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Keep Calm and Carry On Trading

  • #81
  • Sep 13, 2022 1:18pm Sep 13, 2022 1:18pm
Quoting sabbb
I am sorry if I am OT, but perhaps someone of you can help me, with a simple explanation. I am trading future on Uk 100 since some time and at the moment of expiry the futures always were in backwardation (new contract lower than old one). This happens for all indices because some stocks in the new quarter detache dividend and the value of index goes down and this reflects on future. But now, in the roll over september-december 2022, it is in contango, new contract higher. I don't understand. Even if no stock detaches dividends in the new quarter,...

Hi sabbb,
Your question is rather outside the main scope of this thread and for reasons of focus I don't really want to digress into the technicalities of futures pricing here. You'd do better taking that question to a more specialised thread on the topic.
Best regards
OTM
  • #82
  • Apr 5, 2023 1:29am Apr 5, 2023 1:29am
Quoting Oldtraderman
Bonus: What the Big Boys Do As I am sure you all know, big boys play with big toys. Big investing institutions look after big money and so throw big resources at managing risk, at a level retail traders can’t even dream about. Quite literally, they look at their business as one huge exercise in controlling risk, not returns. Their investing holy grail is capturing 100% of all the theoretically available returns made available by assuming any given degree of risk. If they assume more risk in their investments you can be sure they will demand a higher...
the Instutional differences are well- informed; Strick procedure and Psylogolical checks of the dealer staffs at trading with threshold to ST and TP determined by the upper levels. The back office providing daily information; Trader on the 2 -screen Bloomberg or Reuters ....
  • #83
  • Apr 5, 2023 1:40am Apr 5, 2023 1:40am
Quoting Oldtraderman
{quote} Hi BinhAutoDat, And many thanks for your contribution also. Calmness and patience are emotional states of mind so I guess it depends on each individual's own makeup to find what it takes to get into this desirable mindset in trading. Very much a personal journey. I do agree wholeheartedly that without the ability to call a stop you can indeed easily spiral a poor situation into something out-of-control disastrous. To this end I do employ a couple of other checks/stops in my trading in addition to my ever-present firm stop loss on all trades:...
You could gain the patience if you realise what is the risk to your positions. You will win the market if your mood is good, that is impacted your mistakes in trading.
  • #84
  • May 12, 2023 3:30am May 12, 2023 3:30am
The (un)Importance of Trade Win Rate

Hi all,
Been a while since I last posted as I transitioned to a more retired trading-for-pleasure status rather than to generate a living. All the same, I have been trading consistently and have just been reviewing my YTD trading statistics as I hit a round 100 trades in 2023. It has thrown up some interesting observations to hopefully usefully share here.

Happily, I have been profitable, up +16R (1R being my standard unit of risk per trade, presently set at 2% of my starting account balance per trade so equating to about +30% YTD) but the more interesting statistic is the win/loss/scratch numbers in these 100 trades - 41 have been winners, 25 losers and 34 were scratched for essentially no gain/no loss. The average size of winners and losers is very similar so you can hopefully see that the net profit has come from the net win balance of 41-25=16. The method employed has remained consistent over all 100 trades which gives me reassurance that my method remains a viable one. These numbers provide two important takeaways for me:

First, that the stats give reassurance for my method is very important to me as it provides me the confidence to keep putting on trades even after a poor spell. My worst streak in this period has been 10 successive trades without a single winner. As you might imagine, putting on the 11th trade with the same methodology was a somewhat testing exercise for me and it is only strong internal confidence in my method that allows me to do that and retain a decent mental state. The message here is reasonably obvious - however you achieve it, you must get yourself into a position where you really do trust your method and can stick with it through the inevitable lean patches you will encounter.

Second, the overall win rate is materially below 50%. I am only winning about 2 trades in 5 but it is quite enough to generate respectable returns without having to take any undue risks - I never risk more than 2% of my account on any single trade. The numbers show you do not need a high win rate to make money, nor do you need to take large risks. Conversely, you actually need to rigorously control and limit risk, and to stay disciplined and consistent to your proven method.

