My journey to long term consistency

DrSafari

Established member
590 36
Quite a fall on the Nasdaq-100. Probably shouldn't touch this even if my setup triggers. This is not your average down move. Haven't seen this since I started testing.. then again, the other markets seem fine.
 

DrSafari

Established member
590 36
Short NASDAQ-100

Net P/L: -7.85 points (-19.75 €)
Amount: 3 contracts

Opening Rate 6413.78
Close Rate 6421.63

Open time 27/11/2017 16:00:54
Close Time 27/11/2017 16:11:30

Stop loss: fixed stop above highest high

Entry and exit on a 1m chart
Screenshot from 2017-11-27 17-17-37.jpg


Reason of closure: SL got hit

Comments
Yeah... so what I already mentioned in my psychologic post is very clear on the chart here. My system is not to be seen. I mean, technically price did go higher and then lower again but it's all in the same one minute bar. I normally never take trades like that.

I clearly got impatient and greedy. Error trade sadly enough :( But that's why we start trading small with real money, so we can still learn.
 

DrSafari

Established member
590 36
Long NASDAQ-100

Net P/L: -8.98 points (-22.70 €)
Amount: 3 contracts

Opening Rate 6417.98
Close Rate 6409.00

Open time 28/11/2017 16:02:15
Close Time 27/11/2017 16:58:04

Stop loss: fixed stop below lowest low

No chart available.


Reason of closure: SL got hit

Comments
No chart but I remember the setup was messy. Price first went up alot, but then it dropped almost the same amount in a short time frame. That's not how price behaves on any of my clean setups. Same issue as previous trade really, I took the trade because I was greedy and impatient.


Today there won't be a trade either, last week no trade, maybe tomorrow but who knows. This is possible. Some weeks there's a trade every day, sometimes there's no trade.. 10 days is exceptional but can happen of course. Just be patient and only take clean trades. Opportunities will come, I know this from experience.
 
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DrSafari

Established member
590 36
Another losing trade. This time it was a trade I would have taken during my testing period (at least I think so, to be confirmed). The setup could be cleaner but it wasn't really messy like the last two either.

To me the market is behaving really strange lately and maybe we have entered some sort of bear market or there's a market correction right now (and from februari till october, during the testing of my system, there have been none of those (let's assume this for now, I'm just thinking out loud) . If this holds up then these losses would be normal.

Then again, the first two losses were error trades clearly and this could be a legitimate loser so maybe nothing is up at all.

Then again, market is behaving strangely in that when market opens the moves are not just big but humongous . Fifty point moves were about the biggest moves I had seen during my testing while now day after day the moves easily beat this. This points to a different market phase we are in. (to be confirmed)

The again, if I look at the daily charts and I look at the time period from februari till now I see that from beginning of June till beginning of July price had a similar decline which I see happening now. Of course a lot of detail is lost looking at the daily charts so it might be that although price did decline, market still behaved in a -for my system- normal manner and something different is happening now. (again, to be confirmed, I should look at my test trades during this period)

So this is what I have to do now. Let's investigate what (if anything) is up.

I'm going to cease all trading until I have investigated this.
 

DrSafari

Established member
590 36
I have done my investigations and come to a conclusion, but first let's post this other losing trade.

Long NASDAQ-100

Net P/L: -14.75 points (-37,4 €)
Amount: 3 contracts

Opening Rate 6332,38
Close Rate 6317,63


Open time 12/4/2017 16:24:40
Close Time 12/4/2017 16:34:08


Stop loss: fixed stop below lowest low

5 min chart
04-12-2017_5min.jpg

1 min chart
04-12-2017_1min.jpg


Reason of closure: manually closed because trade was going nowhere and didn't want to wait for my SL to trigger and lose even more.

Comments
After investigations it appears I have taken 3 similar trades like this during my testing of which 2 were winners and 1 was a loser. Both the loser and the 1 winner was with a big move (65+ points). I wouldn't say it's an error trade therefor but it isn't the cleanest setup ever either if you look at the 5 min chart (which my system says to do with moves this big).


I'll post detailed conclusions about my analysis decribed in previous post later.
 
