Trading Contest Discussion

[Mysticforex 13]

Ingot asked for it and it sounds like a god idea. So here it is.

[Obsidian 10]

Ingot is busy counting today's profits I guess

[Ingot54 13]

Ingot is busy counting today's profits I guess

It's all good mate - I count by tens :rofl:

 

OK - thanks to Mystic, we have an opportunity to discuss what is going right/wrong ... and what

went right/wrong in previous trading.

 

Like most of you, I try to manage my working life around my trading, and it is this issue that causes

me the greatest frustration. It has also led me to focus on longer term trading ie the higher TF.

I prefer to swing trade, but always watch for a trade to develop into a position trade lasting a few days.

 

For the contest last month, I attempted to take positions that would be ok to hold for a day or two,

and started very well - see post #313 here: http://www.traderslaboratory.com/forums/forex-trading-laboratory/9303-traders-laboratory-forex-trading-contest-10.html

 

With an overnight reversal of the GBPNZD my initial 11% profit after a few days blew out to

a -30%+ loss, and I closed the trade to avoid disqualification. Next day the trade came roaring back

in the short direction I had traded it, which gave me a rash ... to put it nicely!

[Ingot54 13]

Anyway - I did recover somewhat... back to -15% ... with a few other quick trades, before

dropping a few more pips to end the contest at nearly 20% loss.

 

From there I decided that attempting to swing/position trade while working was not a great

mix (I work permanent nights) which does make me a grumpy-bum at times (with apologies

to 4EverMaAT again). So I have reverted to an older strategy involving one or two indicators,

and the WEEKLY - DAILY - 4H - 1H TF.

 

It is simple, and robust. The problem is, it needs to be "minded" a bit, and so involves more

screen time than I really need to spend. These past 2 nights I have not been working (Aussie

time is GMT +10 where I live) and have been able to nail a decent trade or two.

 

The point is, I have to stop trading between 4 and 6 hours before the USA session kicks in.

But I can usually get in on London/Europe, if anything is happening, for a few hours.

 

Does anyone else identify with this kind of issue?

 

Night shifts leave my brain fuzzy (you will have noticed I'm sure ) and hardly inclined to focus well.

 

So that's the excuse I am sticking with here!

 

Would like to hear other trading stories ... and what is happening through the contest.

Later I'll bring in a bit more about what went wrong with trade management, and how I avoid

improving my performance in that area.

 

Is it laziness? Or is it something to do with personality?

We'll see I guess.

[kuokam 10]

Hi Ingot,

I might be getting some thing wrong but this kind of results, plus or minus 10+% in one single trade makes me wonder if you limit yourself to the "generally accepted" norm of 2% risk per trade?

 

Kuokam

 

It's all good mate - I count by tens :rofl:

 

OK - thanks to Mystic, we have an opportunity to discuss what is going right/wrong ... and what

went right/wrong in previous trading.

 

Like most of you, I try to manage my working life around my trading, and it is this issue that causes

me the greatest frustration. It has also led me to focus on longer term trading ie the higher TF.

I prefer to swing trade, but always watch for a trade to develop into a position trade lasting a few days.

 

For the contest last month, I attempted to take positions that would be ok to hold for a day or two,

and started very well - see post #313 here: http://www.traderslaboratory.com/forums/forex-trading-laboratory/9303-traders-laboratory-forex-trading-contest-10.html

 

With an overnight reversal of the GBPNZD my initial 11% profit after a few days blew out to

a -30%+ loss, and I closed the trade to avoid disqualification. Next day the trade came roaring back

in the short direction I had traded it, which gave me a rash ... to put it nicely!

[Ingot54 13]

Hi Ingot,

I might be getting some thing wrong but this kind of results, plus or minus 10+% in one single trade makes me wonder if you limit yourself to the "generally accepted" norm of 2% risk per trade?

 

Kuokam

No ... I don't follow the "2% rule."

 

When trading live, I usually trade either a full contract ($10/pip) or a half-contract.

 

I don't concern myself with the maths of the account too much.

