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

Hi diamond1011,
That is an excellent spot, I did not explain the +0.5R trades in the post for reason of not wanting to distract from the main point being made. You are correct, these are rare for me, I usually like to wait for a trade to go the full +1R or let it come all the way back and scratch at 0. The two trades in question were fairly rare situations for me that just so happened to come up in this sequence:

Week 1 +0.5R was a range edge failed test & reversal trade but entering against the direction of the flow going into the range. Normally I only like to work one edge of a range/consolidation, that being the side against the inbound flow, I feel I am still trading with the flow that way. This trade I did the opposite, was immediately uncomfortable and so cut for +0.5R as soon as it started to lose momentum through the range. It would have been a -1R loser had I stuck with it.

Week 3 +0.5R was chasing what looked to be a powerful breakout from a consolidation. However, price quickly got stuck very close to +1R and could not drive on materially further so I cut for +0.5R once it started to fall back after a couple of attempts. Had I held on here I would have had to endure the trade going almost all the way back to my -1R stop before it exploded out again and would have made +1R and more. For a cautious trader like me that is a bit too much to bear!

I trust that explains OK.

I would also note that you can deduce from the above that I do keep a reasonably thorough trading journal so I know what happened to all my trades: why I took them, how I managed them, and what the outcome was. I think it is a good idea to do so because you can then go back at your leisure to review your trading, otherwise it is quite difficult to learn and improve as a trader.

Hi all,

The Power of Perseverence

Further to post #417 about the need to be resilient and careful not lose too much when going through a lean patch, let’s roll on here another three weeks to today to complete the picture.

In these latest three weeks I have been trading steadily if not spectacularly and find myself up a net +3R. So, for the last 9 weeks my record, broken into 3 week blocks, has been:
1st 3 weeks +6R
2nd 3 weeks +0.5R
3rd 3 weeks +3R

So, +9.5R overall, averaging +1R per week despite a poor patch in the middle. This equates to an uncompounded 50% pa account return at my modest 1% per trade risk. And compounding as I do by retaining profits and steadily increasing position size whilst keeping per trade risk at 1% boosts this achieved account return on opening capital quite considerably.

The whole point here is that trading is a marathon, not a sprint, and each year you have to set yourself up both structurally and psychologically to plod on steadily for a whole year, accepting in advance there will be both good and bad patches on the way. If you can manage to stay both consistent and prudently risk controlled throughout, even a modest edge is plenty enough to generate pretty solid annual returns without needing to endure deep drawdowns. My worst YTD drawdown is only -6%, and keeping this number low certainly does help your ability to maintain your emotional equilibrium throughout the year.

Of course, you can make all these numbers much larger simply by increasing the per trade risk level but bear in mind it is always a two-edged sword: the returns will increase but so will the depth of the drawdowns. I have seen many systems where the achieved returns are excellent but seriously marred by the need to endure some very deep drawdowns. You have to be honest with yourself and ask whether you really can routinely go through a, say, 40% drawdown and carry on unchanged as if all is fine and lovely? I know I can’t, which is a major reason why I operate a conservative, low drawdown strategy. I like to sleep at night! You have to decide what comfort level you want to play at, just be aware what that level means in terms of likely drawdowns and be sure you are OK with it before you start. Good luck!

Hi all,

Haven't posted any live trading for a while but my efforts this morning are worthy of sharing as an example of how good trading skills are necessary if you want to make a profit (and I didn't...):



Market opens at 8am with a quick look at the 16,200 level. It falls back and then gets there again at about 8.20 before breaking down sharply to the 60 level, bounces to 80 then rolls over; as shown in the light gold box on the chart. This is a standard setup for me to go short and I duly sell at 76, 12pt stop above the bounce high and 12pt 1R target above the prior 60 low. All good. Except that it only makes it to 66 and +10 before reversing and eventually taking me out for a full 1R loss at 88.

What is poor trading about this is not moving the stop down to breakeven 76 when the trade got to +10 at 66. Sure, it does look as if a run down to 60 and possibly a lot more is on the cards, but it didn't happen and I am guilty of trying to predict the market. You shouldn't do this, the market is always right and can do whatever it wants. My job is not to predict or assume, but to protect myself and move the stop to breakeven as it neared the prior lows. I didn't and it cost me. Poor trading skills.

