Facing Reality, and My Dilemma

Anyone familiar with my roughly 6 year long part-time trading history knows I’m a net loser. Never had a profitable year ever. Not one. I’ve ground down three small accounts now, trade by trade, loss by loss (with the occasional win, though). I’ve done the spectacular blowout before, losing 30%+ of the account at once, done the revenge trade campaign, but this time, I’ve just been wrong in my timing and direction more than I have been right. No big blowout trades, just consistently losing 1R at a time. I’ve matured to be in control of myself, I just can’t bring home the results.

So as I near the close of another losing year of trading, I see that yet again it is time to stop trading. The discretionary setups I have been playing just are not working, as evidenced by my win/loss rate and my PnL. While this is a psychological blow to me, it’s not a big monetary blow. Nothing in my life changes because of the lost money. I make plenty of money as an engineer to cover our family’s lifestyle and save for retirement. Basically, the middle class dream. But there is nowhere else to go. No more upside, and very little personal freedom. That’s what trading represents to me: being in control of my own life. So far, I have not succeeded. While I have a lot of success in many areas, especially the ones that count (health, family, career), this one is where my heart is set. Either I need to give it up or try a different approach. Since I don’t have the approach right now, I’m stopping until I do.

So this is not an emotional breakdown, I didn’t go tilt, no real damage done. But I am sad that I still can’t win at trading. I will likely study some more, watch the markets, maybe make another try next year.

Now, the dilemma: what do I do with my programming/blogging? I feel like I have no business writing about trading, making indicators and software for other traders if I can’t even do it myself. It just doesn’t feel right. If I’m trying myself, and having success, then I feel like sharing and working is honestly good. What I worry about is this: if I’m not a good trader, then people come looking to me for something that will help them find success. I’m no snake oil salesman. I don’t want to prey on people and their desperation to find something that works. I won’t do it. So that leaves me with the question: is it ethical to do the programming work when I can’t make money myself using the same tools? Say the answer is yes. Then is it enough business to replace my income and do it full time? So far, the answer is far from yes. So where should I invest my skills to have the greatest chance at my end goal: financial freedom, while I am still “young”? Again, I don’t know.

So that’s where I’m at. I believe it is possible to make money at trading, but it is far harder than even I thought. If I can’t do it, how can I help anyone else do it? And if I don’t trade or help others to, then what should I do to meet my goals? Welcome to the inside of my head.

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28 Responses to “Facing Reality, and My Dilemma”

  1. Victor Mora (@victormora) Says:

    what strategies have you tried?

  2. Doug Says:

    Wow!! A brutally honest assessment.

    Do you know if it’s a matter of timing or are there other, psychological, issues?

    Kudos for the honesty.

  3. Nascent Says:

    I don’t usually post, as I am not either a ‘real money’ proven trader, but your musings and studies have helped me immensely so I feel obligated… I have been following you a couple of years learning, still paper trading, but on a positive trajectory and once that meets my price objectives in real time, on to money, so… take my advice for what its worth… I think you can do it… and I’m not a super optimist type… Take a break if you need to, but don’t give up. You have the intelligence and determination to figure out a winning strategy and the skills to code it up, but I think maybe you need to work on some of the same issues I am at the moment, (1.) focus, (2.) patience (3.) specificity and perhaps the (4.)resolve to just stick with one plan through the bad times — That is, take one part of one strategy that works probability wise for you that strikes your fancy and HAMMER IT out to back test it over 20 years of daily data or the significant amount of your time period and back test it looking at it from every different angle without adding extra variables – studying one simple principle or plan Excruciatingly (focus)… (2.) having the patience to wait on this simple plans signals and the patience to give it time to pan out good or bad (patience)… … … and then if it pans out – statistically – quant it up into a systematic set of rules or codes — most traders benefit from this (specificity), and if its working statistically set it aside in a separate fund for that strategy alone without messing with it! (resolve)… along these lines, perhaps your trouble may be with the volatility inherent in Even what may be a winning strategy that you are employing the wrong way because of inconsistent position sizing or because you don’t have a consistent goal in the form of an expected utility curve that you are shaping your strategies and position sizing around… Understanding the statistics of a utility curve and how this relates to your account value over time helps with this aspect of money management and with the resolve to stick with one plan even through a draw down. Regarding this, I would recommend the utility curve, Money management and risk management sections in Euan Sinclair’s Volatility trading and his Excell tools to look at goals and position sizing in relation to a strategies historical performance and how these should be clarified so that you are not surprised by how they effect your account p/l. They really opened my eyes to that… ANOTHER thing that might benefit you with timing or psychological factors could be watching a successful pro or taking some lessons. There are some decent services that provide not just “trading signals” but also education about timing and money management and psychology. My only current subscription service (I have tried many) is to http://www.thegoldandoilguy.com and I feel that he has a lot to teach about how to approach the market. He is a winning trader, but the most value in his service for me are the daily videos and written analysis about market and trading psychology. I don’t trade off his signals currently but have learned a ton watching over his shoulder. Hope this helped you somehow! cheers, – billy