Last edited:

DrSafari

Established member
590 36
Right, here is the analysis:

Things to check for in my logged trades:
1- check if last trade is conform trades I took during testing (apart from humongous move)
2- check what the biggest moves were during test phase
3- look at test trades from begin of June till begin of July and see if you find anything odd

Conclusions
1) MAR 22, 2017, 4:47PM --> similar to last trade and also loser
1)JUN 1, 2017, 7:06AM --> similar to last trade but winner
1) SEP 27, 2017, 7:15PM --> similar to last trade but winner

2) big move (80) but loser MAR 22, 2017, 4:47PM (not under current system unless taken a trade like last trade
2) big move (65) and winner JUN 1, 2017, 7:06AM

3) Also big moves (but not quite as big as now) but recovered better of the instances I recorded. Didn't take that many trades that month. (Due to taking cleaner trades?)

So, last trade as mentioned in earlier post for point #1 I can't really say it's a bad trade but it didn't have the cleanest setup either.

#2: There were big moves during test phase but they weren't nearly as big or as frequent as the latest week and a half.

#3: There were a few big moves but again not as big as the last week and a half and they seemed to recover better (at least the instances I recorded when I took a position)

The overal conclusion is that this is an anomaly situation. At least for my system. This probably occurs once every year on average in the market? That's just a wild guess but "easy" to check out. To take this into account in the future I will adapt my system that I am not to trade if a move is bigger than 65 points.

This situation is similar to the first time I started trading for real money. Back then my testing phase was much shorter (like 2-3 months) and I didn't have a real system. I just took trades that seemed to make sense. I went from 20k virtual money to 60kish virtual money. Pretty good. However, after looking at that 2-3 month testing phase it was very clear to see that the market was going up very steadily (and I only went long during my testing). And of course right when I started with real money the market started going down for a while which resulted in me losing money of course :p

Same thing happened now. I take my system live and conditions change. I lost a lot less money now and I am still testing now, that's the difference. That's why you start trading with small amounts. Also, back then my testing phase was the anomaly while now this period is the anomaly.

Next post will be one of my system updated with the 65point +move rule.
 

DrSafari

Established member
590 36
Trading System as of 14-12-2017 (updated from 04-04-2017)

1) Define S&R levels up front monthly, weekly and daily (*)
2) Look for big moves 8 points or more (over the course of maximum 4 hours) (**)
3) Watch where it reverses after a lower low (higher high) and wait for price to retrace.
4) If price reverses once again, take a position once the high (or low) previous to the retrace has been breached. (***)
5) put stop loss at 0.25 above or below highest high or lowest low
6) when nearing resistance (1p distance) or 3R profit put in a tight (tightest possible) trailing SL. (****)

7) avoid trading during US market open for now (15:30 - 16:00). Must a trade drag on long and would still be open during US market open, put tight trailing SL. Or close in case left over profit would be 0 or less.



(*) If after the upfront defining I spot another level I can draw it and treat is as a daily level.
If there are two previous daily levels in the past week which are the same, draw that on the chart too.

(**) If the move is bigger than 65 points do not take any trades

(***) For moves between 8 and 25 points look at the 1m chart to determine retracements. If the move > 25 look at the 5 min chart.

(****) The only exception is if you enter a trade close to an S&R level, don't put a tight trailing SL immediately (because we expect the trade to not stop at that level obviously)
 

DrSafari

Established member
590 36
Long NASDAQ-100

Net P/L: -5.85 points (-14.95 €)
Amount: 3 contracts

Opening Rate 6408.48
Close Rate 6402.63


Open time 12/12/2017 15:59:50
Close Time 12/12/2017 16:30:10


Stop loss: fixed stop below lowest low


1 min chart
12-12-2017_1min_edited.jpg


Reason of closure: manually closed because trade was going nowhere and didn't want to wait for my SL to trigger and lose even more. Except that I would have won instead of lost. Explanation below.

Comments
So the entry of the trade is fine. But I closed the trade because it was going nowhere. But there is no description of that in my system anywhere. I do remember that even during the testing phase I closed the position prematurely (to be confirmed) which mostly led to ... I don't really know, that's what I need to confirm really. Is it better to leave it running or is it better to close if the trade seems to be going nowhere?