Moving on, after I am stopped out at 88, the market just touches 90 and reverses sharply again. This is another standard pattern for me, a fake break and immediate reverse of the little rectangle that had formed in the 78-88 region, shown in the light green box. So I am happy to try short again at 85 and this time around I get my 1R profit at 73. However, this time I did move the stop to breakeven once the trade reached +10 at 75 and I wasn't stopped out by the small rebound before getting to my target. Better trading skills.

So my net result on the morning is a big fat zero. If I had had a breakeven stop in both cases I would have been a net +1R. If I had taken two partial profits (say at +6 each) after both trades rebounded from +10 I would have been a net +1R. But I traded poorly in the first trade, did not move the stop to breakeven and ended up with a net nothing as a result, the worst outcome of all.

The message I think is clear: good trading skills are what generates the profits over time, my ability to predict what is going to happen is not. You have to be prepared for the market to do anything at any time and trade defensively to protect profits and prevent sharp reversals costing you money.

I hope for better fortunes tomorrow, will post again as and when I have something useful and interesting for you

Hi all,

After my travails yesterday in the previous post #423, today I am happily able to show you some better trading, systematically following a predetermined trading plan:



The market opens with sharp falls before settling into a broad range of 920 to 880, unsurprisingly oscillating around the big figure 900 level. Incidentally, I did not look to trade until after 8.30am today as that was the time of important German Flash PPI numbers and you need to let that volatile uncertainty get out of the way first - it actually marked a quick drop to the first 80 low before immediately rebounding. I can't trade that.

Anyway, after the market had formed a clear 20-80 box a jump out to the 30 level was immediately and sharply reversed. Such a fake break & reverse is a core setup for me so I am quick to be short but not until the 11 level, such was the sharpness of the reverse. It means the trade is less than perfect because the 12pt stop is below the 30 high and the 1R target is below the big figure 00 but I am comfortable that the overall flow is bearish right now so I take the trade and it quickly pans out with a 1R win at 99. Braver traders could have got a lot more but I am too afraid of a potential bounce off 00.

The market duly runs on and breaks out of the other end of the range below 80. This is again sharply reversed so I have the same fake break & reverse setup, this time on the long side. I don't enter until the market is well back inside the range, going long at 91 as I want to have some comfort that this is a true reverse and not a breakdown, retrace and rollover down again. My waiting means again a less than ideal trade with the stop above the low and the target above 00. But you have to trust your setups if you see them and take them all, you can't pick and choose, you always seem to get it wrong whenever you do that! Happlily, it works out again for a second quick 1R profit on the morning at 03. Again, braver traders had a lot more to play for but my method is to be scared of big round numbers like 00 so I am playing as safe as I can in the circumstances.

I hope you can see how both these trades are borne out of systematically following a predetermined method. I am not trying to analyse or predict the market, just following my setups. Both worked but they could easily both have failed, the 00 level in the middle of all this was a serious concern but you have to follow all valid setups as and when you see them or you can't really say you have a method at all. Of course, I could have said the presence of the 00 level precludes me from taking these setups, that would have been OK, but I was happy that the volatility of the market this morning was enough to at least drive up to this level as the reversal momentum picked up, my entry levels allowing me to take a scratch at worst if it couldn't get through.

Thanks Oldtraderman for this outstanding thread from a real successful trader.
Besides many other very useful concepts, if there is one thing that stand out in your style, is that not being greedy pays off in being more consistent.
I also daytrade but more with a gambler attitude that puts me on a rollercoaster each day. I'll try to take example by you.

Hi QuantTraderX,
Many thanks for your kind words, glad my ramblings may be of some value.
My not being greedy is part natural caution and part a sad inability to be able to run profits; I am always looking to ring the register. But you have to work with who you are, if you try to force yourself into a method - however good - that doesn't suit you, it's unlikely to work out well and it's certainly going to be unduly stressful for you.

So I take steady modest profits and don't go looking for home runs but it is not an optimal method, my analysis over and over again demonstrates I would do net better letting more trades run but I just can't manage it comfortably. Of course, letting more trades run would mean risking moderate open profits evaporating more often rather than being captured, so the trade success rate would fall but the R:R ratio would increase. This balance between trade success rate and R:R can be viewed as a spectrum along which almost anywhere could work, you just have to play in the spot where you feel most comfortable.

