The unlucky trader

[JTrader]

Hi

Could a trader be defined as an "unlucky trader" if they have a strategy that works overall, but is going through a losing spell due to -

Not placing trade entries at "valid" trade entry signals (according to their strategy) that for all accounts and purposes do not look, solid/stable/reliable - but had they placed these trades they would have gone on to make a profit.

Placing trades at solid/stable/dependable looking trade entry signals - but these trades then go on to make a loss.

The trader may then say, OK, perhaps I've been a bit too fussy about what i do trade - "look at the signals I did not trade that then went onto make a profit." The trader than becomes slightly less picky about what is a good or bad entry signal, and they then start trading some entry signals like the entry signals that looked bad, but went onto make a profit that they didn't trade, but when they start trading them, they make a loss?

I've made around the equivalent of 8 (in terms of total pips drawdown) consecutive EURUSD trades like this.
This is not good - especially when over the last 7 days, have made a loss on 6 of these. Whereas, by following all "valid" entry signals (including the bad looking ones) and following my other rules when in the trade (which I have done) I should have made an overall profit on 6 of the last 7 days.

Is this just sods law?

Do you get hit with such seemingly random jinxed periods of trading activity from time to time?

Or is a greater being trying to give me a subtle message?

Many thanks.

 

[JTrader]

Hi GJ

Nice to hear from you, I've not seen you round here much.

You're right that I do probably fit into the middle category.

Although I do classify this recent spell as bad luck, i agree that in general, such trade failures are often due to mistakes. In these recent cases, I have avoided the trades that turned into winners as they looked like mistakes. But they didn't turn into mistakes.

In my case, part of my present frustration is directly linked to EURUSD price action. Recently it has been very slow and stagnant, being range bound, falsely breaking out of a range without a trend forming, only to retrace back into a consolidation pattern.
Then when a trend does form post economic news, it is again often untradeable, due to a range establishing, or a steep trend establishing which does not give me many potential entries.
Therefore EURUSD tends to be too slow to move in the UK morning, with non sustained breakouts, and too quick - choppy post USA economic data.

GBPUSD on the other hand is too quick for my liking.
I could do with finding a pair that is inbetween EURUSD & GBPUSD in terms of general ease/range/speed of price movment. For this reason, I'm thinking about having a look at USDJPY (Any thoughts on this welcome) I trade from 0800-1600 UK time.

Besides, this, I did think that "The unlucky trader" would be a good title for a thread.

 

[smccreedy]

JT

If you have any discretion over trading I don't think it can be put down to luck.

There are in my mind two ways to look at your patch.

A) You are doing everything right and this is just a bad run in your system that will pass. Having longer term evidence that your system works will help reassure you with this.

B) There is something wrong with the system and it needs to be fine tuned or you don't know if the above it correct as you are either not following it or don't have a history to see if it is long term (5 years min I would have thought) viable.

Back to the FTSE system we meddled with. If you ever looked at a one week period there were plenty of horrendous looking weeks, but over a 18 year period or so it seemed to do well with reasonable draw down.

Have a solid backtest behind you can help in these periods.

If you don't have that you don't know if the good run you had was the blip and this run is the norm or if this is the blip and the good period is the norm. Without this you have to take the emotional strain yourself.

Chin up though, it's only money, take your ego and dissapointment out of it and I'm sure you'll see clearly what you need to do. All the answers are in you.

I don't believe in luck I'm afraid, even when things like Sep 11th come around they usually affect the market in a predicatable way and often a way it would have acted in eventually albeit maybe over a little more time.

Stephen McCreedy

 

[JTrader]

Hi

I currently trade with WS with 1 pip EURUSD spreads. GBPUSD is 2 pips. USDJPY & AUDUSD both 1 pips from 0800-1600. The 2 pip cable spread is affordable due to the biggers cable swings.
Therefore moving onto a pair that doesn't have a 1 pip spread is a bit unrealistic for me given the current situation.

 

[chump]

I've read a number of your posts made in a similar vein ..that is the underlying message is the same ....pinching a little something from Graifer (which I don't think he would mind as it is not a state secret) ..I think ,you are ,and have for quite some time, been trying to cope with acquiring the traders mindset ...'lucky' , 'unlucky' have nothing to do with this .....as Graifer alludes finding a system ,mechanical , or otherwise is not that hard to do....but getting the mindset to use it to extract from it what you know from testing it should deliver is the hardest part of becoming a trader...perhaps you should just take your lumps and keep at it..from what I can tell there is no magic formula for how long (if at all) it takes for an individual to acquire a professional traders mindset.
Thinking in terms of "unlucky" ,"sods law" isn't going to help you ...perhaps you need to find some artifice to help you...it's hard to know what that might be as it must be something very personal to you if it is going to work for you. Not being funny ,but just as your mind can play tricks on you to 'make' you do things you know you should not do (like deviate from your discipline) so too can you play tricks on your mind to make it behave...sounds off the wall I know ,but it works believe me.

