my journal 2

[Yamato]

It's terrible. It won't let me play again on this laptop and browser. I tried on another computer (same IP) and it lets me play. I installed safari and it lets me play on this computer. But if I try to play with internet explorer it seems to say that i've played too much: regardless of my deleting all cookies and similar.

 

[Yamato]

This time I've gone both LONG and SHORT and ignored a couple of stoplosses, but got lucky.



Last game for today. In the meanwhile, losing hundreds with real trading.

 

[Yamato]

All by going SHORT. New lesson learned: when there's a hammer (meaning that during a week it fell down a lot and then went back up to where the week started) at the top of a rise move, the next candle almost certainly is down. The same applies to this situation: top of a rise, big red candle followed by an equally big white candle: the next candle is red again, almost always.



I am glad I achieved this by losing a few times, which means I am in control of losses.

 

[Yamato]

Yep, another doubling up just on SHORT trades.



Pretty soon I will require tripling up of myself, both for SHORT and for LONG trades.

In the meanwhile I've blown out my real money account due to not using a stoploss. I still have this problem even in my simulations. I still cannot accept/conceive losses, whether simulated or real. But I feel that I am getting closer to accepting them. The closer I get to being confident of my profitability, the closer I get to accepting my losses.

 

[Yamato]

This was all done by going short, and I'm playing all stocks, even the most bullish ones.

Rules:
1) going short below s/r or at extremely overstretched levels
2) stop trading stock as soon as you get a loss
3) exit as soon as your loss is over 5%



I resolved to getting to 40k (from 10k), because this rules out any luck and it forces me to use the stoploss. Otherwise I can just hope to be lucky and not finish the games where I don't get lucky and blow out my account.

The account must be conceived as one. I can't just test out several accounts and only keep the ones that succeed because in real trading this cannot happen. I have to stick to one account no matter how poorly it performs.

 

[Yamato]

Yeah, now I am tired, but from now on, whether LONG or SHORT, I should just focus on getting the 10k account to 50k, or else it doesn't count. In the past few days I've been getting great results and posting them, but did not actually take pictures of the times I blew out my account. I still think I figured it out, but I can't just blow out my (simulated) account when I am in a bad mood, because that's what happens in my real trading. I really have to make sure I get used to using a stoploss, regardless of my mood. And also that I pick my trades carefully.

 

[Yamato]

Damn! The game keeps on taking me out. This doesn't necessarily mean that I suck. I am playing poorly because I am tired, after dozens of games.

However, even if I used the stoploss, I'd be losing all capital, only more slowly.

Essentially I've been playing this game just like I invested my real money. I usually win, and have a high percentage of wins, but I can never get my account to 50k because sooner or later I incur one of those huge losses. So: if I play to 20k, i get it most of the time. But if I play to 50k I rarely get it, because sooner or later I get one of those losses that wipe me out.

So this is exactly what I need to do in order to learn the stoploss: play to 50k over and over again, until I finally understand how to play for the long term rather than for the short term. Because whereas a quick win will impress people and myself, what I need to do is make sure my capital never goes to zero, regardless of how slowly it will increase.

 

[Yamato]

Short again. I will see it like this: each time I keep my losses below 10% per stock I should celebrate. Regardless of whether I am making a profit or not. The important thing is not to gamble, rather than to win. The important thing is to do the most convenient thing, and not to get a huge return that will impress people. All these years I kept on aiming for huge returns, for being right... and never worried about my capital. Is my capital safe? Is my capital growing? It didn't matter. What mattered to me was being right.

This time I didn't make a huge return, nor doubled within 10 trades, but my capital is still there. Tomorrow I will continue this game. I don't have to restart every hour from 10k. I need to see this capital just like my real capital, in order to learn to use the stoploss both in simulation and in real trading. Almost all problems are symmetrical, except time and trials: I get faster games and more trials on my simulator, and this enabled me to become profitable. Nonetheless I still retain the problem of not using the stoploss. And that is good, because i can work on learning to use the stoploss on the simulator and it should work for real trading as well.

