DugDug

Discipline can be bought in a can down at the local store or off a website offering trading tools that will turn you into an instant millionaire.. Discipline defined to me - planing, developing a process (that involves thought, and testing), and applying the plan. On a regular recurring basis. (Practice, practice, practice the more you do the easier discipline becomes (be it good or bad habits)) General tips to get/improve discipline (of course these come with the caveat that you have to have some sort of discipline to do these) 1) Develop a trading plan, this should include strategy/edge/beliefs etc; 2) Plan your trades - know why you are doing them, what your entries, exits are etc; 3) Follow your plan. (tweak it, improve it, but stick to it if it works) If you cant do steps 1-3 (in some form or another) then I suggest try another job. They are not hard, and the format and the detail is up to you. But if you cant really be bothered to even first think about and try and follow some sort of plan/methodology/style/system/idea then I feel that a successful long term trading career will evade you. As you do 1-3, and the more you do 1-3 then the easier trading seems, the more relaxing it seems, and the less of a chore it seems. (Thats probably where intuition kicks in as its second nature and experience, easy as ABC - 123) I am sure others will add to or detract from this, but that's my 2 cents.

I got set at the low of that pin bar - didn't you?

Hi Blowfish - the volatility component was a major part of the position sizing. If you were to chop it up ..... Basically - set the % you are willing to loose per trade (the consistent % part eg; 1% or total Equity), then base the stop price off the ATR (the volatility component, eg; stop iis 2 ATR below the entry) by dividing these and adjusted in the same units ie; $ then you will get a unit size. I also dug this up in some notes I made of it.... Dollar Volatility Adjustment The first step in determining the position size is to determine the dollar volatility represented by the underlying market’s price volatility (defined by its N). It is determined using the simple formula: Dollar Volatility = N×Dollars per Point Volatility Adjusted Position Units The Turtles built positions in pieces which were called Units. Units were sized so that 1 N represented 1% of the account equity. Thus, a unit for a given market or commodity can be calculated using the following formula: Unit = 1% of Account / Market Dollar Volatility or Unit= 1% of Account / N x N Dollars per Point EXAMPLE N = 0.0141: Risk 1% of equity per trade Account Size = $1,000,000 Dollars per Point = 42,000 (42,000 gallon contracts with price quoted in dollars) Unit Size = (0.01 * $1,000,000 /0.0141 * 42000) Always round down.

Similar to Spydertrader. Key to remember is that this is a business. my advice is to initially - maintain a fairly simple lifestyle initially, keep way more than you need in a trading account (inefficient maybe but you dont want to get stuck - business risk is something a lot of people forget about - you must remember to pay the bills, especially the tax man - unless you are in the Caymans, BVI (or risking it):haha:) Remain conservative in the trading and shuffle money off elsewhere to invest in some other traders. Which means you will probably never be a person who turns $2000 into millions. But it will (I hope) mean you never go broke. I would prefer to use more leverage in the trading account whilst trying to keep the risk similar. Ensure you keep good records - you dont want to have to spend weeks each year trying to work your book keeping out. Keep your personal and business spending separate - makes it easier. Depending on the amounts you have and the area you are in - corporatise yourself. taxes are usually lower. Of in the UK use CFDs (tax free) A lot of this depends on how much you have to play with, and the lifestyle needs of family? Or just put everything into trading and go for it. Either way you will either never need to worry about it again as you will either be back working for someone, or rolling in it.

I think you have answered the question - my making your strategy automatic/mechanical/systematized you reduce the need to be as disciplined on a discretionary basis. HOWEVER - the discipline you will require is to believe in your system. To trust your system when it has losses, to not be tempted to tinker with it too much. Yet to continue to do research to improve the system. Same thing - different thing? I think the discipline required regardless of how you wish to define it is to regard trading as a business - it requires hard work, research and a plan - the discipline to stick to those things.

I apologise - ignore the last chart it seemed to be the continuous futures contract from esignal, and not the actual march contract. the march contract looks similar but is NOT yet at support for the actual contract - which is more like 510. The error occurred as I had not rolled over this particular contract on this particular sheet. Normally I trade off and look at the actual contract I intend to trade, but I also look at the continuous contract for the general context. Always best to look closer. (Which raises an interesting question about support and resistance when it comes to futures contracts and the contango/backwardation S/R levels. Support in one contract - is the based on that particular contract or for previous contracts - clearly not)