 

[Crap Buddist]

I think its a question of confidence we have to go through, ie perhaps we dont trust ourselves to action ourselves, because we are unsure. I mean we lack knowledge of "seeing the field of play" we know this and its what drives us to further gain insight. These trades I think you are not taking ,is you just at a deeper level saying , JT need to study more.

What characteristics do those ugly looking trades have that you didnt take but went on to be the right ones to take in hindsight.

 

[JTrader]

My problems with trading on a 1 hour chart are -

1. Bigger stop-losses required = smaller stakes sizes placed.
2. Less frequent trade opportunities.
3. Less frequent trade opportunities alongside a non-exposure policy to major news releases. Lets say a 1 hour system averages 3-4 trade signals per 24 hour day. If you have a signal coinciding with major news, that you don't trade due to potential gaps etc. I can foresee a situation where it becomes inpractical.

 

[Crap Buddist]

How do you see yourself trading ideally, what comes to mind ? frequency , points, timeframes, how do think you want to be with it at the moment.

What would you like?

 

[chump]

Ok, I think I may have the solution. The next time you find yourself having discipline problems with trading your system you must imagine yourself sat in an Iranian prison answering questions "what was your position...tell us " ...then think what you must do to make Tony Blair proud of you and press that trigger simultaneously shouting "I was short US$"...I think this would be good as if you ever were in the said prison I think they would like your answer anyway.

 

[JTrader]

At present, my system trades for continuations from minor pull-backs in a trend.

The problem at the moment is there are not many trends. Price is tending to break out of a range, before slipping backing into the range when the trend doesn't sustain itself much further. I have measures to account for this situation so that i avoid entering when such a situation is likely. However, there are still times when the price action/chart passes these measures, i enter and the trade still fails.

But over around 8-9 weeks of backtesting, theres literally only been a few days that would have made me a loss (had i followed my rules correctly).

Problem with EURUSD is that my trade entry levels typically form around the 00255075 levels, which can & will act as S/R in the mornings especially, and so I am reluctant to enter, until this level has been passed by.

It's been frustrating because, as I say my limited 9 weeks of manual backtesting (on 10 tick charts) have shown that the vast majority of days should make a profit, if i follow my rules. Which i haven't been doing fully, due to lack of belief/doubts etc. in the strat.
This is my 5th week of trading this strategy now, and I have to some extent become at one with the rules. But yesterday was one of the very few days that should have, & did make me a loss. So i am not getting the opportunity to prove that it works over the long haul!

Perhaps I am being impatient, as I am still making occassional mistakes. But i am in a hurry to prove that what I am doing works, otherwise its time to find something else to do.

 

[Crap Buddist]

Besides, this, I did think that "The unlucky trader" would be a good title for a thread.

Just on this, I think its says to me "The unkowledgeable trader" ,its not a put down, look at it this way, "The learning Trader" who aint in that boat ? now you read that knowledge bot thing written by a bloke who says place your trade and if the market goes with you all well and good and jump out with profits. (something like that).

What I think, and its just my personal look at it, is thats rubbish. A trader should seek to trade with the market at all times. and not think bloody hell, ive done my thing and luckily the markets going the same way.

Also, from the "My trouble with controlling risk " Thread. the companion linked to that i see when reading that thread is a traders ability to identify that (to use a phrase from that thread) The character has changed

Now can or does the trader know the character of the market . Is he advancing to that point or depth of knowledge /experience to view the field and absolutley able to know (for his/herself) the character of the market at that time. If he does then he can look for VALUE for high probabilty . If he doesnt know then he will wait until the character is known and seek to then position with it.

System traders and part descretionary? hmm i see a conflict, system bangs away based on what rules? allsorts, trader over rides because i think deep down we know that because we dont know the character of the market ourselves, then for some, this maybe bloody frustrating to work through.

2 camps, those who say well even random makes money mate with good management, others who say, learn to read the market and figure out what speculation is. The choice is down to us. But can take time to arrive at the decision about the route to take ,that the individual thinks is right for them to be pursuing.

Rant over.

 

[JTrader]

In an ideal world, I'd recognise when the market is ranging, and look for reversals. Then when the market begain to trend I'd start trading with the trend. This way I wouldn't be sat on my hands for such long spells as I'd know how to profit from trending & ranging markets.

