System Messages

This forum is for members of the Apiary Investment Fund. To learn more about how to get involved, sign up now or fill out the form below and preview the training right now!

Equity AKA Homework

 
Back to Forums
 
 
Rookie

Equity AKA Homework

In this forum thread entitled with one word so I can find it again, it could have been titled a lot of things such as Homework or how to fix your equity curve or the secret sauce of trade management.

Jeff is the featured speaker of this topic and related discussion. I am certainly not qualified to present this education and am skeptical of even presenting an analytical review. 

The subject of homework is what separates a real trader from a gambler and growing their equity.

Shortly after signing on with Apiary and facing serious frustration disappointment I went back thru the Library and calendar from the beginning and listed certain instructors such as Shawn and Jeff (even Toddster) by subject matter. While going thur the Trader learning curve (see attachment) I complained that Apiary doesn't do enough to teach about the trade management of sizing. Jeff has put that complaint to bed with this series of sessions.

As was said when I complained. A trader needs to be ready or have enough experience to comprehend and apply sizing principles. For the most part, I suppose that's true because there is definitely a cycle a committed trading student must go thru. However, once a trader rounds the bend in the elbow as in the attached image an enlightenment begins to occurs and this knowledge must be understood to increase the equity curve and increase the expectancy to make the time and risk of capital worth the effort.

To that extent for a trader that is on the downward slope of the arm, an enlightenment must happen in order to get from Pips to Cash management a Psychology transformation must take place. Once resolved a trader can move on to the cash management of sizing.

My hope is that other participants will jump in and provide the needed spreadsheets.

And it would be helpful if a few senior traders share their experiences and their methodologies of cash management and sizing. 

To that end, Lindsey has done an awesome job of sharing already in various threads.

 

So my next post I will list the calendar schedule of this group of sessions. The one I am posting now I think sets the stage for the topic.

Friday, September 14, 2018

https://apiaryfund.com/training/discussion/catt-toolstrading-management

AttachmentSize
new trader cycle.jpg45.95 KB
Wed, 10/31/2018 - 10:17am
 
Rookie

Jeff's Equity discussion schedule.

Monday, September 24, 2018
CATT Tools/Money Management.
https://apiaryfund.com/training/discussion/catt-toolsmoney-management-0

Wednesday, September 26, 2018
CATT Tools/Money Management.
https://apiaryfund.com/training/discussion/catt-toolsmoney-management-1

Friday, September 28, 2018
CATT Tools/Money Management.
https://apiaryfund.com/training/discussion/catt-toolsmoney-management-2

Then comes a series discussing Liquidity and adding to the playbook of tools
Then a session or two on Balanced trading which is very similar to 5M laid back scalping.

Now;
CATT Tools/Money Management, what to trade and why, the base
Friday, October 19, 2018
https://apiaryfund.com/training/discussion/catt-toolsmoney-management-3

Where the peddle hits the metal,
CATT Tools/Trade Analysist.
Monday, October 22, 2018
https://apiaryfund.com/training/discussion/catt-toolstrade-analysist-0
Wednesday, October 24, 2018
https://apiaryfund.com/training/discussion/catt-toolstrade-analysist-1
Monday, October 29, 2018
https://apiaryfund.com/training/discussion/catt-toolstrade-analysist-2
Wednesday, October 31, 2018, Summation.
Not posted yet so got to https://apiaryfund.com/calendar/2018-10?event=42467&d=0#calendar-event and click on the recording.

 
mike_smith

Thank you Rookie, I like your new thread.

 
mike_smith

"The subject of homework is what separates a real trader from a gambler and growing their equity."

Though I believe it's Fermat who separates gamblers from traders: "... they are now regarded as joint founders of probability theory.[14] Fermat is credited with carrying out the first ever rigorous probability calculation. In it, he was asked by a professional gambler..."

https://en.wikipedia.org/wiki/Pierre_de_Fermat

"A trader needs to be ready or have enough experience to comprehend and apply sizing principles."

I believe you refer to compounding correctly? Because you can simply use the smallest lot size for any balance if you just wish to not hit your daily risk limit. I am so used to Alveo doing this for me. Even if I started with $100, you're right I would be asking Alveo.

BTW seems you lean most towards Jeff Crystal's training. Is it right?

 
Rookie

Mike, I am glad you like the new thread. I really do hope that some of our spreadsheet folks and more senior traders will jump in with their experienced trading mantras.

