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  • #21
  • Apr 25, 2010 12:23pm Apr 25, 2010 12:23pm
Quoting pipmutt
Nothing can be as boring as trading, I mean how morose is it to watch a number going up and down, it's terminal boredom!

ssdd

Nice article. I agree that trading sometimes get very boring. However, it is very addictive too. I've been trading for more than 7 years and decided stop trading on several occasions. Guess what? Never been possible.
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  • #22
  • Apr 25, 2010 12:30pm Apr 25, 2010 12:30pm
Quoting sdsarmad
Nice article. I agree that trading sometimes get very boring. However, it is very addictive too. I've been trading for more than 7 years and decided stop trading on several occasions. Guess what? Never been possible.
I think if I had it to do all over I'd go into law.

Maybe Leon wants to swap

You're right though, it's addictive.

(sorry, off topic, I'll stfu now!)
  • #23
  • Edited 1:36pm Apr 25, 2010 12:38pm | Edited 1:36pm
Quoting pipmutt
I think if I had it to do all over I'd go into law.

Maybe Leon wants to swap
For those without connections, Law is never going to bring the opportunity of earning big. There is little 'skill' to demonstrate to put you ahead other than determination and an exceptional memory, and little hard skills to gain throughout the qualifications; it's good for those who like to walk in line and accept the hand they were dealt at birth.

Id rather die a failed trader/economist/opportunist/entrepreneur than a guy who made £30k per annum working in the legal profession following rules, memorising cases, and being someones bitch their whole life.

I love to think, that's where I get my kicks. I'm not the smartest or quickest, but I enjoy it.

EDIT: yea, ill zip it too. Sorry Buck.
Living the adventure in my head.
  • #24
  • Apr 25, 2010 12:41pm Apr 25, 2010 12:41pm
Quoting Marsh
My fellow traders,

I currently use an excel spreadsheet to document and track my trading, and am trying to get a feel about what kind of performance I am having. Currently I track my wins and losses, and figure simple things like win/loss ratio, expectancy, etc.

I am wondering what kind of statistical numbers some of YOU guys use to keep track of your trading. I am not looking for the almighty most powerful numbers necessarily, but even just the little ones you keep an eye on just because.

Any and every measurement of trading interests me....
Marsh,

This is how I do it. I only input 3 things: pips risked, pips gained, and money gained for each trade and it automatically calculates everything I need to know for that month. I also attach a hyperlink to a screen shot of my chart for that trade, which also has the trade specifics like entry/exit prices, dates, lots, etc. At the end of the month I input the results from the first spreadsheet into a second to track my progress over that year. Both spreadsheets have conditional formatting so if something is off I know right away what I have to work on for the next month.
Attached Image(s) (click to enlarge)
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  • #25
  • Apr 25, 2010 2:41pm Apr 25, 2010 2:41pm
@Leon: the way I see it, it depends whether you want to think in dollar or percent terms; either way is valid. If you trade fixed percentage, it's true that you have the problem that (for example) a 20% drawdown requires a 25% increase to return to breakeven. If you increase your pos size %-wise while in drawdown, then you'll either recover more quickly, or plunge yourself more quickly toward ruin, depending on the outcome of subsequent trades. Effectively that's increasing risk for greater return (faster recovery).

Another possible approach is to risk a fixed dollar amount per trade. Then we don't have the "20% drawdown requires a 25% increase" problem. But we run the risk of hitting absolute zero, which fixed percentage mitigates. And then we're not compounding our gains, either, when the account gets into positive territory. Once again, it's a tradeoff.

Everything involving MM ultimately comes down to some kind of a tradeoff between return and risk; we can't have our cake and eat it too. Unless we size consistently in some way it becomes a game of hit-or-miss. Sizing is ultimately a personal decision, it's a case of what risks one is willing to take, in order to achieve a desired return. I don't necessarily see one approach (fixed %, fixed ratio, optimal f, etc) as being better than another, but I think it's important to be well informed beforehand, and be willing to take personal responsibility for, the nature and extent of the risks one decides to take.

