My journey to long term consistency

[DrSafari]

Closed my short WA position at € 121.74 profit. Around my soft target. Funny thing is, I was just thinking I shouldn't hold my position over the weekend, that would be stupid cause I would probably lose a lot of my profit due to slippage. So I had to close it soon because market would close in an hour. Right at that time it started going up. Why? My guess is other guys were thinking exactly the same and started closing their short positions as well. Either what I'm saying now is bat**** crazy or I'm starting to understand the market better.

I will update with a chart with opening and closing prices. See you guys on monday

Current equity: € 4,622.15

 

[timsk]

Hi DrSafari,
Well done on your WA trade. The really impressive thing you did was to re-enter after you were stopped out the first time. That's an area a lot of traders struggle with psychologically, as they're still suffering from a loss first time around or annoyed with themselves for giving back a profit to the market.

. . . Isn't it so that you should take into account your risk management rules for that so if you base your adjusted one on monetary amounts (relative to your original monetary amount) it would be correct as well?

If not, how else should I do it?

First off, there are no 'shoulds' or 'shouldn'ts' in trading. Well, precious few anyway. Those that there are tend to be universally accepted truths such as these: Mark Douglas on Emotionless Trading.

With the above in mind, regarding your question, my view is that it sounds as if you're trying to impose your money management rules on the market. It couldn't care less! There are no rights or wrongs, but I suggest you adjust stops to sensible technical levels rather than saying 'I've risked X, therefore I want my profit to be 2X, 3X' - or whatever. The problem with fixed ratios based on amounts risked is that one ends up putting stop loss and take profit orders in technically poor positions. That said, there are traders who do exactly this and swear by it. Do what you're comfortable with and works for you.

. . .So I had to close it soon because market would close in an hour. Right at that time it started going up. Why? My guess is other guys were thinking exactly the same and started closing their short positions as well. Either what I'm saying now is bat**** crazy or I'm starting to understand the market better. . .

No, you're not crazy. Often in the last twenty minutes or so of the U.S. session there is a reversal as traders flatten their positions, taking profits or simply bailing because they don't want the overnight risk. Similarly, the opening half hour can be a bit haywire as market open orders are triggered. Then the day settles down and takes its course.
Tim.

 

[DrSafari]

Hi DrSafari,
Well done on your WA trade. The really impressive thing you did was to re-enter after you were stopped out the first time. That's an area a lot of traders struggle with psychologically, as they're still suffering from a loss first time around or annoyed with themselves for giving back a profit to the market.

Thanks! And yes indeed I have struggeled with this in the past. The thing that helped now was that I determinded up front that if an uptrend wouldn't establish I would take a short position again, and so I did.

With the above in mind, regarding your question, my view is that it sounds as if you're trying to impose your money management rules on the market. It couldn't care less! There are no rights or wrongs, but I suggest you adjust stops to sensible technical levels rather than saying 'I've risked X, therefore I want my profit to be 2X, 3X' - or whatever. The problem with fixed ratios based on amounts risked is that one ends up putting stop loss and take profit orders in technically poor positions. That said, there are traders who do exactly this and swear by it. Do what you're comfortable with and works for you.

How I do it is that I try to abide by my fixed ratio's if possible. Of course I also look at the technicals, if I get stopped out by the slightest noise I would put it higher of course. But that is already taken into account by my first stop loss and the adjusted ones are relative to that one so unless the volatility of the stock changes it should be sensible in my eyes. As for profit levels, I try to picks stocks that realistically can make 2X profit if I've risked X, but in reality i always let my winning stocks run and continue to adjust my stop loss, kind of like a trailing stop loss. With this trade I happened to close it manually because market would close soon and wouldn't want to hold the position over the weekend and the profit taken happened to be my soft target which I obviously was happy about but it could just as well have been more or less. It's not that I absolutely stick to my ratio's at all costs.

The one thing I'm still not too sure about is to when to move my stop loss when I'm in the profit zone. So far I kind of use a trailing one so that the distance between the actual price and the stop loss is always the same (except when i've reached my target that's when I move it closer to actual price) but I'm not sure if that's the best way to do it.

No, you're not crazy. Often in the last twenty minutes or so of the U.S. session there is a reversal as traders flatten their positions, taking profits or simply bailing because they don't want the overnight risk. Similarly, the opening half hour can be a bit haywire as market open orders are triggered. Then the day settles down and takes its course.

