really need help with my trading (many aspects)

[breaktwister]

I've been trading for around 3 years now. I spent a lot of time learning how to read fundamentals and TA and was profitable at stockpicking over the first 12-18 months.

I then started to spreadbet (stocks, FX, indices, commodities) and did OK over a period of 2 years but ultimately lost money when my risk management and discipline slipped. I have tried trading crypto this year, mostly taking short positions which has worked out great, however, I just blew 50% of my account in one trade taking a margin long position and failing to get out when it went against me. The trade was too big and I entered with no plan other than I had been waiting for a dip to hit a target buy price. A very very stupid mistake.

I am now fully in cash and wondering wdf to do to get my trading together. I feel that at this stage I should have found my niche, something that I can at least grind out a small profit at. I have a long-term goal of being able to trade full-time but first I need to be profitable!

Can anybody give advice? Has anyone lost money over 3 years but then managed to turn it around? I am not afraid of hard work and study and I am ultra-competitive, I do not like to give up.

I see two options for me,

1) Try something new from the ground up, reading and watching a lot of videos while trading small or even paper trading. I would like to try trading options at some point.

2) I have enjoyed trading crypto and have had good success apart from my recent blow-out. I clearly need to address my lack of planning and discipline so I am thinking that I could just get back into crypto with a more clearly defined plan for each trade.

Any advice for a losing trader will be very much appreciated.

 

[Quantt]

I've been trading for around 3 years now. I spent a lot of time learning how to read fundamentals and TA and was profitable at stockpicking over the first 12-18 months.

I then started to spreadbet (stocks, FX, indices, commodities) and did OK over a period of 2 years but ultimately lost money when my risk management and discipline slipped. I have tried trading crypto this year, mostly taking short positions which has worked out great, however, I just blew 50% of my account in one trade taking a margin long position and failing to get out when it went against me. The trade was too big and I entered with no plan other than I had been waiting for a dip to hit a target buy price. A very very stupid mistake.

I am now fully in cash and wondering wdf to do to get my trading together. I feel that at this stage I should have found my niche, something that I can at least grind out a small profit at. I have a long-term goal of being able to trade full-time but first I need to be profitable!

Can anybody give advice? Has anyone lost money over 3 years but then managed to turn it around? I am not afraid of hard work and study and I am ultra-competitive, I do not like to give up.

I see two options for me,

1) Try something new from the ground up, reading and watching a lot of videos while trading small or even paper trading. I would like to try trading options at some point.

2) I have enjoyed trading crypto and have had good success apart from my recent blow-out. I clearly need to address my lack of planning and discipline so I am thinking that I could just get back into crypto with a more clearly defined plan for each trade.

Any advice for a losing trader will be very much appreciated.

Forget about crypto, go back to where you were profitable 2 years ago, write dawn your trading plan and backtest it for few market cycles, if does indeed works you are all set, if not try something else, but do not trade live until you have iron clad back tested trading plan...

 

[breaktwister]

Hi quantt, I assume by your username that you are into automated trading? I have to say that I have never backtested a strategy, I picked stocks mainly on fundamentals with TA as a secondary check. Surely the markets change too often for backtesting to be of real value?

When you say "market cycles" do you mean from recession to recession?

 

[Quantt]

Hi quantt, I assume by your username that you are into automated trading? I have to say that I have never backtested a strategy, I picked stocks mainly on fundamentals with TA as a secondary check. Surely the markets change too often for backtesting to be of real value?

When you say "market cycles" do you mean from recession to recession?

Yep, I am 100% systematic/automated and yes I mean recession to recession...
Market never changes from my point of view and back testing works for me personally...

Even with the fundamentals you must have a system and I would find some way to test it, so I know if it works in the long run or not, before pitting real money on the line...

 

[malaguti]

Hi quantt, I assume by your username that you are into automated trading? I have to say that I have never backtested a strategy, I picked stocks mainly on fundamentals with TA as a secondary check. Surely the markets change too often for backtesting to be of real value?

When you say "market cycles" do you mean from recession to recession?

I concur with Quantt, backtesting is fundamental. If you feel like giving stock picking again but for longer term let me know

 

[mpups]

I concur with Quantt, backtesting is fundamental. If you feel like giving stock picking again but for longer term let me know

what kinda backtesting to you do mate?

 

[malaguti]

what kinda backtesting to you do mate?