Of course, there are an infinite number of trading methods out there with their own return profiles. My method with essentially a 1:1 risk:return on each trade is a short term intraday method that suits my psyche. A longer term trend following method that may suit another trader would typically have a R:R much better than 1:1 and the win rate could be down nearer 30% yet still make good money. Any sensible method can generate solid profits over time and it doesn't necessarily need a high win rate to get there.
  • #85
  • May 12, 2023 3:53am May 12, 2023 3:53am
Quoting Oldtraderman
The (un)Importance of Trade Win Rate Hi all, Been a while since I last posted as I transitioned to a more retired trading-for-pleasure status rather than to generate a living. All the same, I have been trading consistently and have just been reviewing my YTD trading statistics as I hit a round 100 trades in 2023. It has thrown up some interesting observations to hopefully usefully share here. Happily, I have been profitable, up +16R (1R being my standard unit of risk per trade, presently set at 2% of my starting account balance per trade so equating...
Welcome back. Your posts are always a pleasure to study.
every Saint has a past. Every Sinner has a Future
  • #86
  • May 15, 2023 8:44pm May 15, 2023 8:44pm
Quoting Oldtraderman
The (un)Importance of Trade Win Rate .
Good to see you posting again.

Thanks for sharing your statistics.

I might have remarked before that you could increase your winrate by scatching trades at BE+1 rather than BE.
At TP=Sl=10 pips, BE+1 would have given you an equivalent of a further 3.4 wins and a net balance of 19.4, an increase of 21 %.

I also find that the addition of a 20 ema complements your method very well, in line with Bob Volman's trend scalping techniques of entering near the 20 ema after a pullback. The slope of the 20 ema also indicates the strength of the trend (your 'flow').
  • #87
  • May 17, 2023 3:05pm May 17, 2023 3:05pm
Quoting ikdenk
{quote} Good to see you posting again. Thanks for sharing your statistics. I might have remarked before that you could increase your winrate by scatching trades at BE+1 rather than BE. At TP=Sl=10 pips, BE+1 would have given you an equivalent of a further 3.4 wins and a net balance of 19.4, an increase of 21 %. I also find that the addition of a 20 ema complements your method very well, in line with Bob Volman's trend scalping techniques of entering near the 20 ema after a pullback. The slope of the 20 ema also indicates the strength of the trend...
Hi ikdenk,
Many thanks for your comments. With respect to scratch trades, I perhaps should clarify that I classify a trade as a scratch when it is closed with a profit or loss of zero to a few ticks either way, i.e. not a meaningful contribution or loss to the account. They are not clear winners or losers so stay in the scratch column where they more or less net out and won't distort the underlying ratio of meaningful winners vs losers. Trades scratch out because I have moved the initial worst case protective stop closer to breakeven as part of my in-trade management activities and that stop has been hit before the profit target. Trying to ensure they earn one point at least is of no interest to me, I am more concerned with having the stop in a sensible place as a trade progresses, technically speaking. I only really examine my scratch trades to check I am not scratching too many trades that would have been winners if left alone. That would be something that needed looking at.

As for utilising a moving average in your trading method, it is something that I have done in the past. If a trader finds it helps them then great, use it. I discarded the idea some time ago as I found it was not giving me any more insight than not having it so I applied the simplifying principle of Occam's Razor and discarded it. But that's just me and I would not dissuade anyone from using anything if they found it helped them.
  • #88
  • Dec 5, 2023 4:30am Dec 5, 2023 4:30am
Hi all,
Long time, no posts, but I have been trading steadily if at a slightly slower pace than previously now that I am playing for pleasure rather than for a living. Anyhow, as today will be my last day of activity this year, thought I'd share both today's trade as it happened to turn out a textbook one; and update you on my full 2023 experience.

Attached Image (click to enlarge)
Click to Enlarge Name: Germany 40_20231205_09.49.png Size: 17 KB


Above is today on my usual DAX 40 Index. Market opened 8am at about 16,405 and tested a high at 440, then just below the big figure 400 low before moving up again. This price action gives us a steer that the market has tested and rejected a big figure low and probably wants to move up now to have a look at the prior 440 high. So I am thinking of a long and wait for both the uptrend to build some momentum and then a retracement from 433 to 420 that forms a nice bull flag. As this bounces off 420 and moves up I am happy to try a long at 24 with a 14pt stop at 410 being well below the flag low and a 1:1 R:R 14pt target at 39 back at the prior high. If I am right the stop should not be tested and the target is easily in play. Happily all this works out in textbook style (it doesn't have to, of course!) and I am happy to take my 1R profit at 39. Braver traders than me could have held on for the breakout beyond the high, the move quickly going as far as 65 for a near 3R potential to be had on this trade.

