kayaktri

I wanted to write a note as a student who is enrolled in Steve’s Futures class. Steve has been working with me as part of his class, and I am very thankful for the transfer of knowledge he has given me. Prior to this class, I had traded stocks but had not attempted trading a market like the ES as I could not make a lot of sense out of the constant gyrations and reversions. In short, I could not separate the signal from the noise. I knew better than to ‘just wing it’ as I would quickly have my account equity reduced without the requisite skill to operate in this market. Since being enrolled in Steve’s class, I am now gaining the confidence to understand what Steve refers to as ‘context’ of the market and how this is used for making low risk entries AND exits. In my opinion, he has a very good understanding of the mechanics of the market, and is able to convey his thoughts on the many aspects of what the other participants are doing during the session as to give one a higher probability of achieving success without getting ‘chopped out’ or having price immediately move against the position. I have not posted a lot on this forum, as I have taken more of the role of listening and learning. But, I can say that the manner in which this class is being conducted, I am learning a great deal more in a shorter period of time (especially with the feedback loop of being able to ask questions in real time (using gotomeeting)) than I was attempting to decipher and filter a lot of the content that is available on the web. Steve is very clear in that he is teaching me how to trade the ES, not how to press the buy/sell button when he makes a ‘call’. In fact, I do not think his teaching environment would work well for folks who wish to be told – ‘enter here’ and ‘exit here’. Just as importantly for me, Steve pays particular attention to detail to the risk and money management aspect of trading, which is critical for my (and all traders) success. Many of the trades that we have gone through (yes, in real time with me watching the same thing on my system) have resulted in price moving away (adverse) to the expected movement, and yet Steve has managed (in most cases) to exit at break even or even with a small gain due to his active scale outs and stop mgmt. This, in itself, is worth attending the class (imho) and has been an excellent education on capital preservation. In closing, I know this forum is chock full of naysayers, but I am reminded by a quote that reads ‘The path to success is often paved by people who say it cannot be done’. I am a person who chooses to listen and learn, rather than say it cannot be done.

Frank, Thank you for taking the time to post this. I certainly appreciate the detail you used when working through the triggers. I will be curious to see how the backtesting and money mgmt portions either show this to be a productive (profitable) system or not. The details are where the edge will be flushed out or not. Again, thanks for your effort and keep up with your great post.

I think you can continue to use excel by simply adding horsepower to the equation, however in my opinion, it will not do it efficiently and that is why it is necessary to continue to ramp up your hardware. Do not get me wrong, I use excel every single day to perform functions for which it is well suited, but I also know what other systems (databases) do well and rely on them when they are more efficient. To answer your questions: So which one of these softwares would you recommend to me? I have not used all available database software, so I cannot comment on which is the best, and they all do something better than others, but I have chosen MS SQL Server to accomplish my database tasks. It is robust enough for my purposes, and is easy to create databases and tables, import data, manage data, and manipulate this data. It is the one database that is tightly linked to Excel in case you wish to import/exprt data to from excel (which I do). how much time do you think it would take to reach the minimum level required to do the same as anyone can do using excel? I cannot answer this as I do not know what you are doing with Excel. Excel truly does a good job at quickly summarizing data in a mathematical and statistical sense. It has many built in functions to perform this work. I myself have custom code working in my Excel spreadsheets that I find very useful. SQL coding is similar to building custom formulas in excel. The good news is if you do not know how to code in SQL, you can find hundreds of examples on the internet that work with little or no modification. To give you an example, once you learn how to perform basic data manipulation in SQL (which could be accomplished in a day or two (IMO), if you are computer savvy), it takes me about as long to code a custom formula in Excel as it does for me to write SQL code for the formula. The main difference is SQL allows for a lot more flexibility in how my data is displayed and grouped, and it is much more efficient when dealing with large data sets. Is one easier and simple than others at using math formulas. I do not know which one is easier or more simple for math and statistics, as I think each have a similar baseline for achieving this goal. I use MS SQL Server due to it being less complex to perform the functions I require in a simple and efficient manner. We mainly use Oracle at work, and other systems that I work on a weekly basis include PostGres and MySQL, but at the end of the day, I prefer to use MS SQL for my purposes as I can manipulate the data faster (import, export, create databases/tables, etc.) than I can with the other systems. Also, I prefer the GUI of MS SQL, for managing and manipulating data than the other programs, although I am sure others would have a different opinion. As the previous poster mentioned, the lightweight version of MS SQL is a no cost solution. In the end, you can accomplish what you are looking for on anything from paper and pencil, a spreadsheet, or a database, it just depends on the amount of efficiency you are expecting. Best Wishes . . .