 

[andyroki]

So I looked for something similar, and it might turn out to be better:

http://sites.google.com/site/testmytrades/

Nice Journal.

Did you get to try TurTrades :?: If yes did you find it useful ?

 

[Yamato]

Thanks, I like it, too. I find it much better than those of people just listing their trades. I can't read those at all. Then again, those guys might be profitable whereas I am not.

Yes, I tried that software, and it's the second best thing after the Chart Game. But it's not nearly as good for the quality of its charts (too small and not customizable). However I am grateful to the author for letting us have it.

 

[Yamato]

New Objective for Chart Game

The objective from now on will not be to achieve some record, take a snapshot and post it here, but to post every single series of 20 trades I will make, regardless of their balance.

I will strive to achieve profitability out of every series of 20 trades. That will be my objective. I believe I have an edge, but I must prove it by posting every single trade i make on the chart game, and not just those that turn out to be good. Out of every 20 trades I should be able to get a profitable balance. If I won't, i will have to analyze the reasons.

 

[DionysusToast]

Re: New Objective for Chart Game

This is interesting stuff Travis.

I think this move is a good one - to post all attempts. What does concern with this type of thing is that you become more sloppy on intra-trade drawdown. So you may have a set stop %age but allow yourself to stay in a trade after blowing through it.

Saying that - the end result may be holding on to something way longer than necessary, so if you are doing this, at some point you'll have a trade with much more loss than allowable.

Also - how does it get the entry & exit price ? If it uses the open price, you potentially be getting a better price that is actually possible. Same for the close price. You need to perhaps shave off a few cents on the entry/exit to allow for this.

It is rare I have a market or stop order triggered to fire of at the open, rather - I wait for the price to come back to me or I just don't get in.

Anyway - this looks pretty good. I had a go myself - it's rather addictive.

 

[Yamato]

I am glad you're liking my approach. You see, i realized that the more I try to impress myself and others by posting doubling up or tripling up my account with just a few trades, the more I am encouraged to not use the stoploss when something goes wrong, counting on the fact that I'll either get lucky or I'll simply not post my results (in case I blow out my account). But this is not a healthy approach for two reasons:

1) In real trading, I don't have to impress people but increase my capital, and it's unconceivable that I'll blow out my account every once in a while, and impress people with my returns the other times.

2) What i really need to find out is if I have an edge and if I am profitable, and I measure that simply by listing my next 20 trades, making 20 trades at a time (because i'd get tired with more and start underperforming).

The 20 trades at a time will teach me to use the stoploss and will tell me if I have an edge, or help me develop it. Then I will try to write down univocally what it is that I do (for using it in real trading). But even before doing that, I will develop a very useful confidence, which I never had: I've never really felt confident about my own discretionary profitability, since with automated trading I have been profitable for years.

Which brings me to another point. Why have i been profitable with automated trading and not with discretionary trading? For the same reason that I find it easier to be profitable with the chart game: time, patience. With automated trading and with the chart game, I don't have to wait around for the right time and then act. The computer does it all for me (it's fully automated). And in the chart game, I cause one week to pass by clicking a button. Why can't I do this in my own discretionary or rather "manual" trading? Because I am not patient enough. But with automated trading and with the chart game, waiting is not an issue.

Which brings to answering your initial question. With such a huge edge (no "waiting" issues), the last thing we should worry about is a potential "entry" edge given by the chart game. At any rate, such an edge in my opinion does not exist, because - you might not notice it if you play one week at a time - you actually enter one day later than you want.

Anyway, here's my first 20 trades after setting that as a target. Let me state it once again: the objective is to learn to grow capital by using the stoploss rather than trying to impress readers by achieving huge returns. I just want to know that I have a constant edge, and that I never blow out my account out of every 20 trades.

I traded SHORT, as I've been doing lately. I failed a few times, but it seems, from these 20 trades, that I definitely have an edge (but I can only make sure of this, by trying this approach another few dozens of times):

 

[Yamato]

Second profitable 20-trades set in a row. All short trades.