I will catch the Fermat info thanks for the postings

"apply sizing principles," I think maybe its a bit more than "compounding correctly" Its how many positions to enter, what lot size, the timing but most important is the winners in a row and losers in a row to really implement when to go big and when to pull back.

I have no issue with useing the one-click and asking Alveo. I use it on almost every trade but when useing a small lost size I really will sit and hit enter a hundred or more time to which I might interject defeats the purpose of one-click sizing. Of course, you can always do 4 trades od 25 clicks and get eh same results within theory less risk and more trade management control.

I prefer to up my lot size and take fewer trades and not more than four to achieve the desired objective.
I will also cut he one-click advice and split the recommendation by 50% when trading two pairs and so on if 3 or even 4 pairs are being traded.

I have discovered once again that less is more and I am capable of tracking two pairs at the same time and more than that I will inevitably lose track of the price action for one or two pairs and inadvertently wind up lope sided. By focusing on just two I get a shorter more focused time span and almost doubled my pips by being able to focus more on trade-cash management.

My fav for watching is Shawn and Todd maybe Brian could be but I do not get to see him trade very often.
For this stage in my trading education and personality match up, I am certainly biased towards Jeff.
Jeff is trading on steroids!

 
Rookie

You might ask why is this such a big deal, what's the bottom line here. Is da Rookie just running his big mouth?

The big deal for me is increasing my expectancy. Long ago I discovered short-term scalping was not the answer because of the risk-reward ratio. No matter how good you are without high-risk HF scalping or you're a professional wobble your trading life is either very limited or doomed to be high stress and minimal at best equity growth.

I had maintained a very high win-loss ration and a small but negative expectancy thru funding, then let ting the win-loss slide from the high nineties to mid-eighties my expectancy was increasing... food for thought.

Next and not being totally stupid the scalper then decide that a higher than 1M time frame must be used. Ok, some success.
Next and again not being totally stupid while having some success but not being able to master any time frame greater than 1H,
I conclude I have to let my targes run and decrease my loser amounts, da heard dat before; to at least five pips and reduce my costs while incrementally increasing my profits.
Ok, that's starting to show real promise.
I now so ok well if it works for one trade lets add two or up to four, experience has already tough me about over leveraging its not a pretty outcome always working your way out of the grave.

I have recently adjusted my goals from 1K pips per weel to;
100 pips per day, a .50% to 1% equity growth and a $5.00 Expectancy.
Yesterday someone asked how often do you achieve these goals.
My reply went like this, 100pips a day not much problem, ,50% most of the time but $5.00 not so much.

The attached spreadsheet of today's trades is very simple even for da Rookie. When I do the next step I need to calculate by hand..

Ok yes, it was an ok day trading but not my intended outcome. To me, I did not trade well.
How to fix with the data at hand, time-consuming and tedious. But to know the max winners and losers is fundamentally key to when to add lot six or back off lot sizing.

Trade with better-aimed targets and do not take frivolous trades just to trade because they will bring the overall stats down even with winners.
You can't always count on a retracement hedge, so close losers out early even before the loser looks to be heading outside the defined channel.

This I shall push my trades out to a higher TP and endeavor to reduce the size of my losers.

That's it for me today traders enjoy and green pips to all bees and none to the other heathens...:))

AttachmentSize
as of 10-31 8am CST.xlsx 1.79 MB
 
jkroad

Thanks for this new post. I really like the "new trade cycle".

 
Rookie

Speaking of cycles, Norma made a suggestion yesterday, which I have not thought of nor tried out.
and this has some merit.
Place a stop on how many trades you can take in a session based on you usually, low reduce it by 10%,
and keep on doing this cycle until you hit the brick wall so to speak of increasing your efficiency.
Challenging to say the least.

