The Kung Fu of Trading

[a_gnome]

I've been meaning to start this journal for some time, finally I seem to have got around to it. I am doing it for purely selfish reasons: actually writing stuff out forces me to think about it and confront the issues involves. This is largely a psychological journey for me so it's going to be rather self-indulgent and I make no apologies about that. I hope that in addition readers may find it useful but that's not it's prime objective.

Firstly a bit of background information about myself: I have been interested in trading for a long time. In fact I have developed a business around it, combining my knowledge of trading with my programming skills offering consultancy/programming services to traders and occasionally city institutions all over the world. I have been doing this for some 14 years now and have been making a good living from it. For the last year and a half I have been working with someone else developing trading strategies for a very large fund. We license our strategies out to the fund in exchange for management and performance fee remuneration. This is going pretty well with the money under management measured in millions. So I know all about mechanical strategies and what works and what doesn't.

Now, what originally got me interested in trading was the idea of being able to make money for comparatively little effort. I was originally working in academia and wanted to earn money so that I could continue my research. I naively thought that for a "brain-box" like me it couldn't be that hard! That's what got me started all those years ago. Whilst I now make a living from these strategies with the fund I do still hanker after a more hands-on approach. Strategies that are suitable for a fund have to have the potential for large capacity so that one can trade millions with them. There's no point in doing something which can only trade $100k on it no matter how good it is. The trouble is that I am now rather disconnected from the market itself, spending my days doing the research on new strategies so I don't even need to look at a market. I have traded my account on and off over the years and always enjoy the challenge of "figuring out the markets". I would still like to be able to trade in a more hands-on way along-side my fund work and the purpose of this journal is to promote this goal.

My trading has historically always gone the same way: I've started out ok, have always trading sensibly with regards to size but once I've had a few losers I find that I just keep on losing. Being quite cautious I then stop trading fairly quickly. This has happened on several occasions. I did also have a rather ignominious go at trading stocks which was after the .com bubble had burst. My strategy involved buying tech stocks averaging down where necessary. Needless to say I wiped out the account!

I did paper trade for several months a while ago with good success. I had purchased a trading course and using their methodology I was making money. However I realised that there was no way that I would be able to make a living purely on the amount of profits that I was making so I needed to find some other source of income. At that time my consultancy had gone rather quiet so I took a 6 month contract in the city to earn a bit of dosh. I have realised that given I have a wife and three children to support, I'm not going to be able to make enough of a living from this kind of trading to support them so if I am to get it started I am going to need to have some other kind of income as well. With the success of the fund work I now have this so I am once again looking at realising this goal, hence this journal.

People are often surprised that for someone with a scientific background such as mine (D.Phil in theoretical atomic physics at Oxford) and with my programming skills, that I still seem to be drawn to a more discretionary approach. I am a firm believer that the individual trader who is disciplined and who can read the markets should have an edge over a purely mechanical approach. The key aspects of this though are the discipline and the actual ability to read the markets. The great advantage of a mechanical approach is that it gets in every trade opportunity without fail - the discretionary trader still needs to do this, he/she just needs to know when the conditions suit and when they don't. The risk is that they talk themselves out of potential trades for reasons other than objective assessment of the market conditions, which is where the psychology comes in.

So why have I called this the "Kung Fu of Trading"? The reason for this is that "Kung Fu" literally means a cultivated skill or something that one works hard at (*) and I know that to be successful at trading it's all about what's going on inside rather than outside. I know all that I need to know about the mechanics of trading already, it's just the internal aspects that I need to have in place and the aim of this journal is to work towards this. In the following entries I shall talk more about how I intend to do this.

(*) Thanks to Shadowninja for pointing out that it didn't actually mean "personal development" as I had originally stated.

 

[swandro]

May I be the first to encourage you in your quest. I am looking forward to reading your journal.