This is difficult as knowing when the range will break & a trend will form requires a crystal ball, as far as i know.


I also find trading based on S/R, looking for reversals, very difficult psychologically, thats why I've settled on a mmethod that trades with the trend. But when false breakouts/non-sustained trends occur, and price creeps back into its prior range, this is when trading my approach with the trend can hurt the results.

 

[Crap Buddist]

Problem with EURUSD is that my trade entry levels typically form around the 00255075 levels, which can & will act as S/R in the mornings especially, and so I am reluctant to enter, until this level has been passed by.

hmm, well it stopped falling bang on 25/30 your golden number ? this Am, now trading 60, see if they sell it from here? any failure to advance 60 to take 70 out might suggest sub 25 will be eyed?

 

[JTrader]

Ok, I think I may have the solution. The next time you find yourself having discipline problems with trading your system you must imagine yourself sat in an Iranian prison answering questions "what was your position...tell us " ...then think what you must do to make Tony Blair proud of you and press that trigger simultaneously shouting "I was short US$"...I think this would be good as if you ever were in the said prison I think they would like your answer anyway.

That may work....

My previous discipline problems, weren't really discipline problems. More like an inability to follow my exits rules in a decisive manner due to wanting the market to do as i expected it to, and chasing imaginery weekly profit targets - which was a mistake, alongside not being aware of certain other peripheral phenomenon that was going on. Now i have all that in hand to a large extent, but the market isn't letting me prove it!

Just made 4 pips on a trade, best single trade return in the last 3 days!

 

[smccreedy]

JT

Maybe look to a different market?

I think from the limited time I've spend that FX is tougher insofar as you have to know about all the data coming out, when it is what the expectations are etc I don't find that with trading the FTSE, really on the MPC and MPC minutes each month make a massive difference and even RPI readings etc don't usally change the tone.

The fast moves are slower than in fax and I think trace more often.

Just a thought.

One small change I made once that changed my account for the better was to only enter on stop limit orders, ie above the market if long and below the market is planning to go short.

For me as long as they are not too close to the market to be hit by noise then you have to be in sync with the market at the time it is triggered.

Buying trend continuations can sometimes get you in the mindsight of buying a falling market in the expectation that it will reverse and go higher. You might be right but the even if you are and are too early you will get stopped out only to see it go your way in the end.

I hate to sound the same tone as everyone else but really zooming out and looking at longer term trades might help, it could be that the spread is killing you not to mention the skew if you are using CFD or SB and not direct market.

Seriously, I went from scraping even each month to making good money when I swapped from SB to DMA.

Good luck finding and answer and as I said before it is all in you somewhere you don't need our help, you honestly know what the answer is I'm sure just trust yourself and go with it.

If you are feeling desperate to trade to get some wins behind you it won't happen.

Try reading some FAQs at Seykota.com always calms me down, no matter what you think of the 'oddball' ways of some of it.

Stephen McCreedy

 

[JTrader]

Really think you're quite literally not seeing the 'bigger picture' here. There is no such thing as ranging and trending in such short timeframes (in any meaningful sense). No one with any meaningful amount of capital to commit looks at this sort of thing.

When I have a billion Euros to execute, the difference between me executing at time a and time b can be for reasons as esoteric as I want to have one last chat with the rest of the desk about game plan, or I want to quickly go to the toilet before I get locked in to my desk for a while or whatever. All in all, too much random stuff to legislate for imho. And I am typical of the wholesale market. Trust me on this.

GJ

Hi GJ

Moving from short to long timeframes is a big change in psychology.

Perhaps I've just found 60 minute & bigger charts, more confusing & harder to interpret than shorter timeframes.

As a guide, what size stop-loss do you consider typical for a person trading EURUSD on a 60min chart, and how many trades per day would you consider typical for this timeframe?
How might a trader start to look at profit targets?

I've never really looked into trading from 60 minute charts before, because i have always thought signals would be fewer & far between, news would interfere with trades, & generally the prospect of bigger stop-losses & profit targets at certain levels has not been something I have felt able to decipher from looking at a 60 minute chart.
For example, perhaps you get a valid entry signal 10 minutes before USA news. You only get a handful of signals per 24 hours, but you cannot take the trade as the news release may take out your stop, and slippage may even result. Therefore thats one valid trade signal that you couldn't trade.

I've heard people on these boards discuss their profit targets 70 pips away and so on, but it just confuses me slightly ,as I find it difficult to see how people can trade on such a basis, when economic data plays such a key role in directing price movements, a news release can quickly send price 30+ pips in the opposite direction, and a 20-30 pip stop loss can quickly be hit or passed by.

Any feedback much appreciated.

Many thanks.

