Friday, February 26, 2016

End Of Crude Combine- Break-even, Complexity & Showing Vs Being.

I've taken away a HUGE amount of information from my experience in this 3-month-long Combine. I will attempt to reduce the information in this post down to its core principles/points... that way it will be easier for me to cull information from it as needed when the inevitable need for new direction arises.

Here is a screenshot of the TST report:

I have more faith than ever in the method as holding break-even for 3 months/1 financial quarter is not to be sniffed at. Novice traders will look at how much you didn't make, experienced traders will look at how much you didn't lose...

Result up until 19th Feb....3-months to the day.

Random- truly random- entries with a fixed stop/target would result in a loss of costs per trade turned (spread + commissions...slippage negates itself as there is +ve as well as -ve slippage throughout). Therefore: 129 trades with a spread of $10 and a commission of $3.68= -$1764.72. Put another way, you have to have an edge of 1.368 cents per trade to cover costs. Anything above that goes in your pocket.

Simplicity= The initial $800 run-up- key stats:

- 20 trades over 12 traded days out of a possible 19 trading days.
- 50% WR (10 trades. All +10 cents or greater), 30% LR (6 trades. -6 cents), 20% BE (4 trades). 
-No trailing.
-1 pattern, 1 time frame, lots of patience.

Complexity= The second, $770 rally after fall due to "Showing" (more on that later):

-11 trades over 5 traded days out of a possible 5 trading days.
-45% WR (5 trades. 4 >/= +15 cents...1= +11 cents) 19% LR (2 trades. -6 cents), 36% BE (4 trades).
-Some trailing.
-1 pattern, 2 time frames, less patience (but more giving back).

Objectively speaking, the complex approach yields more. $144 per trading day over $42 per trading day using the simple approach. But there are so many moving parts that it becomes even more dangerous to implement should emotion creep in to the process.

The lure was the higher profitability. But you really don't need to do better than $750/800 per contract per calendar month to make big things happen. Leaving $1K as a draw-down per contract, you'd be able to double your contract load every 1.25 months. Meaning a hypothetical 8 contracts after 5 months of compounding and a nice $6-6.4K/month.


Green arrows show aforementioned run-ups in equity.
Ownership leads to showing. I had already figured this out back in mid 2012 when I managed this after a prolonged period of not talking specifically about trading results only to end up here

In the year that I took off from blogging between mid '13 and mid '14, I managed to put in Combine-passing performances (for the current rules) twice... back then, they were a lot more strict in terms of rules and didn't have the Continuous Combine, hence the reason why I didn't make it back then. 

The above evidence is clear. Sharing my results is bad for my trading health.

Moving Forwards:

1) No more Combines on my own for the foreseeable future. Instead, I'll work on doing one with my partner as we have shown consistently good results together.

2) No more 5 min chart. One target based off of the pattern and it's location within the backdrop as viewed on the one time frame (15 sec). Simplicity with patience.

I'll also be cultivating that distance from telling the story and, so, will make the following changes:

3) Stop writing a trading journal and capturing charts- It hasn't offered me any new information in a long-time and isn't where the issue lies.

4) Use what's working to help the trading plan evolve without having anything written in stone.

5) No more blogging- it just isn't serving me right now.