Nowler's Trading Journal

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After reading this journal, do you think Nowler will be a successful trader?

  • Yes

    Votes: 3 21.4%
  • No

    Votes: 4 28.6%
  • Not enough information yet

    Votes: 7 50.0%

  • Total voters
    14

Nowler

Active member
Sep 13, 2017
757
51
38
#21
If I cannot make it as a profitable trader then educating others would not be my place. I have very strong morals. I'm not even planning on charging people for it. My income is a result of the traffic through the site. But if I cannot make money trading then I wont do it. Obviously. Well perhaps not "obviously"... the internet is saturated with "guru's" and couldn't-do's teaching others.

Anyway, thanks very much for the input. I definitely have some food for thought!
 

Nowler

Active member
Sep 13, 2017
757
51
38
#22
I am considering setting myself a target for the final week of month 5.
If I can reach the target then I will reward myself by depositing another €20 onto the account.

Since I made this journal 8 trading days ago, I am up 3.4%
Considering 3 of those days I didn't trade (ill/busy) and then I also took some experimental trades, some of which cost me and also took up my time... I think it's a very motivating % increase!

The official target for this month was to experiment with increased capital risk and gain a better understanding. I am still 1 week shy but since I am up money this month...and if I finish next week in the green for the month, then that months target was a huge success :)

Fingers crossed the next week offers me a few good opportunities. I'm expecting the USD/SGD to offer up a few long opportunities. Perhaps even just longing it on Monday and riding it until Friday or until some big releases if there are any
 

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Brumby

Well-known member
May 25, 2012
600
136
53
#23
Nowler,

Your attitude and willingness to positively change your personal circumstances is highly commendable. I wish you success and that you will achieve a better life for yourself through your efforts.

Having said that it is also important to understand what you set out to accomplish is undergirded by reality and facts and not by hope and blind optimism. You should know that having done a psychology major that we are inherently bias and I can see that you are subject to confirmation bias (what you want to see to support your case); recency bias (judging your overall trading skills based on recent successes); and plainly just over optimistic.

As a starting point, we should benchmark trading performance against what is happening out in the market place. In other words, how other professional currency traders are performing in making a living. I am talking about verified results and not those unverified BS claims out in the internet space.

Some of the top 15 currency traders can't even make a positive return every year and these are the best of the best (audited accounts). The bottom 10 in the ranking actually loose money over 5 years and these are professionals. Refer to the attached files.

You are aiming to perform better than every one of them. What makes you think that you can perform better than them besides on hope and optimism? When you have a 5 year record which supports your claim then at least that is the basis. Making money consistently is very hard to do. You only have 4 months of trading. Are you so sure that some of your success is skills based and not just luck? Each trade is frankly a random distribution of events. If you can achieve success consistently over a long period then possibly skills outweigh luck in terms of probability. Until you have a long enough track record, you are counting your chickens prematurely.

I would also touch on a topic which is not discussed at all. Risk and return are tied together. If you are going after big gains you are in fact taking on more risk. What is absent from the conversation is drawdown. In evaluating returns, the performance metrics that professional investors look at is not just return but more importantly drawdown. This is the main reason why leverage is used sparingly because of its effect on drawdown. If you can achieve 30 % return with a drawdown of 15 % or less, every fund in the world will line up to engage your services. If you can deliver a smooth equity curve with limited drawdown, you can offer your signal services through copy trading. You don't need a large equity to live on trading. A good trading record can generate good income. There are many ways to skin a cat. Taking on outsized risk to grow equity is a sure way to terminate your trading ambition.
 

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Nowler

Active member
Sep 13, 2017
757
51
38
#24
Having said that it is also important to understand what you set out to accomplish is undergirded by reality and facts and not by hope and blind optimism. You should know that having done a psychology major that we are inherently bias and I can see that you are subject to confirmation bias (what you want to see to support your case); recency bias (judging your overall trading skills based on recent successes); and plainly just over optimistic.

As a starting point, we should benchmark trading performance against what is happening out in the market place. In other words, how other professional currency traders are performing in making a living. I am talking about verified results and not those unverified BS claims out in the internet space.

Some of the top 15 currency traders can't even make a positive return every year and these are the best of the best (audited accounts). The bottom 10 in the ranking actually loose money over 5 years and these are professionals. Refer to the attached files.

You are aiming to perform better than every one of them. What makes you think that you can perform better than them besides on hope and optimism? When you have a 5 year record which supports your claim then at least that is the basis. Making money consistently is very hard to do. You only have 4 months of trading. Are you so sure that some of your success is skills based and not just luck? Each trade is frankly a random distribution of events. If you can achieve success consistently over a long period then possibly skills outweigh luck in terms of probability. Until you have a long enough track record, you are counting your chickens prematurely.