That's my next job, to figure that out. Then I should put it in my system and stick with the damn system.


I remember thinking about this issue before but I never bothered to check it out because I was doing good. And when it's going good your emotions are better in check (apart from greed but atleast there's less fear) and you're likely to make better decisions if they are not 100% defined in the system. However when your confidence has taken a punch (like now) it's extremely useful to have a well defined system.

Funny business this trading, every time you think you've progressed well and so you take it a level higher, you get another set-back. From experience I know this is a normal part of life. The key is to keep going and not let negative emotions get the better of you.

Right... I've got some work to do.
 

DrSafari

Established member
590 36
Ok so I have gone through all my trades and of the ones that started going against me , or went against me after some time 13 of them hit my SL so ended in a loser and 14 of them ended in me closing the position with a profit. I did not keep track of how much the winners and the losers are BUT ...

1) I noticed I almost always followed my system i.e.: I let my trades run. And we know that end result is positive.

2) 13 losers and 14 winners are 27 trades. If I would close as soon as price starts going against me (i'm not talking minor fluctuations here but like halfway my stop loss or something) it would mean I'd have 27 losers, small losers but losers nonetheless. Even if the 14 winners do not completely cancel out the 13 losers I doubt I would lose more as 27 small losers.

Conclusion is: I should keep the trades open and just follow the system. Last trade was a loser because I let fear get the best of me because of my recent losers.

Glad I cleared this one up. :)
 

DrSafari

Established member
590 36
The curse is broken!!!! (hopefully :p)

Long NASDAQ-100

Net P/L: +7.15 points (+18.23 €)
Amount: 3 contracts

Opening Rate 6432.98
Close Rate 6440.13


Open time 15/12/2017 16:03:10
Close Time 15/12/2017 16:20:12


Stop loss: fixed SL below lowest low


1 min chart
15-12-2017_1min_edited.jpg


Reason of closure: trailing SL, activated as soon as price reached the all time high (for the reason of there being no levels yet obviously)


Comments
The wait for the final retracement took some time but that has happened before. As soon as my setup got triggered I took a long position but price didn't move much after that and stayed stagnant. Now I know I should keep the position until my SL is hit or until I can put a trailing SL in place. The beauty of this thing is that I wasn't constantly worrying about whether I should close or not. A beautiful sort of calm came over me and in that instant everything was well. A losing trade or a winning one didn't matter, profit or loss didn't matter. The only thing that mattered was the system. THIS! This is the correct mindset for trading. This is the mindset I remembered having near the end of my demo trades as well. I recognize the feeling.

Even when entering I did not hesitate, my mind was very clear again. All thanks to my research, which wouldn't be possible if I didn't keep a detailed journal. I will just keep executing my system now, no expectations, just plain boring execution :)
 
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DrSafari

Established member
590 36
Long NASDAQ-100

Net P/L: -13.98 points (-35.51 €)
Amount: 3 contracts

Opening Rate 6515.98
Close Rate 6502.00


Open time 19/12/2017 16:02:59
Close Time 19/12/2017 16:24:26


Stop loss: fixed SL below lowest low


5 min chart
19-12-2017_5min.JPG

1 min chart
19-12-2017_1min.JPG


Reason of closure: SL got hit

Comments
Seems like just a legitimate loser. Move was a tiny bit bigger than 25 points so based myself on the 5 min chart.
 

DrSafari

Established member
590 36
Long NASDAQ-100

Net P/L: -17.25 points (-43.50 €)
Amount: 3 contracts

Opening Rate 6484.88
Close Rate 6467.63


Open time 19/12/2017 16:10:31
Close Time 19/12/2017 16:41:39


Stop loss: fixed SL below lowest low


5 min chart
20-12-2017_5min.JPG

1 min chart
20-12-2017_1min.JPG


Reason of closure: SL got hit

Comments
Another one of these very big moves. But it was smaller than 65 points so I took it. Trade went nowhere but I did not manually close it (as determined earlier) and my SL got hit.

