Thursday, January 24, 2008

Jan 24 Choppy with bond futures selloff


ZN- 10yr bond futures retracing after sharp peak


YM- Dow futures has a choppy up session


NYSE A/D remains to the upside


HPT: it's clear that you're a serial self-sabotager. You've clearly put in the research and screen time to hone your skills as far as far as entry patterns. As an analogy to driving a car, you've mastered how to put the key in and turn the ignition. These are your setups and strategies.

As to trading size, how much research and screen time have you devoted to assessing when to trade 1 contract, when to add contract, when to go hogwild and make it a 10 contract entry from the start? Do you have any rules in set in stone as to your sizing methodology? This would be knowing how much pressure to apply to the gas pedal. I fear you have no such rules and gas the pedal sporadically.

As to stop losses and targets, do you have a set methodology? Do you peel off contracts at pre-set targets or go by feel? Do you set a stop loss or wing it? This is braking. Well, you get where I'm going. Successful active traders are 5 tool stars. You can't make it to The Show blessed only with a great arm or as a slugging, no glove DH or as a platoon late inning defensive specialist. Unlike baseball, trading isn't a team sport. You can't specialize in one facet of the trading game, you need all the skills from entry to exit, and be ready on a dime to do it again.


Answer-
As for position sizing, I start out the day trading 1 contract with a set stop and only add to the first contract if the trade goes my direction. I then lower and trail my stop, but sometimes I have to widen my stop when trading is choppy, and that is where I incur a lot of churning and sometimes get frustrated. I agree that I need better position sizing skills. I will take suggestions from readers if anyone out there has advice. This is one area that I need improvement in surely. I know some people will go all in on there trade and then scale out. Some people scale into their positions like me. Some people keep a fixed contract size on every trade. I welcome all opinions on this subject and I know that this is a highly debated subject on elitetrader.

For the record I traded and lost money today. I was up over 1k and then I preceded to churn that profit into a loss. Perhaps taking my profit for the day once I've hit my profit target for the day is the best strategy.

10 comments:

MWF said...

possibly consider a volatility stop...i'm fairly certain QT has it as an option...experiment with the settings for your particular timeframe and instrument

it takes into account the volatility in the market, and allows u to stay on the right side of things...most importantly, it will give u a guage, besides anything internal, on what size position u can likely take

its not the holy grail, but it does help filter out some of the noise

future zombie said...

I will take suggestions from readers if anyone out there has advice...

I doubt you will give this advice any consideration at all but here goes. $1k swings per day is too much for you, IMO. Cut your losses at $100, take your gains at $200. Discipline.

Anonymous said...

Give yourself a couple of weeks to get your confidence back. Then increase you position size. Blow up your account and make a video.

Sincerely,
Fan of your blow up video.

Anonymous said...

I hope you can get your bankroll back man. It sure is more fun watching you blow thirty grand in one shot. I know you are going to lose what you have left... it's just not that entertaining to watch. Remember this; The more you say Fuck the more hits you will get on your blog. It's been fun! I'll check back when I hear your having another freak out. See you at the end budy. I'll be the one with all your money.

West Coast Trader on 5:11 PM said...

This advice is coming from a PAST futures trader that loved to trade futures (an still do). I traded futures from 02 thru the end of 07. For me, the decision to walk away (for the immediate future) was due to lack of discipline and head games. I would be very disciplined after a blow up; however, that lasted only a week or two and then I would do what you did today - be up only to draw it down at the end of the day instead of walking away. Plan your trade - trade your plan...all that BS is true, but you need to decide if the game fits your personality. I was dissapointed to walk away at the end of 07 from futures trading because I enjoyed it so much (I'm sure that thare is some psychobabble explanation about that as well); however, I decided that discretionary futures trading was not for me. I will be back in it when I learn how to fully automate with a mechanical system - in the mean time, I am on the sidelines as far as futures are concerned. The bottom line with me telling you this is that you need to consider this aspect as well as all the tweaks, rules, systems that you come up with to modify your behavior. Maybe it is the discretionary part that flat doesn't work for you. Dude, I watched your video 3 times - not for the laugh - but because that was dead on me. I sent it to my buddy that also trades futures and the only thing I said to him was close your eyes and pretend that is me. It was spooky. The things you said, they way you said them, walking away and coming back just hoping you would have recouped a bit of the drawdown - I was especially spooked by the Yogi Bear impression you did when you said "oh, the market is going to go up" - dude I cannot even tell you how many thimes I used that voice after a monster drawdown.

I am still using the ER2, YM, and ES charts to find setups, but I am using equities and ETFs to get into trades. I have also switched over to swing trading rather than day trading. This combination has worked wonders for me so far in 08. No shit - I am up so much more in this one month period that I was in all of 07 trading futures. I utilize systems I developed on the futures charts, execute in equities, and that allows me to stay in the game longer for my thesis to develop and work. See, for me it was that I would get in with ER2 contracts for a sell divergence, or buy convergence that I saw in the charts, but I wouldn't be able to handle the drawdowns waiting for my thesis to play out. Then it turned into a head game revenge fuck match with the markets - the markets would win. It's not that I wouldn't be able to handle them financially, I wasn't able to handle them mentally. I lost all objectivity.

Using equities, I am taking laughable drawdowns before my thesis kicks into gear, and then I stay in the trade longer and profit much, much more than when I traded futures. Bottom line, I just decided that discretionary futures trading does not fit my personality.

Just consider this possibility along with everything else.

east coast winner said...

West Coast:

That was a very insightful post.

About those nastygrams earlier: my apologies.

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Anonymous said...

for each 5.000$ in your account take 1 Contract! (maximum)
(daytrading)

don´t hold futures overnight.

instead you can use some Options (qqqq) or turboetfs (proshares.com)

West Coast Trader on 6:31 AM said...

EastCoast Winner,

No worries. Just wondering if this guy reads or responds. Maybe that is one issue that he has - not really listening. Don't want to pass judgement too quick - I have only been peeking in for a couple of days.

West Coast Trader on 6:31 AM said...

EastCoast Winner,

No worries. Just wondering if this guy reads or responds. Maybe that is one issue that he has - not really listening. Don't want to pass judgement too quick - I have only been peeking in for a couple of days.

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