 

I guess what you are wanting to know is whether I manage my live trading the same

as I do contest trading.

 

The answer is no, I am far more conservative in personal live trades.

 

Probably a better contest would measure the number of pips made for the month, rather than

the number of dollars, for this very reason.

 

But trading the way I do is based on timing the trade to take advantage of high probability setups

rather than going into a trade high expecting draw-down.

 

It's a matter of personal risk profile. I want my trades to be moving into profit fairly early.

 

I regard what I am doing with the contest as being far more risky than I would accept for my personal live account.

If we were trading for a pip tally, rather than dollars, then the trade management wouldn't matter

as much - ie you could trade a micro account or a 100-contract account, and still produce the same pips.

 

Trade management is very important. My personal approach - to trade $5 - $10/pip - is safe (for me) but

is possibly denying myself an opportunity to really grow my account faster and more safely. I haven't

looked at it much, as I have been more focused on improving overall pips on a consistent basis.

 

Hope that helps - it's honest. I don't like the 2% rule, as I think it is flawed.

[Ingot54 13]

Kuokam, have a look at post #115 here:

 

http://www.traderslaboratory.com/forums/trading-psychology/10158-optiontimers-project-4.html

 

It makes very good sense, and is in line roughly with

my approach to the position-sizing/risk-management issue.

 

The most important thing with any trade, is to get out fast

when the trade is not performing as planned. Your first loss

will then be your smallest.

 

I think we have all experienced the inability to take a loss -

and paid dearly for the paralysis of it.

 

You should know ... or have a good idea ... what you want

from a trade the moment you go into it. Of course, you will

adjust that view as the trade progresses depending on whether

momentum is holding up well, or a million other things.

 

Basically, if you want 40 pips ... or $400 ... then when you

hit that target, you either close the trade, or consider whether

the initial target might have been too conservative.

 

There is always another trade, and I usually take a good

profit while it is there. Under better conditions (eg if I had

a week or two off work) I might look for position trades, as

opposed to swing or day trades.

[kuokam 10]

I am just about to finish reading that thread of Optiontimer. Awaiting you over there with a couple of questions, as you are the vet in there:)

 

Can't understand why you say the 2% rule is flawed. I am presently having tough times recouping the losses from 4 trades in a row in the last contest, that didn't even total 2% of my account. Sure I don't have a fixed strategy either. Still struggling to stick to one.

 

 

Kuokam, have a look at post #115 here:

 

http://www.traderslaboratory.com/forums/trading-psychology/10158-optiontimers-project-4.html

 

It makes very good sense, and is in line roughly with

my approach to the position-sizing/risk-management issue.

 

The most important thing with any trade, is to get out fast

when the trade is not performing as planned. Your first loss

will then be your smallest.

 

I think we have all experienced the inability to take a loss -

and paid dearly for the paralysis of it.

 

You should know ... or have a good idea ... what you want

from a trade the moment you go into it. Of course, you will

adjust that view as the trade progresses depending on whether

momentum is holding up well, or a million other things.

 

Basically, if you want 40 pips ... or $400 ... then when you

hit that target, you either close the trade, or consider whether

the initial target might have been too conservative.

 

There is always another trade, and I usually take a good

profit while it is there. Under better conditions (eg if I had

a week or two off work) I might look for position trades, as

opposed to swing or day trades.

[Ingot54 13]

Can't understand why you say the 2% rule is flawed. I am presently having tough times recouping the losses from 4 trades in a row in the last contest, that didn't even total 2% of my account. Sure I don't have a fixed strategy either. Still struggling to stick to one.

The key words I needed to hear from you are:

 

" I am presently having tough times recouping the losses from 4 trades in a row in the last contest, that didn't even total 2% of my account."

 

To understand how I came around to this ("the 2% rule is flawed") point of view, and now trade

the way I do, read the link below. There are other links no doubt if you look.

 

Forex Trading Money Management - An EYE OPENING Article | Learn To Trade

 

I do not believe in the Reward:Risk approach either - how can you hope to tell the market where it is likely to go?

