My journey to long term consistency

DrSafari

Established member
590 36
Plan including my new findings:

1) Deciding whether to trade or not
-before deciding to trade look if any major economic events are up in the current trading day if yes then we DO NOT TRADE
-before deciding to trade: check yahoo finances whether something big is up or not. If it is DO NOT TRADE


2) Find potential trades
- scan american stocks and look for clean charts (up or down). Clean is a steady rise or decline(1) for at least 3 trading days on a 2 hour chart
- Always look for a stock against the current economy first (cause that is hardest to find), S&P500 is a good indicator for that. Then find a suitable one going with the trend. Because I need equal amount of long and short
- do not include stocks that gapped in those 3 trading days
- do not include stocks that require me to take stop losses wider than 4% of my equity (see next point)
-do not include stocks that are going against the trendline at that moment, the last three bars should go with the trendline


3) Taking positions
- make sure my portfolio has an equal amount of longs and shorts at all times (3)
- look for the trend and 66% of the highest difference in opposite direction is where I place my stop loss
- for testing purposes I am not going to risk more than 4 % on each trade (2)
-Have same total risk on both long side and short (so adjust position size accordingly)


4) Once in a position
- Make it a trailing stop loss
- Exit only if stop loss hits
- document every trade carefully in journal (with charts) saying what you did and what I should have done

Since the system changed again I will evaluate after 40 trades


(1) how can I quantify this? I looked into this but cant find anything suitable at the moment. For now Ill leave this at my discretion but of course it is visible if a chart goes up or down in a steady fashion, the more it resembles a straight line the better, only need to measure that objectively and put a number on it
(2) is normally 2% but because of leverage I dont have enough money in demo account currently to be able to take most trades) --> since my stop loss is tighter maybe this doesnt count anymore. Still 4% makes it easier to adjust my positions so that I have equal risk on long and short side.
(3) to profit from bad events and to take away risk
 

DrSafari

Established member
590 36
Demo account


Short Campbell Soup
200 Shares
Reason of closure: stop loss got hit

Opening rate: 60.30
Opening time:3/2/2016 5:06:36 PM

Close rate: 60.97
Close time: 3/2/2016 7:12:52 PM

Amount risked: around €120

Net P/L: €-123.43

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
CampbellSoupChart.JPG

Personal notes
I did everything I needed to do according to the system. Simply started going against me the moment I opened it. Making my stop loss tighter (66%) already pays off because I'm losing less money on my losers. I am starting to doubt the strategy to go Short and Long at all times though. For now I will hold on to it and see how it will turn out and IF its feasable to find at least one trade (so two actually) every day that matches my criteriae. Come to think of it, I should also incorporate some financial plan into my strategy. If I want to trade for a living I need to make profit but I also need to make ENOUGH profit. I have a lot of money I can invest but it is not limitless obviously so would be a shame to develop a consistently profitable system that does not make me enough profit (although through compouding it I would probably reach that sum sooner or later). Still I should do the exercise.
 

DrSafari

Established member
590 36
Demo account


Long Wadell
200 Shares
Reason of closure: trailing stop loss got hit in the profit zone

Opening rate: 24.97
Opening time:3/2/2016 6:44:28 PM

Close rate: 25.47
Close time: 3/3/2016 8:11:34 PM

Amount risked: around €120

Net P/L: €91.23

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
WaddellChart.JPG

Personal notes
Did what I had to do according to the system. Still I could have had 120 more profits if I had sold sooner. The current system is to not tighten the stop loss once you have more than your amount risked of profit so that is what I did. In my real account I always tighten it, but now I want to test if its a better idea to let my profits run more... it did not help as the stop loss got hit anyway. Im starting to think that it is a good idea to tighten it once you have a certain amount of profit. Either the trend is broken OR the stop loss gets hit anyway even if it goes back up afterwards. At least that is my experience. Still, for now Im going to keep abiding with the current system.

Oh I also did some calculations, I want to make on average a profit of 2000 per month. 1000 to live off and 1000 to keep in my account. Seems that it is very feasable* considering a minimum amount of 12 trades per month with a capital of 30k .

Also I seem to be learning at a much much faster pace now that I am taking this journaling and my system very serious. Good stuff.

(*) In the assumption I have a consistently profitable system that is.
 

