the lot. It's easy to look at this burnout and be put off. But there's wealth of information here. He has been extremely successful and he has blown up. Both are addressed, but you really have to read between the lines to extract the lessons.

 

[Gringotts Bank]

Two of the most important lessons, one positive, one negative.

1. When you're winning, bet more. Position sizing should increase when you're in the zone and/or when your system is perfectly aligned to the market phase. Conversely, position sizing should shrink (rapidly) when your system and the market are out of phase and/or when you're not in tune with the markets personally. Obviously there needs to be an upper limit. That upper limit should not just be determined statistically, but in terms of one's ability to sleep at night.

2. In the second half of the video he talk about how everything changed when he made it big. He bought the luxury house and the expensive toys and then suddenly started losing every day. Why? Limiting beliefs and self-sabotage are very clearly in play here. He did that to himself without knowing why. The only thing his mind could do was to blame 'god or some spiritual thing'. He knew something was wrong but couldn't unpack it. He wanted success, got it, then realized a part of him wasn't comfortable with it. That uncomfortable part needs processing because it's unecessary, and it blocked his success.

 

[Gringotts Bank]

Some subtle lessons.

2:13 "...because you've made it". Look at his upper lip curl and his nose scrunch. Body language is indicating contempt as he references having "made it". How can he maintain his winning streak when he has contempt for winning? So there's contempt, but there's also envy ('everyone has a Rolex - all I could think about').

2:30 "go on an expensive vacation..." then a very obvious eye accessing cue indicating a constructed inner voice, which he nearly divulges before quickly changing topic. It wasn't positive.

2:18-2:30 The left-right-left-right movements of his head are an outer show of the inner battle between left and right brain hemispheres. Old memories in the right brain haven't been integrated.

2:09 'god or some spiritual thing'. Religion and worthiness are heavily intertwined. It goes back centuries. So it's likely he had a religious upbringing or schooling. The other possibility is that he uses the word 'God' as a metaphor for a parent who held certain views about life, money, worthiness etc.

Because he's drunk, it's all there to see. If he was sober it would be much harder to discern exactly where it went wrong for him. I hope he found a good coach and is back in black!

 

[Gringotts Bank]

More...

"I f'd a Playmate. Isn't that what every guy's dream is?". He aims to achieve 'every guy's dream' rather than his own true dream, which means he is focussed on impressing his colleaugues. So the trading is not a true desire but a tool. This plus the envy/contempt provides a very powerful driver for success ("you what what? I can beat these guys"... and there wasn't a shadow of a doubt; he knew it).

But there's a built-in problem here. As soon as he beats them, what is there to continue driving the successful behaviour? Nothing internal, that's for sure. This is yet another reason for the collapse.

"They hate me at the Merc". He created that reaction to add fuel to the fire of his contempt, because contempt was driving his success. [Sports people sometimes do this]. So the original goal of winning favour with his colleagues was never going to happen, right from the start.