 
Rookie

Kelly Criterion in detail
http://www.elem.com/~btilly/kelly-criterion/

a Babypips forum discussion
https://forums.babypips.com/t/kelly-criterion/32970

Money Management Using The Kelly Criterion
https://www.investopedia.com/articles/trading/04/091504.asp
The Basics
There are two basic components to the Kelly Criterion:
• Win probability - The probability that any given trade you make will return a positive amount.
• Win/loss ratio - The total positive trade amounts divided by the total negative trade amounts.
These two factors are then put into Kelly's equation:
Kelly % = W – [(1 – W) / R]
Where:
W = Winning probability
R = Win/loss ratio
The output is the Kelly percentage, which we examine below.
Putting It to Use
Kelly's system can be put to use by following these simple steps:
1. Access your last 50-60 trades. You can do this by simply asking your broker, or by checking your recent tax returns (if you claimed all your trades). If you are a more advanced trader with a developed trading system, then you can simply backtest the system and take those results. The Kelly Criterion assumes, however, that you trade the same way you traded in the past.
2. Calculate "W," the winning probability. To do this, divide the number of trades that returned a positive amount by your total number of trades (positive and negative). This number is better as it gets closer to one. Any number above 0.50 is good.
3. Calculate "R," the win/loss ratio. Do this by dividing the average gain of the positive trades by the average loss of the negative trades. You should have a number greater than one if your average gains are greater than your average losses. A result less than one is manageable as long as the number of losing trades remains small.
4. Input these numbers into Kelly's equation: K% = W – [(1 – W) / R].
5. Record the Kelly percentage that the equation returns.

 
TraderHewitt

Rookie, looked at that spreadsheet, awesome trading man, I knew you where a huge ledge! :)

Thats an interesting idea, about reducing the trades per session, especially for people with a serious problem with over trading , less bullets means one may wait for a better chance to fire!

>>short-term scalping was not the answer because of the risk-reward ratio. No matter how good you are with high-risk HF scalping or you're a professional wobble your trading life is either very limited or doomed to be high stress and minimal at best equity growth.

I know you are likely referring to your own personal experience, but did want to point out for readers this is not necessarily the general case.

First, "small win, large stop-loss", this is not scalping/short-term trading, this is gambling. Retailer traders who learn from forums call it scalping but proper scalpers like John Grady etc don't risk 10 ticks to make 1. Real scalping is about cutting loosers very quickly (even at the same price on a thick market like treasuries) and though they take profits quickly, when conditions present will run those trades out.

Retailers do the opposite, they close their trade as soon as they can, but happily let those loosers run out.

I don't think for a minute that scalping or really very short term trading is not profitable. To my understanding many very big traders in the world are scalpers. The problem is we (amateurs) don't do it right. I think also its harder to properly scalp 2/3 pips in a CFD type market like this where you always pay spread and have no volume info (unlike futures where you work bids/offers to get "the edge" i.e. don't pay spread so start your trade break even).

It has its disadvantages, it does take more focus and possibly stress, but there are many advantages too, in that being out the market most of the time minimizes your exposure to flash crashes/geo-political spikes, and trading very short term like that imo also means you can take advantage of current (trigger) order-flow which is likely to continue for a few minutes, unlike trading higher times where the trigger flow could change sentiment at any point based on Trumps random tweets or whatever.

 
Rookie

Shawn, makes scalping work big time, he does it right!
That said with Shawn's example in a large account it is so hard to think smaller... many times smaller
It is doable but just hard to grasp the colossal difference.

 
Rookie

From an anonymous Apiary friend. Shared as is. So Bee's if someone needs help it is up to you more spreadsheet aficionados.

The file is attached. It has the instructions. I haven’t yet included the latest Jeff updates. But you have to refresh the data once you import it from the Alevo export. Like Jeff stated today it is best to remove all the 0 profit trades. I do that by creating a filter in the export file and filtering on the Close Price of 0 and deleting all the 0 rows. Then when you import your file it will only need to be refreshed for your use.

Go ahead a share it.
Yes, you can certainly share it. I would suggest that you just let people know that they need to know excel well enough to manipulate the program for their specific analysis or it really will not be of much value. The real value for me in this spreadsheet is isolating the analysis to the trading session which Apiary doesn’t really do. The additional pivot table can be useful. I give no warranties for accuracy.
-------------------------
deleted and replaced with ver3

AttachmentSize
Copy of Alveo Account Analysis (003).xlsx 394.31 KB
 
mike_smith

Isn't this what my stats do?

 
Rookie

I hadn't looked at the export since the new version of Alveo was released.

If you have your Orders History open then right click and you get a new choice,
What a delight to find this new page for running my stats.
Now I just to learn to fill in the blanks!!

Also while exporting to Excel it doesn't work exactly the same it used to.
I used to be able to just dump to my desktop and open, well no longer.
You must save to a Documents Folder. Then you can open it.
Apparently, until it hits the doc folder it remains a web file.