Hi all,
First of all, Happy New Year to you all and I hope you all had a good Christmas break, Covid notwithstanding.

I want to start 2022 here with a few trading days to show the value and importance of discipline in your trading. Unless you do trade with discipline it is very unlikely you will survive over the long haul. Now, to define terms, I take discipline in trading to be a few interconnected things:
- have a clear trading plan/method
- stick to it consistently
- have good risk control, essentially a hard stop loss & only very modest % of account at risk on all trades.

I have banged on long enough about risk control in the past, you can look it up across the posts on this and my other thread, that's not what I want to focus on here. What I want to do now is try to show you that almost any intuitively sensible trading concept can make net money if traded consistently with discipline. So, we need a plan to trade, and I will select just a very simple one here: we will wait for the market to make consolidations/ranges and trade as a reversal all moves that try to break out from either edge of the consolidation but immediately fall back inside the consolidation. I will use my usual 1:1 basic R:R hard stop & soft target, and will use my usual 12pt (=10x the spread on my platform) stop on the DAX40.

This is not a fantastic system, it's just a basic failed break reversal method that is as good or bad as many other methods you might dream up yourself. But whether it is great or not is not the point here: I just want to show you through real trading that an average, simple method is OK if you trade it with consistent discipline.

All that said, let's go in the next post to my trading this morning using this exact method.

Hi all,
Following on from my previous post, here is my trading this morning, three early trades that resulted in 1L 2W for net +1R.
The market opened at 8am at around 16000 and duly dropped a full 160pts in the first 30 minutes or so. Given the breadth of this range my posted chart just shows a chunk of the move in the middle where I took my trades:



Trade #1: We see a small consolidation in the 15940-50 area around 8.15am, after a rapid opening sell off. After the prod up to the 50 level and subsequent fall back down to 40 and below the prior low of 42, price bounced to 44 and I went long. Sadly, the market immediately went south and I very quickly am stopped out for a full 1R loss at 32, all of this happening in the single long breakdown bar that was 8.18am. Note the stop did its job as there was a straight line fall to the 04 level. That this trade looks rather naive, going long against a collapsing market is not the point, I am just trading the described method as and when a setup occurs with no regard for anything else. But, thanks to the discipline of the stop, just a 1R loss and we live to try another trade.

Trade #2: The market next forms a rather taller consolidation in the 04-34 range before reversing sharply to just break the prior 04 low. As it reverses back up I go long again at 09 and take a quick 1R profit at 21 as it jumps up a second time. Note this is also a rather naive long in a falling market but the method is the method and I am applying it with discipline and consistency for a win this time around.

Trade #3: The upswing continues beyond the 21 profit take level and goes on to just break the prior high at 34 before reversing back inside. Thus, in accordance with the method, I go short at 31 and get a second rapid 1R profit at 19 as the market renews its downwards march.

So, two longs and one short in a sharply falling market. Not too bright but still made +1R net thanks to disciplined trading in keeping the loss small and in taking all setups even though some looked stupid, market volatility making us the quick profits. I hope you can see that this result is a function of disciplined trading, not genius analysis or anything else. Discipline matters.

Back tomorrow to see how we get on then

I notice trades (2) and (3) could also be 2b set ups ( Victor Sperandeo) ?


and

https://www.google.com/search?q=2b+r...RnnNqj9vigg_tM

Ignore any invitations to buy anything.

Hi turnip15,
Glad to see you are still going strong.

Yes indeed, there would be similarity in these trades with Trader Vic's 2b methodology, as far as I recall it's also a failed new high/low reversal method. The important point for people to capture in your observation is that you don't have to reinvent the wheel yourself or have some genius inspirational insight to trade profitably. Pick a core concept/method that is well established and has been used profitably by many traders for a long time, and one that you understand and feel comfortable with. Sure, play around with it as much as you want, to personalise it so it suits you. That's what Trader Vic did with his 2b reversal, it's at heart a basic trend continuation failure setup and he has just codified it to suit his way of looking at the markets. Do the same yourself then trade it with discipline!