DrSafari

Established member
590 36
Demo account


Short Coty
500 Shares
Reason of closure: trailing stop loss got hit in the profit zone

Opening rate: 27.8
Opening time:3/4/2016 4:20 PM

Close rate: 27.74
Close time: 3/4/2016 7:23 PM

Amount risked: around €176.74

Net P/L: €‪27.27‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
CotyChart.JPG

Personal notes
Did what I had to do according to the system, nothing more to add.
 

DrSafari

Established member
590 36
Demo account


Long CoconutPhillips
350 Shares
Reason of closure: trailing stop loss got hit in the profit zone

Opening rate: 39.54
Opening time:3/4/2016 4:25 PM

Close rate: 41.38
Close time: 3/7/2016 4:01 PM

Amount risked: initially €165.08

Net P/L: €‪584.87‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
CoconutPhilipsChart.JPG


Personal notes
Made a nice profit considering i only risked 165 and made 584. This is the advantage of going into positions where the chart goes up steadily. I can put my stop loss pretty narrow which allows me to take larger positions which results in nice profits if the trade works. These wins make it worth to put a narrower stop loss. Good example of letting your profits run... on the other hand, you can see it gapping down afterwards so at some point you have to real in your profits as well. The gapping usually happens at the start of the trading day, so I am still reluctant to keep posititions open overnight. Of course the current system does not talk about that so I keep it open until stop loss gets hit for now.
 
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DrSafari

Established member
590 36
Demo account


Short Microsoft
350 Shares
Reason of closure: stop loss got hit
Opening rate: 50.72
Opening time:3/7/2016 9:11 PM

Close rate: 51.19
Close time: 3/8/2016 3:47 PM

Amount risked: €146,18

Net P/L: €‪-150.04‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
MicrosoftChart.jpg


Personal notes
Did what I had to do according to system. Trade went against me as soon as I opened. Nothing more to add really.
 

DrSafari

Established member
590 36
Real account


Short St M
1000 Shares
Reason of closure: trailing stop loss got hit
Opening rate: 292.02
Opening time: 3/8/2016 12:11 PM

Close rate: 295.39
Close time: 3/9/2016 2:20 PM

Amount risked: €60 initially but readjusted to 40 later due to trailing SL

Net P/L: €‪-43.91‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
stM_short_chart.jpg


Personal notes
This could be a trade of too tight of a stop loss, then again, how much longer will I hold it before it starts moving into the desired direction? And wider stop loss would have meant I risked too money cause the minimum position size was too much for my equity.
 

DrSafari

Established member
590 36
Real account


Long Tes
1000 Shares

Reason of closure: Had a profit equal to amount risked and price was not moving for some time already so decided to exit the position not having any overnight risk.

Opening rate: 191.55
Opening time: 3/8/2016 9:29 AM

Close rate: 196.2
Close time: 3/9/2016 3:25 PM

Amount risked: ~€60

Net P/L: €‪60.06‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
Tes_chart_long.jpg


Personal notes
Decided to exit because it was not moving anymore and didnt want to hold it overnight anymore to reduce risk. I may re-enter this trade if it starts moving again.

Current equity: €4 814.67
 

DrSafari

Established member
590 36
Demo account


Short wheaterford

600 Shares
Reason of closure: adjusted stop loss got hit
Opening rate: 5.84
Opening time:3/9/2016 4:06 PM

Close rate: 6.18
Close time: 3/9/2016 4:38 PM

Amount risked: around €‪185

Net P/L: €‪-185.34‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
wheaterfordChart.jpg


Personal notes
Did what I had to do according to system. Went against me as soon as I entered the position. I was a bit late to post this one but as you can see it went even further up so SL's are a good thing!
 

DrSafari

Established member
590 36
Demo account


Long Enbridge
250 Shares
Reason of closure: adjusted stop loss got hit

Opening rate: 37.64
Opening time:3/7/2016 9:15 PM

Close rate: 37.8
Close time: 3/10/2016 5:27 PM

Amount risked: around €‪140.74

Net P/L: €‪33.60‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
EnbridgeChart.jpg


Personal notes
And this is the disadvantage of not tightening your stop after you have made more than your stop loss of profit. This one went down again and negated most of my profit. This could easily have been +150 profit
 

DrSafari

Established member
590 36
I just went over the trades I have done with the system Im currently testing, Some observations

- The shorts were all losers apart from one minor winner
- I have missed out on good profits twice because of not tightening the stop loss after being positive the amount being risked
- Because of that same reason I also made one huge profit.. it would be less without that rule but not as much as I missed out on the other winners in previous point.

These things are things I can potentially change but for now Im going to do some more trades to gather more data.
 

