Formerly "Trading In A Futures Contest - 2012" - My trading journey - a mechanical trader trying to make a discretionary approach succeed.
Wednesday, June 6, 2012
Embarrassing
This is not going to plan! It is funny - it is one think to think beforehand "Hey, I could have a 50% drawdown," but it is a TOTALLY different thing to have to live it, in real time (not accelerated backtest time).
Thank you for your honesty Kevin. Just about everyone in the limelight always has some reason they cannot share their results. Your honesty and humility will be rewarded.
I think you are on to something with the real time factor as opposed to accelerated backtest time. I experience the same thing when visually backtesting price action bar by bar, where it is easy to be very patient and wait for just the right setup. In real time, it is MUCH harder to actually wait for those same setups as the bars form agonizingly slow. I've found that in realtime I have the tendency to take 3-4 times as many trades as I would when backtesting bar by bar. It's a pattern that is very hard to break.
Great point! It is SOOOO easy to look at a chart and say "oh, I would have taken that trade" or look at any equity curve and say "that drawdown isn't too bad at all."
When these things are looked at in real time, every doubt, insecurity, question, uncertainty and voice in your head has a chance to raise its ugly head. Many times, any one of these can negatively influence your trading.
Since you know your tendency to overtrade, you are on your way to "recovery." Most people never even notice they are doing it!
I agree wholeheartedly with Anon's comment!! The proximity of trades in both time AND place creates all kinds of problems for the amateur and the professional alike.
If discretion is involved, which, IMO, it always is...even with "systems", you have to work hard to be absolutely honest with yourself and recognize that you are hesitating after a string of losers/winners or when the trades come all bunched together and you cannot stay with the plan due to thoughts about a volatile equity curve etc etc.
It's only when a trader gets to that point that he/she will be able to start on the (long) road of closing the gap between theoretical performance and actual performance.
Thanks for the comment MM. The "gap between theoretical performance and actual performance" will be something I discuss in a few weeks, in my Trading Process series of posts.
Can you explain a little bit your comment: "If discretion is involved, which, IMO, it always is...even with "systems"" Thanks!
Thank you for your honesty Kevin. Just about everyone in the limelight always has some reason they cannot share their results. Your honesty and humility will be rewarded.
ReplyDeleteI think you are on to something with the real time factor as opposed to accelerated backtest time. I experience the same thing when visually backtesting price action bar by bar, where it is easy to be very patient and wait for just the right setup. In real time, it is MUCH harder to actually wait for those same setups as the bars form agonizingly slow. I've found that in realtime I have the tendency to take 3-4 times as many trades as I would when backtesting bar by bar. It's a pattern that is very hard to break.
Great point! It is SOOOO easy to look at a chart and say "oh, I would have taken that trade" or look at any equity curve and say "that drawdown isn't too bad at all."
ReplyDeleteWhen these things are looked at in real time, every doubt, insecurity, question, uncertainty and voice in your head has a chance to raise its ugly head. Many times, any one of these can negatively influence your trading.
Since you know your tendency to overtrade, you are on your way to "recovery." Most people never even notice they are doing it!
Thanks again for the comment.
I agree wholeheartedly with Anon's comment!! The proximity of trades in both time AND place creates all kinds of problems for the amateur and the professional alike.
ReplyDeleteIf discretion is involved, which, IMO, it always is...even with "systems", you have to work hard to be absolutely honest with yourself and recognize that you are hesitating after a string of losers/winners or when the trades come all bunched together and you cannot stay with the plan due to thoughts about a volatile equity curve etc etc.
It's only when a trader gets to that point that he/she will be able to start on the (long) road of closing the gap between theoretical performance and actual performance.
Nice discussion :)
Thanks for the comment MM. The "gap between theoretical performance and actual performance" will be something I discuss in a few weeks, in my Trading Process series of posts.
ReplyDeleteCan you explain a little bit your comment: "If discretion is involved, which, IMO, it always is...even with "systems"" Thanks!