Hi all,
A quick one-and-done this morning, trading the opening swing with the failed break reversal method outlined in post #427:



Market opens at 8am around 15,900 and makes its first biggish swing from 933 to 893, then trades within this 40pt range for a little while, so creating a range/consolidation box we could be interested in. The market will almost certainly test one end or the other soon enough and after a bit of internally swinging around we do indeed get a break on the upside to the 40 level. This tries to but cannot progress and we trade short the reversal back at 30, very quickly making a +1R profit at 18, the market actually dropping straight down to 00, potentially a +2.5R trade for the brave amongst you.

Again, at the time the trade looks poor as the market has rushed up from 00 to 40 before we try the short at 30. It could easily have just paused there and carried on to 50 and beyond but we follow our trading plan and get fortunate this time; if we had been wrong, well, that's what the stop is for! The discipline here is in having the stop, sticking to it and taking the predetermined loss should the trade not work out.

I'd also like you to note today that this method being used, like all others at the end of the day, is inherently subjective. The trader decides where the range/consolidation/box is, there are several others I could mark in that would just as easily fit the concept. Equally, the stop and profit taking points are subjective to the trader, there is no absolute reason why they have to be where I put them, that just suits me. So please remember, whatever method you trade it's down to you, your interpretation of the market action, and your precise rules that will determine the outcome. What should not be subjective, however, is your discipline - having a plan, sticking to it, and trading with solid risk control.

Back tomorrow for more.

Glad to see you again. I really love your Posting and this very claer approch
Best wishes for 2022.

Hi all,
The markets are proving very friendly this week so far with near perfect volatility and market action for the method I'm currently demonstrating with, so another quick one & done today:



Market opens at 8am and begins a steady move downwards punctuated by weak and quickly failing small rallies. As we are operating a fake breakout & reverse methodology this kind of market sets us up with nice rollovers to trade. I miss the first rally & rollover around 8.10am as the second peak of the rally to just over the 50 level didn't quite break the first peak and so I didn't call it a fake break and trigger an entry.

However, lesson learned and for the second rally at around 8.20am I draw my consolidation box top as being defined by the low of the earlier dip. The market duly rallies from a fresh low around the 10 level up to 40 before falling back into the box. I am short at 25 and quickly make a tidy +1.25R profit closing at 10 as the market rolls over and continues its descent south. Braver traders could have got an awful lot more as the drop went all the way to 950!

I'd like you to particularly note today how I drew the consolidation box I traded with, using the prior low as the top of the box. This is based on the idea that, once broken, previous support becomes new resistance; a concept that does often (but not always!) hold up. I want you to see this is a totally subjective piece of work on my part, there is really no clear area of consolidation on the chart to draw a neat box around, it is my pragmatic idea given the observed market action. It illustrates that trading is always in the end subjective and down to the trader, even when following what might seem a very clearly defined, objective trading plan. That said, also please note that discipline is maintained in that the basic methodology was consistently applied - I had a defined consolidation box, waited for a failed break of it, and had a hard stop in place.

The market just doesn't operate in a neat and tidy way for us, you have to apply your judgement, which is why different traders tend to have wildly different outcomes even when trading the exact same method on paper. The difference comes from practise and experience, you just have to put in the trading time & effort to learn and hone your skills. Trading is definitely not a get rich quick scheme!

Back tomorrow for more

Hi all,
After friendly conditions so far this week, a less helpful market this morning but one that can usefully show some other facets of required discipline, those of patience, acceptance and understanding when to stop:



The market displayed a choppy look this morning and I have marked on 5 different consolidation boxes that I successively looked at. The first four all broke and went a full 1R or more so I stop looking for reversals after that, I like if I can to have the stop beyond the extreme of a fake move and all these went too far for that before reversing.

The fifth box around 9am did dip below and reverse back in so I was tempted into a long at 78. I immediately suffered a 10pt move against me (on a 12pt stop) before watching it turn around and proceed to +9pts. Unhappily, it fell back from there and I ended up taking a scratch back at my opening price. This was good as it did keep falling and would have become a full 1R loser if left open. At this point I decided the market conditions were just not right for me today and called a halt - I don't feel comfortable when I find myself constantly switching from looking for longs to shorts and back again as the market churns.