More of a daily longer term trade but i thought i would post it. Wheat Mar10 - I like the fact that B is at a great level than A. This occurred twice - the first as it tended to signal the end of the recent large decline from last year. the second more recent one indicates to me that it is more likely to bounce off support and rally at least back toward B again. I would enter a small amount on support, then enter more on a strong day, and look to run it. Stop while i would position size off a stop at a close below 5 - I would tend to watch and any weakness below this level at 540 would probably see me cut it. (this trade worked in mid Nov - catching some of the break above 525.

why fix it? Age - stubbornness - boredom. (this is more a trading physc thread) There was a great quote - i think it was from Jesse Livermore - that went something like..... "not taking a loss does more damage to the soul than to the pocketbook" I kind of apply this to myself in that when trading completely on feel I tended to get ill disciplined, and gave back chunks of money usually after big wins. Then I used to mutter to myself like some mad man - hrumpf , moth f...k, idiot, stinking market etc; etc; I started to loose friends, girlfriends and the like. By introducing an element of discipline and trying to flatten/smooth the pl etc I enjoy myself more by not being too harsh on myself. This should make for a longer trading and more scalable trading career. People talk about burnout in trading - I think to a certain extent its more about boredom - which then leads to excessive risk taking, stupid decisions, and low risk trades while trying to capture the thrill of being right. So by adding more of an element of process driven decisions it takes some of that emotional element out of it. (just kidding about the loosing friends)

Hi Dinero, as a side note have you read "blink" Malcom Gladwell - its an interesting book - but the point of mentioning it is sometimes - when you have expertise or experience in something, then just by flicking through a lot of charts and pulling out the ones that your intuition rates highly can work very well. Its the old story of not trying to think to hard and over analyse things. Myself and a partner used to flick through over 100 charts and pull the ones that looked good - it worked. Problem is now I want to be a little more process driven. :crap:

Hi Robertm, I agree - but I also witnessed the 1997 October stock market crash (I am old)- down one day, back up the next right before an option expiry. There were some horrible stories of margin calls for the day. People who sold OTM puts for 50cents buying them back for $4, and people who used stocks as security for other stocks - (I call that doubling up when they all crash) The point is it pays to really understand your exposure no matter the instrument. These days there are more an more of them - which is great - but i have always been conservative and boil everything down to it ultimately it is either a fully paid up instrument (eg; stock), OR a put or a call or a future which leads to a fully paid up instrument! no matter how the marketers cut and dice it.

Hi Blowfish, 1...pyramiding - yes the turtles pyramided - but in testing we found that what seemed to give the best or most palatable results for use was if you limited the pyramids to only two units. It implies that the after that the losses became a bit big when reversals occurred. This was just shown in the results we tested. 2...% Risk - as we understood it the turtles risked a % of equity per trade/unit. Thats what we did. The volatility adjustment came about from where the stop is set based on an ATR move. These are two separate elements of the position sizing. One remains the same in our testing, although you can also alter the equity risk percentage if you like. 3....we tested data from 1994 up until Jan09 as the last test - not just for one year - sorry for the confusion. 4.....the 600% return example is reliant on running the test for the whole period whereby a parameter is changed. The major parameter to change is the amount of equity to risk per trade. eg; 1% or .5, or 0.25% This makes a massive difference to risk of ruin and return profiles. The risk changes between tests not during the test. yep you are probably being a little pedantic but in discussing the turtle system then to fully understand what makes it work, how it changes etc; then it makes sense to test variations of the system. Thats what we did. If you wanted to keep a "pure" original system then fine - it works - but wow - there are times it hurts.

Offsetting risk - in remaining with the turtle system discussion. Risk is largely offset via portfolio diversification, and dealt with in the original position sizing algorithms. It defeats the purpose to get on a winner and then either hedge it or try and offset the risk. while substituting for options etc; will cost money. Its always the trade off. The point about stops and gaps/ crashes remains - 2008 shows this. People thought they had hedges and their risk was offset. But then everything became positively correlated, or the supposed hedge disappeared - Lehman, bear sterns. Also there have been plenty of people burnt by the idea of guaranteed stops. I think that a lot of people sometimes think only of what they think they are risking and forget about the actual exposure. eg; if risking $1000 on a trade with stop but if you own $150,000 of stock on a margin account, your total exposure is still $150,000 - if that goes to zero overnight, your $1000 risk means nothing. There is no wrong or right here its a matter of leverage, but its often forgotten by traders and investors and its that 1 time in 100 (or more like 1 in 10) that gets you. I believe if you have a system that you have tested in a certain manner you should stick to it. If the turtle system does not have risk offsetting trades, stick to the system. .................... The CFD market has certainly revolutionised trading and the ability to trade anything so I agree they are great for us. (I stick mainly to futures still and get leverage via the brokers for stocks if I trade them), and the way these accounts are kept mean that any account in any currency is easy - so long as you actually understand how they work - thats a whole other discussion for how brokers make money via loans and taking the interest clip. ................. Re spread trading - yes and no - I would class spread trading as buying one bank, selling another. If you are buying a portfolio and selling the future then I reckon its different. I just thought it would be interesting to test. .............. On that note one of the tests we did regarding the turtles was a long only test. The results we got over the long term was very similar to the long and short trades. Except with less PL volatility. There were no massive PL in the short years, and the losses were minimised, but it was interesting. - I guess markets really do trend up over the long term:roll eyes:

Robert M Q - "If our stop has moved to break even, do we have any risk on this trade?" always an interesting one - for anyone who has witnessed a crash, or a takeover in a stock - the answer is always - IF YOU HAVE A POSITION YOU HAVE RISK. a stop will not save you. Re the stocks I think you nailed it. I think the correlation is what ultimately kills you. The size and liquidity can be negated by having a larger universe of stocks (there are thousands of large liquid stocks in the world.) On saying that it would be an interesting test of the turtle style with a futures hedge - looking for outperformance for a long short strategy - not my bag but maybe one day that would be worth a look.

Hi pricetrader99 - as I was one of the critics - I apologise it was more a response to reading lots of sales info on the day - but I also think Thalestrader makes the point perfectly. forums are easy to misread/mis-interpret etc; and there are only so many hours in the day. I think all information can be valuable, but when people push a product/person/idea then it would ideally need more substance.

I think Andre was more pointing out regards pyramiding - (please - correct me if I am wrong) " adding a pyramid to the system won't improve the reward/risk ratio, you're just leveraging up. If the edge was better for each additional entry level, then a pyramid would improve the system. But in this case, you could improve it even more by only taking the upper signals and not using a pyramid." The point we found is that pyramiding allows more leverage and a slower entry than all at once. How much total risk you want on is a different matter. ie; if you wish to buy 10 contracts - do you buy them all at once or in stages. The end risk is ten contracts. The testing we did with pyramiding - using the same triggers and exits - showed that the end result with or without pryamiding was not that much different over the long term - it just increased the PL volatility as the losses and the winnings became bigger with pyramiding. (an alternative is to increase the strategies used/ or time frames used to smooth that PL volatility.) Also one of the points raised makes an interesting thread for discussion - why are most trend trading strategies (used as funds etc) focused on futures and not stocks?

interesting Dinero - i like this sort of thing, but have learnt over the years (as it suits my style), to wait and buy into strength on such a chart. I would wait for it to start to rally and look to buy it back above $20 with strength with a similar stop. It stops me from picking bottoms and getting smelly fingers. Also the big drop here would make me suspicious if i did not understand why - was it a dividend, share issue, profit warning. the gap up and gap down sends a few flags for me that i would like to know why first.

I have to agree with everything Andre says - we did the same thing - used Excel to backtest the turtle rules and our own variations of them. We also had similar conclusions. What we found was that the most palatable results were when we only pyramided 2 times, and reducing the risk per trade from 1% to 0.25% of equity per unit. Now on saying that - there were years/tests where you could have made 600% on a very scalable amount of money.(we tested data from 1994) Problem is to do this you needed to really increase the risk per position, and this leads to massive intra month drawdowns. (up to 80-90% (many people look at end of month - we looked at daily - can be hard to stomach being down 20% mid month to end up being up 3% at end of month) Also many people find it hard to stomach the correlation between many products in the short term - especially when it turns against you and losses hit the portfolio all together. Regardless the concepts are good to understand and the ideas interesting. You do need a broad portfolio of instruments, lots of money and a stomach for drawdowns - ie; a very intensive belief/faith in the system. It works over the long term - the only way it stops is if you think trends will stop. Trend traders killed it in 2008 in terms of making money....not so good this year. Its the problem people have with such a system - they want to make money all the time and cannot understand that the key is in the cumulative returns over the long run when looking back at a return per annum average. (look at the equity markets - they outperform bonds over the long term - but may not over shorter periods - everything becomes relative to what you are trying to achieve and measure I guess.) But for all the companies/funds that I have seen do it (trend trading) profitably in terms of scale usually incorporate some other measures - either short term trading, or variations on portfolio construction, discretion on when to roll contracts - pricing of these eg; OJ trades differently to corn, oil, bonds, and rubber. The turtle system is just a simple and aggressive version of trend trading. (look at the long terms returns of trend traders - their returns vary greatly but it works over the long term) The other important thing that most people do not test for the turtle system- as its hard to accurately do, or as we used - requires a separate filter - is to incorporate the rule that goes something like - "after a winning trade do not take the first trade in the opposite direction (until that opposite direction trade has resulted in a loss)"

ignore last chart, this makes more sense.