Sure there are some who claim to see the supply / demand levels, and can show lots of charts to prove it.

I can assure you there are many charts that could show where price did NOT reach those levels too.

 

What you trade is probability, and if your strategy has any legs at all, then you need to risk what you - personally

are comfortable with.

Using this approach, you also need to K-N-O-W exactly the point at which you can say the trade is NOT working.

 

Doing it this way, you can throw the 2% risk myth right out the window.

 

Look - I could tell you my strategy/approach, and there would be 100 traders instantly jump all over me calling

for my confinement into a mental recovery group for insane traders. But statistically 95% of those who would

castigate me for the approach, might be losing traders.

 

I have been years working this out, and I have found that many of the sacred cows of trading are nothing better

than bedtime stories.

It keeps traders struggling in the muddy shallow water, instead of allowing them to swim out in the deeper, clearer streams.

 

I would like to hear from traders who are doing ok, and get their views on the 2% rule.

 

I think quite a few of them might agree that you risk on a trade what suits your risk profile.

I know position sizing can be worked out on size of risk, or vice versa ... but while your

Stop Loss might be placed at a level that satisfies the 2% risk rule ... who in their right mind

allows a trade to run against them to that extent?

 

Such a stop is placed as a disaster-recovery strategy for an unforeseen event ... not meant as a way

to take you out of a failed trade.

 

Hope that helps ... and gets you thinking about where to place stops, why, and where you should be

closing trades ... and when.

 

Your question was a very intelligent one, and I hope you can come around to trading with freedom and

responsibility, that does not involve the rigidity of thinking that locks you in to certain losses.

 

By all means, if you must, calculate risk based on the 2% rule. But please do not allow a trade to hit that

stop after it is clear to you that the trade is not working. Trades that are not working do not suddenly turn

around in your favour, simply because they are approaching your Stop Loss order. In this respect, the

2% rule is costing thousands of traders their accounts every week.

 

I had a ... shall we say ... "brisk" or "robust" ... discussion with a broker marketer the other day.

He could NOT tell me how many of his clients were profitable ... even a ball park figure. He cited

'confidentiality' issues. I told him I didn't want names or account numbers ... just whether

he had even ONE successful client trading.

 

He could NOT do it. So I said - "I give you permission to give my contact details to ONE trader

who could contact me anonymously (if he wished), to tell me that he was doing "OK" with

his trading.

 

He could not do it.

 

Such are the ways of conventional wisdom in trading.

 

If all the rules, myths, sacred cows, and strategies in trading are NOT working (eg less than 5%

of traders making money) why do we cling to them?

 

It is time to start thinking for ourselves.

 

Apologies for the long response ... but now you have insight into my thinking.

[kuokam 10]

Ingot,

Agree with you that yet another "myth" is that of risk to reward. But I admit it might be me who don't understand the thing. But I also know I cannot get every single piece of fundamental and technical right before acting, or I will never.

I also agree with the idea of sizing down when risk is big. But what of the alternative of letting go in that situation?

The real problem is do we need to limit our risk when trading or not? If yes, how?

I seems to me the examples Mr Fuller shows to illustrate his points are biased, the 2 traders starting out on uneven ground. 200/5000 is 4% of the account, the double what trader B starts with! Therefore he is only 20 behind trader A after the 4 trades and 73 ahead if the next trade is a winner.

So his demonstration didn't convince me of the superiority of his trade management but I believe that is the way many might find success and that is okay. Every body must find their way to achieve consistent success at this game. But having done so should never mean that those doing it the other ways are wrong.

[Savant 10]

Kinda agree on that subject...

[Ingot54 13]

The real problem is do we need to limit our risk when trading or not?

 

Every body must find their way to achieve consistent success at this game. But having done so should never mean that those doing it the other ways are wrong.

Don't be put off by what others are doing.

 

Read as widely as you can on threads like the OptionTimers approach. You will pick up some good principles there.

In fact, those are some of the very best principles available.

 

The idea of trading DAILY charts might be novel to traders who are addicted to action. But action should be reserved for the Casino.

