Jake Bernstein. Trading Problem Solutions. Monday 23 April 2012 Session 3

Transcription

1 Jake Bernstein Trading Problem Solutions What we will do TODAY and why Real Answers to Real Issues Why Make the 10 Trade Commitment? Monday 23 April 2012 Session by Jake Bernstein jake@trade-futures.com *

2 Hi Jake: I did some research on my account for the last 3 years after the last TPS session. Here s what I found out If I kept my winners as long as I kept my losers and if I kicked out my losers as fast as I exited my winners I d have made money every year! I ve been a total jackass I can t believe how totally bass-ackwards I ve done this

3 A sad but true fact NOT everyone can or should trade FIND your niche WHAT ARE YOU? Trader investor day trader game player forever hopeful

4 Today we will look at some REAL ISSUES Today I will give you real answers that I have discovered on my own Today we will debunk a few popular beliefs and gross misperceptions DAILY AMOUNT (WEEKLY) I need to make When does the trading day end for you? How to develop not caring and what that really means Laying the right groundwork for your trades

5 Why make the 10 trade commitment? To see if you have what it takes Clarifying what I mean Don t make the challenge unattainable EXAMPLES You will learn a lot more than you expected SET SPECIFIC RULES! EXAMPLES What can you learn? IT CAN CHANGE YOUR TRADING LIFE

6 The paradox revisited The Paradoxical Simplicity What Makes this so Hard to Do? 1) Too much information 2) Lack of focus 3) Your most recent win or loss 4) Your account size and risk 5) Position size 6) News

7 Err on the side of simplicity It s easier to follow clear rules than to analyze and micro-manage It s also less time consuming It s also clear and it works It creates less anxiety and therefore fewer errors of emotion It makes outcomes more clear and enhances learning

8 Reviewing the relationship model When you decide to trade you have started a relationship with the market That means you have responsibility and you must get SATISFACTION That also means you have to WORK on the relationship You have to understand the language of your relationship what does that mean? You have to keep your commitments or the relationship will fail

9 Relationship with the market If you develop your relationship based on commitments and rules with the markets then it will reward you If you are inconsistent with the relationship then it will grow to be a bad child or mate meaning you will LOSE Ask yourself what would you change?

10 Reality is the BEST cure for all trading issues What do I mean? The SATISFACTION vs RESPONSIBILITY Model What does that mean?

11 2 variables Satisfaction: profits, well being, pleasure, happiness, sense of accomplishment, progress, growth, learning, improving, bragging rights etc Responsibility: financial commitment, resources, time, hardware, software, homework, emotional stress

12 The possibilities and outcomes what works what doesn t High responsibility and high satisfaction * Low responsibility and low satisfaction * High responsibility and low satisfaction ****** Low responsibility and high satisfaction (luck)

13 Assignment What are your BEST assets as a trader? What do you do well? Examples - I can take my losses well - I am very organized - I have good gut feel for the markets - I know how to ride my winners - I m good at order entry and I don t make mistakes - I know how to spot fake earnings reports - I do good fundamental research - I can execute a clear plan effectively and flawlessly

14 What are your WORST qualities as a trader? What do you do poorly? Examples - I hold on to losers too long - I can t hold on to a winning trade - I let the news influence me - I am totally unable to carry any trade through from start to end by the rules - I am very impressionable - I am grossly disorganized - I m the worst trader in the world - I change my stops when prices get close - I don t look at my trades when I am wrong

15 Types of trading problems Before we can find solutions we need to CLEARLY identify problems To identify problems we need to categorize them Here are my categories and their beakdowns 1) Problems of omission 2) Problems of commission 3) Problems of ignorance We will address all 3

16 WE cannot treat all issues immediately it takes time We will look at the easy ones first Easiest to solve are organizational Let s look at a few today

17 I spend more time than I need to reading the news and watching the price action for the stocks I own and for those I m considering buying. Typically I look over my positions every morning for half an hour, then I check the prices 3-4 times during the day, perhaps reading the news if I find one that is moving, then I ll spend another hour or two in the evening looking over my positions and looking over the market to find new positions. All in all I think I m spending twice as much time as I need to putting more wear on my life than necessary. Even though I am getting returns for the effort I m not satisfied with my results

18 I believe that traders are going out gunning for my orders. As soon as I get filled prices go the other way. I do really believe they are out to get me do I have a psychiatric problem?