So nothing on the day but at least the powder is dry and intact for tomorrow. Note the discipline required in such a session to prevent a poor outome: discipline of patience to watch potential opportunities not set up properly and let them go rather than force a suboptimal trade; acceptance that not all trades work out and scratch them when appropriate rather than sit and hope; and the discipline to know this is just not for you today, and give up.

Back tomorrow hoping for better

What a refreshing thread, no bs, down and dirty trading, kudos from an evenoldertraderman lol

Hi Swede,
Welcome to the thread and many thanks for your kind words.
It is a deliberate attempt to show how trading actually goes in practice - hence the thread title - as I remember I could never find a full trading expereince laid down anywhere when I was learning, it was always only partial and/or cryptic hints or else all easy win, win, win. I just knew trading was not like that and so hope here to give a flavour of the reality of it all.

Hi all,
I think I've possibly bored you all enough this week with an endless rant about discipline, I'm sure by now you get the idea so something a touch different to finish the week - an exercise in market action analysis:



The market opens at 8am with a test of the big figure 900 level which holds and we see an early range in the 00-30 area, marked off in the green box on the chart. It's an area of consolidation in that all price action is contained within it and it is not progressing beyond 30, but to me I also see an inherent uptrend as indicated by the rising lows (I think some chartists might call that an ascending triangle of sorts, not too sure, I don't follow such chart patterns). I also see the prior high sitting above the 50 level so the whole picture to me is a market that has tested a significant level, bounced off, is trying to move up on balance and has headroom to a prior high. So I am net bullish and looking for a long.

We see a small consolidation box, highlighted as usual in orange, form at the attempted break of the 30 level. Now, if I believed the green box was indeed a solid range area I'd be tempted to take a short as price slipped back below 30. But, as mentioned, my analysis makes me bullish for choice so I am willing to try a long at 34 as the market kicks up again away from the 30 level, for a presumed run at the prior high. My stop at 22 is below the orange box low and the 46 target is below the prior high so it all sets up OK for me and I am happy to give it a go. Fortunately this time it works out well and I quickly get my 1R target at 46, again there was a lot more to be had for the braver trader than me.

I hope you can see how my price action analysis led to the trade. I also want you to note two other things: one, that I am observing the market not predicting it, the market is always right, remember; and second, that this analysis is all entirely subjective on my part. It is what I see, it will be different to what you see and it is not necessarily right, it's just what I see at the time. What I have done, though, is maintained discipline (sorry, had to get it in!) in that I have applied my core trading methodology consistently to this view of the market. This is trading in a nutshell: observe, form a plan, trade it with discipline, and 100% accept the results with equanimity whatever the outcome. If it is a loser, oh well, your stop kept it to modest proportions and it's an inherent and inevitable part of the game, don't let it affect you and move on to the next setup.

Have a good weekend all, I may take a break from posting now I've got the discipline pitch in, back again when I think of something of interest to share.

Thank you
For yet again another excellent summary

Oldtraderman...any reason why you trade the Ger40 mostly. Currencies are pretty good trend followers and the same criteria applies for entries in many cases.

Hi Swede,
Good question! I look to trade whatever market looks to me to have the best combination of volatility + round trip cost. I can't make money if a market doesn't move much in my core trading time of 8am-10am (UK time) whilst a high round trip cost is a serious handicap. The DAX40 routinely ranges 100pts and more in this time window and the all-in round trip cost is 1.2pts. This means my basic 1R amount is 12pts (=10x round trip cost), nicely small compared to the market movement. That's better than the other major markets I see so I trade it. I have traded forex and other equity markets extensively in the past, I've not any inherent preference but I like to trade only one market at a time, for reasons of focus.

It is important also for me that I only operate in liquid, active, freely traded markets; I don't like to dabble in smaller or more exotic markets as I feel they are too prone to insider information and manipulation. The big major markets are a more level playing field for a tiny retail player like me.

Finally, I'm actually not that bothered by how trending a market is; as long as it moves it'll do for me! I'm terrible at following trends, I'm too much a short duration trader for that so the trendiness of a market is not something I really worry about.

Hope that helps to answer your question.