How do you mean, what kind?
I’ve backtested loads of various conditions, over various timeframes going back to the 90s. using all different types of indicators both standard, proprietary and ones created by myself. I’ve tested breakouts, trending, mean reverting, cyclical, patterns,
on different charting methods candles, renko, point and figure. Using multiple timeframe confirmations, sector rotations. Literally anything I can think of. Neural networks, hive technology, astral projections
If I could think of something, I tested it. Mainly for one chief reason. I trust nobody unless I can verify it myself.
It doesn’t take long, so long as you can code it.
When I came up with something half decent such as relatively good percentage hit rate I’d then go through and put it through the sausage machine. Never optimising just going through the years.
Then improving the results using filters, even good coding will bring up unwanted trade entries. Using stand alone trade by trade and then portfolio backtest simulating a real account with position sizing and equity risk.

Once I’m happy with the results I’d put money on it to make sure it wasn’t luck. You could never do this without automating the backtest process.
Like I say, personally, backtesting is key and saves time in getting you to be comfortable with a strategy to know that the dips in equity is expected, that 10 losing trades in a row can happen. It’s very hard to have confidence in a strategy without giving up and thinking of starting again unless you can prove it. Even 70% hit rates will have numerous losses on the trot.
It’s a numbers game in the end

Anyway hope that answers your question. Feel free to ask if you do have any
These days I still code anything that looks interesting, and just for fun to see if you can make it just that bit better.

 

[Brumby]

You clearly know what your problem is because you outlined them.

I then started to spreadbet (stocks, FX, indices, commodities) and did OK over a period of 2 years but ultimately lost money when my risk management and discipline slipped.

I have tried trading crypto this year, mostly taking short positions which has worked out great, however, I just blew 50% of my account in one trade taking a margin long position and failing to get out when it went against me. The trade was too big and I entered with no plan other than I had been waiting for a dip to hit a target buy price. A very very stupid mistake.

..... and you know what the solution is because again you outline it.

I clearly need to address my lack of planning and discipline

The problem then is not over choice of instrument or methodology but one of discipline and risk management. The obvious question is why aren't you dealing with the issues you clearly have identified? If you are finding it difficult to deal with the issues identified, the reason is because it is a trade psychological issue and not a methodolgy issue. If my assessment is incorrect then ignore what I have just said.

 

[breaktwister]

You clearly know what your problem is because you outlined them.

I guess so! I suppose my question now is what are some techniques for discipline?

 

[breaktwister]

Quannt and Malaguti, where do I start with backtesting? I have basic coding skills.

 

[Brumby]

I guess so! I suppose my question now is what are some techniques for discipline?

Your issue if I understand it correctly is not a lack of discipline but that discipline broke down at some point. You would need to identify your stressors and reflect on the emotional drivers that caused the break down in discipline. Typically they are emotional experiences. For example, the oversized crypto position could be a fear of missing out on a trade opportunity and when the trade turned against you the loss prospect became an oversized loss aversion issue. Usually one emotionally driven trade mistake cascade into a series of problems which may end up in a total breakdown of your trading process and trade discipline. The key is not allowing the initial emotionally driven mistake to happen and subsequently when it gets out of control to hijack your trading process. The first step is to reflect on those events, identify the issues and to develop awareness on how your emotions come into your system when trading.

 

[mpups]

How do you mean, what kind?
I’ve backtested loads of various conditions, over various timeframes going back to the 90s. using all different types of indicators both standard, proprietary and ones created by myself. I’ve tested breakouts, trending, mean reverting, cyclical, patterns,
on different charting methods candles, renko, point and figure. Using multiple timeframe confirmations, sector rotations. Literally anything I can think of. Neural networks, hive technology, astral projections
If I could think of something, I tested it. Mainly for one chief reason. I trust nobody unless I can verify it myself.
It doesn’t take long, so long as you can code it.
When I came up with something half decent such as relatively good percentage hit rate I’d then go through and put it through the sausage machine. Never optimising just going through the years.
Then improving the results using filters, even good coding will bring up unwanted trade entries. Using stand alone trade by trade and then portfolio backtest simulating a real account with position sizing and equity risk.

