Hi, let's discuss my short blog post here. What do you all think?
In case you haven't read it yet, here it is:
https://www.wealth-lab.com/blog/are-you-really-in-the-market-to-make-money
Cheers
VK
In case you haven't read it yet, here it is:
https://www.wealth-lab.com/blog/are-you-really-in-the-market-to-make-money
Cheers
VK
Rename
I'm going to re-read that article at least once every week to keep me from doing stupid trades!
Well said!!!!! Thanks for the reminder, I know I need it.
It's nice to know I'm not the only one in this business going through this. In fact we've chosen the hardest path to easy money. And the phrase in the article "The trader trusts the system until real money is on the table" explains it perfectly.
As for me, I've just stopped trusting myself when it comes to discretionary day trading. At some point, I end up breaking all my own rules as described in the article and then it turns into gambling. Wealth-Lab provides every tool to avoid this, but even there I sometimes manage to interfere manually and close positions myself. I think it all comes down to how hard it is to accept losses as part of the game.
I also read somewhere that to succeed in trading, you have to act against the same instincts that helped us survive through evolution. That’s why I try to automate everything as much as possible.
Another solution I see for myself is moving away from day trading and focusing on daily bars. Even in a recent YouTube podcast, I heard something that really resonated with me "I got distracted for 5 minutes and missed a good trade". So for me, the goal right now is to automate day trading strategies and trade manually on a daily timeframe, in order not to sabotage my own strategy
As for me, I've just stopped trusting myself when it comes to discretionary day trading. At some point, I end up breaking all my own rules as described in the article and then it turns into gambling. Wealth-Lab provides every tool to avoid this, but even there I sometimes manage to interfere manually and close positions myself. I think it all comes down to how hard it is to accept losses as part of the game.
I also read somewhere that to succeed in trading, you have to act against the same instincts that helped us survive through evolution. That’s why I try to automate everything as much as possible.
Another solution I see for myself is moving away from day trading and focusing on daily bars. Even in a recent YouTube podcast, I heard something that really resonated with me "I got distracted for 5 minutes and missed a good trade". So for me, the goal right now is to automate day trading strategies and trade manually on a daily timeframe, in order not to sabotage my own strategy
QUOTE:
Another solution I see for myself is moving away from day trading and focusing on daily bars. Even in a recent YouTube podcast, I heard something that really resonated with me "I got distracted for 5 minutes and missed a good trade". So for me, the goal right now is to automate day trading strategies and trade manually on a daily timeframe, in order not to sabotage my own strategy
One reason why I got involved in system trading is that I wanted more "free time" and definitely not changing one 10 hour job to another one. Day trading is even more stress, I tried it (again) many years ago and lost a lot of money in a week after weeks of making money.
Today I can not see how you can make more money day trading, IMO it is more volatile, higher winning months and higher losing months (no sleep).
Thank you for the true and wise words!
It's best to print it out and hang it prominently at the trading floor...
It's best to print it out and hang it prominently at the trading floor...
Of course it's about earning money :-) ... at least that's how it is for me. In my opinion, the behaviours described in your blog are also closely linked to this. I think that a lack of confidence in one's trading systems is often the source of all evil. Many traders don't even know what they are trading, whether there is a positive expected value or not, how long and deep the drawdown times are etc.. Fortunately, things are different in the WealthLab world. Here you know what you are trading... at least if you get it right when developing the system (yes, there are a lot of pitfalls here).
The first requirement is a robust and self-developed system, or even better a combination of different systems.
In my opinion, it is very important to familiarise yourself in detail with your system and the backtest trading processes. Quantitative trading using daily or weekly bars offers the advantage that you can implement your trading outside of trading hours. This reduces psychological stress immensely. There is no ‘time pressure’ as in day trading. If you are unsure about continuing to implement your system (is it still working?), you have time to look at the progress of your backtest again. You will then often realise that a supposedly bad phase may not be so bad at all or may be within the scope of the previous backtest. You should also ignore the news. There was plenty of news, especially very bad or uncertain news, during the development period of the trading system and there will also be plenty of such situations in the future. A good trading system, or even better a combination of several trading systems, can cope with this. Every system has good and bad phases (which is why you should combine several systems). This is normal and you should always be aware of this. In the end, the decisive factor is to trade your systems and not to intervene discretionarily.
With discretionary intervention, you leave the path of quantitative trading.
It stands and falls with trust. Trust in the trading system and a good assessment of your own capacity for suffering (how much DD can I actually cope with and for how long).
The first requirement is a robust and self-developed system, or even better a combination of different systems.
In my opinion, it is very important to familiarise yourself in detail with your system and the backtest trading processes. Quantitative trading using daily or weekly bars offers the advantage that you can implement your trading outside of trading hours. This reduces psychological stress immensely. There is no ‘time pressure’ as in day trading. If you are unsure about continuing to implement your system (is it still working?), you have time to look at the progress of your backtest again. You will then often realise that a supposedly bad phase may not be so bad at all or may be within the scope of the previous backtest. You should also ignore the news. There was plenty of news, especially very bad or uncertain news, during the development period of the trading system and there will also be plenty of such situations in the future. A good trading system, or even better a combination of several trading systems, can cope with this. Every system has good and bad phases (which is why you should combine several systems). This is normal and you should always be aware of this. In the end, the decisive factor is to trade your systems and not to intervene discretionarily.
With discretionary intervention, you leave the path of quantitative trading.
It stands and falls with trust. Trust in the trading system and a good assessment of your own capacity for suffering (how much DD can I actually cope with and for how long).
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