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The Good, The Bad and The Ugly - A Real Trading Record

  • #341
  • Feb 2, 2021 1:59am Feb 2, 2021 1:59am
Quoting diamond1011
Hi Oldtraderman, I'm glad you are keeping well despite lockdown and Covid. I've been wondering how your mechanical entry experiment was going because the result was so great in a few starting weeks. Now we have the conclusion that it is not a successful experiment but for sure it is a valuable lesson. Regarding your discretionary exit strategy, may I ask when you let the price run past the initial target +1R then do you have minimum points you expect to take, say like you will not take profit less than +1.3R or +1.5R or something like that? Because...

Hi diamond1011,

Nice to hear from you again, hope you've been keeping well.
Your post to me contains three separate issues which I'll deal with each in turn:

1) The mechanical entry experiment was a failure in that the mechanical entry unfortunately showed no material long term edge on a basic 1:1 R:R exit, but I was able to trade profitably with the mechanical entry. This apparent paradox I think is explained by the fact that it did occasionally set up trades with profits significantly in excess of 1R without having to accept losses of greater than 1R to achieve them. If you could run those profits you have a profitable edge. My issue with it at the end of the day was a personal one: 1) I am not good at running profits; and 2) being mechanical, it does necessarily create deeper drawdowns during times when market conditions are against it, and I am not good with that either. So, for someone else for whom these things are OK it could well be a fine system; for me, not.

2) Your question about profit taking touches one of the raw nerves of trading: there is no definitive answer and it boils down to a classic greed vs fear argument. From the above paragraph you may deduce I am on the fear side of that equation! Once a trade gets to 1R I get very trigger happy and rarely do I get a much bigger winner as I tend to quickly book the profit, no matter how hard I try to stick with it for more. As a result of this, I tend not to move the stop to 1R should price get past this point, I generally just wait for the expansion move that took it past 1R to run out of steam and I quickly take profits then. Again, very much a personal psyche thing. It causes me a lot of stress to run for big R multiple profits so I tend not to do so. Some people just love sitting there and watch the profits grow, each to their own. If you do want to shoot for bigger profits then you do need to develop a trailing exit strategy of some sort that protects you from giving it all back should the market reverse.

3) In one sentence, for me profitable trading is: Making consistent profits in an acceptable way. The bits there to consider are what constitutes 'consistent' and 'acceptable'? Consistent I think is just can you do it month after month with only the odd inevitable blip here and there; and acceptable means with stress you can live with + drawdown you can live with. No point making money if you are always a bundle of worry & nerves heading for breakdown!
  • #342
  • Edited 4:04am Feb 2, 2021 3:54am | Edited 4:04am
Morning all,

Three trades in the first hour this morning with a full house result of 1W 1L 1S for net nothing for our efforts! Instructive nonetheless to take a look at it all:

Attached Image (click to enlarge)
Click to Enlarge Name: Germany 30_20210202_09.28.png Size: 25 KB


We see a big run up after the 8am open and so I am biased towards looking for a long but not happy to chase the vertical run up. Three times I wait for what looks like a retracement that is failing and the main uptrend resuming to take a long with the results shown on the chart. For a little more colour on each trade:

1) Long at 84 on a presumed renewed run by the market back toward the 04 prior high but this does not materialise and I am caught on a further retracement; the stop takes me out for -1R -12pt loss.

2) Try again long at 64 after it looks market is holding the 60 level. Get as far as +11pts at the 75 level before a sharp break down again but this time I have moved the stop to breakeven (done after it broke 70 upwards) and so took a frustrating scratch.

3) Third attempt after the spike down to 44 sharply reverses, suggesting a fake move. Go long at 67 and take profit at 79 for +12pts, not wanting to test the 80 level as I am a bit cautious after the previous trades. Once again, though, braver traders than me had a lot more to take as the market duly ran back up past the old high up to the 20 level

So I am a scratch for the day which is disappointing given the directional strength of the market. But can't be (even close to) perfect so I call it a day at evens for me.

Do note how my trading this morning was conditioned entirely by my subjective assessment of the market direction; I was only ever trying for long trades. This was right but the execution was less than perfect today. Shows you need to bring both good market judgement AND good trade mechanics to win; sadly I couldn't manage both today.