 

[Charlton]

Available Information

Hi

Could a trader be defined as an "unlucky trader" if they have a strategy that works overall, but is going through a losing spell due to -

Not placing trade entries at "valid" trade entry signals (according to their strategy) that for all accounts and purposes do not look, solid/stable/reliable - but had they placed these trades they would have gone on to make a profit.

Placing trades at solid/stable/dependable looking trade entry signals - but these trades then go on to make a loss.

The trader may then say, OK, perhaps I've been a bit too fussy about what i do trade - "look at the signals I did not trade that then went onto make a profit." The trader than becomes slightly less picky about what is a good or bad entry signal, and they then start trading some entry signals like the entry signals that looked bad, but went onto make a profit that they didn't trade, but when they start trading them, they make a loss?

I've made around the equivalent of 8 (in terms of total pips drawdown) consecutive EURUSD trades like this.
This is not good - especially when over the last 7 days, have made a loss on 6 of these. Whereas, by following all "valid" entry signals (including the bad looking ones) and following my other rules when in the trade (which I have done) I should have made an overall profit on 6 of the last 7 days.

Is this just sods law?

Do you get hit with such seemingly random jinxed periods of trading activity from time to time?

Or is a greater being trying to give me a subtle message?

Many thanks.

JTrader

An interesting question.

I think an unlucky trader can only, in reality exist, if:
(a) markets are totally random OR
(b) markets are controlled by some superior force based upon a label that the force gives to traders - lucky trader or unlucky trader

In fact I believe that neither is true and that the trader "makes their own luck" i.e. skill and experience dictate their success.

Success should depend on two factors:
(1) Creating a well-thought out strategy based upon available information from the past and at the present moment
(2) Having access to sufficient available information to create, maintain and run that strategy

We can work at developing (1) the successful strategy. The real question is whether we are provided with (2) all available information. If the answer to (2) is NO then our strategy will always be limited and may, at times, take on the appearance of luck or lack of luck

Charlton

 

[new_trader]

Hi

Could a trader be defined as an "unlucky trader" if they have a strategy that works overall, but is going through a losing spell due to -

Not placing trade entries at "valid" trade entry signals (according to their strategy) that for all accounts and purposes do not look, solid/stable/reliable - but had they placed these trades they would have gone on to make a profit.

Placing trades at solid/stable/dependable looking trade entry signals - but these trades then go on to make a loss.

The trader may then say, OK, perhaps I've been a bit too fussy about what i do trade - "look at the signals I did not trade that then went onto make a profit." The trader than becomes slightly less picky about what is a good or bad entry signal, and they then start trading some entry signals like the entry signals that looked bad, but went onto make a profit that they didn't trade, but when they start trading them, they make a loss?

I've made around the equivalent of 8 (in terms of total pips drawdown) consecutive EURUSD trades like this.
This is not good - especially when over the last 7 days, have made a loss on 6 of these. Whereas, by following all "valid" entry signals (including the bad looking ones) and following my other rules when in the trade (which I have done) I should have made an overall profit on 6 of the last 7 days.

Is this just sods law?

Do you get hit with such seemingly random jinxed periods of trading activity from time to time?

Or is a greater being trying to give me a subtle message?

Many thanks.

Jtrader,

It has nothing to do with luck and everything to do with you. I also have a discipline problem that I am trying to overcome and I honestly think I will be a much better trader once I have mastered myself. This means having the discipline to take trades when the setup appears and to do nothing when there is nothing to do or abstaining from ‘kamikaze’ trades based on hope of recovering a loss. Today is a classic example. I saw my setup, took the trade and the market moved in my favour. However I lost my nerve and cut my profit early. I was happy that the market moved to where I expected but at the same time mildly annoyed because I wasn’t profiting from the continued move. So what did I do? I put in another (panic) trade hoping the move would continue but it reversed taking out my stop and wiping out my first profit and then some. I have practised and practised trading with a simulation program I developed and I still have problems with my discipline. BUT on the bright side, I am getting the practice I need with real money.

 

[chump]

When it comes to discipline actually in the trade it helps if you have a decent idea of what to expect from price..that is what is 'normal' for a trade to continue and what is not 'normal' for continuity..if you have not done enough observation to feel comfortable in this regard you will continue to have problems with crowding your trade.

 

[Paul71]

Discipline comes with experience. Trading discipline comes when you find a style that suits you. Trading discipline is not a separate issue.

Trading is a discipline!

Which sentence sounds correct?

1) I didn't trade because i had the discipline to stay out of the market.

2) I didn't trade because there was nothing to trade.

When you find yourself saying no.2, you have trading discipline, no.1 is just discipline. The two are very different.