Ok! Thanks for the clarification.

 

[DrSafari]

Here are the technicals of that trade

WA
Type: short
Amount: 50 shares

Opening rate: 74.17
Opening time: 2:22:43 PM 9/16/2015

Stop loss: (information not available anymore, that's why I should have logged it sooner)
Amount risked: around 60€

Close rate: 71.75
Closing time: 4:25:20 PM 9/18/2015
Net P/L: € +121.74

Chart is a 15 min chart. Green arrow is open, red one is close

 

[DrSafari]

Yesterday I entered another trade, it already got stopped out.

Long TE
Amount: 50 shares

Opening rate: 53.56
Opening time: 2:33:50 PM 9/21/2015

Stop loss: 52.38
Amount risked: 59€

Close rate: 52.38
Closing time: 9:56:36 AM 9/22/2015
Net P/L: € -59.00

Chart is a 15 min chart. Green arrow is open, red one is close, red horizontal is about where my stop loss was. General trend of the chart was up, although it's not obvious on this part of the chart.



Not every trade that goes wrong is a bad trade but this one is in my opinion. The chart didn't look perfect but because there were not many candidates this month (only 2 instead of the average 4-5) I decided to take it anyway. Mistake #1.

Mistake #2: I shouldn't have gone long in the current market. Since the China thing on August 24th the market felt bearish ever since. The Fed decision didn't help. Writing this down I feel so stupid to have done that trade. I'm sure I could have found a stock to go short on that had an equally good chart (or even a better one) than this did.

Things to improve: My entry point. If I had chosen my entry point more carefully I wouldn't have been stopped out yet. At least this time I didn't blindly enter the position but I tried to choose a better entry point. I have difficulties with this because whenever I see it going down (when I want to go long) or going up (when I want to go short) I'm afraid that the trend will actually reverse. This is a psychological thing because as long as the downwards or upwards fluctuations are within the expected parameters of the volatility of the stock I have no reason to believe that the trend will reverse. Because of this my entry points are often on a top (or near the top) when I'm long and in the pit or near the pit when I'm short.

Also, once I see a good chart that's approved by my trading system I am impatient and want to enter a position ASAP, another psychological issue

Now that I'm aware of these things I can work on them. I lost a small amount of equity but these lessons were worth it imo.

So next time I wil focus on choosing a good entry point so my brain will learn that the trend won't necessarily reverse.

 

[DrSafari]

I'm trying out the Triple screen trading system explained in "The new trading for a living" in my demo account. So far not much trying has been going on because it's REALLY difficult to find a stock that matches the criteria. This makes me think I'm doing something wrong but I've been reading that part in the book over and over again and seems I'm doing everything right. Could also be that the current market doesn't produce many opportunities according to that system or you just have to go through a ton of stocks before an opportunity arises. Time will tell I guess, I will have to have discipline to monitor everyday and be patient. If I can't even do that I don't deserve to be able to trade for a living in the future.

On one hand it's good because it will discard many bad potential trades, on the other hand it's annoying, especially when testing and you don't know what to expect. I guess I'll just have to monitor a ****load of stocks. Another good thing is that it's purely technical and I don't have to "wait" for any economical indicators. I can do this everyday on every stock. If I keep a list of 100 stocks and keep monitoring them every day something must meet the criteria sooner or later. So far I'm only monitoring 14 for 3 days so that's not saying much I suppose.

Meanwhile I'll still continue to trade with my old system for real money. So far I seem to be making more money with it than losing (albeit not that much) but I can't conclude anything yet.

 

[DrSafari]

Ok, looking back in history I see there are opportunities so it's just a matter of time and/or monitoring enough stocks. Just writing this down to remind myself.

 

[DrSafari]

Demo account
So I've been monitoring 15 stocks with my new to be tested trading system. Yesterday 2 came out as potential trades. Part of the system is to track the daily stochastic and if there's an uptrend you should place a buy order when stochastic lines drop below there bottom reference line thus indicating being oversold and vice versa. I'm testing on USA stocks and am doing this before market opens.