I would have to nominate the following: ThalesTrader DbPhoenix Brownsfan These folks really have produced a lot of thinking and re-thinking on my part.

I do not have enough expertise in Excel to answer your question. However, I do have enough experience to communicate that I second the above posters comments that this would be much better suited work for a SQL database. I personally use MS SQL Server for my data repository, and am quite pleased. The other databases the above poster identifies would work as well. Although the code for the statistical math components is more difficult to generate in SQL, the database is very efficient in handling very large data sets. Also, Ad Hoc reporting of your data is very simple using a SQL database. I have a system at work that performs about seven million updates every day on hardware inferior to yours without any issues at all. Best Wishes . . .

I was also gone for the long weekend. I would be interest in more discussion of the ideas presented in your two pdf's and possibly gain more insight as to the details on the account losing 50% of the equity in one or two trades. Currently I am using a Fixed Fraction system of calculating my risk exposure and the amount of shares I can purchase for my transactions. I am very aware that I am not optimizing my CAR, but without long term statistical results on my system (I am still building my large sample size of trades to base my stats on), my goal is equity preservation rather than optimized gains. Best Wishes ...

For my trading, I have been using (with an acceptable degree of success) a combination of what you are referring to as conservative and aggressive approach. Prior to entry, I determine my Risk ®. When price moves in my direction .5R, I move my stop to -.5R. When price moves in my direction 1R, I move my stop 0R (which is break even). In doing so, I certainly risk the chance of getting stopped out a trade that would otherwise be successful, however, it rarely stops a high spirited gainer, and it greatly minimizes my daily exposure. Today for example, I had 13 trades. By using this style of stop management, I had 4 trades that washed out (at BE), 4 trades that were losers, and 5 that were winners. For my trades today: The 4 washes were BE (no gain/no loss) so 0R The 4 losses totaled -1.37R (if they would have hit full stop it would be -4R). I conduct post trading analysis at the end of every day to determine if I am following my system well, and if my exit management needs to be adjusted (over a large sample size mind you). If I would have allowed the original stops (set at -1R) to remain for all trades, and exited - 1) when the stop was hit, or 2) at better price based upon PA that came after I set the new stop, or 3) at the end of day (RTH), my results for today would have been the following: The 4 Wash trades resulted in net of -1.3R The 4 losing trades would have resulted in a net of -2.8R This totals a daily net of -4.1R, which is an additional loss of -2.73R over actual. Of the 4 wash trades, 2 remained a wash, and the other 2 accounted for the -1.3R. Of the 4 losing trades, 1 had a gain of .2R, and the others would have hit full stops shortly after my new stops were implemented, resulting in a -3R loss (netting -2.8R). This is pretty indicative of what happens on a daily basis for me, hence the reason for my making these changes to the stops (note: I never increase the risk, only reduce it based upon the PA). Best Wishes ....

