I haven't really kept stats on specific setups in a long time.
One of the things I decided to do after my come to Jesus meeting was keep some stats and see if certain setup or ideas were serving me.
I had to go back a couple of weeks and re-create these things of course but here is what I found.
Exactly 1, Uno, One, and I mean ONE set up accounted for nearly all my gains. The others were at best break even. In all honesty, the other ideas were really losers and I got lucky on a couple. I guessed right and one was a larger winner. Throw out those marginal (ok losing ideas) and suddenly even with the mental sloppiness of the last few weeks, I am profitable.
This is the issue though. Mental sloppiness and emotional overconfidence says I can make a winner out of anything and that is the real reason for the stupid ass trading over the last few weeks. I have always known those setups were marginal and for the most part avoided them but I can see very clearly now how impatience, greed, FOMO and general stupidity leads you to think over time you can make them work.
With stats clearly demonstrating the complete opposite, perhaps its time to do as Andrew Carnegie once said "if you want to be rich, focus on one thing".
The other thing I discovered was that even with really good timing, trading small and scalping doesn't really work. It works to help get your head straight but to make money you really have to let things run a bit, even with limited time available to trade, I can afford to let a winner run. However, my emotional weakness is I need to ring the cash register quickly and I hate watching open profits reverse on a pull back and so Thursday and Friday I began scaling out of a position instead of trying to scalp only or scale into a position and it has helped my PnL quite a bit. I know its not optimal mathematically but if it provides a crutch emotionally and that leads to larger profits overall, then I am good with it. Just have to keep the losers smaller than the winners and its all good. During those same 2-3 weeks using just the one set up idea, letting the winner run with a trail stop at major swings would provided more than double the all in all out scalping thing I have been doing. I have the math to prove it.
So going into next week, I will begin trading 2 lots again. One off early to "get paid" and provide the mental crutch and the other to actually make money. Its much easier for me to let it run if I made something on the trade early on. Crazy stupid I know but that's how I am wired.
Doesn't sound bad. I might add, though, that for me that type of contract management isn't money management, but actually trading two different systems.ReplyDelete
I don't disagree with that. Its purely an emotional crutch. Nothing more.Delete