9/17/2009

I take all signals except........

To take them all or to not take them all?

This was the question of the day in the trading room the other day. I seemed to be standing alone with my premise that I do not take them all. After two full stops I quit for the day, or at least go sim for the rest of the day. This caused much abuse to be heaped upon me from the take all signal boys.

Well taking all signals sounds good and in theory I'm all for it. However I don't trade theory I trade money and my experience has been that my trading goes significantly downhill as the consecutive losses stack up. So, for me, I have found it beneficial to stop at 2 full stops.

Beside my personal trading issues I also think that stopping for the day runs along the lines of cutting your losers and letting your winners run. Ok I admit that's a bit of a stretch. Yes I also used to quit after 2 full targets hit in the day. That was a stupid idea, why didn't you speak up.

All professional traders have risk management limits that they must live under. My question for the take all signal boys is, at what point do you quit? Never? You would just keep taking loser after loser, and this has no affect on your execution?

I doubt it.

With my system I need momentum to keep moving, and there are days where you get just enough to produce a signal and then it reverses. Sometimes this happens over and over all day. Do some days just find that range and stay in it? The answer as always in trading is sometimes.

Now the take all signal boys want my stats to prove that this is a financially sound idea. I must admit I don't have them. After quitting or going to sim my record keeping had been going out the door with my interest level. This was a mistake on my behalf, and that mistake has been rectified.

I am now keeping all live and sim stats along with another technical setup that I want to see the results from.

We shall see.

Today was all live as I had 1 full target, 1 full stop, and 3 bes.

2 Minute Crude Oil Charts

13 comments:

daytrader233 said...

What's with all these charts? I stop in for the YouTube videos.

Solfest said...

You have my sincere apologies. I had to stare at the charts all day today.

A lame excuse but it's all I have.

Anonymous said...

8/16/09
Do you even read you write ?

‘Let me put this another way, wander over to your bookshelf and pick up your well thumbed copy of Trading in the Zone, by Mark Douglas. Douglas has a great analogy on page 102 about casinos. He states a casino has a 4.5% edge over all the players in the game of blackjack. A small edge. The casino is very confident in their edge, they don't question it, they don't get concerned if they lose money to some players. They know they have an edge and if the game is played by their rules they will win in the long run. How do they know this? They have stats, millions and millions of games played.’

‘There are two issues that must be done right in order for your "casino" to be profitable, your plan must have an edge and you must never deviate from the plan.’

‘How do you know what your edge is? Stats, stats, and more stats. It's all you have; it's the only way to know. Do you have them? If you don't have the stats to back up your plan and you are trading live you are a dead man. You are not the casino, you are the drunk tourist from Hoboken, and let me repeat, you are a dead man.’

And we did tell you about the quitting after 2 winners, you soon after changed your rule

Could I get you a another heineken sir : )

Anonymous said...

oh ya

YM
90 trading days
414 trades

if quit after 2 stop outs

23 days quit

22 losers avoided
21 winners missed

net 254 ticks . . . left on the table

i have no idea what cl would be
but then again neither do you $: )

Solfest said...

See how vicious the take all signal boys are?

They’re like little piranhas devouring anything that gets in the water.

My lack of stats is inexcusable so I won't bother to argue. I will just say you all of you are right and I am wrong.

And then I will continue on with my plan completely ignoring you.

I still have one question, do you have any daily, weekly, or monthly stops?

Oh and no I never read what I write, it's just for other people.

longandwrong said...

Let me be the nice signal-taker...

Take all signals, absolutely. However, a string of losses may just be statistical noise or it may be to do with the 'mode' of the market on that day. If you can reliably recognise this then you are a better trader than I am.

I have a 'stop' that isn't based on a daily, weekly, monthly etc figure but is a time when my current performance deviates to the downside *statistically significantly* from my historical data. Then is it time to pause, think, kick the cat etc.

FX said...

Hehe Sol, this discussion is interesting for your other readers ;)

Solfest said...

So, let me re phrase that for you.

You do not take all signals.

longandwrong said...

"You do not take all signals".

True, but...

I do not take all signals when I have a reason not to. 3 losses in a row, which at WR=40% will happen >20% in any 3 trades, is not a good reason.

And anyway, don't get at me, or I'll start mentioning those 'break even' trades :-)

Solfest said...

FX trading, politics, and religion are always interesting. :)

Today is a good test, so far price action is horrible, it's a Friday, volume is split between the Oct and Nov contracts, and we have seen trend direction change 3 times in 1 1/2 hours.

I have a stop and a b/e, so one more stop and I'm done.

Maybe the differences between trading and a casino are things like that. Contract months, number of players, who the big players are, etc.

I would think the action is a casino is a little more consistent than on the trading floor.

That said, and as I've said, I understand and accept Douglas's words. I expect that from a pure financial point of view the take all trades boys are correct.

This is mainly to keep my head in the right place where it's able to do the right things at the right time.

I'm compensating for my weakness.

Anonymous said...

It’s a good thing I was right cause after two wrongs I have to quit

nawww, I was only teasing you to do your homework and you are so . . .
you are right

I reckon my overall stop is in the detail of my plan, keeping constant vigil over pattern performance, trading a couple products, trading at a dollar level where I am comfortable with the wins and losses.

That said 3 or 4 weeks of losers ? I would of already started digging more and found the minor adjustments needed on the signals. Since the main challenge is the ‘dull market’ most adjustments would be adding to reasons not to trade.

I guess you could say then you don’t take all the signals, but for me it is no longer a signal. I will still stat it but not a signal. My signals are only about a third of the patterns I keep a stat on.

I guess I'll give you that one so your right again, that’s two wrongs for me . . . I have to quit now $:** (

Anonymous said...

Casinos have one big advantage over traders. They are an unemotional conglomeration of machines and people. They are not subject to the psychological issues that an individual trader might encounter after the number of consecutive losers begins to mount. If a trader starts having his judgement affected by x number of losses then it may indeed be wise to stop trading. If a trader starts having her judgement affected by x number of winners so as to start becoming reckless and breaking the rules because of the thought that she is playing with "house money" then it also may be wise to stop trading. Everyone must make those decisions based on their own particular history.

Solfest said...

Wise words anon.