Anyway, this new stats option is really going to be great for analyzing trades!

Thanks, Apiary staff.

New Stats Page.JPG
 
Charles Moeller

Thanks Rookie, for pointing it out.

Thanks, Apiary Staff, for making it happen!

 
Rookie

Next to the Apiary Instructors especially Shawn and Rex well Norma also but she technically isn't an instructor this is the best why Risk Management Podcast I have seen. It is by Peer Brandt, lifetime expectancy of 40%+ annually. That's also 40 years traders.

https://www.tradingview.com/shows/real-vision-the-edge/investing-master-...

This includes a short synopsis of Peters top three metrics.

 
Norma Jenner

Rookie, surprising but true that this is first time I've seen this good thread.

But it was not I, from your post of 10.18.2018, who suggested reducing numbers of trades by 10% until you "hit the brick wall."

I remember having talked w you about Janice Dorn, MD,PhD, brain-chemistry expert, addiction expert, gold-trader, who recommended that overtrading traders drastically reduce numbers of trades until they had control over whether they could sit and wait.

What I do think is that hundreds of traders overtrade. It is one thing to have a trading plan that requires hundreds of trades per day. In itsself, trading that much, within a plan, is fine. In fact, I believe that many, even most of the traits or habits of real champions in any endeavor are exactly the same ones which psychologists label as addiction. Too many spouses/relatives of traders jump on those habits as if the champion-mindset-trader were an addict. Only the trader knows. The trader does know.

Two things are not OK at all
1) Trading w/out a plan, overtrading w/out a plan, overtrading with a plan that offers fewer trades than trader takes
2) Trading dozens or hundreds of trades each day WHILE being UNABLE to NOT trade

If traders are in that situation, they may be addicts and need help (maybe cutting back slowly could help--I do not know), or, they may simply have a very bad habit that once recognized can probably be fixed in 3-4 wks. To do this, simply make a decision to trade very small, like 3-12 trades per day or fewer, and journal every trade, both before taking it to rank it with your plan requirements, and after exiting the trade, analyzing the quality of the process. If you think you can justify not doing this long enough to get absolute control over clicking the mouse because your plan demands too many trades to journal, I see the point, but the decision to get absolute control over overtrading is more important. So folks should get all the control first, then trade as per plan.

Rookie, that was a long way around the barn to say, "it wasn't I who said that." lo. Thank you very much for the Peer Brandt reference. I'm off to watch now

 
jerry.woolston

I love being able to have the take profit and stop loss set inside of One Click trading.

 
Rookie

Well, this thread is certainly not the most popular by vies and not the most important in terms of becoming a successful Pro Trader.
As Norma points out one of the real bottom lines is our psychology, out missed.

I post a lot and try to help all of us as much as I can with my limited ability. I have also communicated with many of us one-one and always out of love however not always with the requisite empathy and compassion necessary, For these shortcomings, I deeply apologize.

We all have various handicaps that subconsciously manifested in our daily lives, real or imagined. Why do I use the word handicaps? Because I believe no matter the nature of the issue is mental, or physical or biological, it presents an opportunity to be faced and overcome.

Notwithstanding my POV is that a trader's equity is a direct result of the homework the trade does.
My mind has expanded since I first wrote this thread quite a bit and still has a great deal of expansion room left.
I am like a child full of inquisitive questions of why and then testing what learn, eventually it becomes my own only to be reevaluated and, adjusted and preformed once again.

I for one and perhaps all of we wannabee consistently profitable traders without regard to time come to question is this quest worth it. Obviously the reply to that question is intrinsic to a person's inner self.

Assuming a level of comment to become a most successful consistently profitable trader. The process of KAI+ZEN = KAIZEN is the process of making small improvements to produce massive results.

With that said I am changing my POV of the three legs of a trader, psychology, physical, and lifestyle-life habits.
The following podcast from Chat with Traders embodies these principles.
0:00 / 1:14:38 196 · My First Year Trading Full-Time: Prop Trader, Ryan Trost
https://www.youtube.com/watch?v=ahSTzg9pVP4&feature=em-uploademail

Bottom line I to the question is how badly do we want it? Are we prepared for a holistic approach to change?

strong Enough to let go.PNG The KaiZen Process.PNG
 
trident78

Thanks for sharing your thoughts and link to the video!

Totally agree with you...in order to have a shot at becoming a consistently profitable trader, we really have to put in the commitment and focus on trying to improve our game.

