Whipsawed by waiting

Discussions about personal psychology for the individual trader.
Post Reply
zoopy12
Full Member
Full Member
Posts: 10
Joined: Mon Apr 05, 2010 7:50 pm

Whipsawed by waiting

Post by zoopy12 » Thu Dec 06, 2018 12:37 pm

Hello Bloxites, I am facing a little bit of a tricky issue that might be resolved by hearing some input from the forum. the issue is this: I have a system that I feel confident in, and as I wait on the sidelines deciding that I am going to be begin live trading "soon" I keep seeing monster profit moves that the system would have taken except I didn't take them, because of waiting for the system to give up some of the last big profit so that I don't start the system after a recent big equity run -up, with the idea of reducing the 'give back" that sometimes occurs after big profit runs. How do I puncture this dangerous "illusion"??
The answers I have come up with are: 1. Just jump in, to hell with it, the system is winning why wouldn't I want to be trading a winning system?
2. Switch to a different symbol that I don't know the recent history of profits and losses of. ( "blind to past equity curve")
Feel free to inflict some "tough love" here, if needed. Thanks, Zoop

Louis Crowder
Roundtable Knight
Roundtable Knight
Posts: 194
Joined: Sun May 27, 2007 7:09 am
Location: Memphis, TN
Contact:

Re: Whipsawed by waiting

Post by Louis Crowder » Sat Dec 08, 2018 12:33 pm

Zoopy12,

What you’re feeling is not an illusion. The reality is, you simply don’t know what your system will do next. It doesn’t matter what its recent performance was.

If you jump in with both feet, you’re likely to regret it. If you take a large loss at the beginning of your trading before you have a cushion of profits, it can take a long time to recover. And it's pretty hard to stomach.

Going all in with a random symbol is a worse idea. If you believe testing is valuable, then why would you trade a symbol you haven’t tested?

I’ve found that the best strategy is to ease in intelligently. Start with 50% of your equity. Add another 10% after each day your account is up. Just as in “a journey of a thousand miles,” a major loss begins with a single down day. If you experience a streak of down days right after you begin, this strategy can save you up to half of that loss. I’ve tested it, traded it, and it works.

Louis Crowder
Tradingautomation.com

zoopy12
Full Member
Full Member
Posts: 10
Joined: Mon Apr 05, 2010 7:50 pm

Re: Whipsawed by waiting

Post by zoopy12 » Sun Dec 09, 2018 2:04 pm

Louis, Thank you for breaking these ideas down and sharing your insights here, they help me understand the current situation and a possible way forward. I went to the trading automation website and at some point, I will be exploring the idea of automation so I'll keep it as a reference. Your help is greatly appreciated by me. Thanks, Zoop

Louis Crowder
Roundtable Knight
Roundtable Knight
Posts: 194
Joined: Sun May 27, 2007 7:09 am
Location: Memphis, TN
Contact:

Re: Whipsawed by waiting

Post by Louis Crowder » Sun Dec 09, 2018 3:35 pm

Thank you, Zoop.

Louis Crowder
Tradingautomation.com

Post Reply