 

[Physicsman]

...and let me be the second to encourage you! It's so good to see another Physicsman who trades, especially here at T2W. :clap:
Like yourself, I'm a Doctor Of Physics (Ph.D in laser physics from London University), hence my user name. Very much looking forward to what you have to say!

Also, just by co-incidence I train in Kung Fu as well, for the past 27(!!) years - so this journal title appeals to me on so many levels. (Bamboo Forest Praying Mantis style, just in case you were interested!)

 

[RichieE]

It's so good to see another Physicsman who trades, especially here at T2W. :clap:

There seem to be a lot of Physics trained traders around... I have a MSc in Physics myself (Sonoluminescence). I often run into Physics trained Quant traders who have put their mathematical knowledge to more 'lucrative' use!

 

[Physicsman]

(With apologies to a_gnome for slightly diverting his thread!) :cheesy:

RichiE: Oooh-rah! Another Physicsman - that is good to hear. At my last job in the City, out of 18 Physics Ph.Ds., only 2 of us traded - myself and another chap, and he was more of a stock investor than trader.

I was feeling somewhat let down - here were are in the City, one of the bastion's of capitalist finance and with lots of us Physics Ph.D.s working there yet only 1.5 traders?? Till today, hadn't yet met Physics quants who also traded. Now I have, I can gladly say
"Boys, at least we physicsmen as a profession are not quite letting the side down what what??"

 

[fcmisc]

Interesting story. Good luck!

Will you be providing quantitative reasons for your trades?

 

[a_gnome]

Hi all,
Thanks for the surprising amount of interest that this journal seems to have generated. During my brief periods working as a contractor in the city I came across a fair few physicists working as quants. This seems to be the main area where they end up - it's an opportunity to use one's theoretical abilities but is a bit too abstract for me. Personally I like actually being at the cutting edge of making the trading decisions.

As an aside, I have also done various marshal arts over the years: judo as a boy, karate and kung fu as a student and then tai chi as I got a bit older.

Anyway, I thought that I would fill in the next part of the background information which is the particular "markets" that I was going to trade. For me, having tried and failed several times in the past, I was looking for a way to participate in the trading process as "cheaply" as possible, both financially and also in terms of time commitment. I am happy to risk reasonable sums of money once I have something working that I am confident it but there is an iterative process of homing in on what works and what doesn't and whilst this is going on there is not point in risking more than the minimal amount of money. Also in terms of time, I don't want to spend hours watching the markets fine-tuning my technique as I have a "day job" to be doing. Now you might say that the thing to do is to spend time back-testing strategies rather than spending money trading to discover what works. My issue with that is that that's what I do for the day job anyway. I'm looking for something a little different and I feel that it's more of an iterative process, sort of like training your own "wet-ware" neural net. I feel that the principles of trading are universal to any market and the psychology that one brings to it stays the same. It may be that in the end I decide the best approach is a hands-off mechanical one and if so then so be it but I need and want to go through the process first.

Anyway, the solution that I came up with was to trade horse odds on BetFair before the race starts. The principle is the same: determine which direction the odds are moving and then buy (Lay) or sell (Back) the horse accordingly. As long as one closes out one's position before that start of the race there is no net exposure to the actual race itself. I won't bore everyone with the mechanical details of how this is done save to say that I've written a Level II depth of market trading platform together with some charting. This enables me to do single-click trading on these markets. The advantages of these markets are:
1. Can trade any size that one wants - there are no minimum contract sizes so it can be as small as you like.
2. All the liquidity is in the last 10 minutes before the race so one has short 10 minute chunks of activity. This fast turn-around suits me as it enables me to learn faster: trading on a daily time frame for example means that one gets through fewer trades in a month and so has fewer opportunities to learn.
3. The odds of each race tends to have its own characteristics and so can be treated like a different day. Some "days" are choppy with little direction, some are trending and some are highly volatile and heavily manipulated by the big players. One has to decide which type of "day" one has and then select the best trading approach.