I would also touch on a topic which is not discussed at all. Risk and return are tied together. If you are going after big gains you are in fact taking on more risk. What is absent from the conversation is drawdown. In evaluating returns, the performance metrics that professional investors look at is not just return but more importantly drawdown. This is the main reason why leverage is used sparingly because of its effect on drawdown. If you can achieve 30 % return with a drawdown of 15 % or less, every fund in the world will line up to engage your services. If you can deliver a smooth equity curve with limited drawdown, you can offer your signal services through copy trading. You don't need a large equity to live on trading. A good trading record can generate good income. There are many ways to skin a cat. Taking on outsized risk to grow equity is a sure way to terminate your trading ambition.

Hmm...
That's quite interesting mate.
Immediately I disagreed when I read your claim that I was exhibiting confirmation and recency bias but I decided to hold off on replying for a while because I wanted to think things over. It's also funny you said that because I just had to point out some confirmation bias to a mate of mine during the week (attempting to trade also). He was adamant that he wasn't, but he was, he really was :) He just refused to believe me and as a result, just made a mistake that he refuses to learn from (lost 75% of his account on one trade!).

I don't want to insult you by disagreeing but I would like to discuss this further because I cannot just take someone's word. I have to see the evidence myself. Can you give me an example of these? I understand what both mean, I'm just looking for the evidence.

Thank you very much for this reply mate. It's after evoking a lot of thought and investigation, especially when doing my homework in regards to the 2 files you added. I don't doubt that the list is legit BUT I still need to be proven wrong... and the only way for that to be done is for me to fall short of my targets. I am not disregarding people's input when they tell me that I'm overstretching when it comes to goals. I am totally listening! I just need the evidence to support your claims and then I will accept it. Thankfully my risk management should be able to hold off any catastrophic damage.

You raised another interesting point also. Luck...
You asked if some of my success was not just luck, as opposed to being skill.
I'm sure some of it was luck, but I don't think that luck has any more to do with my trading than it does with yours. We can all get lucky. Each and every single one of us.

The forex market opportunities are currently not rare... so in that sense, am I lucky? What about when the market goes through a period of not offering me the same amount of opportunities? In that sense am I unlucky? I don't look at it that way. It is my job to understand the market...not just how the market is now, but how it was before and how it will change next. It is my job to understand the cycles of currencies. That is, the increase and decrease of currencies/economies value. The movement of the value of a currency largely follows the same patterns. Chart patterns present themselves on the chart and then often the pattern is completed by the release of some sort of economic statement. Knowing what the direction that currency is going in is what I am trying to do. By knowing that and taking trades in that direction increase my probability of being right. That's all I can do...to put as much probability on my side as possible and then, wait to see if I was correct. Will I be right all the time? Nope. Will I be right most of the time? I hope so but I don't need to be. I can be wrong 40% of the time and still turn a profit if my risk/rewards are in such a way that I lose less when I lose than I win when I win... as you are already aware of.

Something that has been said to me often and something I agree with myself is that I can make all the claims and projections I want. But at the end of the day, it's a track record that solidifies such claims. Unfortunately time is not on my side as I am only 4 months into it. Does this mean I'm wrong? Of course not. But without that record then nobody is interested in what I have to say about my style.

All I can do it to keep on keeping on!.. Listening to people when they offer critique and for me to observe my results as objectively as I can.

Tell me this though, if you can.
That list of hedge funds performance that you gave me... or any top hedge fund for that matter. How many traders on average trade for these funds? Do they trade to their own strengths or do they trade how they are told to?

PS: I have also linked my trading account to myfxbook in order to get the actual stats of my account. Not what I perceive/remember them to be. I think this will help me a lot!
 

Kaeso

Active member
Oct 4, 2015
860
90
38
#25
..I would also touch on a topic which is not discussed at all. Risk and return are tied together. If you are going after big gains you are in fact taking on more risk. What is absent from the conversation is drawdown. In evaluating returns, the performance metrics that professional investors look at is not just return but more importantly drawdown. This is the main reason why leverage is used sparingly because of its effect on drawdown. If you can achieve 30 % return with a drawdown of 15 % or less, every fund in the world will line up to engage your services. If you can deliver a smooth equity curve with limited drawdown, you can offer your signal services through copy trading. You don't need a large equity to live on trading. A good trading record can generate good income. There are many ways to skin a cat. Taking on outsized risk to grow equity is a sure way to terminate your trading ambition.
Exactly, well put brumby, brilliant thanks :D
 
Feb 20, 2017
93
18
18
#26
Exactly, well put brumby, brilliant thanks :D
We should prob limit our hijacking of Nowler's thread - but leverage isn't necessarily about overexposure or insane risk - it can be used to enter multiple working orders without actually having open interest exposure and preventing dead money in that respect. I use this method to imitate collocation.
 

