Hi Fast Track Trading Journal,
Needed to rest and get some sleep. This is the final post on this Trade Journal thread.
So, do you feel clever? No.
Do you feel happy? Yes
Have you learnt anything? Most definitely.
LESSONS LEARNED
1 Not able to participate when other tasks were a higher priority. Recorded errors (inability to enter bets (trades) numbered 14 events between 4Nov20 and 13Nov20. Though the net effect of all these “no trades” was about -1%, so did not impact the overall results, the stress levels were not comfortable. I was not “In the Zone”.
2 Reaching a balance of £666 which coincided with a 66.6% reduction in capital was a bit spooky. That angel parrot on my left shoulder said “time to get the hell out of Dodge”, so I did not wait around to see what that other parrot on my right shoulder - the devil parrot - was going to say. I took a decision to cut my losses when analysis showed me so clearly that I was on a hiding to nothing.
3 Backtesting has its limitations. You need to be sure that the market direction has not changed enough to render your backtesting unrepresentative of real time results. With all the choice in the world of markets, try to find one that has an obvious long term trend and go with that trend, not against it. My gut feeling is that I will be concentrating on year, month, week time intervals for long trend, short trend and entry triggers in future, not on weekly, daily, 4 hourly.
4 Whilst I thought my psychology is adjusted to trading the daily timeframe with a 4 hour trigger for entry, my inability to find time and missing 14 trades in nine days clearly demonstrated I could not cope with the entry frequency required of this pilot, and though the numerical impact of missing 14 opportunities in nine days was insignificant, it demonstrated that I am incapable of coping with such a frequent decision regime considering all the other commitments I have alongside Trading.
5 A feeling of discomfort with the binary outcome - win at set target (averaging 13R) or lose all at stop loss (the stake, at the end of the race event).
POSITIVE OUTCOMES
I was able to create a detailed trading log that included all the Management Information required to analyse the outputs and to be able to positively determine what was required (% wins) to demonstrate an edge, and that the actual results were not consistent with the back tested results. I had proposed some real reasons why the market had changed, the main one being the impact of COVID and non-attendance at race meetings which I am convinced materially impacted the model used to choose selections whose odds were substantially higher than their recent form had shown by model analysis. I have no way to prove that hypothesis.
I feel that trading ALONE is not for me in future. I am also unsure about the use of leverage in general.
CHANGES TO OUTLOOK - STARTING OVER AFTER AN UNSUCCESSFUL TRIAL
This trial has served as an example that just because you have a trading idea (strategy), write a detailed plan and back test historical results, it does not mean that the future results will follow historical results. I know the historical results are not cooked up. They have been published (by the author, and by a third party). It is those published results that I parsed from http to Excel in order to perform the back test analysis. I also do not think there is anything flawed in the Monte Carlo analysis spreadsheet either.
HOW I HAVE USED OUTPUTS FROM THIS TRIAL TO INFORM MY FUTURE INVESTMENT AND TRADING PLANS
The next step is to continue to refine my Crypto INVESTMENT plan, using 80% of the funds we have allocated to this opportunity. After six months the total commitment has been 2% of total net worth. The next 18 months will see that increase to up to 5% of total net worth by rebalancing an overbalance of gold to shift capital to Crypto. Meantime, the first six months actual outcome is way over plan - nearly four times plan, so we need to temper an outstanding start with a dose of reality - it ain’t going to be like that forever.
Of the total allocation of up to 5% of net worth allocated to Crypto INVESTMENT, up to 20% of that total will be allocated to TRADING Crypto. It is not intended to use any leverage in trading Crypto. Recently I have been placing limit orders to buy at ATR(14) daily less than current price, and adjusting those limit orders on a daily basis. Too few entries to tell at this stage, but the trading strategy is to sell same underlying at: 10% profit within 30 days, 20% profit within 60 days and 30% profit within 90 days. Doing this with 20% of 5% of wealth is considered “using money we can afford to lose”, so instead of doing this as a demo test, my decision is to do this real time. In particular, and about Crypto, I follow the belief that we are in unprecedented times and that the entire market is more likely to experience a parabolic curve during 2021 than any other market. For that, I redirect my efforts in this trading space to 100% crypto.
New timeframe of investment decisions - 6 months to 3 years
New timeframe for trading decisions - 1 month to 3 months
Frequency of entry/exit decisions - from daily to weekly, reassess “take profit” goals as a function of holding duration.
I hope that members have found this end to end review of the trading journal useful for their own planning purposes.
If you are right I´m almost scared of the consequences, such a big movement of capital, because oil halves or cryptos goes illegal globally 