Anyway, that's the background to what I am doing. The actual stakes that I am trading are pretty small and I shall be reporting the results as % of my account so the stakes and account size are actually immaterial anyway. I've actually been doing this for some time now and initially I managed to make a fair bit of money, basically doubling my account. However I seem to have got stuck in a rut for the last couple of months and haven't made any money. I am using this opportunity to explore the psychology of what is going on within me with regards to my trading in general.

 

[RichieE]

Thanks for the surprising amount of interest that this journal seems to have generated. During my brief periods working as a contractor in the city I came across a fair few physicists working as quants. This seems to be the main area where they end up

That seems to be a fair assessment. The other 'quant feeder' route appears to be a PhD in stochastic calculus.

it's an opportunity to use one's theoretical abilities but is a bit too abstract for me. Personally I like actually being at the cutting edge of making the trading decisions.

That's exactly how I felt. However I note that many quants quit the finance game after a while because they can't show the world what they've done. I.e. you can't really publish a white paper on your findings since the game is to generate money... not accolades.

As an aside, I have also done various marshal arts over the years: judo as a boy, karate and kung fu as a student and then tai chi as I got a bit older.

Interesting, I competed at national level in Tang Soo Do when I was an under 16 (like Tai Kwon Do but more military focused) and went on to Wing Chun at university. However I got distracted and never went back.

Anyway, I thought that I would fill in the next part of the background information which is the particular "markets" that I was going to trade. For me, having tried and failed several times in the past, I was looking for a way to participate in the trading process as "cheaply" as possible, both financially and also in terms of time commitment. I am happy to risk reasonable sums of money once I have something working that I am confident it but there is an iterative process of homing in on what works and what doesn't and whilst this is going on there is not point in risking more than the minimal amount of money. Also in terms of time, I don't want to spend hours watching the markets fine-tuning my technique as I have a "day job" to be doing.

If you don't want to 'micro manage' your positions why don't you take a longer term view of the markets? In that way you can look at your positions at the end of the day and do your best to ignore them intraday (barring any catastrophes).

Now you might say that the thing to do is to spend time back-testing strategies rather than spending money trading to discover what works. My issue with that is that that's what I do for the day job anyway.

I would see that as a benefit rather than a problem. If you have access to your existing backtesting routines why not use them?

I'm looking for something a little different and I feel that it's more of an iterative process, sort of like training your own "wet-ware" neural net. I feel that the principles of trading are universal to any market and the psychology that one brings to it stays the same. It may be that in the end I decide the best approach is a hands-off mechanical one and if so then so be it but I need and want to go through the process first.

Interestingly enough I ran into someone many years ago who was working on a 'darwinian' heuristic trading program. It would run multiple investment strategies and 'kill off' the poor performing ones while allowing the better ones to 'evolve'. That sound similar to what you're proposing to do.

Anyway, the solution that I came up with was to trade horse odds on BetFair before the race starts. The principle is the same: determine which direction the odds are moving and then buy (Lay) or sell (Back) the horse accordingly. As long as one closes out one's position before that start of the race there is no net exposure to the actual race itself. I won't bore everyone with the mechanical details of how this is done save to say that I've written a Level II depth of market trading platform together with some charting.

That sounds like an interesting technique to look at from a 'quant' viewpoint. I bet that you could exploit that technique in many markets. I wonder if 'Betfair' has an API that you can program to...

This enables me to do single-click trading on these markets. The advantages of these markets are:
1. Can trade any size that one wants - there are no minimum contract sizes so it can be as small as you like.
2. All the liquidity is in the last 10 minutes before the race so one has short 10 minute chunks of activity. This fast turn-around suits me as it enables me to learn faster: trading on a daily time frame for example means that one gets through fewer trades in a month and so has fewer opportunities to learn.
3. The odds of each race tends to have its own characteristics and so can be treated like a different day. Some "days" are choppy with little direction, some are trending and some are highly volatile and heavily manipulated by the big players. One has to decide which type of "day" one has and then select the best trading approach.

