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Very true indeed. You might reconsider the way your stops are built. it sounds
as if you have $ stops that have nothing to do with market conditions which is
not too good. Best is to have market related stops, as the market doesn't care
about you $ tolerance.
Gwenn
wallst wrote:
> Hi Brian,
>
> One thing you must remember, the market will do what it wants to do
> regardless of what system you are using so do not get locked in a mindset
> thinking that it should be doing this but its not. I too have seen many
> lose a lot of money because what they expected to happen is not. As far as
> studies regarding drawdowns, becareful with this as there are many
> variables, the systems, the current structure of the market, even the person
> trading the system, all these play a big role in what the drawdown could be.
> Yes the market does exhibit patterns that repeat over and over, just
> remember that even though it has before, IT DOESN'T HAVE TO.
>
> The fact that you say you are getting stopped out left and right says that,
> your stops may be too tight. Right now the S&P is very volatile and you may
> need more room on your trades for them to work, which requires more risk. I
> personally have stopped trading the S&P temporarily for that reason.
>
> You need to be very careful here Brain, because its at this point, where I
> have seen people totally get bonked out of the markets. You said that you
> are trading for a living, which means you have added pressure on you, do not
> rush, do not rush, do not rush, take your time and focus on what is going
> on. Learn how your system is trading in regard to the structure of the
> market, it may mean you have to do some changing here. And even more
> important, do not let it get to your head, the last thing you want to do is
> lose your confidence.
>
> Troy
> wallst@xxxxxxxx
>
> ----- Original Message -----
> From: Brian Keith Voiles <admagic@xxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Monday, April 03, 2000 9:15 AM
> Subject: [RT] Advice: Draw-Downs for S&P Day Trading System
>
> > My daytrading system for the S&P 500 must be in a draw-down... is there
> any
> > data,
> > studies, or information in general about how long a draw-down period
> should
> > last? I'm getting stopped out left and right... I've decided to go back
> to
> > paper
> > trading until the draw-down period is over -- hopefully I've got enough
> > money in
> > reserve to cover my butt in the meantime.
> >
> > Although the last 5 trading days in March didn't work out very well for me
> > (that's
> > when my draw-downs started) I still made 260% ROI after commissions and
> > other costs.
> > In February I made a 464% ROI... with just 1 losing day... a loss of $423.
> > In January I made an 83% ROI... with just 1 losing day... a loss of
> $2,020.
> >
> > Now, here we are in the end of March and April and I've lost 31.7 points
> > ($7,925)
> > in the last 2 trading days... due to getting stopped out from the
> > whipsawing in
> > the price movement. (My research shows an optimum stop placement to be
> > 4.8 points in the S&P -- Risking $1,200 per trade).
> >
> > I understand draw-downs are inevitable... but being fairly new to this
> game
> > (just
> > under 2 years) I'm concerned because this is how I've been making my
> living
> > for over a year now. Any advice or suggestions are welcomed.
> >
> > Warmly,
> > Brian Voiles
> >
> >
> >
> >
> >
> >
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