Please note the simple but effective process being followed here:
- wait until you are comfortable you have detected the short term flow
- wait for a retracement so as to get a lower risk entry price
- have both a stop where you should not get hit + a target that is easily achievable if your price action analysis is right.

This is not rocket science or complicated prediction, just simple observation and sensible trade positioning. It won't work every time, far from it (and more on this in a moment), but it will get you the net profitable side of a random outcome if followed with care and discipline over many trades.

So much for today, how about my full year 2023? Overall, I placed 285 such trades this calendar year with 115 (40%) being winners, 90 (32%) being losers and 80 (28%) scratched out for no gain/no loss, typically because I have moved the stop up to breakeven once the trade starts moving favourably, only to disappointingly see it retrace back to stop me out for a scratch rather than go on to the target.

You can see that a full 60% of the time my trading life is one of unhappy losses and frustrating scratches. But the other 40% is what does the business. At my usual 2% account risk per trade and 1:1 risk:reward, my net 25 winners (115 - 90) gives me a 50% account return, actually I achieved a little over a 60% account return as I do manage to let the odd winner run on for a bit extra profit every now and then - but never let a loser go past my initial stop! This strict stop loss discipline also means my worst drawdown for the year was just 12% (i.e. a run of 6 net losers). Sure, I had long patches without really making any net progress but I was treading water most of the time and eventually the net winners come through.

Trading does not have to be complicated, risky or overly stressful. If you have a sound method that you believe in and trade it consistently with patience, discipline and solid risk control you will most probably come out with a profit at the end of the year. I'm pretty happy making a 60% account annual return on a 2% per trade risk, you could be a lot more aggressive if you wanted to be, I don't.

Anyway, hope some of the above may be of interest, everyone have a lovely Xmas and New Year, I'm sure I'll be back in 2024!
OTM
  • #89
  • Dec 5, 2023 5:02am Dec 5, 2023 5:02am
Quoting Oldtraderman
Hi all, Long time, no posts, but I have been trading steadily if at a slightly slower pace than previously now that I am playing for pleasure rather than for a living. Anyhow, as today will be my last day of activity this year, thought I'd share both today's trade as it happened to turn out a textbook one; and update you on my full 2023 experience. {image} Above is today on my usual DAX 40 Index. Market opened 8am at about 16,405 and tested a high at 440, then just below the big figure 400 low before moving up again. This price action gives us a...
Welcome back.
Always great to see your common sense, methodical and disciplined approach to trading. I gained a lot reading your posts.
Enjoy your Christmas and New Year.
every Saint has a past. Every Sinner has a Future
  • #90
  • Dec 5, 2023 9:29am Dec 5, 2023 9:29am
Great thread. Full of good advice and useful wisdom. Thank you for taking the time oldtraderman.
  • #91
  • Jan 28, 2024 11:03am Jan 28, 2024 11:03am
Quoting Oldtraderman
Hi all, Long time, no posts, but I have been trading steadily if at a slightly slower pace than previously now that I am playing for pleasure rather than for a living. Anyhow, as today will be my last day of activity this year, thought I'd share both today's trade as it happened to turn out a textbook one; and update you on my full 2023 experience. {image} Above is today on my usual DAX 40 Index. Market opened 8am at about 16,405 and tested a high at 440, then just below the big figure 400 low before moving up again. This price action gives us a...
A former banker trader with a provocative message

Inserted Video
every Saint has a past. Every Sinner has a Future
  • #92
  • Jan 28, 2024 12:39pm Jan 28, 2024 12:39pm
Quoting Oldtraderman
Hi all, Long time, no posts, but I have been trading steadily if at a slightly slower pace than previously now that I am playing for pleasure rather than for a living. Anyhow, as today will be my last day of activity this year, thought I'd share both today's trade as it happened to turn out a textbook one; and update you on my full 2023 experience. {image} Above is today on my usual DAX 40 Index. Market opened 8am at about 16,405 and tested a high at 440, then just below the big figure 400 low before moving up again. This price action gives us a...