With both potential trades the stochastic lines didn't go perfectly over the reference line, only near it (one upper and one bottom reference line for long and short positions) but because I was excited about opportunities and thought it couldn't get any better I placed some orders already. But now I see yesterday's stochastic values are even better, so it pays to wait.

Yesterday the buy order for the long position (Activision) got already triggered, but because I entered too soon it kept dropping and almost triggered my stop loss. At the time I thought the system wasn't as good as I thought it would be, but now I know I should have waited for better stochastic values, because for both potential trades the values got a lot better. This won't always be the case of course, but that's the whole idea of the system.... filtering out bad trades.

Demo account equity ~12000€

So this is my open long position:

Long Activision
Amount: 250 shares

Opening rate: 31.00
Opening time: 9/29/2015 4:00:06 PM

Stop loss: 30.18
Amount risked: €182.79

Current rate: 30.64
Current Virtual Net P/L: € -82.22

This is the chart, it's a daily chart so I entered somewhere near the top of the last bar. On the daily chart, stop loss line is very close to current sell rate :

 

[DrSafari]

Start of a new month so I should analyse the European Economic Sentiment Indicators again and look for some new stocks with my real account. I still think this system is profitable in the long run with the knowledge I gained meanwhile. I've only been applying it properly since July (and even then) so it's too soon to tell. Lost some money due to the china thing mistake there was to let all my trades reach stop loss instead of cutting them sooner. And it were 6 of them, all long unfortunately. Ouch. Should have diversified. Bottom line, can't draw any conclusions yet but since I still see potential in it, I will continue with small amounts of real money. It's also important to trade with real money cause psychologically it's different... although lately I don't seem to make much of a difference between my demo account and real account. If I see potential trades on either of them I seem to be equally excited, I don't seem to make a mental distinction between the two anymore and I'm treating them with the same discipline. I say "seem" because maybe my brain is fooling me.

That being said. Some interesting things have come up while monitoring my 15 stocks on my demo account. This is how I monitor my stocks in a text file:

Activision
		1st screen Impulse system =		long
		2nd screen Stochastic = 		85,89 / 76,86 / 23,61 / 16,38 / 25,22
		
		--> action = order was placed on 23,61 but should have been placed on 25,22

I determine the general trend by a weekly screen. In this case it's an uptrend hence long. Then I wait for a good time to place an order on the 2nd daily screen and I monitor the Stochastic values daily. I wrongly placed the order at 23,61 which caused me to enter the trade too soon. I should have placed it at 25,22. No real harm is done because my stop loss wasn't reached but potential profit margin is now less of course.

	Agco
		1st screen Impulse system =		short	
		2nd screen Stochastic = 		59,31 / 77,48 / 69,69 / 91,79 / 86, 82
		
		--> action = placed order at 69,69 but should have placed it at 91,79 or 86,82

Here the order didn't get hit yetso I can adapt my order now since 86,82 are good values. Looking at the evolution of the stochastic I would say it's the perfect moment now.

	Allison Transmission
		1st screen Impulse sysem =		short	
		2nd screen Stochastic = 		12,9 / 12,10 / 16,14 / 33,20 / 95,48

		--> action = wait

This one starts to look interesting. Can't enter yet because stochastics aren't above or near 80 yet. Seeing how they evolve they probably will be tomorrow.

	********** Financial 
		1st screen Impulse sysem =		short	
		2nd screen Stochastic = 		35,26 / 62,38 / 7,35 / 59,43 / 97,54

		--> action = wait

Same as above, starts to look interesting but can't place an order just yet. Tomorrow looks promising.

 

[DrSafari]

Demo account testing trading system

I'm still long in my Activision trade. Price has almost reached my stop loss because of the bad Nonfarm Payrolls results yesterday which suprisingly didn't have much impact right away but only now seems to have an impact on stocks globally.

	Agco
		1st screen Impulse system =		short	
		2nd screen Stochastic = 		77,48 / 69,69 / 91,79 / 86, 82 / 18,65
		
		--> action = 	adapted order to 45.95 price on 86,82 stochastic

I said I put my order wrongly on the Agco stock and I did but of course it didn't get hit yet so I adapted at the time the stochastic values read 86,82 and it got hit. Started making profits right away but instead of following the money management rules of the system I kind of followed the rules of my system I use with real money, meaning I left too little margin for my trailing stop loss and taking a small ~80€ profit.

