my journal 2

[Yamato]

Ok, best accuracy yet

This below shows that I have reached an outstanding accuracy, at least by my own standards. Not very good yet at letting profits run, but at least I learned that I am capable of playing without taking any risks, and stopping my losses immediately and then trying again in case I had a loss, I managed to be profitable on 19 stocks out of 20. I stop here because I know how it goes once I incur a loss. It becomes the first one of a series, at least until my whole system will be univocally defined and automated, which it isn't right now.

Anyway, with 19 profitable stocks out of 20, I can once again say that it is possible to trade profitably just based on charts. It's not a random walk, and charts can indeed be read, interpreted and predicted accordingly.



I have realized that what I mostly need to do now is, rather than focusing on my accuracy, which is good enough already, is to focus on learning to cut my losses. Even in a trading simulator, I get very upset by losses, and cannot accept the idea that I've made a mistake and that the market isn't going my way. Actually, the more accurate I become, and the harder it is to accept that I made a mistake when that happens, because it happens less and less frequently.

Once I'll learn to cut my losses without any doubts and hesitation, I'll worry about letting profits run a little more. The most important thing that I need to convince myself of, and to prove to myself is that I can be profitable, constantly profitable, undoubtedly profitable, always profitable (as long as I can make a certain amount of trades).

Another thing I need to learn is going short, which i still rarely do, because i can't focus on so many things at once.

All these things will have to come later. But right now the most important thing is still to realize and get used to the idea that I can be consistently profitable. This confidence alone will bring many other psychological improvements in my trading.

 

[dog4]

Re: Ok, best accuracy yet

This below shows that I have reached an outstanding accuracy, at least by my own standards. Not very good yet at letting profits run, but at least I learned that I am capable of playing without taking any risks, and stopping my losses immediately and then trying again in case I had a loss, I managed to be profitable on 19 stocks out of 20. I stop here because I know how it goes once I incur a loss. It becomes the first one of a series, at least until my whole system will be univocally defined and automated, which it isn't right now.

Anyway, with 19 profitable stocks out of 20, I can once again say that it is possible to trade profitably just based on charts. It's not a random walk, and charts can indeed be read, interpreted and predicted accordingly.

View attachment 74656

I have realized that what I mostly need to do now is, rather than focusing on my accuracy, which is good enough already, is to focus on learning to cut my losses. Even in a trading simulator, I get very upset by losses, and cannot accept the idea that I've made a mistake and that the market isn't going my way. Actually, the more accurate I become, and the harder it is to accept that I made a mistake when that happens, because it happens less and less frequently.

Once I'll learn to cut my losses without any doubts and hesitation, I'll worry about letting profits run a little more. The most important thing that I need to convince myself of, and to prove to myself is that I can be profitable, constantly profitable, undoubtedly profitable, always profitable (as long as I can make a certain amount of trades).

Another thing I need to learn is going short, which i still rarely do, because i can't focus on so many things at once.

All these things will have to come later. But right now the most important thing is still to realize and get used to the idea that I can be consistently profitable. This confidence alone will bring many other psychological improvements in my trading.

I would say there are also lessons to be learnt from time frames. You can see that the buy&hold strategy performed amazingly. Why is that? I'm sure you can nail it down to just a few trades and learn some important lessons there. E.g. if a stock rises above all resistance, best to just ride it etc... So maybe divide capital into buckets for different timeframes.

Just a thought that you may like to check out with this software... especially as returns can be so juicy at times...

 

[Yamato]

This web site is very basic and doesn't allow anything as sophisticated as different strategies on different timeframes. Please check it out if you didn't.

Yeah, the buy and hold beat me but the buy and hold will also lose money in other situations. So the buy and hold got lucky, but I didn't get lucky and I will make money even the next time when the buy and hold will lose. However, you're right about riding the stock when it's above resistance: I sensed that as well. It always looks like it's at the top (because in fact it is at the top of the window), but it usually just keeps on rising (and the window's scale keeps on changing). Right now though I would already be very satisfied if I learned that I can be consistently profitable (at least in the simulation).