Excellent thread OldTraderMan
From the most experienced to the noobie... a well worth read.

Thanks for your contributions
Blue
Master your Mind,,,Master the Market
  • #93
  • Edited 2:01pm Jan 28, 2024 1:31pm | Edited 2:01pm
Quoting turnip15
{quote} A former banker trader with a provocative message https://www.youtube.com/watch?v=CSYwQrH6kjA
Every Crisis - Wars, Terrorism, Natural Disasters, Pandemic, Banking Crashes, there will be someone in the right place to make a load of $$$$'s

Governments intervene to steady the boat, and Inflation is how Joe Public pays back that imbalance in the books.
It never gets easier, you just get better
  • #94
  • Jan 28, 2024 1:55pm Jan 28, 2024 1:55pm
Quoting Shabs19
{quote} Every Crisis - Wars, Terrorism, Natural Disasters, Pandemic, Banking Crashes, there will be someone in the right place to make a load of $$$$'s Governments intervene to staedy the boat, and Inflation is how Joe Public pays back that imbalance in the books.
Precisely, the public pays, in many ways.
every Saint has a past. Every Sinner has a Future
  • #95
  • Feb 1, 2024 3:04pm Feb 1, 2024 3:04pm
Quoting turnip15
{quote} A former banker trader with a provocative message https://www.youtube.com/watch?v=CSYwQrH6kjA
Hi turnip15,

Trust you are keeping well, many thanks for posting the video. I have watched it through twice and I have not heard the guy actually explain how inflation was caused by his believed wealth transfer from the ordinary taxpayer to the rich arising out of the Covid policy actions of the US and other governments. He does not explain inflation, despite the title of the video, what I hear is a rant about his perceived inequalities of the tax system. That is a different subject entirely and nothing per se to do with inflation.

It happens I do have a background in economics - I took a degree in the subject and kept a professional interest in it during all my existence as an institutional investment manager. His arguments do not stand up to standard economic analysis. If the rich cut back on their spending over Covid as he claims (because it was "illegal" he says. Really? When was spending by the rich made illegal during Covid?), this reduces net demand and is a depressant on inflation. If ordinary people lost their jobs over Covid - demonstrably true - this also reduces net demand and is a depressant on inflation. And, if as stated, businesses were closed over Covid this also reduces economic activity and total demand, yet another depressant on inflation. All these factors work to reduce inflation, not stoke it.

Quite separately, that he feels the tax system is unduly lenient on the rich, this is possibly a socially valid argument depending on your point of view but it is nothing to do with inflation. If he feels the world is a better place by taxing the rich more - and he does at least define the rich as what many of us might call the super-rich rather than just the wealthy - then I do happen to have some personal sympathy with him. A certain Warren Buffett, no less, agrees with him and proposed the Buffet Rule to tax the very wealthy more for similar underlying reasons as in the video. Both economically speaking and in social justice terms, I have more sympathy here than I do for the nonsensical economics contained in the video.
  • #96
  • Feb 1, 2024 3:14pm Feb 1, 2024 3:14pm
Quoting Shabs19
{quote} Every Crisis - Wars, Terrorism, Natural Disasters, Pandemic, Banking Crashes, there will be someone in the right place to make a load of $$$$'s Governments intervene to steady the boat, and Inflation is how Joe Public pays back that imbalance in the books.
Hi Shabs19,

Thank you also for your comments. Sticking to economics, the first part is obviously true, the second part will need to be explained to me. How exactly does government intervention automatically mean inflation? And what is the mechanism exactly that explains how inflation on Joe Public is how the government balances its books? Government spending is balanced by government taxation, at least that's what standard economics says. And, funnily enough, here in the UK at least, Joe Public is currently paying the highest burden of taxes for some 80 years in an attempt by the government to balance its Covid spending books. Again, nothing per se to do with inflation except to note perhaps that higher taxation is a reduction on net private demand, a depressant on inflation.
  • #97
  • Edited 4:28am Feb 2, 2024 3:51am | Edited 4:28am
Quoting Oldtraderman
{quote} Hi Shabs19, Thank you also for your comments. Sticking to economics, the first part is obviously true, the second part will need to be explained to me.
Not an economics expert but here goes......

