the most important question in this forum

I am programming automated trading systems for a while and during the past time I often had the same questions and doubts. My strategy looked good on manual trading, and also backtested but at the end of year, I burned a lot of money.

I took an off-time from trading, spent some time on the canary islands enjoying the beach life and surfing and started analyzing all my trades. absolutly no trading during this time.

What I figured out was really shocking for me .—– I destroyed almost my good performance of the robots by interrupting them manually. For example taking the system out of the market because the profit was nice, and what happened? yes – the market rocket even more and I could trippe/quadre my profits.

Or I did some stupid hedge trades against my robots signals – influenced by stupic clown tv shows on cnbc , bloomberg and more.

I decided to run the systems without interacting manually. I stopped watching all these news shows , reading financial papers.

And what happened? My monthly returns became profitable. Of course, there were month, were one or more of the systems did not generate so great returns, but because I mix different robots on different timeframes and markets I can distribute the risk.

Since I did that, I had following returns (real money – not demo):

may +63%

june +22%

july +58%

august +6%

september +82%

october -9%  —- arghhhh  (i did not test a new system on the demo, instead i added it to real money account, and of course it did not work well) – ok another lesson learned

november +25%

december +51%

hope this helps.

good luck and feel free to ask.

4 users thanked author for this post.

Gianluca, EB, Juan Salas, Nobody

maybe a comment on the 95% of Retail Traders lose money statement.

that’s a confirmed number, and what may surprise you, is that the 95% have a winning trade ratio of more than 50%!

the reason the are loosing money is the money management. their stops are higher than the expected profit.

so always check the risk-reward ratio before entering a trade.

personally i do not enter a trade less then 1.5 :: 1.0

cheers

mr blue wrote:

maybe a comment on the 95% of Retail Traders lose money statement. that’s a confirmed number, and what may surprise you, is that the 95% have a winning trade ratio of more than 50%! the reason the are loosing money is the money management. their stops are higher than the expected profit. so always check the risk-reward ratio before entering a trade. personally i do not enter a trade less then 1.5 :: 1.0 cheers

This where knowing your expectancy is so important and something i suggest EVERY trader of all styles get a handle on  , cannot emphasize that enough

Mr Blue – great post.  I have a similar plan myself re Tenerife.

 

 

My situation same as Mr. Blue, I also igrone all financial news and only belive price and time. Started my algo from last year July, but my result was far behind Mr. Blue😢

The people I know, or have seen, making great consistent returns have years of experience, and focus on it full-time. It is their professional career. Personally I have been at it for two years part-time, and am soon transitioning into full-time. The game is about survival: risk managment, patience and making sure you can always take the next trade.

In 2016 I focused mostly on automated trading and had decent profits, way better than if I had spent the time working my regular job. In 2017 I ventured more into manual trading. In the third quarter I took some huge losses. In two weeks I was down more than half of my earnings from that year. I know what went wrong (idiotic behaviour and hubris on my side) and have taken steps to better my trading style/psychology. To conclude 2017 I lost manual daytrading, mitigated the loss slightly through automated systems, and got some enormous wins through other long-term risky investments that put me in the green again.

I truly believe consistent month-to-month profit is possible, but only with full understanding of what you are doing. That said, trading, and in particular daytrading is NOT for everyone. It takes a lot of self-discipline and experience (not to mention capital).

 

Wing – everything you have written screams out that you should give up manual trading and concentrate on emotion free automatic trading. I fear that you may have slight tendency towards enjoying the risk of a gamble. We all do to different levels – as life is boring without risk, but this thrill effects some of our decision making. If you can afford to enjoy a gamble then carry on manual trading for the buzz but if it is just profits you are interested in then I would stick to auto trading judging by what you have said. Just my humble opinion.

No problem. We should all stick to what is working. Thankfully, I am young and have no family to feed.

Wing wrote:

I am young and have no family to feed.

Oh I remember those days. The morning spent pouring over the Racing Post and the afternoon spent pouring money into the bookmakers pockets.

In fact looking back those days studying horse racing taught me an awful lot about probability, money management (mainly the wrong ways to do it) and about controlling emotions regarding wins and losses – but they mainly taught me not to trust horses.

I did work out how to win big at horse racing though – become a bookmaker!

I agree this is one of the most important questions in this forum.  i.e. is it actually possible to consistently make a profit day trading stocks in the long term (spread betting /cfds etc)

The OP is right to ask this and anybody who wants to doubt this or mock or be rude to the OP as some people have clearly has never run a business or are just unhappy people.

Thankfully most people on here are polite.

I know an extremely successful and wealthy individual trader who has accumulated approx £100 million personal wealth from professional trading and has hundreds of contacts in the industry over a 20 year career in the industry.

He says one thing “do not day trade – I have never met a profitable day trader except many years ago some floor traders used to be able to make some profit”

I would say this person along with Warren Buffet answers the day trading questions very clearly – it is a losers game.

Sure some people will even tell you it is possible to make a living gambling on sport.

Yes some people on here claim to have made some money but they were not just day trading – they were also holding over night.  I do believe retail traders can make money trading medium/long term.

It is possible to set up other businesses with a lot less effort, time, money and make a lot more money in a matter of months than trying to be the elusive the profitable day trader.

 

 

 

 

 

 

 

 

I think another important question is, who pays the profits to the winners?

say  sp500 avering 10% a year buy and hold

and you are hoping for 20% a year trading the same index

 

 

realtrade wrote:

Yes some people on here claim to have made some money but they were not just day trading – they were also holding over night.

Why have a toolbox and then put only one tool in it. Why restrict yourself to just day trading. You diversify your other investments – you have some in a low rate cash account, some in shares that you might hold for anything from a few days to a few years and anywhere in between and a pension which you will hold for a very long time. Some is high risk, and some is low risk. So have a portfolio of trades too, day trades, short term, medium term and long term – and then you stand a chance of at least having a few good tools in your toolbox even if one is broken and not working.

Yes but Vonasi that was not what the OP was enquiring about.  You are answering a different question.

The scope of the question was day trading i.e. not holding overnight.

 

 

realtrade wrote:

Yes but Vonasi that was not what the OP was enquiring about. You are answering a different question. The scope of the question was day trading i.e. not holding overnight.

Yes but I am just pointing out that just day trading is a bad idea. If someone is just day trading then they are unlikely to be a successful trader which is maybe why so few people have come forward and said that they are consistently successful at just day trading. Anyway it is silly to restrict yourself to just day trading – sometimes a day trade turns into an overnight hold or even a day or two or a week. If you just say I’m not holding overnight because I am a day trader then you will never be successful. The time of day is never a good reason to close a bet.

My day trades are some of my most successful due to the reduced risk from reduced time on the market and the lack of overnight fees but that success is measured in a balance of risk to reward to cost. With day trading risk is low if on small stakes because the market normally only moves a small distance in a day and reward is low because the market normally only moves a small distance in a day! You have to work hard to win those pips or risk more of your bank balance to increase gains. Costs are low obviously. The longer a trade is held the higher the risk but for higher reward (a longer trade will need wider stops) and with of course higher costs if done via spread betting. Spread betting and CFD’s are really only suited to day trading, short term trading and maybe the odd short term trade that turns into a medium term trade! Put the long trades directly with your broker for a fixed small fee or leave it to your pension fund.

Vonasi you say “Yes but I am just pointing out that just day trading is a bad idea.”

There in one sentence you have confirmed the OP’s probable belief.

 

 

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