Oh, it just barely went through my SL and then went steadily up until the predefined 6493 level and bounced off of that. Here is the extended 5 min chart.:
20-12-2017_5min_extended.JPG


Let's talk about these recent developments but I'm going to do this in a different post.
 

DrSafari

Established member
590 36
My thoughts are all over the place so I'm just going to write them down to try to structure them a bit. I am currently losing money with my real account. My system should have a win rate of 75% but right now it's even less than 50%. This is on only 15 trades so it could be a bad streak. I am going to list all the possible explanations for this and then see what course of action I should take.

1) It's just a bad streak, nothing more nothing less
2) Market conditions have changed and are different from my 10 months of testing.
3) Market just happens to "randomly" have more big moves right now and my system is not well equipped to handle those (the few trades with big moves I took during 10 months testing phase aren't enough to be statistically relevant)
4) I am somehow taking trades I normally wouldn't take (although I have already reviewed my trades and this is not something I observed)

Hmm already a lot less cluttered, I was trying to come up with more points but it seems I have no more points. Ok so let's move on.

If we take point 1 together with point 3 they both become a lot less likely. I just happen to have a bad streak juuuust at the exact same time the market happens to "randomly" have more big moves? That's a whole lot of coincidence. However, point 1 is likely to be caused by point 3. If the market just happens to randomly have more big moves right now it could be that it affects my system causing a bad streak. And that would mean my system is not well equipped to handle those big moves. If this is true overall my system should cancel out the randomness and be profitable over time. (I can still of course come up with a way to handle those big moves better and become even more profitable.)

But again, why choose randomness as an explanation when you have point 2 sitting right there. Market conditions have changed (2) causing a lot of big moves (3) causing my bad streak (1) because my system is not well equipped to handle those. The only point that doesn't seem to have anything to do with this is (4). Especially so since I already checked it out (it's always possible I missed something though) so for now I'll dismiss point 4.

So for me now my next course of action is simple. Backtest the **** out of the system, gather as much data as possible and be as consistent as possible. I should probably put all this information in some kind of database so I can draft relevant statistics from it if I want to make an adaptation from my system (not sure how feasible this will be).

Backtesting is good but what on earth will I do with the results? Will my system still be sufficiently profitable with these different market conditions? If not, I will have to adapt my system. How will I adapt it? Will I be able to see what to adapt based on the data of the backtest? Is there some way I can "easily" extract that data (that's why I mentioned the database). If I adapted it I need to run the backtest again. And I need to do it manually going from left side of the chart to the right without knowing what the next candle will bring, else it won't work. So this will be a ****load of work.

However, a 10 month period of profitability can't just be swept under the carpet either. So I am thinking I'm having to adapt my system for the current market conditions, so probably only taking into account these big moves by either not taking them or come up with a slightly different approach for them.

And that's why I need to backtest. So we can verify this.


This is all another lesson of humility from the markets. Another wake up call to take this even more serious. I know from life experience that one should persevere. I'm at a point where a lot of people usually quit. At some point the challenge seems insurmountable or would require such a vast amount of effort that they just give up. I already have "invested" a lot of money in the markets for learning, it would be a shame to give up now.

If it weren't for these prior life lessons I would have given up too. It just bloody sucks that right when you think you're almost there you get kicked to the ground again :p


I was also thinking about stopping trading until I have things sorted out or not. But I figure the more experience the better so I'm going to keep on trading but to be careful for the bigger moves. The normal move trades I am going to be trading according to my system. It's possible that for the bigger moves I will be using discretionary trading. Maybe this is foolish but meanwhile I have learned to read the market a lot better AND i'm trading small sums AND with money I can afford to lose. The only thing that can happen is blow up my 1k account (now only 900 :() and having learned a bunch of stuff in the process.
 

DrSafari

Established member
590 36
I'm not dead, but maybe it's not bad to have taken a break. I'm at a new work project and it's quite busy at the moment, however I only work 3 days at the office so I should be able to trade on thursday and friday (or any other two days)
 

neil

Legendary member
5,167 746
I'm not dead, but maybe it's not bad to have taken a break. I'm at a new work project and it's quite busy at the moment, however I only work 3 days at the office so I should be able to trade on thursday and friday (or any other two days)
This might help you: If not then ignore it.

 

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