DrSafari

Established member
590 36
Demo account


Short Pandora
550 Shares
Reason of closure: stop loss got hit
Opening rate: 9.54
Opening time:3/11/2016 4:09 PM

Close rate: 9.86
Close time: 3/11/2016 5:11 PM

Amount risked: around € 157

Net P/L: €‪-157.71‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
PandoraChart.jpg



Personal notes
Went against me as soon as I opened, again. And again a failed short.
 

DrSafari

Established member
590 36
Demo account
I shorted another 600 shares of Pandora because I risked more with my long position. Both Pandora positions and my Nordstrom position risked an equal amount that way. Of course this means it also hit that stop loss, not going to post the chart for that reason but just the basic info.

Short Pandora
600 Shares
Reason of closure: stop loss got hit

Amount risked: around around € 150

Net P/L: €‪-150.54‬


Personal notes
Another failing short. Im pretty close to abandoning this current system and start testing with a tweaked version.
 

DrSafari

Established member
590 36
Demo account

Long Nordstrom
250 Shares
Reason of closure: stop loss got hit
Opening rate: 57.58
Opening time: 3/11/2016 4:07 PM

Close rate: 56.26
Close time: 3/11/2016 6:59 PM

Amount risked: around € €‪295

Net P/L: €‪-295.73‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
NordStromChart.jpg


Personal notes
Again, went against me as soon as I took the position. Im sounding like a broken record. Either its a streak of bad luck or Im doing something "wrong" that I dont yet realise.
 

DrSafari

Established member
590 36
Real account

Long Tele
200 Shares
Reason of closure: stop loss got hit
Opening rate: 48.1
Opening time: 3/15/2016 10:27 AM

Close rate: 47.66
Close time: 3/15/2016 11:28 AM

Amount risked: around € €‪88

Net P/L: €‪-88.00‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
TeleChart.jpg

Current equity: €4 726.67



Personal notes
The broken record continues, AGAIN it went against me as soon as I opened, this time on my real account. I dont think its a bad trade, it matched my criteria. This system is more discretionary than what Im trying to cook up on my demo account though. The only thing that bothers me is that I first decided not to take the trade cause it started the day in the negative AND most but not all stocks in my watchlist were starting there too. Later, around the time I opened my position, the stock was positive and more stocks in my watchlist became positive as well (for the day so far) . Still the thought crossed my mind that having taken a trade when I first doubted it never turned out good so far. Not sure if that is true but that was the feeling....but feelings can trick you I am well aware of that. A way to track this is to write down my thought process before I take the trade as well, so at least I can track this stuff.

Another thing I could do is make my real account system more mechanical and less discretionary. Then again, I still am making profit since september when I started trading properly. So why change a system that still seems to be working? Although I guess I am not 100% confident in it yet, else I would commit more money to it.

Another observation is again that once a trade is going against you, it will continue to go against you. Rarely have I ever seen that it goes near my stop loss and then recovers to make a profit. It goes straight through it and well beyond it in most cases. Reason the more to make them tighter. That will result in being taken out more often AND afterwards to go in the right direction which can and will be super frustrating. Thats why stop losses should always be set in stone (in my opinion). But my losers will lose much less. I came to the same conclusion in my demo account after all. I will first analyse some of the charts I posted here of the losers and winners of my real account before deciding to narrow down my stop loss.

One last thing, the last couple of trades were all going against me as soon as I opened which looks like the market or my broker is out to get me, luckily it wasnt all on my real account. I guess this is something every trader goes through sooner or later and starts to doubt his system. This happened to me on two different systems albeit similar ones. But I think its more a streak of bad luck. I also play poker and in many ways playing poker is the same as trading, good players can make consistent profit in the long run, over many many games by abiding to their system and play the cards they're handed the best way possible. Risk/reward management is also super important in poker. Anyways, sometimes you have evenings that EVERY time you have a good hand, someone else has a slightly better one causing you to lose a lot of chips. Up to the point you start thinking they are cheating (broker analogy) or the deck is stacked against you (market is out to get you analogy). This is exactely the same feeling with trading, but since I know it also exists in poker and they are somewhat similar I am going to assume this is bad luck and I am going to assume the statistics will balance it out in the long run. Sometimes in poker you also get lucky, that can happen here too. There will be times you will win big with trading too. Anyway, enough ranting. Action points so far:

An action point I have already for my real account is to write down my thought process before I take a trade as well.
 

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