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There are certain things that should always be done by a trader. The
experienced trader does it all the time, analyze ever days trades. A good
trade is one that is entered and exited according to your rules and your
system. It has nothing to do with whether it was profitable or a loss. If you
had a profitable trade for all the wrong reasons, it was a bad trade. You
should chart your equity the same way you chart the stock or futures that you
trade. The minute a downtrend occurs, you stop trading and analyze whether it
is you or the system that is failing. This is very difficult for the
inexperienced trader because he is still blaming "them" for his losses. It is
never someone else's fault. It is always your fault.
Size is governed by your money management system. If your risk parameter is 2%
of your gross trading account, then as you lose money your size is automatically
reduced. The other problem is that beginning traders usually look at initial
risk and do not think of volatility risk. Once volatility risk exceeds your
initial risk parameters your size should be reduced.
The other thing that Norman brings up which is very important is over trading.
Trading is easy if you wait and trade your signals. Pressing or forcing a trade
or trading for trading sake will cost you a lot of dollars. Most successful
systems are rather simple and easy to follow. The more indicators, the more
decisions. The more criteria, the more decisions. I have a rule. No more then
2 indicators. The indicators should not be based upon the same information.
Have a good Easter holiday and good trading next week. Ira.
Norman Winski wrote:
> ----- Original Message -----
> From: "charles meyer" <chmeyer@xxxxxxxx>
> To: "REAL TRADERS" <realtraders@xxxxxxxxxxxxxxx>
> Sent: Saturday, April 14, 2001 11:56 AM
> Subject: [RT] GEN: FILTERING OUT BAD TRADES....
>
> > This may sound like a naive question but has anyone discovered
> > a method by which to filter out your bad trades? Example. After
> > analysis of one's trading, say for some reason Wednesday entries
> > are found to be unprofitable. Whenever the next Wednesday signal
> > arrives; should one's bet size be a lot lower in the future? at least
> > until the win percentage on Wednesday comes up to the level of
> > other days? I'm not sure exactly if anything useful can be derived
> > from an exhaustive post mortum of one's trading equity curve. The
> > standard answer is probably either simply 'no' in the sense that one
> > should learn to take all trades. Thoughts or comments from anyone
> > who has cracked this nut? Thanks.
> >
> > Chas,
>
> Chas, you have hit on a very importnat point. I think one major difference
> between inexeperienced traders and the old veterns is that the newbies
> concentrate on looking for reasons to trade whereas the vets concentrate on
> filtering out the losing trades or knowing when not to trade.
>
> I use a combination of time, price, volatility, and shape. I start with
> a time forecast for a turning point. I have a model that the market should
> follow in terms of how it should act via volatility and shape, and when it
> should do this. If it doesn't follow the expected pattern, I don't trade it.
> This eliminates about 75% of the potential losers. It also means I watch
> alot of potential signals come and go without trading them. This reminds me
> of one of my trading guidelines, which paraphrases the famous Woody Allen
> line, "sex is dirty.........if it's done right". My rule is "trading is
> boring.....
> if it's done right".
>
> Cheers,
>
> Norman
> >
> >
> > To unsubscribe from this group, send an email to:
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> >
> >
> >
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> >
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