Emini Trading July 27, 2009
Before I discuss my emini trades today – i’d like to go over a couple things:
1) Drawdowns
2) Recovering
Apparantly some traders do not accept the fact that drawdowns are a big part of trading. Losing trades is a big part of trading. Nobody wins every trade. Nobody! Some folks feel my trading system is not that good as from time to time it experiences drawdowns.
I gotta be honest. I really do not like drawdowns either. However – its a fact of life. The important thing to focus on is RECOVERING from drawdowns. We know drawdowns are going to happen…
Look at October 2008. Virtually everyone who opened long term trading funds (mutual funds, etc) – pretty much lost ALL their gains over a 12 year period. Well that my friends is a DRAWDOWN. When will they recover? I really do not know.
Why am I brining this up? Because today I had a DRAWDOWN day!! More importantly, following the rules of my day trading system, I recovered – and still made money!
Last week I was done in 20 minutes pretty much everyday – today I had to trade about 4 hours. BOO HOO…. it happens guys. Drawdowns exist – losing trades will always be there.
From time to time – people will post in other forums that my system doesnt work – because it has drawdowns. Well show me a system that doesnt. On top of that – show me a system that recovers like mine does…
here’s my trade list today
– 8 ticks / + 4 ticks /- 6 ticks / – 6 ticks / – 6 ticks / + 3 ticks /-4 ticks / + 11 ticks / + 5 ticks / + 5 ticks / + 8 ticks / + 3 ticks (just pulled a quick pullback trade to cover commish during the writing of this blog).
So today was a lot of trades – about 12 — but I am still profitable.
So I ask you this.. If you accept that drawdowns WILL happen – but you’re trading account $$ go up EVERYDAY — what’s the problem??
Admittedly my Risk/Reward isn’t always the best – however we seldom lose our worse case stop loss. For example – on a NSE – I have a 4 tick target with an 8 tick stop loss — so someone may think the R/R is horrible. However – what they fail to realize is A) When we do stop out we SELDOM lose 8 ticks – normally its 4 – 6 ticks B) Once we reach a certain point – we drag our stop loss to entry — so the risk reward isnt that bad. Couple that with a strategy that wins over 75% of the time – and you have yourself a winner!
Does my system lose sometimes, yes it does. But the ASTUTE trader, the DISCIPLINED trader who follows the rules – recovers and still makes a profit!!
Good Trading
ETS