I can develop a much better edge, but starting by not blowing out my account is a good start. Later I'll worry about increasing my gains. Right now I want to make sure that I always make money on every 20-trades set.

 

[Yamato]

Third 20-trades series. Only going short. From now on, the series will have to be 50 trades, because on 20 trades I could still get lucky.



With 50 trades I'll get a chance to really get unlucky and really get pissed off. I need to make sure i can react rationally to a drawdown.

One thing is certain. Sense can be made out of charts and the more I try, the more I improve. But only with this chart game, because with real trading, the slowness of charts and the fear of losing real money interferes too much with my learning. So, I will definitely put my efforts in the chart game, where the more I try the more improvements I get. With real trading, it's different. Charts go too slow and I can't really learn that much, because of the slow speed and the limited tries I get.

Another thing is: i've gotten nowhere with my job, no career at all. So my only hope in life is to succeed with trading. I've got nowhere else to look, so I'll keep trying for sure, despite my 12 years of unprofitability are kind of... driving me crazy, rather than discouraging me. Seeing myself still blowing out accounts (I just did it again two days ago) after all this time really disappoints me. I know the problem is all within my mind, and my impatience, and that is why I am both mad at myself and hopeful for the future. I believe that since is within my own mind, I might be able to defeat the problem. It's not like I have to win a beauty contest where others are judging me. I just have to make myself do something: reason, wait, use a stoploss, plan, refrain from impulse trading. If I can make myself trade once a day and use a stoploss, I am confident I can succeed. I just need these two things. One trade a day and with a stoploss.

 

[Yamato]

failure!

Experiment failed!!!

This is what happens when you do not have a definite method: you are prey of your mood swings. If you're feeling good, your instincts work. If you don't and for whatever reason you feel discouraged, you're going to blow out your account.

So, I'm still unprofitable, and hope I will become profitable one day, even in this simulator. What's good is that my failing at this chart game totally reflects my real trading: a few good trades, then I start failing... lose control of losses, and start making worse entries... doing everything wrong basically after i incur a few losses in a row.

But since chart game totally reflects real trading, I'll know I'll have solved my problems once I'll solve them here, and I'll know I haven't, if I can't be consistently profitable at this chart game.



My next resolve is as follows: I must write down some rules that guarantees me profit even if I get pissed off because of a long series of losses. This system might just work on the chart game but I must begin from there. I've got to create a system that at least works on the chart game. Then I'll worry about the rest. I can't rely just on my instincts because my instincts go bad every time I am tired or pissed off.

 

[Yamato]

Rules must be:

1. univocal or they don't have a reason to exist
2. profitable by themselves, and i should only add with my instinct if anything


Rules:
Identify the most important horizontal or diagonal support and resistance levels for every chart you see, and play breakout and bounces on them. If the s/r is diagonal, only play the trades according to prevailing direction: up or down.

The rest is discretionary. It's not enough but I'll change it as i go.

From now on I'll trade with this method, which requires me first of all to identify whether we're going sideways, up or down, and where the s/r lines are.

 

[DionysusToast]

Travis

Do you intend to hold trades for 1 year ?

Making 0% for a year is a losing trade if you consider the risk free rate. Perhaps this is just the way the software reports its results but it appears to always be about 12 month trades.

Oen of the issues with that is you'll probably end up with is having all of your capital tied up in multiple trades in order to maximise your returns. In the event of a crash - you have a lot of market risk and it could wipe out years of gains.

Is this just the software reporting the trades like this ? Or are you holding 12 months ?

Do you trade every chart or do you skip some ? If you trade every chart it gives you, pat yourself on the back for still having positive results.

DT

 

[Yamato]

The thing about holding for 12 months if it was in a trend (rather than sideways) was just a rough draft of yesterday before going to bed. I never actually tested it on the chart game. It might not work, as you suggest.