Number 3 is similar to the strategy employed by most black box companies. They seem to make an assessment on the 'type' of market that is trading and then switch on the appropriate box.

Anyway, that's the background to what I am doing. The actual stakes that I am trading are pretty small and I shall be reporting the results as % of my account so the stakes and account size are actually immaterial anyway. I've actually been doing this for some time now and initially I managed to make a fair bit of money, basically doubling my account.

An interesting question is this. How many times could you scale up your trading size before you become too big and start moving the market? Are we talking about x10, x100 or x1,000?

However I seem to have got stuck in a rut for the last couple of months and haven't made any money. I am using this opportunity to explore the psychology of what is going on within me with regards to my trading in general.

This is fascinating. The psychology should be the same in my view. However, I can't tell how mechanical your system is so I reserve judgement :smart:

Could you make your system completely mechanical? (i.e. a true black box?) Or do you think it will always require some element of 'judgment'.

Keep posting. I'd be curious to hear your results... :cheesy:

 

[a_gnome]

Things have been progressing in an interesting manner over the last week or so. Unfortunately I seem to be playing "catch-up" with the blog since I have up till now just been filling in the background information. I want to talk about something that happened a week or so ago with trading which lead to a minor break-through and which prompted me actually to get started with this journal. I'll answer some of RichieE's questions in due course.

I was trading away and had a really bad day. One thing I should say at the start is that my trade size is fixed such that one tick is 0.1% of my account. It's rare to lose more than 5 - 10 ticks on a really bad trade so this gives you a feel for my risk. I find that this is about right for me. My target is to make 2% per day though I am coming to realise that there will be days when this is not possible as the moves simply aren't there. Anyway, so I had a bad-day in that I lost 4%. I found that towards the end I was getting quite emotional about my trading and this was adding to my losses. Interestingly enough, the emotion that I was feeling was that I wanted to "fix" this problem. I feel good when the trading is going well but if I suffer losses then I want to fix this so that things are right again. The big problem with trading is that unlike many other activities one can't simply throw time at it (i.e. simply put in more hours to make it right again). This attitude of wanting to fix the trading was leading to me overtrading and was only making things worse. I realised that this has been a pattern with my trading over the years: the initial profits followed by some losses and things turning sour from there as I try to "fix" the losses through over-trading.

Now at this point I should say that amongst my other activities I am also a hypnotherapist. I have been interested in personal development for many years which lead to an interest in hypnosis and my training to become a hypnotherapist. This does mean that I am able to explore feelings that I might have and put them in context. This feeling of wanting to fix things seemed to originate from when I was younger - it was an unresolved issue if you like albeit not a very strong one. I did some "work" on this and I think managed to resolve this. I certainly have felt less of a need to fix my trading issues since then.

Another interesting development is that I have been reading John Carter's book "Mastering the Trade". Parts of this book are excellent including all the sections on psychology, how the market is driven by emotion and how amateur traders make emotional trades and one should simply concentrate on the "set-ups". All this has lead me to being much more aware of how I am feeling and responding emotionally to my trading. I feel that I have made good progress in this area though there is still plenty of further work to do there.

I also want to talk about risk assessment and discipline which I'll do another time but I'm putting this reminder in here for myself now.

 

[a_gnome]

If you don't want to 'micro manage' your positions why don't you take a longer term view of the markets? In that way you can look at your positions at the end of the day and do your best to ignore them intraday (barring any catastrophes).

I want a faster turn-around of trades so that I can learn faster. Trading the horses is very fast and intense so you get many more learning opportunities per day than longer term trading.

I would see that as a benefit rather than a problem. If you have access to your existing backtesting routines why not use them?