Realising this I re-entered short position and it's making profit again. I will post details and charts when I have the time.

 

[DrSafari]

Demo account
Agco got stopped out at a ~60€ loss. Both trades combined making a small 20 € profit. Reason I re-entered as mentioned before is because I took profits too soon according to the trading system. So would have made slightly more if I had let it run (and trailing stop loss like I do) because of paying the spread only once instead of twice.

Agco First Entry
Short Agco
Amount: 100 shares

Opening rate: 44.73
Opening time: 10/1/2015 3:31:36 PM
Stop loss: did not record
Amount risked: I think it was around €180

Close rate: 43.84
Close time:10/1/2015 5:11:34 PM
Virtual Net P/L: € +79.47


Agco Second Entry
Short Agco
Amount: 100 shares

Opening rate: 43.90
Opening time: 10/1/2015 5:26:23 PM
Stop loss: did not record
Amount risked: I think it was around €180 again initially

Close rate: 44.61
Close time:10/5/2015 3:30:34 PM
Virtual Net P/L:€ -61.74


Activision (long) which nearly hit the stop loss because of the bad Nonfarm Payrolls results is rallying again so it's good that it didn't hit its stop loss. I placed 3 more orders according to the system who may or may not get executed. I do wonder how long the order is still "valid". That's not really explained anywhere. I guess I'll have to use my common sense for that. I guess if the long term trend is changing it's no longer suitable and if not it would probably get a fill anytime soon anyway.

Tonight I'll have some candidates for my other system with real money.

 

[DrSafari]

Real Account

I had 4 suitable trades coming out of my real account system. But I got into them too soon again. Why too soon ? I had noticed afterwards that today it's the ECB President Draghi's Speech. From experience I know this can have a big impact on european stocks. And I was currently holding 4 european long positions. Luckily all 4 were already making profits. I quickly took profits on 2 of them (Ko and Me). Wanted to get rid of a third one too but couldn't get a fill so I just put a higher stop loss to reduce risk, that one got stopped out now (Rh). And I'm still holding 1 of them with a small profit and minimal risk so I'm holding on to that one.

But again, need to learn to be a bit less eager if I see suitable candidates and a nice clean chart the way I like it. Hard to get rid of this habit

I will re-enter all 3 positions if their trend seems to continue after the ECB's president speech.

I probably won't post charts all the time as it's quite a hassle. They're usually not that useful either, if I don't include a daily or hourly long term chart and a 15 or 30 min short term chart. If I only post the long term chart you see the general trend clearly but not the entry point. If I post the short term chart you don't see the long term trend perspective. So I will post less charts but when I do I will include a long term and a short term one.

Closed positions:
------------------

Long Ko
Amount: 100 shares

Opening rate: 36.54
Opening time: 10/6/2015 10:46:09 AM
Stop loss: again, no time to have it recorded
Amount risked: too much, broke 2% rule slightly

Close rate: 37.29
Close time:10/6/2015 4:19:55 PM
Net P/L: € +75.00


Long Me
Amount: 250 shares

Opening rate: 20.55
Opening time: 10/6/2015 10:14:34 AM
Stop loss: again, no time to have it recorded
Amount risked: around 2%, I think it was €88

Close rate: 20.80
Close time:10/6/2015 4:20:01 PM
Net P/L: € +62.50



Long Rh
Amount: 250 shares

Opening rate: 19.68
Opening time: 10/6/2015 9:20:12 AM
Stop loss: again, no time to have it recorded
Amount risked: too much, broke 2% rule slightly as well

Close rate: 19.59
Close time:10/6/2015 4:34:59 PM
Net P/L: € -22.50

Current equity: € 4,683.38



Demo account
Today's stochastics monitoring was fruitful as it produced 3 more trading candidates, placed orders for all 3, making 6 outstanding orders in total. Will they get a fill or not? That's part of the system so no more action to take on that. My open Activision trade (long) was making a nice profit. More than the amount that I set as my stop loss so I put my stop above the break even point. Because that is my rule to add to my position I added another equally large position on Activision. Same stop loss as the other trade.

