Dec 092010

Now that I’m posting my trade ideas & results to the forums, I hope to share more insightful posts here on the blog.  Today was very interesting and corraborates something I’ve been observing.

First, I traded my plan today.  Or at least I entered trades in the areas that I planned.  Here’s the real trades on the left (all real $) and the trade ideas I posted this morning:

So why did I end up with 3 ticks???   Ahh.. the hard part of trading!  It looks so easy looking at a chart in hindsight.  Just go long here and short there.  But it’s not that easy.

A brief recap, last month I made $5k daytrading but observed that I was only making 2 ticks per contract.  And I’m not trying to scalp but that’s what I was doing. While reviewing my trades at the end of the month I realized I was afraid of losing so I cut winners short before they could turn into losers.

So for December I decided that I was going to give myself permission to lose half of what I made in December.  Meaning I wouldn’t get upset, I’d accept it up front that I could lose $2500.  I thought that’d make losing easier.  Part of my deficiencies is my reluctance to take stops.  I move them, then average down to scratch the trade.  And I wanted to let those stops get hit in December.  I agreed I wouldn’t move them.  And I went back to Ninjatrader specifically for this reason so the stops are automatic (I was lazy with X_Trader and didn’t put my stop in which made it easier not to stop out).

So in December I took some stops.  That was cool.  I lost some trades and I didn’t mind.  Progress.  Then I started subconsciously doing two things:  one was entering partial positions while waiting for “confirmation”.  That way if I stopped out I’d lose half as much.  The other thing I did was since I was in for only 1 contract, if it stopped and started coming back to my entry, I’d scratch it.  And as a result yesterday I got out of 4 trades that would have been nice winners.

So last night I reviewed this problem with a few trader friends and I updated my trading plan:

So today I did the same on several trades.  And I realized I was following my plan.  The problem was I was entering with 1 contract so when I took it off I had nothing left to get the big wins!

The root of the problem is I’ve still got the risk-averse monkey on my back.  One solution is to force myself to trade my normal size unless I have very good reason to do half size. So I’ll update the trading plan again and tell myself it doesn’t matter if my stop is hit I’m still gauranteed to end up positive for Nov & Dec combined.

It seems like as I “fix” one problem, another one creeps up.  I really want to get this all worked out as I wanted to increase my size in 2011.  On a good note, my trading on Euro on sim has gone very well this week and I think that’s because I don’t care if stops are hit and I’m patient for the targets to get hit.  I need to trade Bund & ES as if I were on simulator – that should calm the monkey.  And as a bonus, if the Euro trading continues to be profitable I will trade it with real money.

  3 Responses to “Trading the plan & fear of losing”

  1. I am not sure I get the first amendment to your trading plan. Does this mean you will scratch your first lot whereever it stalls and try to exit your second lot if it gets to the HVN supposed you have traded away from a LVN?


  2. basically I target the next two levels, usually HVN & CLVN. I don’t want to scratch on a stall but when I think it might stop. Like if it makes a double bottom, if i see the bid holding or serious buying against my short, etc. In that case I move second target in to next level and I make less. It’s a compromise between exit completely and staying in.

    I’m still experimenting here. I find taking first target at a fixed n ticks just cuts winners short. I want a reason to scale the first.

    FT71’s first scale is 12.5% so he can do it at +4 ticks. if I do that then I’m scaling 50% at +4 which is no good.

  3. Yes, I see, but I am at least as risk averse as you 😉 , so I try to get very fast to at least break even. And 4-6 ticks is 50% of a normal rotation in my experience.

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