2 years in the game... is it time to hang up my boots?

Jon4664 said:
2 years in the game... is it time to hang up my boots?
-

Hey guys.. this is kind of a long story but I will try to make it as short as possible :)

2 and a half years ago, in June 2008 , I started day-trading full-time.
My previous experience with the markets had been as a long term investor in the ASX, buying (and occasionaly selling) various stocks.
In the first 6 months of 2008 I had started to play around with CFDs and Options.

So without too much hesitation I quit my full time job and decided I would try to make a living trading CFDs.

I read some books,(swing trading, candlestick analysis, trader bios, etc) attended a few seminars, went through a stack of online-presentations to do with technical analysis, trading discipline, trading forex, etc

And within a few months I found myself focusing mostly on trading forex, using a price action strategy with the focus on breakouts on the Daily chart.

My basic strategy was
- look for inside bar breakouts on daily
- also look for pinbars off horizontal support/resistance or fib levels
- risk 1% or 0.5% of account per trade
- use 21 and 100 day EMA as support / resistance levels as well as horizontal lines drawn off 4H charts
- trading majors and yen crosses
- look for 3:1 risk reward targets
- put stops around 3-day hi or lows - or use EMA lines and fib s/r for stops


and that (pretty much) remains my strategy to this day, although I use a lot of discretion and tend to watch the breakouts occuring over the 15min charts, it still forms the basis for my trading strategy.

So where am I today?

Pretty much Even-Steven.
I certainly haven't made any money, I have probably lost around 4-5% of my account all up at the time of writing.

Over the two years, my maximum drawdown was probably 15%, my maximum high point was around 20% gain on the account.

I kept accurate records of all of my trades, trade by trade, month by month,
here is a summary and a graph

Stats drawn from every trade I made between Sep-08 and Jul-10
(total about 650+ trades. Which makes about 25-30 trades per month)
(includes trades on all CFDs stocks, commodities, indices... MOSTLY FX trades but also includes other instruments.)

Average Win: $322
Average Loss: $155
Win%: 31%
Payoff Ratio: 2.18 (winners : losers)

Winning Months: 7
Losing Months: 14

The average month was around a 2% swing in either direction, I had 4 'big' months where I went up or down around 9-12%

vvnZM.gif


(I hope that picture comes out okay?)
--

Looking back, how could I have improved my trading method?
Well , honestly I think there are two main ways that I got burnt.
1) Going for 3:1 payout, was too ambitious. I think a 2:1 or even 1:1 is more realistic. In other words: Smaller targets.
2) Trading with tight stops, and having a lot of small losses. Most times I would rather "give the trade room to breathe" and get stopped out at a loss than 'break even' or take a small gain. I think this is probably more related to my targets than my stop-losses. In other words: Less big wins, more smaller wins and breakevens.


Now I don't have the resources or time to go through every trade and check whether i ACTUALLY WOULD have ended up with more $ if I had modified my system as mentioned above, it's just my 'intuition' that I would have been more profitable.
(Smaller $ wins, higher win %)

For a few years I was really convinced that high-payout ratio targets and accepting a below 50% win ratio was the only way to be really profitable.
Now I am not so sure.

--

So ... this is where I stand.

I have had a lot of screen time over the past few years, and I recently started playing with Options and fixed-odd betting on forex recently, (with a win rate of around 60% on fixed odds betting)

The benefits of options+fixed odds is that... I can't get stopped out if I'm wrong by 1 pip (for instance) and I tend to be correct more often than I am wrong.

(Whereas when I was trading spot Forex, I tended to just get stopped out a lot of the times when I was 'correct' ... not whinging about this I'm just saying that the mechanisms behind FX Options and fixed-odds FX bets means you can't get stopped out... they have their disadvantages too.)


However apart from the odd trade here and there, I'm not sure where I stand on my career as a day-trader.

I don't believe that my system (as described above) will ever be CONSISTENTLY profitable over long term and as a day-trader I MUST be CONSISTENTLY profitable as my livelihood depends on the steady income rather than praying for a few big wins every 3 months.

So where do I go from here?
Is it time to hang up my boots?

Is it merely a case of just tweaking my existing system?

I have heard it said that many people who trade take 2-3 years to become profitable. Also I have heard it said that most traders lose their accounts ...

Well I risked a large amount and I haven't lost my account (i'm pretty much square) and based on my risk management, I don't think I would ever lose my account... I would keep treading water. Even Steven.

so does this mean I actually should just keep sticking it out and I will eventually turn into a profitable trader?

I don't know.

I would appreciate some guidance :)

regards
Jon.
Click to expand...

I dont think you should give up yet. You seem very disciplined. I think you are suited to trading. I just think you need to find your edge. revamp your trading strategy. I think just your trading strategy needs to change.
 
trader_dante said:
Hi Jon,

There may be other things you are doing wrong that you haven't mentioned in your post, like moving to breakeven. However make the changes above and perhaps do all that on demo to start with. Try it alongside what you are doing if you are not comfortable jumping in live with it. Give it an absolute minimum of three months and then report back.

Your results will be much better.

If you need further help on the route, PM me.
Click to expand...

Doesn't he need your e mail addy to send you payment by Pay Pal? :D
 
Average Win: $322
Average Loss: $155
Win%: 31%

From your stats replicated above, compiled from your 650+ trade sample, yYour average r:r here is 2.07:1 not the 3:1 you are aiming for, so at this actual average r:r achieved there is no edge. This may be because your trade management is not lalowing winning trades to run to the 3:1 (which would be a profitable edge @ the 31% strike rate) or that there is just no edge, ie the methodology is flawed and this is not achievable. Only you will know the answer to that.

