The Trader Behind the Trade™

Damn, I thought that I could adjust the date from my TE and see some data from specific timeline..and all of a sudden I got message that "fxtrade only keeps 30 days of transaction history". Now I can't even go back to my old history! So now i'm just going to use myfxbook. I don't even want to change anything there cause I know I might lose my trade history there too.

Well it's been a hell hole for me. Although i'm still up since inception my clients are pretty much in the hole by about -65%. They're all people that I know personally. I just tell them to shut the hell up and let me trade . That usually quiets them down when they nag about gains.

As far as trading goes, I'm still grinding it out.

One regret that I have was taking people that I know personally as clients. Sure in hindsight I probably should've waited or not even start this signal service in the first place. But having people that you personally know as clients will mind fuck you. I have one client that would text me EVERY time i'm down. Can you fucking imagine how that would affect you. That fucked up my psyche real bad. My focus shifted from just trading the system to make money soon and get back the losses!

So original chart shows how I tried to do that on few occasions. Even broke rules (holding on to trades for crazy gains, scalping for few pips, etc.). After all that failed and your clients pretty must lose hope for profits anytime soon, You just have a better outlook on trading- no pressure. My clients have pretty much have said they'll have no choice but to be long term investors lol.

So now i'm much more chill knowing what their expectation is.

Pemully, I agree with you. Some days I wished I never found forex. But when you experienced the money that I turned from this to this- it's hard to just leave. Especially when I bought stuff around the house..and walking around..thinking "remember when it was good??""..fuck....

I feel you TPOTrader.I might have come off as a bit rude,but this is a journal I really wanted to work out.I honestly thought you had abandoned it.
Its good to know that you have now relaxed,there were moments I thought you had totally lost it.Why do you focus on the EURUSD alone? this pair has been quite difficult to trade the past few months.I am also in this difficult journey hoping to make it.

Hope you make it to new equity highs.

I saw another big trader also purely focusing on EURUSD.
http://www.myfxbook.com/members/Nick...inginfo/641883

sometimes i wished i had the opportunity to be on the floor back in those days. Just wondering sometimes if i would a better fit trading "physically" and seeing the emotions vs trading electronically now.

Yap, I agree. Trading electronically is very lonely!

When in good profit, its like exploding. Your so energetic.
When in DD, its like sinking in your mind & thoughts.

Having somebody that understands our situation really helps.

Regards,

Did the market change that much to make you lose your edge? Will you continue to trade the same setups or you look for new strategies?

I've learned that Market changes. In lower time frames it changes a lot more faster than in longer times. When it changes If you proceed with the same strategies in time you will go in DD and get out. I believe that in a year range you will be in profit BUT IF you are trading with high leverage you will not make it till that time. I as a Day trader trade with high leverage so when market changes I need to identify this a.s.a.p and change my strategy accordingly.

FTI, a well respected day trader member in FF who is trading for decades (very old member), says you need to be as flexible as possible. To flow with the market. This is easier said than done because in day trading you are making decisions in a split of a second. IF you are not ready for the current situation than you will make wrong decisions forcing you to experience fear making future problems for you. So the only way is to pre-plan your trades and identify all possible market situations before you go in the trade. Work on them hard enough that when the situation appears you are ready for it. I believe this is the ultimate solution that will make your educated mind = "The Edge". It will take time maybe even years for some but it is worth of it.

I'm preparing myself for this battle and hope to get out of this DD in the next month.

Regards,

This is partly in response to mmaker and partly in response to khanderoo. The view that the market changes and that edges disappear as a result is common here on FF. I also used to think that markets would change and that a real advantage would fade.

However, as I've done more study, testing and discovery I've found that the market's basic structure doesn't change. As a result the changes in strategy performance being seen are merely a reflection of increases/decreases in market volatility or increases/decreases in market trending/ranging. Strategies that rely on a certain market state repeating in exactly the same way each time tend to be very fragile. This is particularly true if those strategies were tested on a small amount of data or the proper backtesting / validation procedure was not followed. High leverage strategies tend to be very fragile because they don't do well when a slight change occurs in volatility or trendiness of the market.

Generally speaking, all of this comes under the category of not enough data in the test or not enough trades when performing backtesting. Another cause is simply not holding out some data for validation when testing - in other words, not performing the backtest correctly. If assumptions about future performance are being inferred based on past testing and the testing is done with too little data or not with a validation, the the test results will not generalize well and thus it will seem as if the market has changed and the edge has disappeared.

So then some will be questioning, what is a real edge? The only real edge available to retail traders is to buy when price is going up and to sell as price is going down.

For professionals, the added edge of diversification is available and these two advantages (edges) can be combined to great effect, assuming that the proper backtesting procedures are followed.

His account now at new equity lows for the year (the 3 client/family sub-accounts down over 70%). How do we accept that our edge is no longer working, or we don't have the edge anymore? Or do we still believe in the backtesting?

his results currently are worse than random. he should consider reversing his entries or find out if his stops have become too small or target too far away in the current volatility.

I have just experienced the biggest Ah-ha! moment in the last 7 years i've been trading.