Please, everyone, stop pushing me harder to do better, because it's already a miracle if I can be profitable at it. If anything, I need people to congratulate me on these snapshots I am posting. It reminds me of that other reader who advised me to try and focus and see if I could get 100 straight wins or something like that, to prove that I wasn't being just lucky. The only objective here is to see if I have an edge and if I can be consistently profitable.

Profitability is a miracle and a mirage to me right now, so don't make me quit by pushing me too hard, like my dad did to me when I was a student. He kept on asking for more and more until I said "**** it" and started skipping classes and failing. That mother ****er, sick asshole. Probably I owe it to him if I can't accept nor cut my losses. It's because he obsessed me so much with being infallible that now I can't accept losses, because somehow I feel that i have to be infallible.

 

[Yamato]

 

[Yamato]

Rules followed:

1) Can't lose more than 5% (stoploss if it happens)
2) Only LONG (stocks go up more than down: no point in looking for the most unlikely trades)
3) S/R trades (bounces on support and resistance breakouts)





This answers our worries about not beating buy & hold in my earlier series of trades: as i said, buy & hold will occasionally beat me but I'll always be profitable, whereas buy&hold will not.

I doubled capital within a few trades and I am stopping here, because I am tired. I will try to do this over and over again in the future, until I'll get so good that I'll always follow the same method. Once that'll be the case, I'll be able to write down (even further than I did above) what rules I followed. And then I'll be able to implement them in my real trading.

 

[DionysusToast]

Rules followed:
2) Only LONG (stocks go up more than down: no point in looking for the most unlikely trades)

Now, I know you will think I am taking the pi$$ with this question BUT....

What makes you think stocks go up more than down ?

For instance, the Dow Index represents .0027% of the entire market and the losers of the DOW get demoted out of the index.

So - how do you know that stocks go up more than down ? Is it purely based on the indices or have you done additional research ?

 

[Yamato]

 

[Yamato]

 

[Yamato]

 

[Yamato]

Now, I know you will think I am taking the pi$$ with this question BUT....

What makes you think stocks go up more than down ?

For instance, the Dow Index represents .0027% of the entire market and the losers of the DOW get demoted out of the index.

So - how do you know that stocks go up more than down ? Is it purely based on the indices or have you done additional research ?

You're not the first one to disagree with me on this one, and what you mention about the Dow is a good point. However, the general understanding, also implied by the expression "buy & hold" (why doesn't anyone talk about "sell & hold"?), is that stocks go up more than down, and since I am totally positive that stocks (in the long run) go up more than down (I see it whichever way I look), I will not do any research on this subject. Since you disagree, please produce the evidence to the contrary. You should have that evidence, if you disagree.

Of course I am taking for granted that you and those disagreeing with me won't tell me things such as "oh, but look at this stock: it fell for 10 straight years" or "look at the period from 2000 to 2003 and how all the stocks fell"... obviously I am talking in general and in the long term. Even if you were to believe that stocks go up and down equally, inflation alone would make them go up more than down.

 

[DionysusToast]

You're not the first one to disagree with me on this one, and what you mention about the Dow is a good point. However, the general understanding, also implied by the expression "buy & hold" (why doesn't anyone talk about "sell & hold"?), is that stocks go up more than down, and since I am totally positive that stocks (in the long run) go up more than down (I see it whichever way I look), I will not do any research on this subject. Since you disagree, please produce the evidence to the contrary. You should have that evidence, if you disagree.

Of course I am taking for granted that you and those disagreeing with me won't tell me things such as "oh, but look at this stock: it fell for 10 straight years" or "look at the period from 2000 to 2003 and how all the stocks fell"... obviously I am talking in general and in the long term. Even if you were to believe that stocks go up and down equally, inflation alone would make them go up more than down.

Travis. Your reply is interesting indeed. You have a belief and when asked what is behind that, you tell me I should prove you wrong. I am not sure why I should do that when all I asked was why you thought stocks went up. I can only presume you have no answer.

I actually agree that a long only strategy is OK - but for different reasons.

The average IPO lasts 8 years before the company goes under. Whilst I would agree that many IPOs go up, the average one ends up worth zero. Most are worth less than their IPO price after 12 months. 'Going public' is a huge interest free lump of cash that many companies abuse. For instance in the way of huge CEO payoffs.