Hi, while I dont want to knock indicators, if you are trying to avoid them I always use this thought when I need to remind myself. (As every now and again the "search" arises its head for me) It may be a little silly but it works for me. "imagine driving along on a motorbike and following a car that has its indicator on. It does not mean its going to turn. But its very dangerous to overtake just in case it does." I have attached a corn trade (i know its not an equity - but i have not looked at any the last week) but the point is regards trend lines and something that works for me. with a few simple guidelines 1 - dont get too fancy on where you draw them, just get the general direction, you will always find plenty of options. 2 - combine them with clear high low breaks. you want to see higher highs, higher lows (or opposite for downtrends) 3 - i always prefer to see a pullback toward the trendline. gives me patience to wait. 4 - you can either get on short term and trade the breaks, the pullback or wait for the longer term trends to change, and just go with them. 5 - they can be used on any time frame. any instrument. It combines the idea of S-R but using more the donchian type channels. (I dont see these as an indicator) The one issue with trend lines that might be raised is the fact that they are very subjective. hence by combining them as a guide with something else always helps.

lesson one: being short a naked put, and buying the underlying and writing calls (buy write, or covered call) are the same risk. Also yes - the hoadley options site is great. Dont worry too much about black and Scholes - they were just the first to formulate an option equation - binomial is probably better suited to understand, particularly if you are using equities with corporate actions. If you are just writing puts and calls, you wont need to focus too much on greeks, you should focus on your plan for the trade. (As the most you are going to make when shorting options is on the day you sell them.) I would focus on scenarios of what to do if certain events occur. Also - cant stress this enough. If you sell and option and its practically worthless, if you can try and buy it back for a cent or two. I have seen numerous occasions where people have got away with it 9 times out of 10, only to have that one time cost them. Until they expire you have risk on the book.

Tams is 100% correct... Also if you start trading options (and this cannot be repeated enough) 1) make sure you actually understand your REAL exposure if things go bad with options. Too many new players start selling options without understanding the margining and the fact that you may have to stump up the amount of the underlying. 2) Understand how the margining works - be careful about thinking you can afford more than the account can bear as the margining and leverage can be pretty good. 3) understand that "a put is a call and a call is a put" using the formula Call=Put + Underlying If you understand this then it means you have a better understanding of how options can work. 4) remember options are quotes by market makers - sometimes they can become very illiquid. 5) when you understand options and get them right - they are very powerful tools.

most expensive words in the English language - "this time its different"

"I' m looking for an electronic symbol where the buyers/sellers cannot send wrong signals to the market buying on one side (ex. electronic) and selling more on the other. " Hi, it seems what you are looking for then is a market that has the MOST traders who arbitrage? That way the price is the "fairest" it can be - the most efficient market? If you are looking for uncorrelated markets then (apart from 2008) you will have to look at different time frames and different products - eg; grains, oil, bonds, equities. But this really becomes largely only relevant from a portfolio point of view. (as I think that at times both the above points of view are correct) The most independent/efficient markets would have to be those with the most independent players - whilst also having the exchange rules to prevent market abuse. This consists not just of insider trading but also window dressing (whereby end of day, end of month prices are pushed around to look good ) or fake orders (whereby people put an order to buy 1000, just below the market trying to get people to think there are buyers there, when they are actually sellers) My guess is that the FX and bonds are the place to go.

agree with you Grey in terms of it will most likely not be as big or serious. BUT it definitely shows things are not over. is it a lobster pot? (a great expression meaning if you throw out a lobster pot and you catch one lobster chances are there are other also there - its just that you cant see them) I think Dubai was always a bubble and hence its problems will be particularly bad anyway. For my 2 cents on the market I follow the technicals - and this just makes me skew every thing to the short side. thats all.

The ONLY real answer is to buy and store the actual underlying. Get a tanker, store it off shore. but of course that costs money (hint hint) Seriously though...learn about how a future is priced BEFORE you invest in them. Learn about fair value, rolling, spreads, contango, backwardation. most spreadbetting and ETFs are the same for these reasons. they have to pay the roll spread as well, (it works in your favour when in backwardation and you are long) Plus the first question that I asked was if you are a long term investor then why don't you invest in a long term future? At the time it may have cost you more but it usually has less volatility, will still rise, and saves you the hassle of rolling. Of course this still has its issues of the contango moving into backwardation at times. hope this helps