19 For a long synthetic I buy a call and selling a put both at the money and for a short synthetic I sell a call and buy a put both at the money. For synthetic positions I normally buy and sell contracts that are 6 months out. When I trade these contracts I size the position and the risk based on the underlying stock. I also trade these positions as though they were the stock, therefore these trades are handled by the same tools I use for regular stock trades.

20 GTAT is the oldest position in my account. I hold it because I m hopeful that the prospects are bright for this supplier of the manufacturing equipment used to make solar cells and LED lamps. I entered this position a year ago on 4/27/11 based on a momentum divergence trigger. Initially, I followed through selling 1/3 of the position on 5/18/11, however when the stock reached the next target I was traveling and failed to make another sell. When I returned, the stock had risen very nicely so instead of executing the missed sell and setting the stop to break even I just let it run only to see the price collapse on 7/7/11. With some profit already in hand and what appeared like a great future I decided to ride out the fall which persisted well below my entry point. Ever since I keep finding reasons to stay in this position, the latest is that it has just formed a new trigger setup in both MOM divergence and MACD divergence. The MOM indication would be a triggered, however my system has not confirmed the trigger since it waits 5 bars from the low before it will accept a new divergence trigger. I know I should sell this thing and move on, however I just too hopeful for this company.

21 Though I ve executed 103 round turns since I started in September last year this account is around break even. The most major issue with profit in this account has been execution errors. These are a result of trading errors generated by the programs I m using and then compounded by me attempting to manually fix them. I believe that if I can get to a point where I don t draw down the account as a result of errors the trading will be profitable.

22 Every time I take a loss I feel like im a big loser even if the loss is small. To avoid taking losses I keep my trades and hope they turn around. I ve been trading for 11 years and NEVER made money. Is there hope? Do I neex a trading exorcist?

23 Jake using your seasonals I m losing money..help! JB How are you trading the seasonals? I run my seasonals using your criteria. Then when it looks like a seasonal will trigger I go to the intraday chart to see if it might trigger early then I enter and I go for the first target of half the average profit per trade and its not working!

24 Jake I am using options for my MAC channel trades and though the trades are working I m making very little money. Any ideas? Jake I get wiped out every time I open an account 5 times in the last five years in futures JB: what is your avg account size: $5k

25 I keep trying to get into my seasonal trades at better prices and I end up missing many of them what to do? Jake I am now trading for 11 months. I still break even after 173 trades. 69% win still break even. JB: send me all your trades how many were CLERICAL ERRORS? How much of the loss was due to that?

26 A few cures for omission 1) Problems of omission: forgetting to place an order, not doing your homework, skipping a step in your sequence 2) One mistake often leads to others 3) Example: enter a spread to avoid a loss 4) Example: miss a trade and enter late you increase risk 5) Example: you forget to enter a stop and the trade is now much larger in $ against you mistake: you wait and hope and agonize 6) Example: you miss a trade and enter a related trade that has not moved yet: problem

27 7) You didn t get a trigger but entered anyway: what to do? 8) You didn t do your homework. What to do now? Solutions 9) You lost money on the last trade in this market so you don t want to take this one. Cure? 10) You got in with a given method but now you can t remember why you got in and with what method. Cure?

28 Simple diagnostic procedures Are you making money? How much time do you spend on trading daily? Do you watch prices all day and is it working? If you ARE making money what is your hourly salary? Could you make as much working at a fast food place? Are you paying for your cost of doing business? If you ARE making money is it worthwhile? Is your system working but not you? Are you using a system? Are the rules 100% clear and objective Proprietary vs system trading

29 Fear vs greed are not the primary issues These are not the two greatest enemies of success HOPE CARING

30 2 types of losses The smart loss The stupid loss How to know MOST LOSSES are STUPID LOSSES

31 Send me your problems We will discuss them Send them to me Be anonymous if you like We will explore solutions

32 Mentoring appointment interview I can be reached at or me if you have questions: jake@trade-futures.com Best of trading Jake Bernstein 2012 by Jake Bernstein *