@Pipmutt: I posted my thoughts on pyramiding in more detail here and here. But to summarize, what you're saying about pyramiding is fine, as long as you have proof from your testing that, on balance, the subsequently added positions will be profitable in their own right. If the move turns against you, the add-on positions will eat into any profit made by the initial trade, and therefore reduce eventual bottom line. So the questions become: how do you know that, once a trade moves in your favor, that it's more likely to continue doing so, than not? And at what levels should you add the subsequent positions?
  • #26
  • Apr 25, 2010 3:01pm Apr 25, 2010 3:01pm
For those interested in a excellent discussion of position sizing should check out the chapter 'Money Management' in the book 'Volatility Trading' by Sinclair. The mathematics for maximizing ones bankroll are fairly well defined, but as with VAR, this all depends on your trade statistics staying nearly constant for some period into the future.
The breaking of a wave cannot explain the whole sea.
  • #27
  • Apr 25, 2010 5:09pm Apr 25, 2010 5:09pm
Quoting hanover
But to summarize, what you're saying about pyramiding is fine, as long as you have proof from your testing that, on balance, the subsequently added positions will be profitable in their own right. If the move turns against you, the add-on positions will eat into any profit made by the initial trade, and therefore reduce eventual bottom line. So the questions become: how do you know that, once a trade moves in your favor, that it's more likely to continue doing so, than not? And at what levels should you add the subsequent positions?
Thanks for the links, I'll read both posts/threads.

I think a great deal depends on how one views unrealized gains, and also what type of strategy one uses. For me it's not an exact science, price action and the momentum behind it are important factors, and I consider unrealized profit as just part of an ongoing trade.

I'm not sure being rigid in one's money/trade management is such a good thing is it? As long as risk is capped aren't we better off being flexible with the option to adjust and adapt according to what price is actually doing as a trade plays out?
  • #28
  • Apr 25, 2010 6:00pm Apr 25, 2010 6:00pm
Quoting Craig
For those interested in a excellent discussion of position sizing should check out the chapter 'Money Management' in the book 'Volatility Trading' by Sinclair. The mathematics for maximizing ones bankroll are fairly well defined, but as with VAR, this all depends on your trade statistics staying nearly constant for some period into the future.
Thanks.
  • #29
  • Apr 25, 2010 7:30pm Apr 25, 2010 7:30pm
Quoting pipmutt
I think a great deal depends on how one views unrealized gains, and also what type of strategy one uses. For me it's not an exact science, price action and the momentum behind it are important factors, and I consider unrealized profit as just part of an ongoing trade.
I agree totally about the inexactness of the science (or is it an art?), and also about the importance of price action and momentum. However, I guess our views on unrealized profit differ; I explained my views and reasons in the links that I gave.

Quoting pipmutt
I'm not sure being rigid in one's money/trade management is such a good thing is it? As long as risk is capped aren't we better off being flexible with the option to adjust and adapt according to what price is actually doing as a trade plays out?
I don't believe that I'm overly rigid in the way that I manage my exits; I look to scale out based on price action around key S/R levels as the trade plays out, but (because I look for setups that have a high probability of trending) I also like to keep some of the position alive in the hope of catching a 'home run' trade. I don't specifically add to open positions, but if a second setup that's valid in its own right occurs before I've closed the initial position, I'll consider taking it. Having said that, if a similar (and valid) opportunity is available in a different pair, then I'll take that instead, because I like the 'smoothing' effect provided by diversification.
  • #30
  • Apr 26, 2010 10:43am Apr 26, 2010 10:43am
Quote
So the questions become: how do you know that, once a trade moves in your favor, that it's more likely to continue doing so, than not? And at what levels should you add the subsequent positions?

1. Obviously the entries should be made in their own right, and not simply because the position is profiting. Either our original analysis is still strong enough to justify adding some entries, or it is not and we need to wait for a pullback etc. If we don't know, then either our original analysis was poor, or we've moved beyond it and shouldn't trade.

2. There's no one answer, as it will vary by analysis and strategy. My method works for me, but won't for many others. This is because my entries are made in mind with my strategy, and my strategy is built on my analysis.
  • #31
  • Apr 26, 2010 2:59pm Apr 26, 2010 2:59pm
Quoting Mr J
Obviously the entries should be made in their own right, and not simply because the position is profiting.
That's obvious to both you and me, but it amazes me how many experienced traders add positions on the basis of their P/L rather than market analysis. One such trader was interviewed in the Lien/Schlossberg Millionaire Traders book; he claims to add positions because once he has a free trade, he's playing with the "house's money".