This trading is very, very serious business. The brokers will separate you from your money slowly ... or quickly ... but that's their goal.

 

Yours is to remain viable and profit. I don't know any traders who scalp who are making heaps of money. Do you?

 

Don't forget that not trading is also regarded as having a position in the market. When the risks are too big, stand aside - there is

always that next trade, and at the same time you reinforce excellent habits in yourself ... patience being chief amongst them.

 

There is no right/wrong way to trade - there is only learning.

 

Right now, for the contest, I have been trading like a cowboy, with disregard to the position size. I have done that because I believe

we need to be focusing on the number of pips made each month, instead of the number of dollars. I hope it causes some discussion.

 

But at the same time, I have been ultra careful. Yesterday my biggest draw-down was 3.7%, and with the dollars I had at risk, that was

quite large. Yet I didn't worry about the dollar size. Instead, I remained focused on the PIP draw-down, and knew that I would be fine.

 

Regarding Mr Fuller's approach and examples - you may be correct in your view; but still there is something to learn there.

Remember he advocates trading nDaily candles, and also uses the 4H charts to fine tune. As a consequence, his draw-down is

also very small.

 

The thing is, your risk profile will change as you expose yourself to more and more trades (live ones that is).

 

A couple of years ago, I sat up all night with a losing trade, sweating, praying and "taking the pledge" just to get a bad loss back

to a respectable loss. The breakthrough came at about 3.30am, and I finally went to bed losing about $150.

 

Today, in live trading, my starting margin is about that, with many trades, and I don't sweat unless I am losing about $2k! Consequently,

I avoid getting into those spots!

 

My risk profile has broadened.

 

There is a little quirky thing I do that has made a very big difference to how I see my trades.

 

I trade a lot on demo. But when a trade goes against me, instead of closing it out and starting elsewhere, I allow the trade to continue -

sometimes for days... to see what happens to it.

 

If I closed the trade at a "loss" and moved on, I would never learn anything more from the experience. It's just a habit I developed after

trading daily bars, and it's how I learned the meanderings of price.

 

To answer your question ... yes, absolutely ... you MUST limit your risk. But there are many ways of doing it.

 

One is by using a Stop Loss

Another is by nailing entries closely

Another is by trading small lots and scaling in as it progresses

Another is by position-sizing according to the 2% rule.

 

There are probably others, and it would be good to hear the opinions of others - what I do is right for me ... today ... tomorrow I might

move on a bit, and this may no longer be relevant.

 

As you said, everybody must find their own way - and I believe you are on the right path Kuokam.

 

Keep searching and asking.

[Obsidian 10]

...Can't understand why you say the 2% rule is flawed...

 

imagine yourself carrying 5 positions and things turned against you...

 

if you are opening 2-3 positions/day, then you take huge risks...

lets say you have 2 winners and 1 loser everyday, 2% each trade...that means 2% everyday!

never met a trader who can do that

 

however if you are opening 2-3 positions/month, then 2% would make sense...in my opinion of course

[kuokam 10]

Well, to continue with the cowboy allegory, they are the winners eventually, same as you in the contest, as you have stroke even harder yesterday, putting the bar very high and definitely out of my reach, if this makes sense in English. Having seen you a bit disappointed by your results last month, my question is how do feel now, after such a fantastic ride ? The expression that comes to my mind is "I am the king of the world".

Bravo again!

 

 

Don't be put off by what others are doing.

 

 

Right now, for the contest, I have been trading like a cowboy, with disregard to the position size. I have done that because I believe

we need to be focusing on the number of pips made each month, instead of the number of dollars. I hope it causes some discussion.

 

But at the same time, I have been ultra careful. Yesterday my biggest draw-down was 3.7%, and with the dollars I had at risk, that was

quite large. Yet I didn't worry about the dollar size. Instead, I remained focused on the PIP draw-down, and knew that I would be fine.

[optiontimer 10]

...Can't understand why you say the 2% rule is flawed...