Crisis management by Governments is done by Borrowing Money from the Country's Central Bank (CB)
The CB creates New digital currency out of "thin air" QE (Quantitive Easng) buying Government & corporate Bonds.
Some people get extremely rich with move by the CB. Economy flooded with New Money.
The economy recovers, fuels inflation as value of stocks rise, as money invested by the rich into stock market as interest rates are very low.
The Government raises taxes to curb inflation, CB also intervenes raising interest rates to maintain 2% inflation targets.
Doube whammy on Joe Public. Then further pain as :
CB starts QT ( Quantitive tightening ) opposite to QE, selling their acquired Governement & Corporate Bonds and raising Interest Rates further.

https://www.bankofengland.co.uk/mone...itative-easing
It never gets easier, you just get better
  • #98
  • Feb 3, 2024 3:34am Feb 3, 2024 3:34am
Quoting Shabs19
{quote} Not an economics expert but here goes...... Crisis management by Governments is done by Borrowing Money from the Country's Central Bank (CB) The CB creates New digital currency out of "thin air" QE (Quantitive Easng) buying Government & corporate Bonds. Some people get extremely rich with move by the CB. Economy flooded with New Money. The economy recovers, fuels inflation as value of stocks rise, as money invested by the rich into stock market as interest rates are very low. The Government raises taxes to curb inflation, CB also intervenes...

Hi Shabs19,
Thank you for your further explanation but I would have some reservations with the argument as presented, it is not completely faithful to the BoE article quoted and it does not to me completely follow logically in accepted standard economics or finance theory (it happens I have a professional qualification in the latter also so I fully confess and apologise for shamelessly ego flattering myself that I am not commenting out of complete ignorance). However, I’d like to keep this thread as being primarily concerned with trading, not economics or the theory of finance, so perhaps on this thread we could simply leave it there.
  • #99
  • Feb 3, 2024 3:34am Feb 3, 2024 3:34am
Hi all,

The Marginality of Trading

After our modest digressions of the last few posts, a return now to thinking about trading.

I have this morning been reviewing my January trading. I was somewhat less focused on my trading last month as I have been occupied elsewhere and my 20 trades resulted in just 1 net winner. I initially took this as being rather a waste of time in the scheme of things but, on further reflection, I think it does reveal something quite telling about the nature of trading.

One net winner to me is a 2% return as I risk 2% of my starting account balance on each trade and operate a basic 1:1 risk:reward method. It follows that a year of that would leave my account up 24%.

A 24% annual return at a 2% risk level is by no means a disaster, it comfortably beats the c.10% pa long term average stockmarket return, for example. And this is just one net winner a month, I don’t think it’s making unreasonable demands of any sensible method operated with discipline, consistency and solid risk control. And it is scalable if you were happy to risk more than 2% per trade (I wouldn’t advise this!) or if you could work to manage either more than 1 net winner a month or squeeze better than 1:1 out of your trades (both far superior ideas). Equally, however, just 1 net loser a month at 2% risk means you’ve lost a quarter of your account at the end of the year. And one net loser over a month of active trading is not exactly a train wreck of bad trading, there is a lot of randomness and unpredictability in markets.

The point is that trading is an inherently quite marginal game for all of us bar the precious few genuine trading wizards out there. You don’t have to do too much to do OK but you do have to always trade carefully and also accept that negative patches are a certainty.

This observation also underpins the notion that trading is largely a mental game as our human frailties are very likely to cost us at least one ill-advised trade a month - I certainly can easily admit to that! I will return with a post on this subject next time.
  • #100
  • Edited 7:53am Feb 3, 2024 3:53am | Edited 7:53am
Quoting Oldtraderman
{quote} Hi Shabs19, Thank you for your further explanation but I would have some reservations with the argument as presented, it is not completely faithful to the BoE article quoted and it does not to me completely follow logically in accepted standard economics or finance theory (it happens I have a professional qualification in the latter also so I fully confess and apologise for shamelessly ego flattering myself that I am not commenting out of complete ignorance). However, I’d like to keep this thread as being primarily concerned with trading,...
Fine it's Ok to leave it there. All I know is that inflation is caused by more money being printed by the CB either physically or digitally.
It never gets easier, you just get better
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