  4. Gregory P Says:

    Please document in FULL your last TWO trades. (last two, not your last two losers or last winners, just the last two trades).

    Entry/exit/ reasons for the trade, etc … technical indicators which gave you the entry and what fundamental factors caused you to be interested in the instrument. What you liked about the trade, Did you have targets ? What time frame did you expect the trade to work out? Did you not give it enough time, too much time ? Was the instrument in the right part of the cycle for the industry it is in? Did you have a checklist of items that had to be met before taking the trade? Do you have any rules, and did you break any of them?

    DOCUMENT IT. ON THIS BLOG.

    I or some of your readers will try to help you out.

    BTW: Just documenting the trades, live right here, will probably sort out your problems.

  5. TKR Says:

    re: is it ethical to do the programming work when I can’t make money myself using the same tools?

    I believe the service you provide is that of helping people translate their trading ideas into code that they can use in TOS. It doesn’t seem like they are asking you for advice on whether their strategy is sound.
    To my mind, the two issues are completely separate.

    I personally think you do a fine job of coding /answering questions – especially in a system which does not have very good documentation or examples. So keep up the good work.

  6. Gerald Gjini Says:

    if you intend to scalp then that must be done with constantly scaling and removing positions until you have a good avg ….. if impossible to do that …… then day trading is not an option … and of course with scaling in comes the amount that you put in and i would suggest at least 5k per contract.

  7. No Ho Says:

    Trading results = market understanding (YOU + Strategy)

    Market understanding = learn the “Market Profile” which will take about 10K hours of real time practice.

    Strategy = trade only when you have an edge, i.e. advantage.

    YOU = self-understanding (self-awareness x self-acceptance)/ self-assertion which will take about 10K hours of real time practice.

    “Trading is a losing game if you can not control yourself.

    – If you’re afraid to lose, you will lose
    – If you’re afraid to win, you will lose
    – If you hope to win, you will lose
    – If you lose your hope to win, you will lose
    – If you’re greedy, you will lose
    – If you are not greedy enuf, you will lose
    – If you are late, you will lose
    – If you are too early, you will lose
    – If you are too glad, sad, or mad when you lose, or win,
    you will lose even more.”
    ~~ Unknown

  8. Scotte Says:

    Perhaps I can suggest getting a copy of the excellent work of Mark Douglas called “Mental Toughness”.
    (Video Seminar)

    I’m not sure it is easily available but it is a seminar he conducted about how trading is more in your head than on the screen.

    Seeing your persistence and the ability to ‘still’ being able to trade says a lot about key concepts needed in a trader.

    Should you decide this is not for you, ‘Good Luck’ in the next adventure.

    Scotte

  9. SS Says:

    I’ve been there before. Similar to you, I’m an engineer with the love and passion of the market. I think we should have changed our line of work a long time back! 😉 That said, each year (3 years) my losses have narrowed and this year will possibly be the first year to close in the green….yes still 4-5 weeks left. If you have acquired the skill of TOS programming, you should not throw away that skill. There are others out there (like me) who don’t have programming skills and are always appreciative of others who can lend a hand by hosting a blog or by charging a fee to help someone resolve an issue. I’ve visited your site from time to time over the past 2 years and feel you have garnered all this knowledge through time and practice. Take care of yourself, family, job and keep this passion in you alive. I probably spend more time pondering about the markets than I do about my job. I’m magnitized by it and continue to be part of it.

  10. james Says:

    just wondering if uve ever thought of going back to paper trading?
    i think its pretty good practice in how you execute your setups and improve without actually paying the price for it.