Nowler

Active member
Sep 13, 2017
757
51
38
#27
Note: If anyone wants to see my account closer, I am happy to supply the statistics that myfxbook compiles.

I just started using this and as I expected, my memory of my first few months was a little off.

At least from now on I can follow it closely...I can't believe this is free :)
 

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Kaeso

Active member
Oct 4, 2015
860
90
38
#28
Note: If anyone wants to see my account closer, I am happy to supply the statistics that myfxbook compiles.

I just started using this and as I expected, my memory of my first few months was a little off.

At least from now on I can follow it closely...I can't believe this is free :)
yeah its a great free resource thanks ill have to get myself an account which can link up to it, im currently on spreadbet with city index and IG , which it wont link to.

i look forward to see you break that downward trendline one day (y)
 

Brumby

Well-known member
May 25, 2012
600
136
53
#30
PS: I have also linked my trading account to myfxbook in order to get the actual stats of my account. Not what I perceive/remember them to be. I think this will help me a lot!
Do you still want me to further comment on whether you have confirmation and recency bias? I would suspect your FX book stats is sufficient in addressing it.
 

Nowler

Active member
Sep 13, 2017
757
51
38
#32
Strategy Update:

I am going to try address my drawdown by reducing my trade size from 4% to 2% and with a view to add another 2% if the opportunity arises.

Since I bumped it up to 4% I have been doing well but my drawdown is too much. Hopefully by only jumping in at 2% and then adding the other 2% when in profit from the first 2% will reduce my drawdown.

Will this work?
 

Quantt

Active member
Jul 23, 2017
945
53
38
#33
Strategy Update:

I am going to try address my drawdown by reducing my trade size from 4% to 2% and with a view to add another 2% if the opportunity arises.

Since I bumped it up to 4% I have been doing well but my drawdown is too much. Hopefully by only jumping in at 2% and then adding the other 2% when in profit from the first 2% will reduce my drawdown.

Will this work?
You'll have to test to know :)
 

Nowler

Active member
Sep 13, 2017
757
51
38
#34
You'll have to test to know :)
:) Seems so

A few more hours and then time to plan for the week ahead.

A few markets of interest are the USD SGD, CAD SGD, GBP USD and Brent Crude.

I was expecting both the USD and the CAD to steam on against the SGD but perhaps I was too early jumping on long on the CAD last week. Or maybe I was just wrong... Maybe this week will be when it does it...

I'm keeping an eye on the oil and observing how it manifests on the charts of petro-currencies such as the CAD for example. Oil is an important commodity! It would be foolish to disregard its sway on the world's economies.


EDIT:
I have also decided to take the information bestowed upon me :) and am going to focus on keeping this account for building a record and my other sub account for the experimental/testing trades. That sub account has very little in it and is really only being used as a way to directly hedge, so I'll just keep the testing of strategies over there.
 
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Nowler

Active member
Sep 13, 2017
757
51
38
#35
If you can achieve 30 % return with a drawdown of 15 % or less, every fund in the world will line up to engage your services. If you can deliver a smooth equity curve with limited drawdown, you can offer your signal services through copy trading.
So what would be the lower limit of performance which would still be reasonable in terms of a prop firm hiring me? Keeping in mind my only third level education is a Bachelor's in Psychology.

I understand that it would be difficult to say and they would also be looking for level headedness etc... but lets just say a middle of the line prop firm...
 
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Brumby

Well-known member
May 25, 2012
600
136
53
#36
I would appreciate it, yes, sir.
If I refer to your equity curve, I can see some recovery from Sep 18. Your recent postings reflect a more positive tone and optimism in achieving a positive return in trading going forward. It is obvious that the more recent results were driving your attitude while ignoring historical draw downs. That is recency bias i.e. a much higher weighting based on more recent performance even though it is relatively short. Confirmation bias is essentially similar. You refer to your more recent results to support your preferred view but ignoring the totality of your track record. In other words, you are seeking data that supports your view and discounting those that are contrary.

Strategy Update:

I am going to try address my drawdown by reducing my trade size from 4% to 2% and with a view to add another 2% if the opportunity arises.

Since I bumped it up to 4% I have been doing well but my drawdown is too much. Hopefully by only jumping in at 2% and then adding the other 2% when in profit from the first 2% will reduce my drawdown.

Will this work?
The higher the risk you take the greater the scope is for drawdown. You can't ignore natural laws. The most important equation in trading is the ability to trade with a positive expectancy. Your equity curve is a reflection of that expectancy. For example, if your trading is in the negative zone the greater the risk you take, the steeper the angle of descent you will experience with your equity curve. If you take on less risk, that equity curve decline will be smoother but it will still continue to decline. The only way to turn it around is to be able to trade in the positive zone. Adding risk just accelerates the curve depending on which side of the zone you are in.