About the other question. Yes, I do manage to get some profit out of every single stock, and I am quite satisfied about that. However, I am not satisfied with the fact that I don't have enough rules to prevent myself from blowing out my account when I incur a drawdown and lose my calm. This needs to be fixed, because it's what always gets me in real trading as well. Or maybe I just need to use automated systems as I've always thought. Something causes me to achieve total failure if I see a hint of failure. Usually I do the same in life. I either do something extremely well or I quit. It is the same with my 20 series of trades. If one of them goes wrong, I try again, just as hard. But if the second one goes wrong, I get upset and stop reasoning.

I've got to find a way to stop my compulsive behaviour. Many profitable traders say that they stop trading for a while after they have a loss that destabilizes them. I don't do that. Am I capable of waiting? Can I even try to trade once a week to cure my impulsiveness? I don't know: maybe I am too insecure, or maybe I don't want to succeed?

I could either use some rules to decide how I trade, or, since I trade profitably when I am stable, I could simply create some rules to keep myself from trading when I am unstable.

For example:
1) after one losing trade stop trading (in the chart game) for one minute
2) after two losing trades stop trading for 2 minutes
3) after three losing trades stop trading for 5 minutes...

Oh, and: analyze chart for one minute before making any trades on it. I will start now, with anothe 100 trades.

Rules

Rules:
BEFORE YOU TRADE
Look at each stock's chart for one minute and identify the most important horizontal or diagonal support and resistance levels for every chart you see, and play breakout and bounces on them. If the s/r is diagonal, only play the trades according to prevailing direction: up or down.

DURING THE TRADE
Stoploss of max 10% for each trade.

AFTER THE TRADE
1) after one losing trade stop trading (in the chart game) for one minute
2) after two losing trades stop trading for 2 minutes
3) after three losing trades stop trading for 5 minutes...

 

[Yamato]

US $ Index inversely correlated with my systems

Before I proceed to making my 100 trades, I must mention the weekly results of my systems.



As one day Glenn pointed out to me, these systems do not only seem to be correlated to the EUR, but even more so (inversely) correlated to the Dollar Index:

http://futuresource.quote.com/charts/charts.jsp?s=DX&o=&a=M&z=800x550&d=MEDIUM&b=CANDLE&st=

The fact is that I've backtested them on the last 10 years of data, and amazingly in the past ten years of data the Dollar (Index) has been going down:



Because of back-testing my systems on 10 years, I assumed that they were very safe, since the Dow Jones has gone in all possible directions in the past 10 years: up, down, sideways. However, I didn't realize that their performance could be affected by something else, that had gone just one way for the past 10 years, and that might stop going there tomorrow. As can be seen from the above forward-testing results, my systems make money (e.g. weeks from July to October) when the Dollar Index goes down, exactly as it happened in back-testing. As soon as this ten-year long situation stops, my systems lose money at an even faster speed (e.g. weeks from November to February).

I never knew why my systems were winning or losing. I was looking for reasons in the stock indexes behaviour, and it didn't make any sense. They didn't lose when the Dow Jones went down, nor the opposite. I finally have figured it out. And this can be used to my advantage in a big way. Since the Dollar follows very long trends, it seems that not only can I avoid losing by staying out of the markets when such index is going up. In those situations, instead of staying flat, I could reverse my systems and make money even faster.

The only question that remains is how I should do that. Let's hypothesize that I say "trade against the system when the Dollar Index is above its 5-day moving average", like here:

http://futuresource.quote.com/charts/charts.jsp?s=DX&o=&a=D&z=800x550&d=LOW&b=CANDLE&st=MA(5,5,5);



This sounds reasonable, but it will screw up my forward-testing and make my back-testing totally unreliable. I'd be on my own from here on, because my easylanguage code doesn't account for using the Dollar Index, and it would be complicated to test all my 42 systems all over again based on their correlation with the Dollar Index. Also, my forward-testing was recorded according to systems back-tested without the Dollar Index. So, if I incorporate the Dollar Index into my trading from here on, results may dramatically improve, but I will say goodbye to all my backtesting. On the other hand, if I make money, I could hire someone to do my backtesting all over again.