  11. donaldt44 Says:

    The bright side is you haven’t completely damaged your emotional capital to an extent where you are psychologically traumatized toward trading.

    I noticed you have FuturesTrader71 on ur blogroll , have you followed his webinars? I’m a student of his for over a year and made a huge difference in my trading. I use NO indicators other than price/volume (volume profile) to find support/resistance levels

    Now execution and psychology in trading is whole different ball game. Like other have recommended, Mark Douglas “Trading in the zone” and simply getting a mentor that follow similar strategy helps with the process.

    You can follow the conversation on twitter #FT71

  12. mulesrule Says:

    I stumbled on your blog while looking for ToS code for the J-line (KDJ oscillator). Wow, sad and discouraging that someone seemingly so clear-headed and dedicated has not been able to make a go of trading. That is a whole separate subject in itself. I’m now prowling around your blog to try to figure out what went wrong. I’m sure I’m not the only one who would like to know …

    Here’s the KDJ script I ended up with, if anybody wants it. Just a tiny little tweak to the stock StochasticSlow:

    declare lower;
    declare all_for_one;

    input over_bought = 80;
    input over_sold = 20;
    input KPeriod = 10;
    input DPeriod = 10;
    input priceH = high;
    input priceL = low;
    input priceC = close;
    input smoothingType = {Default SMA, EMA};

    plot SlowK = reference StochasticFull(over_bought,over_sold,KPeriod,DPeriod,priceH,priceL,priceC,3,smoothingType).FullK;
    SlowK.setDefaultColor(GetColor(5));

    plot SlowD = reference StochasticFull(over_bought,over_sold,KPeriod,DPeriod,priceH,priceL,priceC,3,smoothingType).FullD;
    SlowD.setDefaultColor(GetColor(0));

    plot JLine = 3 * SlowK – 2 * SlowD;
    JLine.setDefaultColor(GetColor(43));

    plot OverBought = over_bought;
    OverBought.SetDefaultColor(GetColor(1));

    plot OverSold = over_sold;
    OverSold.SetDefaultColor(GetColor(1));

  13. airelon Says:

    Heyya Prospectus …

    Quite an interesting post. Refreshingly honest. You know … it’s interesting. I find that this realization of yours?

    I have yet to find one professional trader, that at some point … didn’t go through a similar time period. I know I did.

    I too, took an end to my videos, and blogging efforts. I’m concentrating on spending more time in my volunteer efforts. I still trade and invest; and even help others by letting them look over my shoulder. Just not through the blog. I still have the blog and all of the videos. I just marked them as private is all.

    I had an entry some time ago that touched on this very topic. I call it: Trader Death. Here’s the link, and it’s set so you can view it:

    Just a few things to consider. If you do decide to pick it up, and try again? You may find that you are at the very cusp of learning how to do this for a living.

    Perhaps its a matter of needing to get rid of that exuberance, fun that it may be, that we have when we first learn of trading.

    As a professional, I’ve found your blog helpful; in that it provides an interesting look at a specific toolset. Every industry has the ‘tools’ for the work done. I especially found helpful the swing point post that you had – as I’m trying to develop ThinkScript code for a tool I’ve used for years.

    Thanks all the work you’ve done on this blog, and feel free to get a hold of me via email any time.

    Regards,
    Dan “Airelon” Shy

  14. Jon Molnar Says:

    Well, I’m late to the party.

    Yesterday (12/11/11), I sent you a donation to access some of your TOS codes. I’m a trader and programmer. Using others work saves me time. I sympathize with your situation but I think that you can still succeed if you 1) simplify your approach to the market 2) simplify your methods 3) focus on limited markets and 4) adhere to good money management. Your problem lies within those four items. Review your plan, assuming you have one, and adjust as required.

    Now, I would appreciate the password that will allow me to access your Swing High, Swing Low code.

    Thanks,

    JM

  15. Prospectus Says:

    JM,

    I’ve emailed you the info twice now. Have you checked in the spam folder on your email account? Sometimes I get caught in there for some reason.

    Thanks for the counsel.

  16. tiplex Says:

    Dear Prospectus,

    Needless to say I am very disappointed the we will be losing
    such an asset.

    Your work with Excel and the ability to use Excel to
    provide real time analysis has been invaluable.

    Your apparently have not taken advantage of all the
    benefits of what your efforts have developed.