 

[DrSafari]

Real Account
I opened 3 other long positions of which 2 got stopped out already 2 days ago. The Ca trade was legitimate but was just a losing trade. However, I entered Me again also. It was a mistake. I was trying to look for a good entry point but it kind of screwed me over. It was rallying up so I thought let's have some patience and enter when it goes down a bit. Except it didn't go down. It kept going up. And each time it went higher and higher I resisted the temptation to enter the trade. I kept my descipline until the 4th time I had the urge to enter it and then I actually entered the trade. Of course it was on the high point, figures lol, but serves me right. It really is your emotions what makes the difference in the market. Either I should have entered it immediately or not at all.

Also the minimum amount to buy was rather a lot so my stop loss was probably a bit too tight for the volatility but didn't want to risk too much either. Everything about that trade screams extremely bad trade and the worst thing is that I knew it. I told myself that I shouldn't entere because it's a bad trade a couple of times and then I did it anyway. Well I can only learn from it. I should be happy to learn these lessons now that i'm trading with a small amount rather than my full capital.

Anyway the result of that bad trade was € -87,50 rendering me break even if I count my winning trades and the uninevitable (but not necessarily bad) losing trades of this month.

The one other trade I reopened (Ko) is still in the running making a modest profit. One other position out of my 4 earlier mentioned candidates is Kon that one is still in the running from the beginning. I didn't talk about that one yet but it's also making a modest profit.

On to the technicals I guess. I will post charts of the Ca trade and maybe the very bad Me trade just for fun

As I'm in the process of posting the technicals the market has opened and both my positions are making more profit.

Positions still open:
Long Ko
Amount: 100 shares

Opening rate: 37,11
Opening time: 7/10/2015 9:10:03 AM
Stop loss: 37,14 (re-adjusted twice already)
Amount risked: initially around €80

Current rate: 37.98
Current Net P/L: € +88,88


Long Kon
Amount: 50 shares

Opening rate: 23,78
Opening time: 6/10/2015 10:36:43 AM
Stop loss: 24,18 (re-adjusted twice as well)
Amount risked: initially around €30

Current rate: 24,76
Current Net P/L: € +47,98



Positions closed
Reason = stop loss got hit
Long Me (the bad trade)
Amount: 250 shares

Opening rate: 21,71
Opening time:7/10/2015 11:49:28 AM
Stop loss: near the closing rate of course
Amount risked: near € 87,50

Close rate: 21,36
Close time:7/10/2015 5:07:11 PM
Net P/L: € -87,50

Short term 15 minute chart, green line is where i entered, red is where I exited:


Long term hourly chart:
As you can see, my trade idea was correct but I put a too narrow stop loss because I took too large of a position (couldn't go smaller). If deciding to enter the trade anyway I should have entered where i now exited, afterwards it went back up nicely. I could have made nice profits with this one, but alas



Long Ca
Reason closure = stop loss got hit
Amount: 100 shares

Opening rate: 28,04
Opening time: 7/10/2015 10:01:53 AM
Stop loss: near the closing rate of course
Amount risked: near € 41,80

Close rate: 27,63
Close time: 8/10/2015 11:02:37 AM
Net P/L: € -41,80

 

[DrSafari]

Real Account
My two open positions are now closed as well. One hit the stop loss and the other one I closed myself on friday as my soft target was reached and didn't want to hold it over the weekend.

Long Ko
Amount: 100 shares
Reason of closure: stop loss got hit

Opening rate: 37,11
Opening time: 7/10/2015 9:10:03 AM
Stop loss: 37,56 (trailing)
Amount risked: initially around €80

Close rate: 37.56
Close time: 9/10/2015 11:46:21 AM
Net P/L: € +42,88


Long Kon
Amount: 50 shares
Reason of closure: profit target reached and didn't want to hold over weekend

Opening rate: 23,78
Opening time: 6/10/2015 10:36:43 AM
Stop loss: trailing
Amount risked: initially around €30

Close rate: 25,00
Close time: 9/10/2015 2:50:17 PM
Net P/L: € +59,98

Currently not holding any positions anymore.
Current equity: € 4.650,95

 

[options-george]

Nice to see that you continue updating here, and that you are keeping good records. I believe this shifts the odds of becoming a successful trader in your favor.

Keep up the good work!

 

[DrSafari]

Nice to see that you continue updating here, and that you are keeping good records. I believe this shifts the odds of becoming a successful trader in your favor.

Keep up the good work!

