Is it overtrading or can it be my "style"?

[Teruki 21]

Hi there,
I am aiming to go live in mid October after 6 months of SIM training. I feel I'm ready but some of the things I do on SIM don't necessarily agree with the advice that is often given by the moderators or members here. However, I am green most days recently and I am not sure if it is just because it is on SIM and maybe my trading style would not work in live. Anyway, I would like you to tell me what you think after you read what I do bellow.

(1) I don't really have my "edge." I trade many strategies. I started out by focusing on ORB and the ABCD pattern but after watching many seminar/recap videos and seeing what moderators do, I wanted to try out everything. As a beginner I sucked at everything at first but gradually I started to get better. However nothing stood out as "my edge."

(2) Because I tried out many strategies, I tended to trade many, often more than 50/day. I did not care much about my goal or max loss and I lost a lot every day. I kept at it and gradually I started to have green days. After a few months in, I started to use Kyle's hot keys and settled on $40 as my R.  Around July, I started to have more green days than red days and in August, I started to hit at least 2R almost every day and often more than $200 (5R). But what I did had not changed. I traded many strategies whenever I saw a pattern and I traded a lot in a day.

(3) In mid September, I started to use Chartlog to see more accurate data of my performance. According to it,  my win rate is about 65%,  Average win is $30(0.75R), Average loss is slightly below $40 ( 1R) and average P/L per position is about $4.5.  My average trades/positions per day is 50. Although my average win profit is low (less than 1R), since I trade a lot per day, I end up winning several Rs (around $200). 

(4) One thing I have to be careful is commissions. If I trade low price stocks like NIO, CCL and such then my commissions are huge (DAS's estimates). I learned to trade high price stocks more and if I stick to them (e.g. TSLA AAPL etc.) they are not so bad.   

It seems like I became a "scalper" unintentionally and I may be covering lack of quality in my trade by quantity. It looks like I am "over-trading" but my question is why not? It seems like my win rate is consistently between 60-70% every day. My average profit per position is small but the more I trade, the more I make. Of course I have a losing streak but I have a winning streak too, and statistically they all average out and at the end of the day it settles around 60-70% winning rate. So when I start a day with 3-4 losers, I tend to think "keep on trading and at some point it will be green" and often it does. My Max loss is -$200, but I rarely hit it.

So I am doing OK now and thinking I'm ready for live trade but what I am doing is quite the opposite of what I often hear on BBT. Don't over-trade. The less trades you have, the better etc. Also, I don't have an "edge." Whatever strategy I use, they end up in a similar win rate. I am sure there is a lot of room to improve and after practicing more I may have better win rate and better P/L per trade and I might not have to trade this many. But at this point it seems like it is working. So I'm thinking, if it is working, why not?

What do you think? Do you think it is working because it is not live?
Do you think I should work on having less trades or can it be my "trading style"?
I would like your opinions.

Thank you.

Edited September 29, 2020 by Teruki

[Abiel 475]

50 trades per day could easily fall in the overtrade department.

Do you have a rule about your max trades / day? 

That +/- $200 P&L include commissions?

Remember, you only need one good trade to end your day in the green. 

[Teruki 21]

1 hour ago, Abiel said:

50 trades per day could easily fall in the overtrade department.

Do you have a rule about your max trades / day? 

That +/- $200 P&L include commissions?

Remember, you only need one good trade to end your day in the green. 

Hi Abiel,
Commissions vary depending on the price range of the stocks I trade. If I avoid low price stocks it is usually around 1R. But sometimes it is crazy like $280 green but $80 commissions and end up with $200 or something like that (especially if I trade NIO, CCL etc.). My max loss is not really strict because I keep trading to practice but it would be -$200 including commissions when I start (I will start with $20,000 and planning to risk 1% per day. Not the very beginning though because I am planing to start small). But over the last month I only had a few days that I had more than -4R (about -$200 with commission).  I don't have the rule for max trades - I usually keep trading until around 2pm (until Thor's time is over) or stop when I feel I can't concentrate anymore.   

I understand you only need one good trade to have a green day. It is what everyone is saying and it is exactly why I am asking this question. To me, it seems like trading is statistics. The more trades you take, the more reliable your statistics become. I see that my winning rate is consistently between 60%-70% and my P&L per position is $4-5. So, as I mentioned if I take many trades, I will be green at some point, statistically speaking. Yes sometimes I have a bad day and I have a losing streak and hit the max loss.  But even if I start a day close to the max loss, after I take 30-50 trades I usually end up green (after the commissions).

So, I am wondering, why not? Yes it would be ideal if I can have one good trade and done with it. But at this point it does not happen to me often. Meanwhile, as long as I keep this winning rate (and average P&L per position), it seems like the more I trade, the more I make (Of course I'm still trying to be more accurate etc.)... 

Edited September 30, 2020 by Teruki

[Mike B 625]

5 hours ago, Teruki said:

(1) I don't really have my "edge."

