Friday, November 10, 2017

High performance vs safety

This particular trading strategy that I`m using here is capable of using whatever risk profile the trader desires. Now, since this is a demo account sometimes I`m pushing it to high risk and disregarding the safety in favor of a high return like I did yesterday. Yesterday it worked but it might not always work and then the drawdown could get quite high. How high? it depends, yesterday for example all of this moth profits were at risk and some more which means that instead of having a winning month I could have had a losing month if things would have went wrong. However, it should be noted that I was up 17% this month before yesterday (now I`m up 30% or somewhere around it I think) and even if yesterday I would have lost 20% the month would still be in play and the end of the month could have been a decent 4-6% return which is actually  a very good return for one month. So the way I`m playing is the more I win the more I push the month. Of course what I really have to avoid is blindly pushing it just because I can, that is a mistake. Pushing in search of higher returns should be made only when certain conditions are met, not every time and not on every trade. Now in regard with what can be considered a high return and a safe return things are quite relative and depends on the man and the strategy. What is more important than a single month return is the long term result, its actually all that matters in the end and because of that it all resumes to live to trade another day. With forex I found a way to satisfy my aversion to losing and in the same time to be able to always survive (of course until I decided the game is completely over what my algos can do to achieve 30-50% per month which is what I needed with small capital- another way stated until I`ve accepted I can not make money there - I can not make 30-50% per month I mean and because I would never risk more than penny money on that market anyway trading on that market was useless from my point of view so I`ve stopped trying to bet). With futures I do not have the same tools available to do it - there is a way but that way would require twice as much capital and two accounts.  So what a man can do? Being patient is the key here, being patient and controlling the risk. As a human I am prone to lose control due to emotions which is why I will try to implement a computerized part that will control or better said will reduce risk. The way I`m trading now is manually triggering the trades based on what the algorithms that analyze the market tell me which works well up until I`m starting to disregard the warnings. Yesterday was such a day, the 15th trading day of this account and after I got a 17% return in the safeties mode possible my human behaviour overwhelm the logic, maybe you are asking why am I complaining well its because I know better, I won but I could have lost and such large fluctuations are a big danger without a safety nest. I can think of many ways to implement a safety nest but the thing is that it should also fit my personality and I can not apply the same computerized safety nest like I had with fx because I do not have exactly the same tools. However like I did on fx I will find a way to implement it and feel comfortable and accept it. I shall try different safety nests and chose the one that provides the best experience. Today I have already coded one and I will know its usefulness at the time I use it and it will start to override my actions, for now I`m still after 50-60% for this month.  Of course if really required I can trade 2 accounts in the same time and unleash the power of covered positions.      

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