Anyway back with renewed optimism tomorrow

Rolling summary: W2 L1 S1 +2.5%
  • #343
  • Feb 2, 2021 9:33pm Feb 2, 2021 9:33pm
Hi Oldtraderman,
Just for the purpose of making an example: If you had 3 consecutive losing trades yesterday (instead of 1L 1S 1W), what would be your view and your reactions on that event? Thank you.
  • #344
  • Feb 3, 2021 1:46am Feb 3, 2021 1:46am
Quoting diamond1011
Hi Oldtraderman, Just for the purpose of making an example: If you had 3 consecutive losing trades yesterday (instead of 1L 1S 1W), what would be your view and your reactions on that event? Thank you.
Hi diamond1011,

3 straight losers is not uncommon for me, it is statistically going to be quite common when your long term trade success rate is under 60%, as mine is. Short answer is you carry on regardless and treat each trade as an independent event.

Consider my January trading mentioned in post #337. This was a good month up 11% or 5 net winners in 54 trades with a distribution of W26 L21 S7. I had losing streaks of 3 or more trades 3x that month but I also had several similar winning streaks as well. You are going to have both, you need to learn to accept it with equanimity.

It's just the nature of the game and the inability of many traders to accept losers, and even less strings of losers, is I think a prime reason why so many people fail at trading. They take some losses and either lose heart and/or move to another method and/or begin revenge trading, etc. None of this is likely to end well.
  • #345
  • Feb 3, 2021 3:42am Feb 3, 2021 3:42am
Morning all,

Just the one trade this morning and not a textbook one at that, but will show to highlight how my thinking and emotions went:

Attached Image (click to enlarge)
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Market opened with a sharp spike up that proved to be a fake, good illustration of why jumping in and chasing the market is an unwise strategy in general. The market then settles into a choppy downtrend and I am therefore tempted to look for a short, especially given the fake opening spike.

The choppiness is though a problem and I wait until I see three declining tops in the 20-30 area at about 8.55-9.05am. The third one is a fail at the round number 20 level and the quick drop back tempts me into an admittedly speculative trade short at 16. The stop at 28 is just about OK (above 30 would have been better) but the target at 04 is below the immediate lows and eseentially betting on a test of the round number 13900 level. Happily we quickly get this and I take my 1R profit at 04, not wanting to take on a possible sharp bounce from 00. Braver traders than me could again have got more as the market does sharply break down to 87.

I prefer easier-to-reach targets and a better stop than on this trade so it was an aggressive one for me. A winner but not joyous with it as really I should have waited for a better opportunity according to my method, but we are all human. Good if nothing else to understand your emotions when trading and know when you are starting to move outside your discipline parameters.

Back tomorrow for hopefully safer trading

Rolling summary W3 L1 S1 +4.5%
  • #346
  • Feb 3, 2021 8:04am Feb 3, 2021 8:04am
Very interesting because I was also looking for a trade at your entry point and eventually decided not to take the trade. I felt I would move outside my discipline parameters if I took that trade, and more important I felt I have not yet had enough experience and stability to be sure that I can be able to manage to move back inside again. A little disappointed because I did not have any trades at all during the session today.
  • #347
  • Edited Feb 4, 2021 4:27am Feb 3, 2021 9:25am | Edited Feb 4, 2021 4:27am
Quoting diamond1011
Very interesting because I was also looking for a trade at your entry point and eventually decided not to take the trade. I felt I would move outside my discipline parameters if I took that trade, and more important I felt I have not yet had enough experience and stability to be sure that I can be able to manage to move back inside again. A little disappointed because I did not have any trades at all during the session today.
Hi diamond1011,

Not taking a trade usually means one of two things: either too fearful to trade (bad) or disciplined enough to pass sub-optimal opportunities and wait for a better one (good). Most traders overtrade and get upset and maybe start doing all sorts of poor things like revenge trading or chasing price if they miss out on a trade that would have worked out. No worries. The market presents opportunities over and over, just sit back and wait for the next one to set up. And who cares if you go a day without trading - there's about 250 trading days in a year!

I'll admit it took me a long time get more relaxed about missed trades, and even longer to learn how to reset my emotional equilibrium after doing something dumb. And I did a lot of dumb, still do, but slightly less often now and I recover better. it's just experience, reflection, and practice.
  • #348
  • Feb 4, 2021 4:20am Feb 4, 2021 4:20am
Morning all,

Feeling a bit out of sorts this morning and my trading duly reflected it. Two trades to lose a net 1R, shown below:

Attached Image (click to enlarge)
Click to Enlarge Name: Germany 30_20210204_10.25.png Size: 29 KB


Trade #1: Market opens with a nice uptrend and then spikes up sharply. Usually in such conditions the consolidation after the spike represents a bull flag with further gains to come. Everything looks bullish so I am searching for a long trade and decide to jump in a bit, long at 06 looking for a quick push up past the spike high. But I am wrong and it was a sucker spike that catches me for an immediate 1R loss at the 94 stop.

