Thursday, December 28, 2017

Sources of positive and negative edges

Just a rough summary that I scribbled in my notebook.

SOURCES OF POSITIVE EDGE (apply as much as possible)

+ trade against retail sentiment
+ trade with positive carry/swap
+ historically positive technical strategies
+ trade in favour of hawkish vs dovish currencies
+ trade higher timeframes
+ possess more trading capital
+ mental resilience
+ anti-martingale position sizing (reduce positions as you lose, increase as you win)
+ longevity (the longer you survive, the more you learn)
+ meditation & exercise
+ emotional detachment from outcomes
+ have other income sources
+ ignore other traders' opinions (trade your edge only)
+ check markets routinely and on time (don't enter late)
+ constant learning & journaling
+ networking

SOURCES OF NEGATIVE EDGE (avoid as much as possible)

- fees and commission
- negative carry/swap
- price gaps and extreme spread (avoid news & trading over weekends)
- no trading plan and strategy
- not following trading plan and strategy
- martingale position sizing (avoid increasing positions after losing)
- emotional investment in trades ("I must win", "I'll look bad if I lose" etc)
- performance anxiety / trigger-shy
- excess leisure (erodes discipline and drive)
- distractions (time and energy are diverted elsewhere)

Thursday, October 26, 2017

Latest update on 2017 results

Just a quick update on my trades for this year.

I'm currently at a -2.95% loss for the year, just below breakeven. I'm not really happy, but it could be alot worse. 

This whole year has basically been a grind around the breakeven mark, falling behind, pulling ahead, and then falling behind again.

I backtested all my systems up to the present and dropped those that stopped performing,. I'll wait until when (or if) they return to profitablity. Waiting is free. 

It's very important to have drawdown rules in place. Reducing your risk during drawdown will allow you to survive until your trading turns around. It's boring, but it has to be done. 

To be honest, I violated my own drawdown rules a few times, and paid the price. If I had been true to my rules, I'd probably be slightly profitable by now. During August, I risked 3% on a single trade when I should've stuck to 1%. I held the trade over the weekend, and the market gapped against me on Monday morning. I lost 5% when price opened way beyond my stop loss, more than the 3% I anticipated. I might talk about this trade in a future entry as it provided a few key lessons - stick to your rules, and maybe reduce your risk when leaving a trade open over the weekend.  

It's also important to find interests outside of trading. During times of drawdown / breakeven, you'll want to find other sources of success or motivation in your life. It could be fitness, knowledge, or maybe a new skill. Don't base your identity solely on being a trader. 

Survive. Play great defence. If you truly are better, you will win in the end. And if you aren't better? A tight defence will keep you in the game indefinitely. 

Thursday, July 6, 2017

Hey hey!

Just a short message. I've set comments to moderated / disabled since this blog has been spammed to hell. Still alive and trading. :)