Many thanks for answering my questions, although I was really only asking them rhetorically, i.e. as key questions that every trader should ask himself when he considers the possibility of pyramiding. As you correctly point out, the levels are strategy specific.
  • #32
  • Apr 26, 2010 3:40pm Apr 26, 2010 3:40pm
Quoting pipmutt
Do you grade your setups then? Why would you take anything less than a top quality set up?
Diversification - you want to have different risk profiles for different kinds of systems.

Also about the topic, I find MAR quite a good number.
  • #33
  • Apr 27, 2010 2:50am Apr 27, 2010 2:50am
Quoting hanover

One such trader was interviewed in the Lien/Schlossberg Millionaire Traders book; he claims to add positions because once he has a free trade, he's playing with the "house's money".
I haven't read the book but I'm guessing there must be more to that trader's approach.

I agree with you that additional positions shouldn't just be arbitrary, maybe that's accepted as a given in the interviews you've read. I think this relates more to money and risk management, and the aggressive compounding of gains. Soros for example makes the point that it's easier to risk profit than it is to risk principal. I'm assuming he isn't suggesting being reckless with those gains, just more aggressive with them in risk terms.
  • #34
  • Jun 9, 2010 10:11pm Jun 9, 2010 10:11pm
Quoting Marsh
My fellow traders,
....
I am wondering what kind of statistical numbers some of YOU guys use to keep track of your trading..
Any and every measurement of trading interests me.
....
we have the same interest Marsh.
i'd like to delve in deeper into this topic.

if u dont mind, i'd like to ask traders to make a list, from most important to least important statistics (in their respective opinions).... with accompanying reasons/justifications if possible.
Thanks everyone!
  • #35
  • Jun 10, 2010 1:06am Jun 10, 2010 1:06am
Not a lot too mine - there are those which are essential for trading - account size, % at risk on one trade and how much this means in ££, £ / pip (based on SLs), contract size, but the one that holds golden position at the top of the spreadsheet is, based on a year's history:
Win % / Lose %
Losing streak 5 / 10 / 15/ 20 /25 / 30 / 35/ 40 / 45 / 50
Probability : 100% / 100% / 98% / 69%
Equity damage: 10% / 20% / 30%
Chance of total destruction: 1 in XXX

In practical terms anything position sizing is the most important, but longer-term success those probability stats have taken prime position. Losing streaks are a fact of life, and knowing whether your streak is within normal probability distribution is the only thing that could keep me trading through drawdowns without breaking the rules.

Apparently, the chance of dying from any kind of injury during the next year: 1 in 1,820. So long as you're chance of total destruction is less than that, you'll die before you blow your account
  • #36
  • Last Post: Jun 11, 2010 1:14am Jun 11, 2010 1:14am
Interesting stuff here boys,
I like the way most of you are thinking

Especially about the fixed % will work against you if/when you have a drawdown.
I myself do use a fixed % but I change this number whenever I get 10% more or less in my account. I think I learnt that from the old days when I were betting on sports

However, whatever works--> works. I can only speak for myself but I used to follow all the rules in the book and I were still on the wrong side, first when I made my own road I came on the positive side.

I trade stocks primarily and that’s where my main income comes from, moving some assets over to an FX account did not go so well... Anyway what I learnt here in the FX market have been a huge benefit for me in the stock market (I especially know risk a lot better and why the market moves like it does).

However for all you guys who struggle, we all do but you get more used to it as time goes..

Here is some of my principles, it helped my so it might help you;

 

  1. Break Even as soon as possible
  2. Let your free position run for a day or more...
  3. Always use an SL
  4. Don't spend too much time figuring out where the price should go, no one knows...
  5. If you fail a couple of times just smile, think about why and try again
  6. Don't change your style to often you have probably had several really good trading techniques
  7. This is the most important one; we all have blown up several accounts because we are all the same... Think about that day, what did you do that day? You over leveraged probably and you where hoping that the price would turn... Didn't happen, but you should have learnt something very important that day... Just do the opposite, don't be scared for making money!!



Got a little off topic there... anyways good thread

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