G/L
 
new_trader said:
This is easily the best advice. Unless you have another source of income, I would take it if I were you. It could easily be another few years before you come close to being profitable and that is assuming you are actually cut out for this, something you aren't even sure of yourself having jumped in with both feet. I think it is utterly reckless for people to encourage you to keep going, or read another book, or add another pretty coloured line or timeframe or system etc...wtf?(n)
Click to expand...

Bloody 'ell mate I see that you're still a a barrel of laughs and full of optimism eh? :p IMO it takes a year of (mainly) full time FX trading to become proficient (not profitable just proficient). Year two you may make money, year three you should, if your nut is in the game and you've, immersed yourself/dedicated yourself/ slaughtered yourself enough make a decent wage..
 
I avoid commenting on specific techniques particularly in this instance as it's only a part of the issue however, you mention you choose the 3 day HH or LL as the stop, that would suggest you were/are trading 'off the dailys', perhaps 3-4 hr would be more appropriate that way your stop doesnt have to be so large? Just a thought...
 
From your description, my interpretation is that you pretty much jumped in with both feet before you were ready,

This being the case, if you are only down 4-5% in 2 years of trading before you were really ready, then you have done very, very well indeed.

You should be giving yourself a pat on the back.

I would not take any advice on your entries here. What I would do is ensure you have a 'feedback loop' in place so that you are properly capitalizing on your efforts. You probably do not need to re-invent the wheel.

If you have something that works 30% of the time, then just get better at recognising when it does & doesn't work. Surely you must have a 'feel' for when a trade is going to work out or not by now, right? Maybe just after you enter or maybe just before. That's where a journal comes in. Those feelings are a bit like the auto-pilot you are on when you drive a car. That's what all the good day traders I know have.

You do not need anyone's help. You don't need to be paying anyone to learn new setups. You have what it takes. Don't throw away all you have done so far by changing tack completely.
 
I don’t claim to be a hot shot trader and I still have a day job ( well night shift actually ) so I’m not going to offer any advice here.

However, I would like to say one thing.

I’ve always felt that telling someone how to trade is a bit like telling someone how they should be having sex.

Sure you can tell em how you think they should be doing it, or even tell em how you do it.

You could even post up a video of yourself doing it ( LPC YOU STILL AROUND? ).

Perhaps you might recommend a self help manual on how to do it properly.

But at the end of the day, if they’re plain butt ugly then the only way they’re likely gonna do it is if they pay for it and even then it probably won’t be a very rewarding experience.

Just my 2p

Back to arguing about religion.

dd
 
And there you have it Jon, 4 pages (and soon to be much more no doubt) of same ol' same ol' book learned trade2win advice since circa 2001. You will be rich in no time...hey wait a minute...you've already been doing that for 2 years and it's what brought you here!:LOL:
 
Black Swan said:
Doesn't he need your e mail addy to send you payment by Pay Pal? :D
Click to expand...

No, I wouldn't think so based on where he is and the advice I've given him.

Jon, ignore the BS about not changing what you are doing. Take the steps I've shown you on demo. It won't cost you much in time.

Come back and report the results.
 
dick_dastardly said:
I don’t claim to be a hot shot trader and I still have a day job ( well night shift actually ) so I’m not going to offer any advice here.

However, I would like to say one thing.

I’ve always felt that telling someone how to trade is a bit like telling someone how they should be having sex.

Sure you can tell em how you think they should be doing it, or even tell em how you do it.

You could even post up a video of yourself doing it ( LPC YOU STILL AROUND? ).

Perhaps you might recommend a self help manual on how to do it properly.

But at the end of the day, if they’re plain butt ugly then the only way they’re likely gonna do it is if they pay for it and even then it probably won’t be a very rewarding experience.

Just my 2p

Back to arguing about religion.

dd
Click to expand...

How about a video of dd on the job ? Might brush up on my technique ?
:)
 
I was in a similar situation and ended up with a higher rate of profitable trades by trading on just one financial instrument (Spot Gold).
 
If you have traded the same system for two and a half years and it loses, then try doing the opposite :)
 
I like the idea of rigorous backtesting..... I should have mentioned that in my other post.

I have a couple automated systems that I have developed over a long time.... I spend most of my free time backtesting and forward testing

I limit my instruments to three, because my systems work best on those.

I think you are close to seeing the problem based on your record keeping.
 
Hi Jon,

IBs are extremely tricky, and you're going to find it (have found it?) extremely tricky and frustrating trading them. The way I would take them is with a tight stop (ie, big position size) and hold on to the winners after getting to break even quickly. A lot of 1R losers, a lot of break evens, and the occasional monster win.

But that would be a nightmare for me and personally I wouldn't do it. If you must trade them, pay moe attention to the location than you do to the bar.

If I were you, I would leave them alone until you're profitable using other tools, and then demo them and get profitable on them before risking real money.

IBs are tough to play correctly.
 
trader_dante said:
No, I wouldn't think so based on where he is and the advice I've given him.

Jon, ignore the BS about not changing what you are doing. Take the steps I've shown you on demo. It won't cost you much in time.

Come back and report the results.
Click to expand...

Yes Jon - ignore the BS about the fact you are ahead of 99% of people on this forum already.

Give Dante some money instead. :whistling
 
As Trader_Dante said, maybe 1:3 for every trade is a bit too rigid/ambitious and perhaps start identifying first target areas (FTA) to take some or all of your profit.

Probably will get much smaller risk:reward for FTA but if they are high probability setups, you will still make money....
 
Last edited:
Thanks for all the replies guys... I will go through all the comments and figure out my path forward.

I went for a job interview on Friday and got offered the job today, (IT infrastructure job) which is a 6-8 month contract. So I think i will take this up and put a bit less time into the trading, get a bit more cash and buff up my resume a litle.
 
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