If we just dabble and treat it like a hobby, the chances of success is almost zero.. Hobbies cost money!

 
Rookie

Trident, thank you for your insightful comment.

Oh and I just notice you got funded, Congrats to you, Hats Off, Three Cheers! Hip Hip Hooray!

 
dantheman

I'll give that podcast a listen. Thanks for the recommendation Rookie!

 
Rookie

Dan most certainly welcome.

FYI here is the link to the site that developed their stats, https://www.tradervue.com/
What I have yet to discover from their support is the level of knowledge I need to utilize their system effectively.

 
Rookie

If your like me and not in the top 5% of traders, we might ask, what are we focusing on??

How To Be In The Top 5% Of Traders (When 95% Fail)
https://www.youtube.com/watch?v=MhcWxQ34TAo&feature=em-uploademail

winning focus - Raynor.PNG focus of top 5% - Raynor.PNG
 
Rookie

This podcast is Adam Frifields first and I think aq really good podcast for both new traders and folks that maybe are quite steady on their trader's feet yet. The reason I put this podcast in this thread is what Jerry does for his post-trade homework which he mentions several times.

https://chatwithtraders.com/ep-001-jerry-robinson/
EP 001: Jerry Robinson of @FTMdaily talks in-depth about his journey from newbie to veteran trader

 
kirby

Rookie, thanks for sharing the image in the original post. I saved that to help me evaluate where I am in the graph, and to share with other new traders to help them overcome the valley of despair that results in lost confidence.

 
Rookie

YW Kirby, good luck.

 
mteaney

Rookie, This morning, before I ran across this thread, I was running a test of the last 5 months of trades and applying a martingale technique of doubling lot size after every day of net losing trades (horrible results), an anti-martingale technique of doubling lot size after every net winning day (great results but after a series of four or five winning days in a row, the risk was too great), and finally a modified anti-martingale technique of doubling after a winning day, and continuining with the higher lot size every day until the next losing day, after which the lot size is lowered to the basic size lot where it stays until the very next wining day when the lot size is doubled again and continues at this higher size until the next losing day. This last variant was the best, but still there were days where the risk was much too high. Before trying any other variants, by sheer coinidence, I visited Apiary Forums just to see what topics were being discussed and I came across this thead. Unfortunately, the Apiary Catt links you posted no longer work, but I intend on looking at the other links you posted. I've never really ever looked at any of the Apiary Catt training, but does Jeff pretty much repeat the things he talked about in your 2018 links, so if I look at more recent Catt training maybe he covers the same subject matter?

 
Rookie

Well yes and no, it is recovered yes, PA is PA, but often to fit the questions.
It is unfortunate that the CATT sessions are not labeled by content but mainly Jeff back thru early 2020 would focus on a subject for a week or so. It's just very hard to research one at a time. We have covered so much over the years and I was fortunate to have watched all the early videos as well. had I know what was to come I would have recorded them my self.

 
mteaney

Thanks Rookie. I'll have to start watching Jeff's CATT sessions. They sound very worthwhile.

 
skucchal

Very Nice Thread Ed.

I am new to VERY LONG Term Trading, and never before have I seen how critical risk management is. The really long term trades, while very profitable, are slow and account equity can take a beating during large retracements. I got risked out a few times and discovered that One click trading alone doesn't do the trick. It helps to keep rigid bucket sizes for each type of trade.

Here is what helped me:-
1) Calculate the number of pips for a 0.25% risk and then calculate the risk% I carry for each of my Long term trades (stop-entry=risk pips). I then WRITE that risk in the comments section in Alveo against each Long Term trade.
2) Whenever I take fresh Short Term or Medium Term trades - I do the same for each.
3) This needs to happen DAILY. Only then can the total risk on the account be measured accurately. It is a simple visual check to see how much room remains for fresh trades.

Caution 1: When trading very long term, the risk changes as the price levels move - often they can move 300-600 pips over a long period. This can have an effect on the number of pips involved for the same 0.25% risk. Since the risk for long term trades can change as prices move - recalculate often - Daily.
Caution 2: Account equity must go up daily. I allocate no more than 1% risk to my really long term trades and 2%-3% to shorter term trades. If the risk allocated to Long term trades is too high, we lose out on far too many profitable opportunities. As a rule, we must try and increase the account equity daily.

 
saifxtrader

Cool