Once I’m happy with the results I’d put money on it to make sure it wasn’t luck. You could never do this without automating the backtest process.
Like I say, personally, backtesting is key and saves time in getting you to be comfortable with a strategy to know that the dips in equity is expected, that 10 losing trades in a row can happen. It’s very hard to have confidence in a strategy without giving up and thinking of starting again unless you can prove it. Even 70% hit rates will have numerous losses on the trot.
It’s a numbers game in the end

Anyway hope that answers your question. Feel free to ask if you do have any
These days I still code anything that looks interesting, and just for fun to see if you can make it just that bit better.

thanks for the insight into your testing, it sounds very thorough. yes that does answer my question!

when i said "what kind of" it was to clarify if you mean only from price data or is there any fundamentals research too. also ive known backtest to be used loosely and to mean eyeballing the chart

Your issue if I understand it correctly is not a lack of discipline but that discipline broke down at some point. You would need to identify your stressors and reflect on the emotional drivers that caused the break down in discipline. Typically they are emotional experiences. For example, the oversized crypto position could be a fear of missing out on a trade opportunity and when the trade turned against you the loss prospect became an oversized loss aversion issue. Usually one emotionally driven trade mistake cascade into a series of problems which may end up in a total breakdown of your trading process and trade discipline. The key is not allowing the initial emotionally driven mistake to happen and subsequently when it gets out of control to hijack your trading process. The first step is to reflect on those events, identify the issues and to develop awareness on how your emotions come into your system when trading.

brumby makes a good analysis as you seem to have done well, up to a point, in implementing your strategies but something about your routine is not quite right for you psychologically and it led to the inevitable breakdown. In addition to that if you have a strategy that is creating too many losses that could be exacerbating the issue as well

 

[Quantt]

Quannt and Malaguti, where do I start with backtesting? I have basic coding skills.

Get data, as far back as you can... you can start testing manually, with excel file to "record" your back trades, but it will take forever, so start learning python, it's a easy (even tough a bit ugly in terms of syntax) language and you can automate everything with it...

 

[NVP]

Don’t give up but get smarter with research

No one goes from zero to hero in leas than 3-5 years in this game ...the same as a doctor or any professional vocation they needs years and years of training

Read widely and adapt your approach to suit your personality ...you will find your edge if you are committed enough

The reason so many fail in trading is lack of commitment .....they don’t want it enough as they are not passionate enough about becoming a trader

You have to really want it ......that’s why simfew succeed .....but the ones that succeed are very well rewarded ....and deserve every penny

Good luck
Neil
NVP

Ps if you need inspiration I suggest reading market wizards or even listen to the podcast series
Chat with traders ......all good stuff and you will hear how so many great traders all start out losing money !....but by grinding it out they succeed over many years

 

[shadowninja]

What is going on in your head when discipline goes out the window? You need to address this because the best system in the world is going to fail if you can't stick to it.

 

[breaktwister]

I have never really had a solid "trading" system I am afraid. I am a decent macro/fundamental analyst and combined this top down approach with TA to enter trades. In terms of exits, no real solid strategy, just looking for fundamental or technical reasons to exit, trend exhaustion etc.

I have all the Market Wizards on audiobook, great listens for sure. I listen to macrovoices podcast every week. I just finished Peter Brandt Diary of a Commodity Trader and I'm sure a lot of you know he trades price action only via a rigid rule based system. I would like to try his system although I am not sure how you programme a H&S pattern for back-testing, some of the patterns he takes as H&S are quite dodgy looking! I'll maybe manually paper-trade it for a while as it is primarily a weekly system so shouldn't take too long to look for setups.

Of course for crypto, it is all price action trading so I guess I just wasn't fully adjusted to that. Very emotional markets to trade as Brumby rightly points out. However, I was surprised with crypto how solid the patterns are, I found a lot less "fake outs" than in the traditional commodity world. I think I will continue with crypto trading but implement a hard stop system.

Thank you all for the encouragement and advice.

 

[Arashimuro]

shadowninja, you're absolutely right. Discipline is a very important aspect, if you don't follow your strategy then nothing's going to work out. Also, don't forget about risk management.

 

[NVP]

I tell students you’ve got to Focus on what suits your personality.......just because you make a few bucks in a particular market using a particular strategy DOES NOT MEAN that’s what you should be doing .....

we are taking a lifetime vocation here in trading so it needs a lot of time and patience to bed things in and try all the clothes on it the shop !

I’ve switched a few times over the last 40 years of trading ...and even before that I transitioned to trading from gambling on horse racing where I was really comfortable ...last 18 years mainly in forex and it still works for me .....but I will switch tomorrow if something works better .....

So you are just warming up.....be patient and don’t beat yourself up ....it will come if you listen to yourself and how you feel towards certain things ....

N