I believe so too, thanks

 

[DrSafari]

Demo account
Consistently losing money with my new trading system. I am executing very mechanically and not looking at anything else than the indicators. I'm not going to dismiss it entirely but I'm going to look for cleaner charts when I'm choosing trading candidates, a bit of a hybrid between my real account system and the one I'm testing. I'll probably start with it next week.

I also tested Mr Charts day trading rising/falling candles system two times. Once it worked really well and the other time it didn't. However doing this I learned something really important. The spread of my broker is WAY to high to use this kind of technique. If I ever want to use this system for real I have to use a different broker. I guess to test it properly this counts as well. I have a gut feeling the system could work well and it suits my style too. The fact that you never hold anything overnight also appeals to me. And, there is a common theme with the system I'm currently using for real money.

As I'm writing this I'm in the process of the administration of registering with a different broker. I guess I'll have to withdraw my equity from plus500 and wire it to my future account. The only problem with that is that my loss of around €4400 becomes real then and that it stings to walk away from them with a loss letting them have made easy money from me. Then again, I'm sure that I will make it back sooner or later and I realise this is only my ego speaking so logically there is no reason not to do it. Emotions are the enemy so once everything is set up and I've gotten used to the new platform I surely will transfer my funds.

Real account

Short Mel
Amount: 1000 shares
Reason of closure: stop loss got hit, stop loss levels were at +€5 at the time but due to slippage I ended up in the negatives a bit.

Opening rate: 267,96
Opening time:13/10/2015 10:39:34 AM
Stop loss: near close rate after adapting
Amount risked: initially around €30

Close rate: 268,19
Close time: 15/10/2015 9:09:04 AM
Net P/L: € -2,38

Not a bad trade in my opinion but i highered my stop loss after it was making nice profits of around €30 to reduce risks. Not much after market opened today the stock gapped and went beyond the stop loss which caused me to lose a small amount of money.

 

[Dr. Toad]

I also tested Mr Charts day trading rising/falling candles system two times. Once it worked really well and the other time it didn't. However doing this I learned something really important. The spread of my broker is WAY to high to use this kind of technique. If I ever want to use this system for real I have to use a different broker. I guess to test it properly this counts as well. I have a gut feeling the system could work well and it suits my style too. The fact that you never hold anything overnight also appeals to me. And, there is a common theme with the system I'm currently using for real money.

I look forward to any further comment you have on this system as I am actually taking a bit of a hiatus from my trading/system development to test this out myself. For me though, I am going to spend some time automating it since manual trading this way will not be practical for me. I have come to the realization that an automatic system is probably the best way forward for me and this system in particular lends itself very well to that. Probably will be a month before I have time to get it coded and start testing it out myself so any insight you provide on it will be very useful to me.

 

[DrSafari]

I look forward to any further comment you have on this system as I am actually taking a bit of a hiatus from my trading/system development to test this out myself. For me though, I am going to spend some time automating it since manual trading this way will not be practical for me. I have come to the realization that an automatic system is probably the best way forward for me and this system in particular lends itself very well to that. Probably will be a month before I have time to get it coded and start testing it out myself so any insight you provide on it will be very useful to me.

It will probably have to wait until I've got my other broker set up, but i'm in the process of doing that. To be continued

 

[DrSafari]

Real Account
Internet at work was down so couldn't trade european stocks this week. But before that there was still one trade I haven't documented yet.

Short We
Amount: 100 shares
Reason of closure: wanted to reel in my modest profits and didn't want to hold it over the weekend. Looking at the chart I made a good decision. Cause right after I closed my position it went up again. Of course it might just as easily have gone down but then I would have re-entered my position on monday. It didn't do that because it stagnated around the level you can see at the end of the chart... and I also didn't have internet at work

Opening rate: 1.183,83
Opening time:16/10/2015 3:27:24 PM
Amount risked: not sure anymore but looking at the technicals and the price it was probably around 30€

Close rate: 1.164,67
Close time: 16/10/2015 4:48:39 PM
Net P/L: € +26,01

Current equity: € 4.674,58

Chart is a 15 minute chart



It was also risky because it was so close to the weekend and when I was considering doing the trade I wasn't rushing in and checked all the parameters I could think of, except that it was friday lol. That was the only mistake I made.


Demo account testings are still on hold due to this week being mad busy for me.