Negotiator, Thank you for posting this subject matter, and reminding all of us how important MM really is. I would like to share a couple of comments that may be of some use to others beginning their education. It is my opinion that ones education on the topic of MM should come first, prior to anything even closely associated with trading setups, etc. My path did not start this way, but I certainly wish that it had. Without MM, you have the very highest possibility that your equity will not last. For example, a good entry system without good MM equals very high probability of a ruined account. Even a good entry and exit system without good MM equals a high chance of a ruined account. Everything else less worthy (from a systems quality perspective) equals a ruined account. How does one take steps to develop a proper MM strategy for themselves? .....Education. There are many threads and posts here on TL that are very helpful in the quest of educating ones self on a proper MM strategy. I found many of them helpful (here and other areas of the public domain). However, I was unable (at the time) to differentiate which opinion being represented was valid or not (one that would hold up to actual long term testing). There are many people on this forum who have quite different ideas on the topic of MM, and not all of them would pass statistical or mathematical study (my attempt at being gracious). I also recommend looking at published works to further educate oneself on this topic. I had my eyes opened a number of years ago to the importance of this matter when I read through some books that I would recommend for anyone who has not delved into this topic. The first book that I read that discusses this topic is 'Way of the Turtle' (Faith). In it the author discussed what Negotiator is stating above, on the possibility of risk of ruin, and the basis for this term.The author discusses several very important concepts in the "Risk and Money Management" Chapter. This should be enough to get your interest up as to the importance of this topic. The next book that I read after this one that was instrumental with my learning the important aspects of MM was "Trade Your Way To Financial Freedom" (Tharp). This was a real eye opener for me at that time, as it instilled in me that I had to have not only a proper MM system (from a statistical probabilities perspective), but one that was a proper MM strategy for me (fits who I am as a person - my psychological profile). This work also allowed me to understand that "my" MM system would dictate a lot of the parameters of what my trading system could look like (and just as important could not look like), based upon my account size and my aversion (or lack of aversion) to risk. One of the more recent books I have read that delves into this topic is "Modeling Trading System Performance" (Bandy). There are multiple examples of MM strategies (and the why's and how's behind them) that one may use on their path of discovery for their proper MM strategy. Lastly, Tharp also has a book called "A definitive Guide to Position Sizing" that remains very helpful in giving one a basis for this topic. My path took me from searching on the public domain to published works. And I now will not do anything that deviates from my MM system (incur more risk). I am convinced that if I do, I cannot achieve any long term success in the markets. In other words, once I setup my level of risk, which is always done prior to entry, I never increase this level of risk (In fact I do not even think about increasing my risk). I would suspect that others may not be in agreement with this, but I would refer anyone interested to look at a study of statistical probabilities and make their own determination on which system is right for them. Best wishes . . .

MMS, Thank you for the opportunity to discuss this. For me, I think the site is great. The reason why I think the site is great is because you have people on the site who I will refer to as teachers. This is a VERY small (1-2%) minority of the people on the site, but make up the reason why I come to the site. The majority of the rest of the people, including myself, are what could be identified as students. There are people who frequent and post on the site who are successful traders, but are not successful at teaching, and only a small select group (IMO) qualify as this role type. So, what does this all have to do with your original question? It is my belief that anything that fosters an environment to entice the 'teachers' to continue posting is a great thing, and anything that creates an environment where the these 'teachers' post less and less, or not at all is a bad thing. And, will ultimately cause many of the students, such as myself, not to frequent the site. Unlike an academic institution, where a hierarchy and code of conduct exists between the students and the faculty, an online forum places everyone at the same level. In many cases, from an educational perspective, this is not conducive to learning, and is not very efficient. I have noticed that some of the 'teachers' on this site are no longer posting. I would be very curious to determine why that is. If I were running the site, I would try to figure out why this is, as I would want to create an environment where they would continue to post. I do not know if it was or was not related to the sometimes constant probing/prodding of the students, but it may have been, and it would be good to know. I for one favor a more hierarchical approach to my educational experience (and this is the reason why I am on this site, to educate myself - and when an appropriate opportunity arrives that I can educate others on the topic of interest). As such, I would be appreciative of an approach to moderating that 1) keep the 'teachers' on this site teaching, and 2) not allowing the site to even remotely begin to rival the likes of ET or others that have regressed by letting the students run off the teachers. Thank you for your site, it is much appreciated. Scott