Discretionary Trading Systems, training chart posts - Posts, questions and discussions
28/01/2011 10:25:13
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By discretionary it means manually executing a set of rules - it is mechanical system but human execution… Discretion does not mean trading because you feel like it..
I guess not convinced means you tried but did not become profitable, that's normal - nobody makes money at first trading - it is the costs of learning
As you know - by using risk and money management you can control your losses so you can trade and learn - you have to make the money last - go on sim when not dong well and back on live when you are is a good route.
When I coach people on how to trade - one of the questions is:
how much money can you afford to loose in one year?
say £5K
that is £100 per week
£20 per day
That can become part of the rule…
Of course with Forex learning is even easier as you can trade with $0.01 per pip…
Why did you fail?
How many months trading did you do?
What were the stats?
Where is your golf swing not working?
Did you go live only after showing a profit on the Sim?
Now knowing those answers normally points to a lack of systematic approach… which is the holy grail not one system/indicator etc. -but the whole approach..
Maybe manual trading was not for you?
It could be psychology, lack of trading plan, lack of system rules… incorrect market, timing, capital, impatience, or many other reasons for failure.
90% of people fail at trading and if you cannot make it work for you manually following a system then
mechanical can be better for you - as you don’t need to do the trading yourself. But that is just where it all starts again…
This idea that you can stick with a system--- is not easy during a drawdown that did not show in back testing…
I had a bad spell in life once and in trading and over a 1 year period had a 30% drawdown on the years previous, my costs were £1200 ever 1st day of the month - i was using CQG- plus £1000s in commission £8.50 per round trip- in the end sometimes 100s per day- what did change over a slow period was my approach -
In 2008 I had stopped working for a prop trading company in London as a professional futures trader - trading the ES and wanted to do it all alone to get more profit - and to be a little freer in times i traded etc - It was a commison only deal- but away from the rest of the machine and other traders, news, sqwak box, techncals and the fact that if you did a stupid trade someone yelled at you - i was cut adrift and on my own my discipline was what failed me - not discretionary trading... like a bee away from the hive i found it difficult to replicate what had been quite easy before hand..
When I followed my rules - of waiting like a hunter sniper - I was awesome - but when I did not wait or was over confident I used up my daily ticks…
by using more ticks than I should have - I started to loose more and - lost the most important quality -control.
I stopped logging trades, stopped waiting for the perfect setup, ooops you can see what happened next, I started becoming more intuitive and less systematic and then went for smaller more immediate trades…and wins - became mentally unable to let winners run - but losers I let run…I broke my rules and the days I did that were the ones that caused the drawdown…. I screwed up…
I became too impatient for the old system to work - and became a high frequency trader - but a bad one… a scalper - scalpers are full of fear and need constant wins to feel good - sometimes 100s of trades per day - it spun out of control - with costs and overheads- the effect of costs - external pressure to - it was a loosing business…and I was stuck, addicted to trading… something had to stop…luckily I obeyed my rule of when you have to stop!!! around 30% drawdown…
I was gutted like a fish - very badly effected… over time I realised something that if I had robots trading for me in parallel I could make more money and simply control them like a conductor and orchestra… so I swapped to write algorithms - with an ideal of parallel trading and diversification.. which s still great as I also manually trade - when I get out of bed on time and do better - less is better I find with trading to a point… do it when you want to is an approach which works for me… - I am not fixated by the market…it does not compel me to trade…
I also leave profits in the account - at least I don’t have a monthly target to draw out any more…
An interesting journey for me - in which I setup MicroTrends and concentrated on research and development…
I have found this: Currently Man is a superior trader with the correct system and approach compared to a robots - one day this may reverse…
My perfect approach for trading now then is semi automated… all money management and ATM taken care off - set and forget…
I have created the Easy Trader for that purpose… I can trade alongside a robot… steering it out of trouble if need be - or I can used it with a set of signals etc…
Some traders are using my strategies to good effect and post good results - they have a tendency to use them on the sim and on live…
interesting…
I have a trade plan outline - which works - but relaying it as a set of rules was challenging. It does not include rules that I use on top as this is for a beginner to learn with..
By drilling the system rules over months of historical data
by perorming a manual backtest of the rules
by preparing - it is possible to become emotionless
unconcious competence clicks in
something may help you here or maybe you can add to it -
http://forum.micro-trends.co.uk/topic864-sample-gbpusd-trade-plan-for-mt3.aspx
I trained a guy who never knew what trading was before to trade using this tehcnique and he made a profit in his first year…
He's now swapped to robot though as does not have time to trade… he wanted more money quicker… didn’t realise this was a hard job to do…
edited by forum on 28/01/2011
edited by forum on 28/01/2011
edited by forum on 28/01/2011
edited by forum on 28/01/2011
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28/01/2011 10:23:41
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Newbie Trader: I have to admit that my vision is a systematic trading. I’ve been down the whole discretionary trading thing; I’m not convinced.
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