Buffy_04364: You can also use papertrading to check yourself out on a new setup before using your hard earned cash
google_2: good point buffy -- papertrading is important despite what one hears. Tennis champions practice their winning shots off court and we do the same thing w/papertrading....same concept
Buffy_04364: Get to know the setup as well as you can. Then when you use the setup with real cash you are not thinking of the rules of the setup you are thinking of managing the trade.
google_2: There're different techniques. One technique involves measuring discipline vs. points. I give myself 1 point if I take my setup and take away another 1 if I deviate from that.
Buffy_04364: I can see where that would work google. Direct feedback on if you followed your rules or not
google_2: It works -- shifts the focus from money/trading to consistency and discipline.
elroch: Buffy, did you paper trade when you were learning?
Buffy_04364: yes I used the pfg best simulator - no simbroker back then. Only allowed myself two losers then had to go back on simulator. Had to have 2 winners then I could go back to real account. It worked. Wish ensign had playback and simbroker back then though.
p_8: You will never make money in the market if you don't make money paper trading, but if you make money paper trading, winning in the market is not guaranteed either. The mind and emotions are always ready to derail trading.
pmtrader: I've found the emotions in the business incredible. A typical daily loss is lunch money but it still make me punch drunk if I did it by breaking the rules -- every loss cause me to question my ability to succeed. I was exaggerating - I never risk more than 1% of my intended cap on a trade and my intended cap is a small % of my total net worth
Lizaaaa: google very interesting stuff
google_2: Thanks liza -- I lost too today. No biggie. I still took my setups and won't beat myself up over it.
Buffy_04364: Right losses are part of the job and are not to be taken personally. I try to look at each trade of day as the first one of the day that helps me remove any negativity from a prior trade
Brad26268: How long did it take google to get to that point- of not letting it get to you very much?
google_2: Ok, here's some pointers I use to measure my performance
google_2: When in a trend, I'd like to see my trades 3:1 with the trend
google_2: So for example, if trend is to the long side, I'd like to see my statement reflect 3 on the long side and 1 to the short side. Also I like to see 1.25 in terms of W/L and Avg. W/Avg. L. If I can maintain 1.25 on both, then I know I'm ok. In terms of profits. 1.25 on AW/AL tells me that I'm cutting my losers short and letting my winners run
pmtrader: a 1.25 ratio requires very close to 50/50 trading
google_2: elroch, it's average winner/average loser that's a very important stat. Very challenging too and requires to let winners run and cut loser short
elroch: I see, so > 3:2 in terms of total dollars? I don't think it matters much if you have a few bigger losses or a larger number of small losses.
google_2: It's the total $ amount/ total # of winners, then total $ of losers/total # of losers -- try that. If one can track this 1.25 ratio for a week, you'll see that it keeps one on the right track.
Brad26268: google, when you let the winners run, is that with your whole position, or do you take part off to lock in some profits, and trail stop on remainder?
google_2: brad, v. good question. Ideal position is 3. Meaning, 1/3 to cover cost, then 2/3 to aim at 2 objectives and overhead. So after covering cost, I like to set primary target and secondary target. This way I'm not missing out on a good trade. If it starts going against me, I set stop at b/e in worst case scenario. For many I understand, the case might be 2 and another to let it run. So 1 to cover Overhead and that's what I do when I trade 2
Brad26268: Yes, I have learned, the hard way (only way I learn anything) that 2 contracts is safer than 1, since trade is usually good for a little while
elroch: Might I take the liberty of inviting Jimmer to put his views forward, as I know he achieves impressive statistics?
jimmer49: All in all out is what I do -- either I like it or I don't. Matter of personality IMO.
pmtrader: I think if one is scalping then all in / all out and a high winning % of trades is a must. It's a matter of trading style.
elroch: I think you should always be comfortable with anticipated losses if things go wrong, or it can lead to loss of discipline. I remember setting stops too tight when I started trading in a different market.
Richard_: Expect to lose. But do it well.
google_2: Even with 20/30 trades, one will need a big one once in a while to carry the smaller losses. High number of trades = higher stress level; higher cost
jimmer49: Disagree about higher stress level
elroch: Not sure about that google. Fewer trades usually means allowing more downside on each => more stress
Buffy_04364: I find google that a high number of trades keeps it more automatic for me.
google_2: I guess we all have different styles :-) Was referring to me.
Richard_: Traders have different `metabolisms', some need to scalp, some need to trend trade.
Buffy_04364: Yep it is that comfort zone thing again
pmtrader: Not more downside - just few trades and a strategy that lets winners run real long.
google_2: I can't trade every twist and turn of the market, but that is my style.
jimmer49: Being in a trade for an hour is agony for me - making 2 point in 5 min is easier on me
irod29: me 2 jimmer
pmtrader: For me the stress comes from losing discipline which I'm more likely to do in a rapid fire environment but that's because I'm just not there yet - when I arrive there will be no loss of discipline.
Richard_: How many trades today, jimmer?
jimmer49: 13 Richard, but 1/2 day today for me - the afternoon. Was almost a zone day for me.
Buffy_04364: Those are so great when they happen
irod29: Hope I can reach that point some day:)
Buffy_04364: Yours are getting closer together aren't they jimmer?
jimmer49: Still rare though. Yesterday not even close -- yesterday was tough.
Buffy_04364: Yes but the last one was only a few weeks ago and not over a month like before if I remember right.
Richard_: Today was a pretty crummy day ... a zone day? wow!
elroch: I have successfully traded every corner some days (>15 in one hour), but it needs to be very lively to pay.
google_2: Also, another stat. I like is if my broker got >25% of total winnings as commissions, then I know I overtraded. All these things I like to keep track of and the rest will take care of itself.
elroch: google - are you including the spread? Do you use IB?
google_2: elroch, no do not include spread and use IB
elroch: Might be easier to keep the ratio down with $2.50 commissions
Buffy_04364: This has been great everyone and I want to thank all of you for
your input today