I will do so should I come up with something useful. However, as I have mentioned, I am looking for an approach which does have an element of discretion. My colleague and I have an on-going discussion about the relative merits of purely mechanical approaches (which is what we do for the fund) as opposed to a semi-discretionary approach. For intraday trading it is extremely difficult to get anything to work consistently intraday once you've correctly factored in costs, slippage etc. The reason is that the costs of trading are relatively much higher than the average size of any "edge" that you might find compared to long term trading. My thesis is that by using a discretionary overlay one can actually be a profitable intraday trader but that it is very hard to codify this discretionary overlay.

I wonder if 'Betfair' has an API that you can program to.

They certainly do and this is what I program against to get my software to implement the trades.

An interesting question is this. How many times could you scale up your trading size before you become too big and start moving the market? Are we talking about x10, x100 or x1,000?

Good question. Betfair horse markets are not that scalable. I've heard anecdotally that professional traders can make about £50k p.a. trading the horses. There is simply not the volume there to make much more. I have heard of people who take outright positions making more but their edge is in a superior calculation of the odds of a given horse winning.

 

[a_gnome]

OK - risk assessment and discipline. IMHO this is the cornerstone of successful trading. The only element of a given trade that you can control is the maximum amount that you will lose if you are dead wrong. You have no control of the outcome other than that so it's vital to make sure that you get this part right.

Since I made my "revelation" about wanting to fix my trading I have not fealt this feeling about trading so much. Nevertheless I have had a number of losing days last week and I realised that the problem is that I am not respecting and controlling the risk whenever I trade. The truth is that different races have different characteristics and different levels of risk but I was trading each one the same. This is now getting down to the essence of where one can get a discretionary edge: by identifying correctly when it's a good race to trade and when it isn't.

I had already made three rules about limiting the risk where I had found I was leaking money:

1. Doubling up - I know it's an old chestnut but especially when scalping there are times when it does seem very attractive. The problem is if someone comes and shoves the market heavily against your position (which is common in horse trading) you then have twice the risk. I now never do this.

2. Holding a position once the race starts. There is an "in-play" market so you can still close out your position. The trouble is that I am trading comparatively large positions because the risk can be limited to a few ticks. Once the race starts the odds can move violently according to whether the horse has a good start or not. I now close out all positions by the scheduled race start.

3. Laying horses "in-play". In-play trading is very exciting and extremely fast. The market can sometime move so fast that there's no way you can cover your position. Therefore I only back horses in play (unless the odds are less than evens where it's actually a lower risk to lay the horse). I know that in the long run the edge should be the same for backing and laying but psychologically it's painful to take a hit which has been as large as 10% of the account when you lay long odds only for the horse to win.

Despite implementing the above rules, I realised that there were other occasions where I was repeatedly losing too much. I have worked out that there are basically two dimensions to the quality of a market:

1. liquidity - how much volume there is. This increases substantially the closer to the race start you get.

2. volatility or "shovage". Some races the prices are shoved around a lot by the big players. They will ramp up the price so that they can load up with a short position and then ramp down the price faster than you can get out.

Both these factors are key in determining how you can limit your risk. If the market is not liquid enough then it can easily be shoved around and it's hard to get out. If there is too much shovage then you will get caught out too often by a shove against your position. One of the key factors that I am now learning is to assess the market on the basis of these two factors. I now aim not to trade if there is not the liquidity and I use different tactics or stay out if there is too much volatility. Both these ideas are all about controlling the risk and it's trader discipline which keeps one out of these markets however attractive they might look.

On Monday I managed to put much of this together and made +2.2%. There were plenty of good trending moves and I managed to avoid the nasty pitfalls. Yesterday was more mixed with a result of -0.6%. I had a nasty -1% result for a race which was volatile and comparatively illiquid so there were large gaps up and down. Whilst recognising this I still got sucked in to making a trade right at the end on which I got soundly spanked.

I do feel that I am making progress and that I am at least starting to think and analyse what I am doing. Now that I have more or less caught up in the blog I will report my daily trading results.

