[mike21]

Originally Posted by MadMarketScientist »

When I finally understood what makes a robust system, and what is acceptable loss vs. what is not, I was able to turn the corner.

So, in your opinion, what does make a robust trading system?

.

[MadMarketScientist]

mike21 --

To answer your question, and this is what works for me - others might have different requirements or ideas.....I know for my personal psychology I'm not going to be able to trade a system that has less than 50% winners, even if in the long term it's profitable. Understanding my personal psychology, and looking at tables for example by Van Tharp who shows how many losses in a row you might get with less than 50% winners and I just realized it wouldn't work for me.

I personally look for 60%+ winners -- 65%+ even better. I have no expectation that I'm going to get 90% winners, etc... so for me this 60-65+ area is what I aim for.

Next, I want it to be a market that trades with frequency -- I get a bit bored if I have to wait a long time on set-ups -- I want frequency and the ability to finish quickly, at least on a good day.

I want to make sure my avg. gain vs. avg. loss is at least 1 to 1 and of course, the higher the better, net of commissions and slippage.

I also want to ensure the market is tradeable - some on paper look great but when you try to trade and execute it is a totally different story.

I also need the market I trade to maintain its volatility and trading range -- I don't like to constantly like to chase what's hot this week - I want something I can be trading 3 months from now and a year from now.

Hope that explains it a bit more. Thanks.

[gandalf33]

MMS, it almost sounds like you're describing me.

[MidKnight]

Perfectionism has been my weakness. Trying to get very low MAE entries and near perfect exits. Logically, I knew this was asking too much. After all, humans are imperfect, algorithms and models used to trade are imperfect, therefore the market is imperfect. But my mind defies logic sometimes. I started to conquer this when I focused less on the actual entry trigger and focused more on the general market conditions with zones to enter and scale-in around. Rather than before my single all-in entry off some type of strict rule bound trigger. I had to get lots and lots of exposure to taking a little heat on an entry. Perfectionism still affects me today, but it definitely has less control over me than it did for my first 3-4 years of trading.

Good thread.

With kind regards,
MK

[zdo]

Originally Posted by gandalf33 »

I have one challenge only: I can't face losses.

Losses are killing me, a losing trade feels to me like a stab with a knife in the heart, while I have no problem losing at conventional games, e.g. chess, a single losing trade is something that puts me down. It's causing me so much pain that it's hard to express. I feel clouds darkening the sky of my mind after a losing trade. Like facing a huge block that you know will be almost impossible to get thru.

That thing is having a bazillion effects on me, all of them adverse:
1) my mood goes downhill, affecting my own and others' personal life
2) I have a great urge to find a flaw in the system after a losing trade, and correct it
3) after a streak of losing trades, just 2-3 are enough, or a month of trading where I'm +/- 0 on balance, or slightly below 0, I immediately seek a new system

....

gandalf33,
To keep from diluting this topic, I am quoting you and making some comments in the 'thyself' threads... maybe at least skim them.

Also nominating that post for Post of the Month

All the best,

zdo

[daedalus]

My biggest problem has been trying to "normalize" all of my trades. That each opportunity should go X ticks in favor so I can move my stop and that then the move should move another X amount in favor to a predefined Y target each time.

The markets aren't static, they don't offer identical opportunities and after you realize this you start to understand the need for a more relaxed and flexible management ideology for your trades.

Sometimes the trade blasts off immediately in favor, in which case you trail stops and try and garner as much profit as possible. Sometimes price consolidates a bit more with you in it and then only pops a bit - in these situations your probably best taking the profit offered and waiting for the next opportunity. And sometimes price just sits and waits without any real move in favor in which case sacrificing the position for a couple tick loss or at breakeven isn't a bad idea. Other times you just lose and in that case you don't double down you take your loss and move on.

And here's the kicker... you won't make the right call every time. Sometimes that consolidation and heat turns into a massive winner - without you on board, sometimes that quick pop you got out on turns into a big runner, and sometimes that loss you take knocks you out by 1 tick beyond your stop and reverses... but trying to be perfect in this imperfect profession is an impossible task. So don't try. Simply try and make the best call with the information available to you at the time and don't look back.

But allowing the discretion into my trading has been the thing I have to continually work on and consciously allow. As much as I like structure and a 1,2,3 approach to ringing the cash register the markets don't like to make it that easy on us and the sooner we realize it and embrace it the better chance we have to be successful.

[chaotic1]

I would say my greatest roadblock is being too impetuous. This is especially problematic if I have not made a trade in some time. I am still developing my rules to mitigate this, but it can be devastating. This is a problem much greater than if I have had a losing position or even if I have been put into a position of damage control when the market has jumped against me. When I get impulsive (impetuous) the positions is almost certain to go against me, even if it fits into my rules and by all rights everything should work as planned.

[MadMarketScientist]

I find it fascinating how so much of what is mentioned is clearly the psychology of trading. From the mention of the moods, to the desire to constantly fix what might not be broken. I always think that trading is actually totally unnatural for most of us. Human nature I don't think typically fits with how most of us are made up. We don't like to be wrong, we have a desire to fix things, we flee discomfort and uncomfortable situations, etc.... it takes a lot of work to break millions of years of coding

Not sure how many saw the story, but Goldman Sachs in Q1 didn't have a single losing day of trading. They made at least $25 million per day, many days over $100 million. And not a single negative day. Much to most of this is done with programs, and I would bet the removal of human emotion. I would assume there were a number of losing trades in their totals, but the computers relentlessly stick to the plan. Of course it probably doesn't hurt to be the "house" in trading and literally be able to move the markets....