Jul 292012

I’ve started to settle into a new groove working full time.  It’s not an easy adjustment to make. It’s no longer possible to play flute when my work is slow so or go running in the park during lunch time.  The 1 hour runs 3 times a week has been replaced with 1 hour of walking to/from work (I take the train half way and walk the rest) and a run on the weekend.  Time will tell if this is enough exercise.

In the evening I’ve got the routine down.  I try to get home around 6:30pm and give the kids their baths while my wife cooks dinner.  After dinner we play games with the kids for about an hour and then get them ready for bed.  By 8:30-8:40pm I’m at my desk looking for an entry in my 90 minute window.  I get one good trade and win or lose I turn my PC off and I’m done.

Surprisingly, this routine has worked very well.  Last week I averaged 2 pts/day trading 1-2 lots (so let’s say 2).  That’s 1 pt/contract per day.  That’s very encouraging as it’s on par with my average performance trading full time on good months.  I’m very interested in the possibility of making 1 pt/contract trading only this 90 min period (and it’s usually less than 45 minutes, my latest exit last week was at 9:12pm (3:12pm NY time) 45 minutes before the cash close).  In short I am doing in 45 minutes what I was normally doing in a full day.  Is it realistic?

As I wrote in a previous post, I had to adapt my trading method in order to reliably find an entry in my trading window.  This resulted in what some may call more of a scalping style.  I’m not sure if I’d go that far to call it that but it does mean tighter stops and smaller targets.  The key is getting the market direction correct.  I’m not trying to get a big winner, ideally 1.5-2.0 pts on first scale and 3-4 on second.  When that is consistent then I can add a third contract.  But I want to prove the first 1-2 are profitable first.

Here are the 90min stats since I started trading this window.  I keep these in Excel because it includes days that I traded full time (the excel filters out only trades taking in the 90min time period).

I put boxes around the key metrics.  The win rate is good, perhaps a little high, so I will be watching this.  Too high of a win rate can be one of three things:

  1. an inverted R:R (bigger stop than targets)
  2. short-term luck
  3. a really good read on the market

It will take some time to find out.  My biggest stop this week was 3 pts and to compensate for that I only did 1 lot.  I got +2 on that trade.  That’s the inverted R:R I want to avoid.

The average trade has expectancy of 1.18 pts.  That’s much better than a tick or two which I’ve had in the past.  The profit factor is really great at 3.02.  The avg win / avg loss is less than 1 but this metric is easily distorted by scratching at +1 tick.

Overall results are very encouraging and I’ll continue the same plan next week and see if the results are in-line.  One of my biggest issues in the past has been the lack of a repeatable method due to too many discretionary inputs.  I think I’ve made progress in that regard and that my current method is a bit more mechanical and more repeatable.  Time will tell.

On a final note, these results are all from the time when I knew I was going back to consulting.  That greatly eased several psychological issues such as the pressure of relying on trading for an income and the pain of losses.  I now I have a fixed daily income that is more than sufficient to meet our short-term needs and so the pressure is off.  I think this is very much responsible for the improvement in my trading results.  I don’t have to be afraid of a loss because it will be small compared to my consulting income.  And I don’t have to make any money trading in order to pay the bills.  I think the impact of that is huge.  So if anyone is currently in a similar situation, working full or part time may actually help your results.

On a macro level, the big gains on solid volume the past two days give me a bullish bias for the upcoming week.  But that could change should any bad news come out of Europe.  So really taking this day by day.





  2 Responses to “Relieving psychological pressures improves trading results”

  1. Well done, good luck for this week.

  2. Congrats!

    “….One of my biggest issues in the past has been the lack of a repeatable method due to too many discretionary inputs………”
    This statement describes my problem accurately. I think I will give this 90 min (more or less) window trading a try. Thanks for this concept and input.

 Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>