 

If you believe that it is possible to time the market, and if you believe that you can learn to identify those moments when the market's next move might be guessed with a greater than 50/50 probability of being right, then the 2% rule is flawed. An individual capabale of such timing would find it to his benefit to vary his bets depending upon each situation and its perceived probability of allowing for a correct guess, i.e. bet more when the odds are perceived to be highly favorable, while reducing bet size when the odds are less favorable, and refusing to bet at all when the odds are even or against.

 

If, on the other hand, you believe the market is more or less random, and if you believe there is no edge anywhere and that every trade is simply 50/50 guesses, then the 2% rule is wise, and in fact, may be generous to the point of foolhardiness. For such a trader, 1/2% to 1% may be better.

[Ingot54 13]

Well, to continue with the cowboy allegory, they are the winners eventually, same as you in the contest, as you have stroke even harder yesterday, putting the bar very high and definitely out of my reach, if this makes sense in English. Having seen you a bit disappointed by your results last month, my question is how do feel now, after such a fantastic ride ? The expression that comes to my mind is "I am the king of the world".

No one makes the kind of profits I have made in those few trades EVERY

time, and I can tell you that the risk was very real that they would not materialise.

 

But in my judgement, and with confidence in my strategy, the probability

was higher on the side of success. As such, I was compelled to

take the trades - there was no better time than right at those moments,

to make my entry.

 

Like other mortals, I am subject to the ups-and-downs of the success moments,

and what I call the "learning moments." Some time back, here on TL, I took

time out, because I wanted to give it all away. It was all just too hard. But I

hadn't (at that time) devoted 7 years to getting this to work, to just walk away.

But I was hurting badly.

 

OptionTimer knows very well what I am saying, because I even turned my

back on him, when he was trying to "straighten me out." I had to learn a few

hard lessons. He can tell the story if he wishes - I give him full permission

to do it if he wishes to set the record straight.

 

There are further lessons for me yet.

 

"King of the world"?

 

Maybe ... for this moment only ... so yes, enjoy doing what you came to do.

Savour the moment, and let the success of the moment wipe out earlier pain,

and remind you that trading success IS possible.

 

Next week I may no longer be king, but I shall have the reminder, that with

tight management of my head and best application of my strategy, I will be

positioned to receive whatever the market chooses to put my way.

[Ingot54 13]

Regardless of the advent of a couple of perfect trades, if you like, these

opportunities (great setups) are both rare and common.

 

Rare ............ because the market never throws out the same clues like a cookie cutter.

Common ..... because the market always throws out the same clues like a cookie cutter.

 

Confused?

 

Don't be. Regardless of whether you are trading the Euro, Gold, Lean Hogs

or Beans, the kinds of clues I am alluding to will present themselves over and again.

 

Some will be vague and ambiguous.

Some will be "perfect."

 

But the outcome, though more probable than "random" is still unpredictable.

 

No one knows what will happen in 5 minutes (there goes your in-it-for-the-trend)

No one knows how many pips will eventuate from a move ( there goes your reward:risk)

 

Keep reading OptionTimer's thread, Kuokam - you are much closer to success

than most traders. Keep questioning. Keep learning.

 

Your job as a trader - MY job - is to locate the higher probability opportunities and trust

the strategy we have practiced so many times.

[kuokam 10]

If you are saying that 2% in each trade is high risk, I agree. That's why I try to halve my stake untill back to profitability.

 

 

imagine yourself carrying 5 positions and things turned against you...

 

if you are opening 2-3 positions/day, then you take huge risks...

lets say you have 2 winners and 1 loser everyday, 2% each trade...that means 2% everyday!

never met a trader who can do that

 

however if you are opening 2-3 positions/month, then 2% would make sense...in my opinion of course

[kuokam 10]

Agree timing is every thing, although we can't always have it perfect. So, it depends on where one stands in his learning curve.

