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This is a discussion on my journal within the Trading Journals forums, part of the Reception category; Ok, doing good. Capital still growing and growing. Basically every week I've been taking out a few hundreds for living ...

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Old Sep 17, 2009, 6:38pm   #65
 
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Yamato started this thread Ok, doing good. Capital still growing and growing.

Basically every week I've been taking out a few hundreds for living expenses and making about one thousand from trading or even a little more. I've been making a few hundreds a day, and - most importantly - no mistakes that cost me thousands in one trade like in the past (discretionary trades that went wrong). At this rate, I should be making about a few thousands a month, and get back to having enough capital to trade all systems in about two months.

Can I sit still for two months without doing anything stupid? That is a good question, and the answer is: I don't know. If I will do it and sit still, then I'll have the capital to trade all systems again, and gains will really take off, earning with trading 10 times what I get for salary, and I'll be able to spend as I wish (at least I won't have to save anymore). In two months, this will be the case. Can I sit still for two months and make it happen? All I have to do is do nothing. All I have to do is nothing. I have to do nothing. I must do nothing.

It's unbelievable how simple it is, and yet how hard it will be to make it happen: because I am used to working, acting. I am uncomfortable watching tv. If I do, I will start flipping channels like crazy. I am unable to relax, because relaxing seems like a waste of time. End of the show for today. More thinking on the next show.
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Old Sep 18, 2009, 11:18pm   #66
 
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Yamato started this thread The week has been good. It's been the second week of climbing up. Saved a thousand, and spent 300 more or less. For the past two weeks it has been this way. Also, I don't spend any of my salary, and next friday another monthly salary will come in, the fourth one that I am not touching. Good habits. I am getting used to supporting myself from my trading and to treat trading money like real money and not monopoly money, or just numbers, which is the way it had been until recently.

I am climbing back up to the capital I used to have. I also am trying to keep the amount of work at my job under control, because there's this tendency of giving everything to me, and letting the slackers do nothing all day long. It's ok... I mean it's not ok at all, but I'll bear with it for a few more months, but I do have to keep it under control, by taking breaks every once in a while. Two thirds of my bank does nothing all day long. The others have to do everything. I downloaded a software that will count down every minute and hour and day until the end of the year, when hopefully I'll be able to quit my job - or at least take a leave of absence for six months and then try to not go back. But this will only happen if oncoming success will not destabilize me so much that I will make myself lose.


Success destabilizes you

Whether you trade discretionary or automated success has a devastating effect on you (which only means "on me", because I don't know about the others). With discretionary it's way more dangerous than with automated. Here's some of the things that could happen with discretionary as you are successful:

1) getting more confident will change the way you trade (less prudent), to the extent that you may never go beyond a given capital, because it gets to your head, you make mistakes, and you get back to starting point.

2) having a larger capital may find you unprepared, and you may be unable to handle it properly, with the right money management. Or even if you make the same good entries, a larger loss will destabilize you more than a smaller loss, even though it will be the same in terms of percentage of your capital. You may skip a stoploss because the larger capital causes you greater losses and you are unwilling to accept them by exiting your position. That way you will then go back once again to your original capital, that you are comfortable with. I think that is why some traders prefer to trade with a small capital and set aside their gains, which is good but also keeps them from making a lot of money.


Which takes me to the advantages in terms of less destabilization from success that automated trading has:

1) Your capital increases but #1 above does not happen, because you are not the one making the calls regarding your trades. So capital will be able to grow at the same speed at before, not disturbed by your different perception of losses.

2) no other advantages that I can see right now, sorry.


On the other hand, here's some ways success could still destabilize even the automated trader, something I am fearing for the near future because it happened to me before:

1) discretionary success consequence #2 (above) may partially happen in the sense that sooner or later you will run out of good new systems to invest your money on, and you will stop diversifying. So that means that the next loss on one system will be bigger than it used to be: say 1000 instead of 500. This is going to hurt more, even though it's the same in terms of percentage. This may spur you to act and make a trade to get back what you lost, and that's when you screw yourself.

2) Another problem may be that you get excited by how much money you are making and start thinking you're really good and make discretionary trades once again. Or that you get so used to success that even a small loss, will upset you and once again cause you to start trading discretionary.