Hey Teruki,

I would offer this for your consideration. If you are looking to trade to make money, without a "Trading Edge" your probability of making money is significantly lower than if you have a "Trading Edge." Additionally, once live you will add in emotions and without full confidence in your trading strategy it can be difficult to distinguish between a bad trading strategy and trading psychology issues you may have.

My recommendation, until you can say without a doubt that you have a "Trading Edge", your time is better spent in sim developing your "Trading Edge" without any emotions attached. 

Feel free to email me if any questions. 

[email protected]

 

[Teruki 21]

16 minutes ago, Mike B said:

Hey Teruki,

I would offer this for your consideration. If you are looking to trade to make money, without a "Trading Edge" your probability of making money is significantly lower than if you have a "Trading Edge." Additionally, once live you will add in emotions and without full confidence in your trading strategy it can be difficult to distinguish between a bad trading strategy and trading psychology issues you may have.

My recommendation, until you can say without a doubt that you have a "Trading Edge", your time is better spent in sim developing your "Trading Edge" without any emotions attached. 

Feel free to email me if any questions. 

[email protected]

 

Thank you very much Mike.
You are right and I really don't know how my emotions will play out when I go live. My plan now is to go live and see how things will go, how different I feel etc. and I will go back to SIM as soon as I realize I am not ready. Thor always talks about how easy it was on SIM for him and it became like a video game and then he blew up $1,000 the first day he went live. I am trying to be careful (therefore asking questions) because of stories like his but at the same time I believe there are things I would not learn unless I actually go out on the real roads to drive so I think I will start small after my current 3 month's SIM deal expires and see what live trading is like. I am willing to go back on SIM right away if it is too much.

By the way, thank you for offering support through email. This kind of support is really great and it is one of the many things that separates BBT from other communities. I might or might not take you up on the offer but I really want to say thank you for that at this point.   

Thank you again.

[JaradBBT 102]

15 hours ago, Teruki said:

 It seems like I became a "scalper" unintentionally and I may be covering lack of quality in my trade by quantity. It looks like I am "over-trading" but my question is why not? It seems like my win rate is consistently between 60-70% every day. My average profit per position is small but the more I trade, the more I make. Of course I have a losing streak but I have a winning streak too, and statistically they all average out and at the end of the day it settles around 60-70% winning rate. So when I start a day with 3-4 losers, I tend to think "keep on trading and at some point it will be green" and often it does. My Max loss is -$200, but I rarely hit it.

So I am doing OK now and thinking I'm ready for live trade but what I am doing is quite the opposite of what I often hear on BBT. Don't over-trade. The less trades you have, the better etc. Also, I don't have an "edge." Whatever strategy I use, they end up in a similar win rate. I am sure there is a lot of room to improve and after practicing more I may have better win rate and better P/L per trade and I might not have to trade this many. But at this point it seems like it is working. So I'm thinking, if it is working, why not?
 

One step in my journey as a trader was finding out more about my style. I realized that I was a relatively impatient trader; i.e. I want the trade to work almost immediately or else I'll review the setup and potentially try again in a better position with more information. Hence, I classify myself as more of a scalper, looking for areas of momentum that typically arrive due to a short squeeze from an aggressive buy support.

Part of the challenge is that I may need to 'test the waters' a few times before finding the right spot for the trade. I know very often that I'm in the right area, but the r:R has to make sense and should resolve itself quickly in order for my edge to be realized. So for me, taking stabs and building a position once it's confirmed to be working is a more ideal strategy for me.

You mention the balance between overtrading and commissions along with not having a true edge; one bit of information to try and define is which strategy that you trade is leaving the most money on the table. Assuming you're looking at lots of stocks and trading lots of patterns/setups, along with the scalper-esque Average Win Value, it may be ideal to find the setup that has a high occurrence rate (so you find trades each day), a high success rate for yourself (so you can achieve goals consistently), and has a good risk/reward based on your criteria for entry (so it reduces # of trades before hitting goal). If you can identify this, challenge yourself to hold for a larger target and bring the Average Win Value amount up for that setup alone. Rinse and repeat for two-three setups and now you have a trading edge along with reducing the clutter that is 'working' but is reducing your mental capacity for the A+ setups you've refined.

Once you begin trading live, the process of refinement and improvement should be constant, where your old setups become better and you build setups for different market conditions.

[Teruki 21]

4 hours ago, JaradBBT said:

One step in my journey as a trader was finding out more about my style. I realized that I was a relatively impatient trader; i.e. I want the trade to work almost immediately or else I'll review the setup and potentially try again in a better position with more information. Hence, I classify myself as more of a scalper, looking for areas of momentum that typically arrive due to a short squeeze from an aggressive buy support.

Part of the challenge is that I may need to 'test the waters' a few times before finding the right spot for the trade. I know very often that I'm in the right area, but the r:R has to make sense and should resolve itself quickly in order for my edge to be realized. So for me, taking stabs and building a position once it's confirmed to be working is a more ideal strategy for me.