 

[a_gnome]

Right, now that I'm up to date I can actually report on today's trading whilst it is fresh in my mind. In general it was ok and by that I don't mean the outcome which was -1.5% but in terms of whether I was doing the right thing. There were no really good races today (by that I mean that made really good moves that could easily be capitalised on) so it was a bit of scratching around. Of the 6 races I traded there were two that were high volatility and I still managed to succumb to trading them and losing -0.6% and -1.2% on them. It was relatively easy to identify them early on and I was much more cautious about trading them which was good. However I still got suckered into making trades and in the second race managed to buy at the top before a massive shove down forced me out for a big loss. I think that at the very least I should halve my trading size for such markets; I don't want to quit them altogether as they can have really good moves (the second one ended up with a pretty good move at the end) but the risk and difficulty in getting on board means that it's not such a good trade. I am still not really sure of my tactics for such markets - perhaps just staying out would be best.

Still I am in general pleased with the more thoughtful and disciplined approach. I did also notice one benefit from the holding back which is that intuition is starting to kick in. There was one market which wasn't really going anywhere, I'd scalped a tick or two from it and was just watching and towards the end I got the feeling that it was going higher so I got it ok but unfortunately got out too early with just a tick whereas it actually made a decent move at the end. This intuition though is something which comes from being in the zone with the markets and having the rest of your game nailed down enough so that it doesn't interfere. It feels different from the amateur "having a hunch" which can lead to ruin. As long as one can correctly assess the risk and the trade is ok from that point of view then I am comfortable trading on such a basis. It's vital though to recognise the different feel of genuine intuition from the hunch/hope feeling.

 

[a_gnome]

Since I posted the last entry I did actually do some more trading that evening. It was very revealing because once again I got completely caught in a pump and dump reversal and I was rather slow to get out so it cost me -1.4%. I realised that I can't afford to keep getting caught out like this and that I have to place stops in at all times when the market is volatile and prone to sudden manipulation like this. I then traded another evening race where they did the same thing but this time I had my stop in so it only cost -0.5% and I made +1% on the subsequent move for a profitable race of +0.5%.

I have realised that part of the problem is that it's cumbersome to place stops with my software as you have to switch to "stop mode" first, place the stop and then remember to switch back. I've had problems with forgetting to switch back so the next time I go to make a limit order I end up doing a stop instead and with not actually switching to "stop mode" so that I end up closing out my position. Therefore this morning I changed the software so that you now right-click on the DoM to enter stops and left-click is still limits. This is much much better so you can now enter a trade and immediately put in the stops.

I traded with this new functionality this afternoon and the net outcome was +0.2%. Not a great result but at least a positive for the day. I traded pretty well - the psychology was ok and I was respectful of illiquid and volatile markets. The only bits that I would change was that three times I got out with a small profit towards the end of the session and missed a really good continuation in the direction of my position. Had I held on for these I would have made +1.5% on the day. I may well add some functionality for automatically trailing stops to enable me to stay in the trades longer.

Oh well - onwards and upwards!

 

[RichieE]

a_gnome - Just to let you know, I am reading your posts so keep up the journal.

One thing though... could you actually post what you are trading and why you made each trading decision. That would add a lot of colour to what you're doing.

 

[a_gnome]

a_gnome - Just to let you know, I am reading your posts so keep up the journal.

One thing though... could you actually post what you are trading and why you made each trading decision. That would add a lot of colour to what you're doing.

Hi RichieE,
Whilst I appreciate your comment on posting the trades to give the reader context, it would be very difficult to do so since everything is so fast paced. I may make up to half a dozen trades in a 10 minute pre-race session and I tend to trade for one hour so that's a fair number of trades. This is what I like about the horse trading - one gets to learn very quickly but it does make it very difficult for the reader to follow.

When I get a moment I may add some screen-shots so you can see what I'm up to.

