For 20 days, including today, I'm going to paper-trade a strategy that I've used on and off before.
Instead of scalping, I'm going to be holding my trades for more than scalp profits.
I'll be trading 2 contracts, and adding 1 more only when my criteria for adding is met. In other words, I'm scaling in.
My initial stop will be 2 points. I'll NOT widen my stop. I'll forgo any trade that comes with a risk exceeding 2 points. I'll let my trade run until I see my exit signal. I'll use only the 5min chart, with the tape.
My daily loss limit will be $400. I'll be trading round-the-clock; as and when I see a setup, I'll trade. There will be days that I won't take any trades and I will state the reasons when that happens.
I'll be showing all my trades.
After 20 days of paper trading, I'll go live with my "holding" method.
After 20 days of live trading, I'll put up a review on the whole exercise, and that will be followed by monthly reviews. I'll do this until one of these happens:
1) I double my live account
2) I wipe out my live account
If 1) happens, I'll continue to deploy my hold strategy, sans the reviews.
2)'s not going to happen.
So, my scalping days are officially over. At least for now.
D, I'm doing this for you (I seriously don't need to paper trade my "system"; all I need is the willingness to lose real money!!), so you'd better do your 20-day exercise. Penalty for cheating: NO CLEAN SHIRTS & SOCKS for ONE MONTH!
Yes, yes, yes, I'm evil. Tell me something I don't already know.
Paper trading result for today (clearly a case of over-trading):
In black arrows are my long entries; in triple black is where I've scaled in; in green are exits with profits; in red are trades that are stopped out; in pink is a scratched trade.Stats:
Number of contracts traded: 13
Number of trades: 6
Number of winners: 2
Number of losers: 4
(3 stop-outs; 1 scratch)
Winning ratio: 33%
Average win: USD 475
Average loss: USD 165
Profit (Gross) : USD 337.50
Details of all paper-trades from today on are posted on my other blog ("Jules" on my blogroll).
Will keep this blog for documentation of live trades only.
17 comments:
Sounds like a good exercise and a great trading plan. Can't wait for the results.
An aside, sooner or later D is going to have to learn how to do his own laundry :/
Can you share more details about the strategy?
MVW,
I can't wait too!! LOL!
I love to do things for D (of course, loving to do something does not necessarily mean that I do it well).
Back in our college days, I had cooked his every meal (traditional Chinese cuisine like... cheese baked lobster!! Ok, that's not exactly chinese, but I cooked it, and I'm chinese, so it's chinese. LOL!!).
Well, it's probably to make up for all those times that I abuse him. :-)
Hello, Life Observer :-)
I will be sharing as I go along. But briefly, what I do is basic ("strategy" is a big word, but until I can find a more suitable term, I'll continue to use it). I first get the bigger picture from daily and hourly chart (to see if we are primarily up, down or going sideways), look for key S/R from the hourly, read candlestick and chart patterns, and count waves (whenever they are obvious) - that's the "context" part.
Once I have the "context" sorted, I look out for a setup that I want to trade. When I have the setup, I look for a signal to enter. It's usually a candle, sometimes the tape, that triggers an entry.
a better penalty would be to wash only one side of the socks, and iron only half of that shirt...
woohoo!! am i evil or am i evil?!!
Yes;)
This sounds *nearly* as sensible as me :-) Personally I would want some criteria to judge the trial by, but I should probably get out more. UF.
Hahahaha!!!! Sea, I would hate to be your enemy...or Bil! LOL!
Jules, Good luck with your exercise.
Many traders who are skilled at reading charts and interpreting set-ups can get tunnel-vision during the "heat of the moment". This lack of focus and attention leads to most trade mismanagement issues.
I would suggest during your exercise to create a situation in which your concentration is challenged while you are in the trade. This may sound strange, but it is a very important element to contend with when transitioning into trading real money.
Scaling is an important concept. Bravo for employing in your exercise. Depending on market conditions and set-ups, I will execute this simple, scaling technique for exiting:
With a minimum of 4 contracts:
Sell 2 contracts at + 2 points
Move Stop on 2 contracts to -2 points
Sell 1 contract at first s/r level.
Once the market has moved 4 points in your favor, move the remaining contract to b/e and let it ride.
Obviously, you can use this technique for any multiple of 4, and it reduces your risk while allowing you to capitalize on trending market moves.
Again, best of luck.
Jules I'm not saying this in a bad manner but I think that you will fail at that. This is probably the most difficult task to chose, to be so disciplined and so emotions free. You will not enjoy it and it's too radical change. It's just my opinion, it would be great if you could pull it out but you are far different personality then it's required to trade like that. Something more user friendly is needed.
Wow FX, talk about a vote of no confidence. I will assume that you know Jules very well to make that assumption.
At least Jules is paper trading to get her feet wet. Most would lose serious $ before going that route.
With all due respect and sincerity, what market would you recommend?
Well I just say what I think, also as sincere as I can. I can be wrong, it's just opinion. As I said it would be great if she could pull it out that way.
Joseph, I don't have objection to a market that she is trading or recommendation. I'm talking about that change in style. That she will use only 5min chart, that all stops will be 2 points and she will not widen it, she will let trade run until she see exit signal and that her scalping days are officially over.
She was discretionary scalper and now she will turn on her heel and became system swing trader.
I think that it's easier said than done. Most importantly who says that new style of trading would make her happy and we people can't do something for long if we are not happy with it. That is all just opinion based on my life and trading experience. Again, I can be 100% wrong.
it is not easy to change your style but it is not impossible either. If you consistently condition your mind with some new style, eventually you will success or you can blend the both styles together. It's trading nothing is impossible.
Yes, FX knows me very well :-) I did widen my stop today and it was the right thing to do. But I did let profits run too. 3 times - once I gave back 500 out of 1000, twice I was stopped out at 2 points each, giving back another 400. I took all my signals, and am now net positive by 130. I gave up all my scalping setups. I kept score of how much I would have earned had I done my usual today. It would be an amount exceeding 800. I could have taken 300 yesterday had I scalped. I would have made more than 300 on Day 1 of my experiment had I scalped too coz I would have taken profits before being stopped out, and I would have scalped my way up those 2 winning trades and took a little from those moves. All because I would have gone in with 3 to 5 contracts instead of 2 when I scalp. Just got stopped out of another trade. Now I'm in the red by 62.
So no, I'm not happy. For the first time, I hate trading.
But the experiment must go on. I'm going to just take it that these 3 days are just not days to hold trades for more than scalp profits.
FX is right about me on another point - I can handle only simple exits.
Thanks guys, for your notes. I appreciate them very much :-)
oh, one more thing, I am indeed the most emotional person I know... but, is it really that obvious, FX?? LOL!
You wouldn't try to change things if there is no reason for change. So, very positive thing is that you are obviously ready to change. This is only step, who knows where it will lead you. But let's not get all philosophical now.
Jules we should make competition to find out who is more emotional. :)))
:-) FX, as if being emotional is not difficult enough, we now have to be competitive too? :-)
I feel that I need change because I'm not confident I can maintain a 70-90% winning rate. It's comforting to see a gain after losing 4 trades out of 6. But it's definitely against my nature to NOT feel bad about being stopped out. It's something I have to work on. It's really me and me alone that's my biggest problem :-)
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