Basically, if you can keep success from destabilizing you and making you start to trade discretionary again, then your capital should increase.

Another thing I have to add - outside of trading - is that with my capital increasing, I usually feel the urge to spend more. And sometimes I have a feeling that I am trying to level my account to the regular account I've always had - which means almost empty, as if a big bank account made me uncomfortable. This needs a lot more investigation. Let me know your thoughts.

In summary, No matter what happens, success will change you, and since most likely you were optimal before (since you reached success because of how you were), changing something that is optimal is likely to make it worse.

Last edited by Yamato; Sep 19, 2009 at 9:15am.
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Old Sep 19, 2009, 5:42pm   #67
 
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Travis - Do you think your Automated systems represent your 12 years of hard work in terms of complexity; Or have you found that having done all this work in trying to acomplish discretionary trading; Your system trading is actually relatively simple in its methodology, maybe not its construction.

For instance, a man told me having been trading 6 years, all he uses now are two EMA's and a weekly chart to take his positions and through diversification across multiple markets and money management he is consistantly winning and i thought to myself how something so simple has to come from 6 years work; That @ the start, the simple things aren't stuck to long enough to see if they work and therefore new traders always ignore the easy things; Hence later on they may fully test them to find they work...

What do you think>?
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Old Sep 19, 2009, 7:25pm   #68
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The man told you right. Perhaps, there may be a few refinements along the way but the basics are those. The other 6 years are, probably, like mine, trying to find some complicated way of doing it better and coming back to the basics again. The man you were talking to was a trendfollower. That's much safer, IMO, than trying to catch the turns.

Good trading.

Last edited by Splitlink; Sep 19, 2009 at 7:49pm.
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Old Sep 19, 2009, 7:38pm   #69
 
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Quote:
Originally Posted by GladiatorX View Post
Travis - Do you think your Automated systems represent your 12 years of hard work in terms of complexity; Or have you found that having done all this work in trying to acomplish discretionary trading; Your system trading is actually relatively simple in its methodology, maybe not its construction.

For instance, a man told me having been trading 6 years, all he uses now are two EMA's and a weekly chart to take his positions and through diversification across multiple markets and money management he is consistantly winning and i thought to myself how something so simple has to come from 6 years work; That @ the start, the simple things aren't stuck to long enough to see if they work and therefore new traders always ignore the easy things; Hence later on they may fully test them to find they work...

What do you think>?
The first thing I learnt about trading, over nine, long, years ago was simple technical analysis, mainly: support and resistance.

After nine years of trying everything else, it's now the only thing I use to make money.
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Old Sep 19, 2009, 8:13pm   #70
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Originally Posted by trader_dante View Post
The first thing I learnt about trading, over nine, long, years ago was simple technical analysis, mainly: support and resistance.

After nine years of trying everything else, it's now the only thing I use to make money.
and TBH (as your journey proves) it's not a concept that's easy to learn/use correctly despite its simplicity and how supposedly obvious...
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Old Sep 19, 2009, 8:34pm   #71
 
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Yamato started this thread
Quote:
Originally Posted by GladiatorX View Post
Travis - Do you think your Automated systems represent your 12 years of hard work in terms of complexity; Or have you found that having done all this work in trying to acomplish discretionary trading; Your system trading is actually relatively simple in its methodology, maybe not its construction.

For instance, a man told me having been trading 6 years, all he uses now are two EMA's and a weekly chart to take his positions and through diversification across multiple markets and money management he is consistantly winning and i thought to myself how something so simple has to come from 6 years work; That @ the start, the simple things aren't stuck to long enough to see if they work and therefore new traders always ignore the easy things; Hence later on they may fully test them to find they work...

What do you think>?
I will reply as I read your post.

My automated systems represent 12 years of knowledge but only my hard work since 2002. Before that, I was just trading discretionary, trying to do my best, but there was no effort made towards trading systems and automated trading, because I didn't know one could achieve such a thing. I didn't know where to put my efforts, and I just kept going in circles, mostly wasting my time. Then, since 2002 with trading systems and since 2005 with automated systems, I finally found something where my efforts paid off.