Trade #2: This experience gets me thinking this is an early morning fake & rollover as per yesterday (see post #345) and this is reinforced by a subsequent lower high & decling tops. So now I am looking for a short and duly enter short at 01 on the falling tops. The trade quickly gets to +10pts and I move the stop to breakeven, only to see the market bounce sharply off the 90 level and just take me out for a scratch before rolling over to below 80.

The market then settles in a sideways pattern and I have had enough, not feeling on the ball and just had a nice would-be winner snatched away. I feel very much I am going to slip into bad mood revenge trading so call it a halt to avoid further potential damage. Sometimes you just need to know it is not your day, either market behaviour-wise or personal emotion-wise, and stand back instead of forcing yourself on.

The net 1R loss on the day still leaves me +1R on the week at close of trading Thursday. This is my minimum acceptable achievement for a Friday off just to watch instead of live trading, so I won't be posting any trades tomorrow. Instead, we will have a review of this week's trading which I think does contain some useful observations for you.

Rolling summary: W3 L2 S2 +2.5%
  • #349
  • Feb 5, 2021 2:02am Feb 5, 2021 2:02am
Morning all,

As mentioned yesterday (post #348), no live trading today as I have at least a 1R profit for the week in the bank by Thursday close of trading. I find I get overly defensive on the Friday when I am in such a position. So instead I just enjoy my week’s winnings and take the opportunity to sit, observe the market and reflect as a form of continuing professional development, if you like.

We can usefully reflect on this week’s trading. 7 trades split 3W 2L 2S for net +1.25R or +2.5% account return at the 2% per trade risk level. Nothing special, just the net odd winner in 7, no big windfall winner, only a 42% trade success rate, but still enough for 10%+ on a full month if we carry on like this.

That rate of progress more than doubles the account in a year, without allowing for any compounding effects. Not many traders double their account each year with just a 2% per trade risk. I suggest that the key to it all is twofold: 1) no big losses taken; and 2) losses and scratches accepted (mostly!) with equanimity. It is the ability to stick to your method and simply plod on through thick and thin with very diligent risk control that allows for the small net edge to be realised over and over.

Trading is a pretty marginal game at best for most of us. Your net edge is small and it takes excellent discipline, emotional stability, consistency and risk control to ensure your edge is realised and continues to be realised. I think these personal behavioural aspect of trading are rather more important than your actual method. The method needs only to be a touch better than random to be OK but your personal behaviour needs to be spot on always or you have little realistic chance of succeeding.

I will talk more about these aspects as we go on in this journal but enough for now, have a good weekend, all!
  • #350
  • Edited 12:30pm Feb 7, 2021 4:55am | Edited 12:30pm
Hi Oldtraderman,
May I ask why do you believe that there is a chance for a trader to make profits consistently on the market or even has a chance to make trading to be a source of income, given the nature of the market is uncertain, random and unpredictable, one day you win but next day you might lose, one thing works today but might not work tomorrow, and unfortunately it is very rare to find true consistently profitable traders around? Thank you and hope you have a good trading week ahead.
  • #351
  • Edited 4:33pm Feb 7, 2021 4:23pm | Edited 4:33pm
Quoting diamond1011
Hi Oldtraderman, May I ask why do you believe that there is a chance for a trader to make profits consistently on the market or even has a chance to make trading to be a source of income, given the nature of the market is uncertain, random and unpredictable, one day you win but next day you might lose, one thing works today but might not work tomorrow, and unfortunately it is very rare to find true consistently profitable traders around? Thank you and hope you have a good trading week ahead.
Hi diamond1011,
The answer to that question could take up a lot of column inches! My short answer is that the evidence exists in that there are people out there who do achieve exactly that: making a consistent living from the markets. It is by no means impossible but it is not easy.

Sure, markets are uncertain and unpredictable (not so sure about the random) but then so is life, is it not? Everything you do in life has its risks and potential for failure as well as success, the markets are simply a part of that for me. I don't think I am doing anything more inherently risky or uncertain by trading than I would be if I ran a greengrocer's shop, for example.

Trading is a learned skill in much the same way being a lawyer is, or being a greengrocer is. Like anything, it suits some more than others. I think some distinguishing features of trading are the demands it puts on the emotional balance and the discipline of repetitive execution of the trader. But then, couldn't you say much the same about being a surgeon, for example?