 

If you believe that it is possible to time the market, and if you believe that you can learn to identify those moments when the market's next move might be guessed with a greater than 50/50 probability of being right, then the 2% rule is flawed. An individual capabale of such timing would find it to his benefit to vary his bets depending upon each situation and its perceived probability of allowing for a correct guess, i.e. bet more when the odds are perceived to be highly favorable, while reducing bet size when the odds are less favorable, and refusing to bet at all when the odds are even or against.

 

If, on the other hand, you believe the market is more or less random, and if you believe there is no edge anywhere and that every trade is simply 50/50 guesses, then the 2% rule is wise, and in fact, may be generous to the point of foolhardiness. For such a trader, 1/2% to 1% may be better.

[kuokam 10]

Trust the strategy...

"Men who can both be right and sit tight are uncommon" (Livermore, Reminiscences).

Attached is a real time emotionally managed trade. It was supposed to be "my" trade for this week, I entered on Monday morning. But after a couple of hours I noticed it was going nowhere. I then looked closer and discovered I had entered long just below the conjunction of a resistance /Round number, and thought the trade was failing. Instead of waiting for the stop to prove my "new" reasoning right, I sold half the position and trailed the stop which later got me out. Now out and watching my first idea develop as planned.

So the problem here was this mix of anxiety and impatience that submerge me as soon as I get into a trade. If only I could enter the trade, put on my SL and walk away for 24 hours!

I believe you guys have some tricks to share ?

 

I also took a trade in oats, but this is for another thread.

 

Regardless of the advent of a couple of perfect trades, if you like, these

opportunities (great setups) are both rare and common.

 

Rare ............ because the market never throws out the same clues like a cookie cutter.

Common ..... because the market always throws out the same clues like a cookie cutter.

 

Confused?

 

Don't be. Regardless of whether you are trading the Euro, Gold, Lean Hogs

or Beans, the kinds of clues I am alluding to will present themselves over and again.

 

Some will be vague and ambiguous.

Some will be "perfect."

 

But the outcome, though more probable than "random" is still unpredictable.

 

No one knows what will happen in 5 minutes (there goes your in-it-for-the-trend)

No one knows how many pips will eventuate from a move ( there goes your reward:risk)

 

Keep reading OptionTimer's thread, Kuokam - you are much closer to success

than most traders. Keep questioning. Keep learning.

 

Your job as a trader - MY job - is to locate the higher probability opportunities and trust

the strategy we have practiced so many times.

[Mysticforex 13]

-----------------------------------------------------------------------------------------------------------------------------------------

[Ingot54 13]

Trust the strategy...

"Men who can both be right and sit tight are uncommon" (Livermore, Reminiscences).

Now out and watching my first idea develop as planned.

You noticed

So the problem here was this mix of anxiety and impatience that submerge me as

soon as I get into a trade. If only I could enter the trade, put on my SL and walk

away for 24 hours!

I believe you guys have some tricks to share ?

Work on that.

 

Not much to add - you already know ONE problem.

 

If you are trading the daily TF, then why are you looking at the trade other than at the daily candle close?

Same goes for all other TF. Turn the charts and trading platform off, and do something else. Let the trade

develop and breathe as intended. You quoted Livermore ... if you are "right" ... then "sit tight."

 

Often it is not the trade that beats us - we beat ourselves by talking ourselves out of the trade,

because of a simple, natural pullback in price.

 

You found that yourself - "Now out and watching the first idea develop as planned."

[Mysticforex 13]

I have posted The Nov-Dec contest open to join on Oanda.

The start t date will be:Mon. 12/4

The end date will be Thurs Jan 31st.

 

We are a a 2 month contest to compensate for the Holidays.

[Obsidian 10]

If you are saying that 2% in each trade is high risk, I agree. That's why I try to halve my stake untill back to profitability.

 

another thing to consider is the time frame, I use more than 1 account for example. on sub account, my trades are based on 4h time frame, so tp and sl levels are very different than intra-day positions. but of course this applies to the real account

[Obsidian 10]

I have posted The Nov-Dec contest open to join on Oanda.

The start t date will be:Mon. 12/4

The end date will be Thurs Jan 31st.

 

We are a a 2 month contest to compensate for the Holidays.

 

great! will join soon