[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.

[SIUYA]

why jump from $10000 to $100,000 - why not implement it in increments. 1/3, 1/3, 1/3
OR
and I recommend this to every one --> get rid of the monetary element of it and focus only in percentages.

[steve46]

Sir or Madam

Generally speaking if you have trouble pulling the trigger after all the work you suggest you have gone through, then "something is wrong with this picture"...either you are exaggerating or some part of you does not "believe" in your system...to me it matters not...but until you resolve that divergence between what you say and what you "believe, you probably won't be able to make it work...By the way...this comment is the result of my work with Dr. Ari Kiev (not my opinion initially although I have come to agree with it)...you see I had the same problem more than a decade ago and he helped me to get over it...basically I had to do more testing so that knew the system inside and out...including the worst possible scenario (max historical drawdown), and how to identify whether the system was working correctly or "failing"...It took me about three months of additional number crunching to come to the conclusion that my system was worth risking money on...from then on I was ok with it...

I hope this helps....since I don't know you well its the best I can do..

Best Regard
Steve

[Tams]

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.

your subconscious mind is very smart...

it can figure out the conflicts and inconsistencies in your strategy,
the ones that you are not consciously aware of.

your subconscious mind is trying to protect you,
holding you back when it detects unresolved issues.

get a piece of paper and start writing down your logic...
if you can computerize it, you will have your problem solved.
if you can't ... mmm... you are the only one who can understand why.

[pa18]

BET OR GO HOME .....

It's that simple, if you don't pull the trigger, what's the point, you might as well pack your bags and go and do something else.

However, its not all a big loss, Tams got it correct, all you need to do is train your subconscious

To do this, all I do which works for me, I talk to myself positively and out loud, win, lose, when in a trade etc...

YouTube - ‪firedUpCocky‬‏

YouTube - ‪firedUpCocky‬‏

and my wife thinks I nuts talking to myself lol

[$5DAW]

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

This may be the key, not so much growing or enhancing your physical appendages but growing psychologically. Most everyone has commented on this and I agree, something is missing between the work you've done identifying your edge and its implementation. I will say, jumping ten fold in size seems a bit extreme, but who among us doesn't want to add another zero to their account. I've found, finding the maximum anticipated draw-down and multiplying that x 2 and adjusting my positions/risk to fit within my comfort zone works for me. Maybe it's 1/3 or 1/4 or 1/2 only you can make that call. If I'm stressed when I enter a trade, I'm almost always doing something I haven't proven to myself beyond the shadow of doubt, the probabilities of positive results are in my favor.

By reading your post I get the feeling you're going to do something, right or wrong. Just stay within your comfort zone, and I'm sure everything will work out fine. Good luck and nice job on the edge by the way

[zdo]

Callahan,

Each of the posts above addresses one of the devils/aspects with this issue and there are several more not yet mentioned. One of them has got you by the nuts, a couple others stand ready to punch you in the guts, and several are messing with your neurons...
Maybe call Rande Howell... or at least read his book. (Just an idea - ie have no financial interests or affilations...)

hth

zdo

[Tradewinds]

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. . . . . 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.

. . . . . . .

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.

. . . . . .

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...

I'm wondering if you are not really happy with the returns. You stated: "Don't misunderstand me, I am not going to break the bank, but it gives some decent returns in most scenarios."

It seems like there is still some lingering doubt. All people do not like the discomfort caused by uncertainty. Some are able to deal with it better than others. How are you going to decrease the discomfort caused by the lingering uncertainty? We can say that we believe in things, but don't really believe. You stated: "I am convinced the strategy is sound." My gut feeling is, that you need to admit to yourself, that you really are not 100% convinced that the strategy is sound. I believe this is your starting point. As long as you are telling yourself the the strategy is sound, but not trusting it, there is a conflict that is causing discomfort.

Please don't misunderstand me. I'm not trying to convince you that your strategy is not sound. I'm saying that it's difficult to fix something when you are working in the dark. Imagine trying to accomplish a task in pure darkness, when you can't see anything. Until you admit that you really don't trust your strategy 100%, then you are in the darkness, fumbling around. Again, admitting you don't trust your strategy DOES NOT mean that it's a bad strategy. The distinction needs to be made between those two things. Once you admit that you are, in a sense, not being totally honest with yourself about your trust in your strategy, you can then feel good about facing reality. Then, "The light goes on". You go from denial, into a clearer definition of the problem.

Something is keeping you from trusting your strategy. I'm a person who needs a lot of certainty, and a really, really well tested system before I'm going to have any trust in it. That's just the way it is. I'm probably not going to make major changes in my personality at this point. I just have to face the reality of it, and once I've accepted the way I am, don't fight it, work within the abilities that I do have. It may take me longer to "get there", but chances are, that when I "get there", my level of competence is going to be better than average.

So, first of all, I think you are in denial about how much you really trust your strategy. After you get past that point, it's time to get honest with yourself about how much certainty you personally need to feel comfortable trading the way you want to trade. Don't fight it, don't try to swim upstream, figure out how to work within the boundaries.