Bottom line, it's just a job, with its own requirements and idiosyncrasies that any other job has. If you happen to like it, as I do, great, trade and enjoy. If you try it and it happens not to be you, well, at least you tried and learned something valuable about yourself in the process.
  • #352
  • Edited 9:16am Feb 8, 2021 4:53am | Edited 9:16am
Morning all,

A new week and just the one successful trade this morning, this one illustrating how I do sometimes use classic chart patterns if I feel they are telling me something about the current market flow. It is the flow I am interested in, not the pattern per se:

Attached Image (click to enlarge)
Click to Enlarge Name: Germany 30_20210208_10.24.png Size: 26 KB


Market opens at 8am with a double thrust up which proves to be a double fake spike and the market settling into an early downtrend. I like this pattern because it is perhaps telling me the flow is down, the failed spikes giving some added strength to this as evidence of opening weak bulls who could not force prices up and are now feeling trapped. The market then traces out an almost textbook bear flag that gives me to room to look for a short for an expected test of the flag initial low at big round number 14100. I am finally tempted into a short at 15 after the sharp fall off from the 30 level convinces me the flag is breaking down to want to test 00.

This is an aggressive, slightly late in, trade for me in that the stop at 27 is inside the flag high and the target at 03 is very near the low & big figure but I am expecting a quick sharp fall here so I take the trade. This duly pans out and I rapidly take my 1R profit at 03, not wanting to risk a potentially sharp bounce off 00. Once again, braver traders than me had another 35pts to play for with the break down extending all the way to 65.

Note how this trade is dependent on my discretionary analysis of the current flow, backed up by visual clues from the chart patterns highlighted. It could also have not worked out: there was a perfectly reasonable earlier trade at the start of the bear flag when the market bounced from 00 to the 22 level before rolling over. A short there at the same 15 level was perfectly reasonable that would have made a rather agonising +11 before reversing sharply back up again and left me taking a scratch. I diddn't take this first trade as I was a little wary about a sharp recovery off the 00 level so I waited for a second rollover instead after the bear flag was well formed. A game of small margins indeed!

Back tomorrow for more

Rolling summary: W4 L2 S2 +4.5%
  • #353
  • Feb 9, 2021 4:19am Feb 9, 2021 4:19am
Morning all,

Three trades taken this morning for another full house of 1W 1L 1S but a 0.5R net profit extracted overall. Instructive to show how not all analysis works out (the loser), how trading can be a very frustrating game at times (the scratch), and that history can and does repeat itself (the winner):

Attached Image (click to enlarge)
Click to Enlarge Name: Germany 30_20210209_09.46.png Size: 28 KB


#1 The Loser: Market opens at 8am with a sharp fall and then a consolidation that shows three higher tops then a lower one. With the flow down into the consolidation this is not an unreasonable sign of the consolidation weakening and a further downleg to come. I am thus tempted into a short at 36 after the lower top reverses only to find this expected scenario does not work this time around and I am duly stopped for a full 12pt 1R loss at the 48 stop as the market jumps up. This was an OK trade for me but trading is a game of probabilities, not certainties.

#2 The Scratch: The break up suggests a challenge at the opening high at 70 is likely so I am happy to try a long now at 52 after waiting for a small drop back after the immediate rush up to the 60 level. This frustratingly gets all the way for +11 on a +12 target only to fall back sharply and I am scratched out at 52, having moved the stop to breakeven when the market hit 60 again. Another OK trade and a bit unlucky perhaps not to have got a winner here. Such is life.

#3 The Winner: I now sit and wait awhile until the market decisively clears the prior lows around 20 and so tells it's a downtrend for now most probably. As per yesterday we get a repeat almost textbook bear flag and I am happy again to take a somewhat aggressive short at 08 in the expectation of a sharp downleg. This happily works out, I move the stop to breakeven as we hit 00 as protection against a sharp bounce from there, but the market drops straight through and I somewhat limply close out at 90 for +18pts, 1.5R. Braver traders again had a further 30pts available as the drop continued all the way to 60.

So just one winner in three trades but enough for 0.5R, 1.0% net gain and probably I should have had enough courage to hold on for more, but regular readers will know I am a cautious trader even at the best of times. Nothing special but even just carrying on like this will generate a decent account return over time.

Back tomorrow

Rolling summary: W5 L3 S3 +5.5%
  • #354
  • Feb 9, 2021 5:10am Feb 9, 2021 5:10am
Hello Oldtraderman,

Good to see you again started to post on this thread. It's rare when someone honestly sharing winners and losers also giving detailed explanations on reasons for taking a trade. Wish you further successful trading.