The principles in my systems are simple, but saying they are "simple" is like michelangelo said "I saw the angel in the marble and carved until I set him free". I could say "I saw profit in trading, and carved out unprofitable things, until I set profit free", but it actually isn't that easy to find what methods are not needed and getting rid of all the bad things - it takes tons of marbles (capital) to practice and get it right. Of course, with hindsight, after many years, you know what is unnecessary and see that profit comes from a few rules. And right now, building systems is easier than automating them - which is the most tiring part, even though it's easier (more work and efforts, but easier).

Your 6-years trading friend is right, especially since he's doing discretionary. So, like Michelangelo, once he has developed his skills (conscious and unconscious skills), as long as his mind stays the same, balanced and everything (which is not exactly easy), then he'll tell you that it's easy and simple, and think that he's being successful with just a couple of rules, even though most likely he'll conscious of those two rules he told you, and he will be applying another 10 rules he didn't tell you, because he never stopped to think about them (since he never felt the need to automate his system).

Once you decide to automate your systems, like I did, for my mental limits which keep me from being successful at discretionary trading, things get much more complicated. First of all, even for a simple system like the one your friends says he's using, one has to be very clear about what exactly he's doing, which he might not even know (subconsciously he does, of course). Then once you know what works, you have to automate it, to such an extent that all you'll have to do is turn your programs on and off. That's when even a simple system starts becoming quite elaborate.

Last edited by Yamato; Sep 19, 2009 at 8:58pm.
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Old Sep 19, 2009, 9:24pm   #72
 
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Yamato started this thread Speaking of automating my trading systems. These last two weeks I've been lucky and I've come up with another 20 or more trading systems, which would make my method totally perfect, with no red weeks whatsoever as a consequence of having about 40 automated systems. If I add to that that I also came up with another semi-automated system on Italian stocks, then I'll have a total of about 50 different securities to be invested in at all times (not enough capital to do it yet, but that's good for the future). So, since everything is perfect method-wise, what is the problem?

Besides a lack of capital, which is the main problem, another and actually the biggest problem which however is just a consequence of the lack of capital is that I still have a job. I still have a job and a bad one.

At my bank everyone considers me the excel expert, so they come to me for tables, pivots, charts, statistics... it's terrible. At the start I was glad to be so valued by everyone, and I encouraged them. Right now it's a nightmare, because I wish to work at home on excel and tradestation, and at work I do just the same. After a few years spent working on excel 16 hours a day, my brain is starting to deteriorate and I am not half as quick as I was before. I hope it is not permanent.

I look stressed out. My eyes look tired. I look unhappy, tired, stressed out. Yet everyone keeps on asking me for help and giving me work. Not like bosses, but kindly with an expression of need, like they don't know who else to turn to. So I help them, usually. But sometimes I just took off, and came home by how much stress they had given me. By all fatigue I accumulated at work, this weekend I was unable to work on my systems. I can't even say that I need a vacation, because as soon as I'll come back to work it will be just the same. They are just exploiting me to the limit of a nervous breakdown.

So, I either start saying some "no", which is hard for me (because I don't want to disappoint anyone), or it will mean that I will go home suddenly getting up and leaving the office, like I did a few times already. Everyone is sympathetic, but no one gets off his ass and does his job. They all keep coming to me to ask me all sorts of questions and help.

If I last until the end of the year, and gather enough capital to quit my job without being called reckless by my parents, then it will be ok. I don't think I can last for longer than another 3 months. Two thirds of my colleagues are slackers, and all the work comes to me, increasingly so.

It goes against my education to refuse work they give me, and yet at the same time I know they are all exploiting me because of this. No one would even realize it if I started slowing down and slacking off, but it goes against my own beliefs. Except I can't keep these beliefs for much longer without exploding in rage against someone, for example this jerk who plays his radio all day long, and keeps me from concentrating.

I wish there was somewhere in the bank a psychiatrist with a bed for me to lie on. I wish I had a single.

90 more days and I will be ok, safe at home. Maybe I'll try to play smart. Maybe I'll go for a walk every once in a while.
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