I would certainly agree that the indices generally go up but I am not convinced this is because the same companies are going up in value or that the survivors are. There is obviously a difference.

 

[Yamato]

Thanks for the valuable information in your posts. Your explanation makes a lot of sense.

 

[DionysusToast]

You know what Travis - I really have a hard time going short. I am not sure why this is but I just can't seem to do as well as I can on the long side. That's on both swing/long term trading and very short term trading.

I don't think there's anything wrong with that at all. I think downswings are a bit more vicious (people need to sell, people don't need to buy). I tend to pass them by as there are plenty of other opportunities around.

You are not ignorant by any means. We take certain things for granted based on what we are fed by the mass media. There are many things I have been fed this way that I haven't ever questioned. The 'stocks rise' story is something that I did take to task. The jury is still out.

 

[Yamato]

I don't have a problem with going short on the currencies, because I know they go up and down equally. Other than this, only going LONG has many advantages, besides that the indexes and their stocks go up more than down. For example, if you are short on stocks there's all those problems with overnight margin. At any rate, I trade futures, so all my (ignorant) talking about stocks is only because I am trading them on the chart game.

 

[Yamato]

Didn't use the stoploss on a couple of trades, and paid that mistake dearly.

 

[Yamato]

playing till I double, over and over again

Getting good... or rather: getting used to having an edge.

This time I even played a couple of short trades.

Trades allowed: all directions, but doing mostly LONG.
All trades according to support/resistance (both bounces and breakouts).

Getting through the problem of accepting a loss: I kept on trading even after I got a loss. Maximum loss allowed: 10% (I close the position as soon as the loss exceeds that).



I played till I doubled, regardless of number of stocks played. I will do so in the future as well: doubling up and then quitting the game for a while.

 

[Yamato]

Here's what i'll do next. I'll double the 10k in the four different ways:

1. long above resistance - WEAK
2. long above support - STRONGEST
3. short below resistance - PRETTY GOOD
4. short below support - WEAKEST

Wherever i'll be weaker, i'll practice more. I marked above my areas of weakness. I am better at playing bounces than breakouts.

 

[Yamato]

4. BELOW SUPPORT

I started from the type of trading which i find hardest: breakouts below support. Not really because it's the hardest, but rather because such situations are quite rare (at least with the stocks I am being offered by the chart game) and it's very hard to play 10 stocks and only find one such opportunity. So it is hard mostly in the sense that it's boring. Another way that it's hard is the great amount of false breakouts, which do not happen as frequently on the (reverse) LONG side (breakouts above resistance).

Played many stocks: it's extremely rare. If you are happy with intermediate support, it happens more frequently but it's more risky, as you get even more false breakouts. No wonder it was working so well by just going LONG. The short side opportunities are much more rare. Maybe not because stocks in general go up more than down, as a reader pointed out, but merely because the stocks which are part of the indexes indeed go up more than down. Whichever way we look at it, it's not convenient to go SHORT on the stocks offered by the chart game, which are probably all part of the indexes.

Next I will try to trade stocks that bounce against resistance, which is also a short trade but not as hard.

 

[Yamato]

3. short below resistance

It went pretty well, and it reminded me how I can make twice as much as with LONG trades. You can double your capital in half as many trades. I've come across a few of those stocks that a reader was talking about, those that go up to 100 and then come back to below 10 or where they started from. I see his point better, even with these stocks that are within the SP 500 (I think). On the other hand they still rise slightly more than they fall (maybe because they're in the index).



In my next 10k to 20k trade series, I will only play the LONG moves above resistance. Eventually I'll still have to go back to the "short below support" series to see if I can learn to double capital even in that direction.

 

[Yamato]

I tried to focus on breakout trades above resistance but they don't happen often either.

Basically I find it easier to double up on bounces: above support or below resistance, but I find it much harder to wait for breakouts (hardest ones those below support).

I would say that in every chart I get a chance to find bounces on s/r, but it's much harder to find breakouts (if we're talking about major s/r levels).

It was a good idea to separate these four types of trades and to see exactly which ones are easier (for me) and more frequent. I will continue to try and constantly analyze, each time I trade, what exactly I am doing and which type of trade I am making.