 

[a_gnome]

Today's trading +0.2%. Again another flattish day. There were some missed opportunities: my waiting to analyse the market for liquidity and volatility means that I'm just not getting on some moves when I should. There was one good thing to report: I caught an up-move trailed a stop up and got out before a huge counter-move. Before I'd implemented my one-click stop functionality I would have given back a lot on that move. At least I'm no longer taking big individual losses.

It seems to be details that need working on at present:
1. Getting into moves earlier when the market conditions warrant
2. Looking out for chart points to re-enter a trend mid-move
3. Setting stops and sticking to them (I twice got out of a move before the stop when it wouldn't have hit the stop before continuing).
4. Keep working on assessing the market conditions.

I've posted some snap-shots of three of the races. It's actually been very useful to be able to look back at the chart and see what I should have done. Whilst the very fast pace of horse trading means that you learn fast it does have its drawbacks in terms of decision making and reflection.

At least I'm no longer losing big amounts. What we need is to start putting together some 2% days.

EDIT: sorry the images haven't come out very well - I'll do them in a different format next time.

 

[a_gnome]

An excellent day: +3.3%!

I seemed to have learnt many of the lessons from last week: I got in on trades early when they were there and I left the market alone when it was too illiquid or playing silly beggars. There was just one move which went away so fast that I wasn't able to get it but I was content to watch it go rather than chase after it. All in all I was very please with my mental and emotional state as well as, of course, the P&L result.

I was up 2% after the first two races and I noticed that there was a certain element of being reluctant to carry on in case this gain was lost again. However, as I continued trading I realised that as long as I was sensible in assessing the risks that were involved in each race and as long as I put my stops in quickly (which I am now doing) then I could control the risk that I was taking and the profits would take care of themselves. There was a certain element of trust in my trading just starting to creep in though of course it is very early days.

Below I've posted the snap-shots of the races, hopefully better quality this time. You can see that there were plenty of good moves today.

 

[a_gnome]

Another good day: +1.6%

I seem to have mastered the art of staying out on low liquidity now and have been very disciplined about this. It's paid off handsomely, keeping me out of choppy markets and has already probably saved me several %. I also managed to catch all the moves that were there. The only gripe that I have was that several times when the market wasn't going anywhere and towards the end of the session I took a trade and this cost me 0.7% from today's total. So it looks like I need to be more disciplined about staying out if the really good moves aren't there. My original thinking had been that I was going to scalp if the market looked like it wasn't doing anything but I think that it may be simpler and more profitable simply to keep out altogether.

So that's two good days in a row. I need to keep this up for a while longer and I'll be making new all-time equity highs. I'll also need to start thinking about scaling up my size but it's a bit early for that just yet.

Below are screen-shots of the six sessions that I traded.

 

[a_gnome]

6th Feb trading: -0.5%

A very unusual day in that it was incredibly quiet. My liquidity filter meant that I was out of many of the races till quite close to the "off". I caught one move and was whipped a couple of times in another race. In general I was pleased at my discipline in not trying to force anything but sticking to the plan.

No images today.

 

[a_gnome]

A solid performance when there wasn't much going: +0.9%

Not a great deal to say really, the markets were ok without being great. There was one good move which I caught plus some near misses. I was very disciplined about trailing my stops which kept me out of any real trouble. The worst loss for a race was only -0.4% where I go caught in a classic trap but the fact that I had a tight stop meant that it didn't cost me too much.

It feels like I've come along way in a short space of time as far as my discipline and mental attitude are concerned. I am finding that as long as I concentrate strictly on what I am supposed to do, namely keep out of trouble where possible (illiquid markets or markets where the volatility is too great) and I am rigorous about putting in my stops and trailing them up then I can't go too far wrong. Also by focusing on these things the profits tend to take care of themselves. I am also starting to get a feel for when the market is just ranging around and faking out as opposed to making a real move. Of course all of the above is stuff that I already "knew" and could tell someone if they'd asked me how to trade, but there is a difference between knowing in the abstract and actually appreciating from first hand experience.

Here are the images for most of the races (I missed one out).