    Get yourself a copy of Options as a Stretegic Investment by McMillan. Use your developments to invest in bull, bear, calendar and volatility spreads, adjusting your investments using the related Greek values, i.e. delta, gamma, theta, vega of the options your probability of obtaining a substantial return is vastly enhanced vs trading seat of the pants and listening to most of that garu’s.

    try some paper trading and when your satified with the results you can use some “real money”

    appreciate all the help you’ve given us in the past and hope you don’t stop if only for the satisfaction it gives you.

  17. Murph Says:

    Hey there,

    I don’t normally comment, but felt that I should after reading that post.

    RE: Donaldt44’s post about FT71…I had been a frequent reader of your blog because of your TOS skills…your blog post about FT71 in September 2009 (https://readtheprospectus.wordpress.com/2009/09/30/must-visit-blog-simplicity-in-trading-by-futurestrader71/) was a more important post than you might realize.

    I was at a similar crossroads at that time. It’s a long story, but the gist of it was that I was shorting the market in March of 2009 and was torn a new one when the market ripped higher. My emotional and real capital had taken a substantial hit.

    Much like Donaldt44, I have been a student of FT71 and his volume at price approach…gone are the indicators off the charts. It’s all about asking the questions of “what has it done, what is it trying to do, how good of a job is it doing and what is it likely to do next?”

    I don’t want to sound like a salesman here, but FT71’s webinar series is a very insightful series. If you only watch one webinar, please watch webinar #3, Beyond the Technical’s. (http://www.futurestrader71.com/?page_id=172)

    Back to the importance of the post…had it not been for you and your willingness to post about FT71, I’m not sure that I would have found that site and in turn, I could have very well stopped all together. While I am not lighting it up by any means, my trading has improved a great deal over the time I’ve started to follow FT71.

    If you do decide to hang it up trading, please continue your blog…it is important and might have more of an impact on others than you might realize.

    If you decide to continue trading, take a little break…get your head feeling good again and come back fresh. Gregory P’s post on journaling is spot on for two reasons…first, you can look back at it with a chart after the day is done and start to see why you might be doing things…and second, you will have real numbers to in a spreadsheet that you can crunch to help fine tune your setups. You can see the true MAE and MFE of each setup and develop stats around those setups.

    Sorry for the long post…at any rate, thanks for all you do with the blog and keep your head up.

  18. Jon Molnar Says:

    Hey Pro,

    Just to let you know, I finally found your e-mail stuck in junk. Thanks!! Have a Merry Christmas and Happy New Year!!! Hope the New Year will see your trading improve.

    Regards,

    JM

  19. Prospectus Says:

    Good. Thanks for the wishes.

  20. Jon Molnar Says:

    Hey Pro,

    I wrote a reply to your pwd e-mail this A.M. Did you receive it?

    Regards,

    JM

  21. Prospectus Says:

    Yes I did. Thanks for all the info. I’ve got a lot to think about.

  22. Fifth_Street Says:

    “Anyone familiar with my roughly 6 year long part-time trading history knows I’m a net loser.”

    Thats b/c you experiment time and again.Stop doing it.The Market has one and only one pattern.No need to experiment.

  23. Prospectus Says:

    You’re right, I do experiment too much.

    What is the one and only one pattern you see?

  24. Fifth_Street Says:

    Hi Pro,

    There is nothing new in it.I e-mailed it to you.

  25. tiplex Says:

    Pro,

    First of all a question? Can we also get the Black Scholes value of an option real time from TOS and feed it to Excel along with all the other iinfo in your template?

    And then my Best wishes for a Happy, Healthy and Prosperous New Year.

  26. art Says:

    @Prospectus

    Thank you for the post and true honesty. My partner and I have been investing/trading and journal our thought and process on our site. I’d like to make a offer for you to review our strategy and possibly start trading based on our watch list. I’m willing to grant member access so please reach out. What I’d like to know is, what would happen if you collaborate your strategy of technical analysis with our value approach.

    Little background. We invest (or trade) based on value proposition but I’d like incorporating the timing of Technical. Let me know your thought on this.

    Regards,
    New Low Observer

  27. Prospectus Says:

    Sure, I’ll send an email

  28. Bone Says:

    Trade Your Way to Financial Freedom by Van Tharp helped me a lot. He talks about position sizing, risk, etc., that helped me.

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