Regards
Alexey
  • #355
  • Feb 9, 2021 5:48am Feb 9, 2021 5:48am
Quoting alexgvr
Hello Oldtraderman, Good to see you again started to post on this thread. It's rare when someone honestly sharing winners and losers also giving detailed explanations on reasons for taking a trade. Wish you further successful trading. Regards Alexey
Hi Alexey,
Many thanks for your kind words. I've always thought there was a gap in the various trading journal & system posts I read in that almost no-one actually posts and explains their trading experience in a complete way. All the chat, ideas and advice is great but at the end of the day you do have to go out there and trade through good, bad and indifferent times. I hope this thread just gives a realistic insight into how trading actually works in practice and how it affects the trader doing it - with a few of my personal insights thrown in for good (or bad!) measure.
  • #356
  • Feb 10, 2021 2:31am Feb 10, 2021 2:31am
Morning Oldtraderman,

guess you entered short at around 25?

Regards
Alexey
  • #357
  • Edited 3:30am Feb 10, 2021 2:34am | Edited 3:30am
Morning all,

A rather quick trading day today, all done in 9 minutes, playing the move from the open:

Attached Image (click to enlarge)
Click to Enlarge Name: Germany 30_20210210_08.14.png Size: 18 KB


Market opens at 8am with a sharp slide down to about 23 then attempts a rally back, faltering twice at the 40 level, After the second failure I am tempted to follow the flow down with a quick short at 36, stop at 48 above the rally high and target 24 just above the prior low, are both OK. The market duly obliges and I take my 12pt 1R profit at 24, not wanting to risk a bounce off the low. Braver traders could have moved the stop to breakeven and got another 30pts to the eventual low at 93.

This is a simple trade exploiting opening volatility in the DAX but is fraught with danger as very sharp, wild moves are the norm here so you also have to be ready to accept being stopped out in just a few seconds. Why I took this one I couldn't honestly say, just felt OK to me today. But I also tried something similar yesterday (trade #1 post #353) and that one failed, so you have both sides of it now!

Notice the simple but quite robust trade triggers here:

  1. see a distinct flow move occurring
  2. await a consolidation
  3. let that consolidation fail at least twice
  4. enter when the flow resumes
  5. ensure the target is not too greedy
  6. have a stop above the consolidation
  7. be prepared for it to fail!

I am not predicting price, I am following it but equally trying not to chase it, and taking a trade that has good stop and target credentials. All this helps to create the edge, and I always employ strict risk control to protect me in the (quite likely!) event I am wrong.

Back tomorrow for more

Rolling summary: W6 L3 S3 +7.5%

  • #358
  • Feb 10, 2021 2:44am Feb 10, 2021 2:44am
Quoting alexgvr
Morning Oldtraderman, guess you entered short at around 25? Regards Alexey
Hi Alexey,

25 would be too close to the prior 23 low for me, you have no wriggle room if it bounces off the low. See the post above, took the trade at a more favourable 36. But you are clearly seeing the process!
  • #359
  • Edited 3:32am Feb 10, 2021 2:57am | Edited 3:32am
Quoting alexgvr
Morning Oldtraderman, guess you entered short at around 25? Regards Alexey
Hi Alexey again,

Your post also highlights something quite important, something I struggled with for a long time.

Taking the trade at or near the low is risky because of a potential bounce off the low. You need a wide stop here and so a more distant target to compensate. You are now asking the market to do quite a lot for you to be right. I really want to ask the market to do very little for me but this requires an entry higher up and this is rather more difficult to judge. Hence my letting a consolidation have at least two failed attempts at pushing up before rolling over. As soon as I am happy the balance of probabilities is in my favour, i.e. the flow is resuming rather than another crack upwards, I'll take the trade with a much better stop & target profile than at 25.

You need to find a way to get into a trade like this nearer the top of the consolidation than the bottom of it (and vice-versa for an upflow) as otherwise you are risking chasing price and being caught on reversal spikes all the time. This happened to me for more years than I care to remember and still does (yesterday for example!) but less often now.

All this said, there are traders who successfully only enter on a new low or high, essentially playing breakouts. But for this you have to be pretty confident of the strength and power of the flow or you will be spending a lot of time extracting yourself painfully off price spikes! Each to their own, whatever works for you!
  • #360
  • Feb 10, 2021 2:58am Feb 10, 2021 2:58am
Quoting Oldtraderman
{quote} Hi Alexey, 25 would be too close to the prior 23 low for me, you have no wriggle room if it bounces off the low. See the post above, took the trade at a more favourable 36. But you are clearly seeing the process!
Well, here is small lessons learned for me, as the chart where I see 25 is not identical to your platform...Thanks!
Attached Image (click to enlarge)
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