You mention the balance between overtrading and commissions along with not having a true edge; one bit of information to try and define is which strategy that you trade is leaving the most money on the table. Assuming you're looking at lots of stocks and trading lots of patterns/setups, along with the scalper-esque Average Win Value, it may be ideal to find the setup that has a high occurrence rate (so you find trades each day), a high success rate for yourself (so you can achieve goals consistently), and has a good risk/reward based on your criteria for entry (so it reduces # of trades before hitting goal). If you can identify this, challenge yourself to hold for a larger target and bring the Average Win Value amount up for that setup alone. Rinse and repeat for two-three setups and now you have a trading edge along with reducing the clutter that is 'working' but is reducing your mental capacity for the A+ setups you've refined.

Once you begin trading live, the process of refinement and improvement should be constant, where your old setups become better and you build setups for different market conditions.

Thank you for your reply and advice Jarad (Wow, I feel really pampered getting advice from 3 different moderators!). I really appreciate your taking some time and effort to write this.

You are right about your assumption and I watch many (7) stocks every day and trading a lot of patterns and set ups. As I mentioned earlier, I did not mean to be a scalper and trade a lot of different set-ups. My intention was trying out a lot of things and find what I am good at but nothing stuck out as "the one." It became more like an habit to try out many set-ups even if they are a bit iffy (B,C set ups)  than waiting and finding the ideal A+ set-up and only trade them because somehow I end up in green often anyway. 

You are a much, much better trader and I don't mean to compare myself to you, but what you mentioned about yourself really resonates with me. I tend to be impatient, and I tend to want the trade to work immediately too. I read your advice carefully and it really makes sense and it is a clear guideline.I will try the next 2-3 weeks before I go live. Thank you very much.  

By the way, I really had a good day today and I had only(!) 13 trades, 8 winners and 5 losers and finished by 10:00am (30 minutes) with $276 green ($264 after the commissions/6.5R). I usually keep going but I stopped today, haha.
 

[JaradBBT 102]

3 hours ago, Teruki said:

Thank you for your reply and advice Jarad (Wow, I feel really pampered getting advice from 3 different moderators!). I really appreciate your taking some time and effort to write this.

You are right about your assumption and I watch many (7) stocks every day and trading a lot of patterns and set ups. As I mentioned earlier, I did not mean to be a scalper and trade a lot of different set-ups. My intention was trying out a lot of things and find what I am good at but nothing stuck out as "the one." It became more like an habit to try out many set-ups even if they are a bit iffy (B,C set ups)  than waiting and finding the ideal A+ set-up and only trade them because somehow I end up in green often anyway. 

You are a much, much better trader and I don't mean to compare myself to you, but what you mentioned about yourself really resonates with me. I tend to be impatient, and I tend to want the trade to work immediately too. I read your advice carefully and it really makes sense and it is a clear guideline.I will try the next 2-3 weeks before I go live. Thank you very much.  

By the way, I really had a good day today and I had only(!) 13 trades, 8 winners and 5 losers and finished by 10:00am (30 minutes) with $276 green ($264 after the commissions/6.5R). I usually keep going but I stopped today, haha.
 

Don't kid yourself, we all have a unique journey in trading that will lead us to our end goal as traders. You have demonstrated just in this discussion a willingness to try many things (flexibility), track metrics (hard work and dedication), and reach out for assistance (don't trade alone).

Remember that nothing will ever be fully refined; everything we do can be improved gradually over time once we know it needs changes and how to implement. I mentioned my impatience; it can be viewed as both a positive for lackluster setups and a negative for missing out before the move occurs. However, I am working on ways to improve the setups that don't work immediately (scaling out of position for a smaller loss, exit and re-evaluate vs losing focus, etc) and improving the ones that do (better partialing, add and reducing, etc). I recommend once you nail the 'Trading Edge' and psychological aspects, to begin the fine tuning and really start to see noticeable changes in #s of trades and quality of trades.

Edited September 30, 2020 by JaradBBT

[Teruki 21]

Thank you again Jarad. I really appreciate it.
I will keep trying and hopefully I will find my edge soon.

When I started SIM trading in April, everything looked chaotic and I had no idea how anyone could even look at more than one chart at the same time. Thinking of that, I realize I came a long way asking this question. But I know I have a much longer way to go. I intend to keep trying and staying in the community for a long time (no blowing up the account!).

Now I am looking at my trading history again at Chartlog and trying to find out what strategy/strategies have made me more Rs (vs win rate) etc. It's a bit tricky because of the overlap ( e.g. ABCD within other strategies) but hopefully I will find what I do best at this point.   

Thank you for your help and support. Really appreciate it.

[Brad 18]

One stat to pay attention to, and I'm sure Chartlog must have it is profit factor. If you're trading a lot and your profit factor is over 1.0, but not by much then that might be quite hard to sustain. If you pare down your repertoire of setups and focus on a couple, you could save a bundle on commissions and according to the experiences of many including mine, you could have even better results.

I went back and forth between sim and live a few times and when I returned to sim after live experience I was much more aware of my risk as it pertained to reality and not just the emotionless numbers on a screen.

[paul ang 9]

50 is definitely overtrading for me. I think for the community as well.

From my statistics, I realised the less I traded the more I earned. So I'm definitely in the one trade camp. 

One, shot, one kill, pack up and enjoy my night.