There are cycles to every aspect of existence that I know of.
I started taking notice those cycles in middle and high school, but specifically my personal cycles of emotional highs and lows.
Our schools would hand out these planner books each year and I actually loved them. They were a nice size with rounded edges and that spiral plastic spline holding everything together. I would doodle in the little calendar days, but I also started making some notes about how I would feel or what I would do that day. I wanted to go back and look years down the road and recall those moments. I began to notice that if I felt great at school I would tend to feel shitty and depressed at home. Likewise if I felt depressed at school I tended to feel better at home.
It's not anything I took serious study with, but it was just enough of a pattern to become noticeable to me. I think those were the formative times of me starting to analyze myself and life in a serious way.
Well, fast forward 16 years and here I am noticing different things about myself that I have never noticed before. Much of which I won't be writing about in this post or even perhaps this blog, but what I did want to mention is that I have been in a pretty shit place for awhile now.
One thing I can say, is that being in a shit place makes it an emotional challenge to even look at the trading progress right now. Losing basically 25 times in a row is pretty stressing in a way I haven't felt since 2008-2009; the last time I was actually in the market. I was trading real money back then and like I mentioned in a previous post, my risk per trade was 10 times the percentage it has been on this blog.
Here, with a $10,000 account a $10 loss is only 1/10th of a percent. 25 losses basically puts me down 2.5% but back in the day that would have been a 25% draw down.It's bugging me and it's still only a demo!
I know I keep saying that I have to remind myself that I am letting this robot just do whatever its going to do because I am gathering data, but damn is it difficult to watch 7% gains get eaten away by a market I know I shouldn't even be trading in.
What kind of data am I gathering you ask? Sometimes I am unsure. At first is was really just to see how the robot responds to live data instead of a historical backtest. It seems to do alright honestly as long as there isn't any crazy volatility from news releases coming into the market.
I suppose part of this data, is actually about me and how I psychologically handle a string of losses. It's also a curiosity of the unknown. As simple "What if I just let the fucker go?".
For those of you who have been keeping up with my posts and paying attention, you'll recall that the market has been doing pretty much what I have estimated it would do. I am thankful for that because it means I am not totally inept at reading the market, yet my actions and losses seem to reflect otherwise haha.
I have said a few times now that I expect the market to be choppy and for me to wake up to losses. That has happened.
An issue rising up in my consciousness is a question that says "If you suspect all of that rubbish why do you even have the robot running?"
Again I think curiosity is the best answer I can thoughtfully give. I think when I set out to test this concept, I wanted to just really put it through its paces. I want to discover just how bad it can get... I guess I want to see the worst it can get now with fake money rather than real money.
So far, even in my 25 sequential losses I have had several opportunities to take profits that would have the account well above the $700 in gains that were there before it started losing so much. When I get home, I plan to take a good look at the performance and document charts showing all the obvious profit that there was to take that I simply didn't.
There is a part of me that has evolved as a trader that makes this process pretty stressing to go through. You see, when I first started out trading I thought to myself "Well, everyone seems to lose money because they can't cut losses and they can't hold winners, so I'll just learn to do both."
Well, the key to doing that successfully as I have learned and am still learning, is to do it in a balanced way. And more specifically in a way that your approach requires based on expectancy and market conditions.
Back in the day I had much less of a problem taking 10 losers in a row because in 2008 when the US markets were crashing there was enough movement in a day that my 10 losses could be made back pretty easily. In the years since, directional volatility and daily ranges have died down considerably. This recent downtrend in the Euro (strengthening of the Dollar) is bringing back some of that large daily range again, but I don't think anyone can or should expect it to last. It feels to me like it is simply a result of the market struggling over whether or not this is the bottom of that drop or not. Very wide swings show a big fight between buyers and sellers. I think once the battle is over those daily ranges will decrease substantially back down to how they were on the downtrend to begin with.
When I had learned to hold winners, my problem became that I learned to hold them so long they became losers.
(I have a whole post about "Making it all back" coming up that will make a lot of sense to you so stay tuned for it. Very relevant to this situation.)
In short though, because I was down 10 losses already for the day, when I was finally under a winner I would want to hold onto it until it caught me up from all those losses and then some. In a market that's moving, that is possible depending on how many losses you've actually taken, but on a slow, choppy, unsure market day... The market will likely only have so much to give you and it won't be all you are asking or hoping for.
So when I say this has been hard for me to go through, it's because I feel like I am watching the same shit happen to me that happened back in the day; where I have a decent profit and I am just not taking it. But this time I actually want to take it.
I'm looking at these charts and where reversal points are likely to be and I am like "I should totally take this profit, but I'm not because of this stupid curiosity to see what the hell happens."
I'ts kinda making me feel like a fool, which is why I have to constantly remind myself that I am choosing to stay disciplined to that curiosity because it's what I set out to do.
Let me explain something though, because it's crucial to this situation: I can't physically be in front of the charts to monitor them.
I feel like if I had the control and the time to trade this robot the way I actually saw fit, I wouldn't even have it trading as much as I do. I would wait until the market where likely to be alive with movement and I would carefully choose to place the robot at key reversal areas.
If price got to that area and didn't immediately reverse I would like to be present enough to gauge whether or not it would be wise to implement my martingale risk profile into the mix. (Martingale by the way is usually a deadly stupid way to trade, but I have no data as to how it pertains to what I am currently doing with this robot.)
Not only that, I would really love to see how I can implement this robot during news trades with the martingale side of it. If price is just really directional and going to pop but I will take a few losses before it decides where to go I think that might really be useful.
But because I am driving all day and don't have the remote control I'd like to have... my only options are to watch it do whatever it's going to do, or take all the profit on any particular position, with no ability to relocate the robot yet.
The following sentence is something I think is a good question for all people to ask themselves:
If the flow of opportunity is never ending, what good does it do anyone to become obsessed with picking exact tops, exact bottoms or capturing the entire move?
I honestly think that as long as trading exists and volatility is tradeable, we should keep that question in our minds because it can help us cut losers quickly and take profits when the market makes them available.
But besides that, at the end of the day... there is still the serious risk that my broker's live execution will kill this strategy altogether and I'll need to keep looking. I have had problems with them before while trading live money and if those issues still exist, putting tens of thousands of dollars at the risk of a shady brokerage is not worth it. I'll have to be extra careful just to try and not get taken advantage of.
Thank you for taking the time to read this if you indeed did.
-Francisco
P.S. By the way, if Orange Juice hits $1.55 again I am selling. I wasn't watching and it totally hit it... I'm just calling it out now so no one can say it's hindsight trading ;P
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