So what would be the lower limit of performance which would still be reasonable in terms of a prop firm hiring me? Keeping in mind my only third level education is a Bachelor's in Psychology.

I understand that it would be difficult to say and they would also be looking for level headedness etc... but lets just say a middle of the line prop firm...
In trading, the only thing that matters is your trading track record results. You can have a dozen Phd's to your name and it means zilch if you can't deliver. The most important piece is a smooth equity curve.
 
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Brumby

Well-known member
May 25, 2012
600
136
53
#37
Fingers crossed the next week offers me a few good opportunities. I'm expecting the USD/SGD to offer up a few long opportunities. Perhaps even just longing it on Monday and riding it until Friday or until some big releases if there are any
There was a news wire that came across my terminal last week that the Singapore Reserve Bank is expected to make a major announcement on Oct 15 (from memory). There is some speculative news that the SRB might surprise the market with a rate hike. If true, will be market moving on the SG. The rest of the research is up to you.
 

Nowler

Active member
Sep 13, 2017
757
51
38
#38
If I refer to your equity curve, I can see some recovery from Sep 18. Your recent postings reflect a more positive tone and optimism in achieving a positive return in trading going forward. It is obvious that the more recent results were driving your attitude while ignoring historical draw downs. That is recency bias i.e. a much higher weighting based on more recent performance even though it is relatively short. Confirmation bias is essentially similar. You refer to your more recent results to support your preferred view but ignoring the totality of your track record. In other words, you are seeking data that supports your view and discounting those that are contrary.


The higher the risk you take the greater the scope is for drawdown. You can't ignore natural laws. The most important equation in trading is the ability to trade with a positive expectancy. Your equity curve is a reflection of that expectancy. For example, if your trading is in the negative zone the greater the risk you take, the steeper the angle of descent you will experience with your equity curve. If you take on less risk, that equity curve decline will be smoother but it will still continue to decline. The only way to turn it around is to be able to trade in the positive zone. Adding risk just accelerates the curve depending on which side of the zone you are in.
Thanks very much for the reply mate.
I still don't quite understand how drawdown works. Specifically, how my drawdown can be up around 55% even in recent times... I have been making money in recent times and my trades have not really been going much against me either...
I did have over 6 trades going at one time (last week or the week before) and that resulted in about 35-40% of my margin being used but this wasn't for long...I'm almost certain not for as long as my drawdown has been at 55% in recent times. So why my drawdown remains so high is beyond me.

While I appreciate your explanation of how I am exhibiting recency and confirmation bias, I do however have to bring a few things to your attention. Of course I am going to exhibit what seems like recency bias. I only started trading nearly 5 months ago, with the last month being profitable. You can call this recency bias but I call I common sense. I'm obviously going to put more weight in this final month because it's where I learned how to be profitable... before that I was making stupid mistake by the bucketload and losing money. In my eyes this is not recency bias. I am not disregarding the early months, I am just acknowledging that I was a bad trader then and that I am much better now. I have been very open about my losses. Not disregarding, underplaying or hiding anything.

This argument against confirmation bias is also similar to the above one about recency bias. I would even argue that it's simply confirmation, not confirmation bias. I was losing money because I was trading wrong... the more examples of right and wrong I accumulated the better I could judge what did and did not work out.

Maybe you're right...
I will be sure to keep an eye on it.
A psych degree definitely doesn't exclude me from making such errors. So I will watch out for it. Thanks for the heads up


In trading, the only thing that matters is your trading track record results. You can have a dozen Phd's to your name and it means zilch if you can't deliver. The most important piece is a smooth equity curve.
Yes, I understand that my friend.
What I am wondering is, what sort of record would be barely enough to get into a middle of the line prop firm?
Generally speaking of course :)

For example:
Would 5% annual growth be enough? more? less?
Does drawdown have to be no more than half the annual growth?
 
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Nowler

Active member
Sep 13, 2017
757
51
38
#39
There was a news wire that came across my terminal last week that the Singapore Reserve Bank is expected to make a major announcement on Oct 15 (from memory). There is some speculative news that the SRB might surprise the market with a rate hike. If true, will be market moving on the SG. The rest of the research is up to you.
Thanks for the heads up!
I was set to work out some mid to long-term plan for the USD SGD, so this is very interesting indeed. I will proceed with caution
 

Nowler

Active member
Sep 13, 2017
757
51
38
#40
Current Trade

Currently short on the AUD/USD with 1.7% margin used.
The Aussies have a release in about 7 hours or so... what I now need to figure out is how the market is going to react to this.
Even good news can cause a negative reaction seemingly...

I feel it's highly likely that the USD will gain on the AUD for a while, but will this news cause a move that will take out my stop, or will it ping my take profit... decisions, decisions, decisions...

As it stands, I'll leave it alone
 

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