[Callahan]

Wow... guys, your comments are really hitting home and I can´t do anything else but thank you for all your help.

Talking this to anybody else other than traders would be an epic fail... I could just imagine what would have happened if I talked this to my wife!!!

God Bless

[maddman]

Callahan, thanks for sharing your story, that was very nice.Try trading with 2% first...what do you think? Then move up in $$$ as confidence moves up.

Originally Posted by Callahan »

I have been trading for several years but not until now I have founded an strategy that works in a consistent manner. The strategy I made is a simple one, but in order to sound more interesting I will call it "elegantly simple". I created this strategy about 7 months ago and I have backtested (5 years) and paper traded it (4 months), the last 4 months I have live-traded it with only $10,000. Bottomline, I have proven the strategy is a good consistent way to trade stocks. Don't misunderstand me, I am not going to break the bank, but it gives some decent returns in most scenarios. As any strategy it has good days and bad days. Needless to say with $10k the bad days don't seem so bad... but here is where the problem is...

I had planed to increase the portfolio size to $100k (most of my trading capital) as the strategy has proven to be satisfactory. What I did not take into account is that I would chicken-out (for lack of better words) at the posibility that I might not have the stomach to weather the bad days. My strategy has a daily max drawdown of 5% so it is different to lose $500 vs $5,000 even though in terms of % is the same.

Being honest I am dissapointed in my self as I had always criticized traders that lack the guts to pull the trigger... but karma is a b#tch... I am doing the same think I have always condemned.

The situation is this, I am convinced the strategy is sound, I am convinced that it will give decent returns even though there might be some bad days, but even though my brain says GO, my gut is stressing out at the (certainty) posibility (?) that there will be bad days...

BOTTOMLINE: I need to grow a pair... any advice?


PS: More info on the strategy... US stocks, I open positions (long or short) at the close and rebalance the next day's close.

[bwebber]

Callahan,
Sounds to me like you are doing things right. Do not change your strategy and don't trade on simulator. You just need to condition yourself by gradually adding to your position sizes. If you have a good strategy confidence will come.

[MadMarketScientist]

The stress about pulling the trigger comes from not knowing the outcome and the consequences. Essentially you are going in blind ... I would be scared too! If you had a system with calculated expectations and risk exposure (stop losses, scenarios outlined, etc) then I believe it is much easier to pull the trigger ... calculated risk vs. 'gambling'.

Bill Dunn once said trading was a matter of survival. Living to trade another day. Risking a max of 1% of your trading capital ensures you live to trade another day.

Traders who shoot for the moon on 25%, 50%, 100% of their trading capital get shot down by the market makers and others who saw them coming. Apprentice floor trades have to make 30 trades a day using support and resistence and still breakeven at the end of the year (they have to make a small profit to cover costs). then they graduate.

MMS

[linkon7]

I used to have this same problem. Only way to come out of this to trade the smallest qty allowed by the exchange. Now the fear of end result is out of the mental system since a win or loss doesn't really affect the capital. Now shift focus on execution. After 20 odd successful execution, increase the qty slowly... objective is to gain 70-90% of the execution as perfect as possible. Once the mind is used to trading the system, it accepts the fact that worst case scenario is stop loss gets hit.

gradually increase the amount at risk...! But keep it to comfortable limits...!