But before i get into that, let's just review my crappy performance thus far...
Since inception..my profit has dropped to little over $1000 (from the peak of +$20,000)



My investors obviously fared much worse. Most of them got in at the peak and rode down the equity downtrend. One of them is on "pause" waiting for the equity to bounce before jumping back in. There is one is about to call it quits if he doesn't see any improvement in the next few months. the rest are just following passively.

As far as i'm concerned, it is what it is. I don't promise riches. I have made disclaimer than i'm one agressive SOB when it comes to trading. And so i don't feel regret about the poor performance. Although i wished that i had been more of an advisor along the way, telling them to reduce their risk in the risk setting so that at least their losses are more minimized.

But moving on..

The last few months I decided to review my performance up to this point and really look at what happened. Initial backtest was taking this "pattern" and look at how successful it was when it happened. The light bulb came on when i decided to look at how often this "pattern" actually happen. And looking at that statistic, it only occurs 58% of the time.

So i decided to come up with ways to make the pattern more reliable and came up with a set of calculation for the "new pattern". I ran the "new pattern" under the same historical backtest up to now and the statistic of how often it occurs is at about 73%! (by the way the "pattern" is basically based on auction market theory- i.e value trading)

So now i'm slightly excited. I've been trading long enough to not just jump the gun and trade this pattern without running it through different scenarios. I decided to take this pattern and test it against various S/L and Target and filter scenarios. After i was done i tested 11 different scenarios!. This is 11 backtests over thousands of trades! it was fucking pain in the ass of a work i tell you.

But the results really was surprising. The biggest gainer out of the 11 scenarios had this following statistics:

Loss% - 6.48%

Win% - 26.85%

B/E% (+0.1)- 66.66%

profit factor = 4.53 (pips)

So the best method would result in my account being "dormant" most of the time due to breakeven trades. But it has the most net profit compared to all other methods with the more frequent trades.

I knew that high percentage wins doesn't necessarily mean anything. And i know that low percent wins can be a positive expectancy system given the right R:R. But i never really considered a high b/e strategy that would avoid me from trading most days and the small percentage of days that i do trade is what really matters. Kind of fits the pareto principle in which money is made from 20% of the trades- the other 80 percent is b/e or small losses.

Only time will tell if this strategy will work in the real market. Maybe it will perform well in the beginning and crash in the end like my original strategy did. But I'm a bit optimistic- i guess we shall see...

see you in 6 months...

Final piece to the puzzle after running 16 total TP and S/L and trend/range criteria scenarios with the updated strategy:

Note:
opportunity cost = no trades% x EV
Rating = EV - opportunity cost

As you all already know, it's a balancing act to figure out which strategy suits you (provided that they all have + expectancy).

Do you prefer higher hit rate? but also suffer from higher losing rate?
Do you prefer longer b/e (dead period) but enjoy the least losing frequency?
Do you prefer to make the most money and not worry about the impact of wins/loss/breakevens

I asked myself these questions and came up with a strategy that "suits" me best.

Its nice to see that you are back on track

I think I will give one more swing to get NocturnalFX out of the hole. If I can't manage profitability this year-I will shut down the website/commercial service. Possibly going back to the drawing board. Maybe just quit trading altogether and focus on other investment vehicles.

2014 Goal = 100% return


I started a new TE for 2014. I should've never messed around with it in the first place since now Fxtrade only keeps trading record for about 30 days only and all my trading history got wiped. So hopefully the performance is locked-and will be updated going forward.

However, FULL trading history will remain on myfxbook account (on post#1).

One of my family members (client 2) decided to hold off until I start showing consistency again. The rest are chugging along with me (except for one day that I accidentally turned off the copy EA ). My goal is to make money for myself-everything else will fall into place.

This looks like a good video...

http://vimeo.com/ondemand/7051/79534238

i thought this was going to be a documentary like Trader or floored..turns out it is PIt trading 101.literally.

That's $3 i'm not going to get back..

After much thought, I decided to close down my trading business.

Managing a trading business is such a hassle. Not only you have to manage your clients but you also have to adhere to the norms of this business. I'm talking about keeping your DD< 15-20%, keeping risk low and all that shit. I rather not have that constraints on my trading. Before this trading business, I wasn't so engrossed in the $ or % statistics at all. And I need to be at that state again to be a good trader and just focus on the rhythm.

At the end of the day, what makes me happy is just trading my own account. My ideal stake would be around 150k-200k; staying small and making consistent gains without pressure. This is definitely achievable based on the kinds of gains I've made in the past.

So basically I will redesign my website for it to be more of a personal site or blog. I don't want to close it down completely since I've spent some money getting my logo created and ownership to it ( I trademarked that sucker ). I think if I make it in trading, I want to be able to tell my story and I think NocturnalFX is the ideal medium for it. And I will still continue trading the other accounts as well until I feel it's the right time to end it. But as far as NocturnalFX commercial service goes-it's over.

This thread will stay open to share my trading experiences. So will my Myfxbook and trade explorer. I always believe in transparency and so I will continue to practice what I preach.

Had a small losing day. Prices pierced one way and reversed..multiple times.

I hope I can maintain this kind of position control during days like these.