How to measure success? - The performance parameters

[tnsn2345]

.....

......


if I have to judge my trading ..
a trade where I have followed my plan...A
a trade where I have not followed my plan..E
(again this idea originated frm one of ur posts in another thread)

I do not find a place fr B,C,D in my analysis..
.....

Dear Anurag,

This indeed is are the initial steps, but you would appreciate that as we grow futher, we try attaining perfection, a kind of self satisfaction derving from what we are doing. It is then not just the case of winning and losing. It is about trying to know the future. An environment or a state of mind which tells us that we on the top of the situation (any situation for that matter) and we in in total control of what we are doing. I don't know what to call this state of mind, but some how we feel the need to be a differntiator or a creator of new things, providing our mind a state to innovate, produce things which have never been on before. And IMO these things can keep us going and not meeting burnout.

Ok....CUT...enough of this story now...

....personaly, I get confused with too many parameters.
over the years I have learnt to keep my trading and analysis 'simple'.

Yes, I agree, undoubtedly we need to keep things simple.

What are the performance parameters? They help us to know what we are and where we stand. Once we know it, we make efforts to adapt to the interpretations. We are now done with it. Now the efforts are to adapt and change or make tools which will help us do that. We then do not need these params constantly. Yes, we will run a sample data over these params at some intervals to ensure that we are not getting astray.


Once out of schools / college we do not refer the maths books or english grammer, it becomes our nature as we have undergone a good number of years learning, registering and retaining the knowledge. It becomes our NATURE.
Since we are not trained in trading in schools / colleges or at our early learning years, we try and learn through experience, but to CORRECT ourselves and IMPROVE our ability and skill we use some performace params (whatever they might be) and then try to make is our NATURE. Once it does become, we will not need these this ever. So today when I take a trade, I have mental T1, P1, review periods, etc..etc...I may not need to document these things if I master over my shortcomings - which are MADE KNOWN to me by these params earlier.

Another challenge is to record the observations but one could still do it himself or though outsourcing and just analyse the output. (but this topic is out of context here)

Regards,

 

[tnsn2345]

ok..coming to the param of 'Performance of DM', I would illustrate it with and example.

At time 11:00 am the price of UL is 100, I make a DECISION the the UL will become 110 (range 109 to 111)at 12:00, this I am doing on the basis of my method and reading a chart of 1H TF (e.g. 1 hour candlestick chart)

So here,

T0 = 11:00
P0 = 100

T1 = 12:00
P1 = 109 to 111

Now I may enter at 11:00 or alternatively, refer a 10 mins or 5 mins TF chart to refine my entry. So let us say I then enter at 11:10 at price 101 (or could be 99 too). I have my review period of 15 mins, so my review times will be 11:15, 11:30, 11:45 and finally at 12:00 (if I remain in till then).

So assuming, I am ok holding the trade at the first review time of 11:15 (trade which was entered at 11:10. And then at the next review time of 11:30, I decide to exit (for whatever reasons, as Linkon mentioned that my view as of 11:00 till 12:00 does not hold good now at 11:30). Assume I exit at 96 (our could be 105).

So the trade is :

Time In : 11:10 at 101
Time Out : 11:30 at 96

BUT....
I am yet to evaluate my performance of DM, hence I will HAVE to check the price of UL at 12:00 which is the original T1. Assume the price at 12:00 is 109.

So for the performace of DM, I will score a A (actual price at 12:00 is 112 which is greater than my P1 which was 109 to 111)

So even in the trade I have made a loss (we will see performance of Trade later) but on the performanc of DM I have scored A.

You will also get interesting analysis when you combine the two performance parameters, viz Performance of Trade and Performance of DM.....

You can now see that change in mind (emotions, anxiety, fear, greed etc) after taking a trade after 11:10 and our mind at 11:00.

...

Regards,

 

[tnsn2345]

Tnsn, whenever I read your posts on this forum, I find it illuminating and realize that like Eco's unlibrary, what I know is far far less than what I don't know about markets and trading.

Dear TT,

I for sure know that there are indefinite things in this world to explore, but I have come to a realisation that most of the these will be not relevant to me. Why, because most will not fit me as an individual. Hence though I may get overwhelmed by knowing their existence, but I will not (or I am uncapable of) be using it.

Best thing is to know and see what is affecting ME (immediate ME only), the mind starts giving signals, ideas and solutions to fulfil our needs. Yes, reading books and sharing thoughts with intellects helps but the ingredients are self created through self analysis only.

Regards,

p.s. little digression and unrelated to the subject

 

[anuragmunjal]

Dear Anurag,

This indeed is are the initial steps, but you would appreciate that as we grow futher, we try attaining perfection, a kind of self satisfaction derving from what we are doing. It is then not just the case of winning and losing. It is about trying to know the future. An environment or a state of mind which tells us that we on the top of the situation (any situation for that matter) and we in in total control of what we are doing. I don't know what to call this state of mind, but some how we feel the need to be a differntiator or a creator of new things, providing our mind a state to innovate, produce things which have never been on before. And IMO these things can keep us going and not meeting burnout.

Ok....CUT...enough of this story now...

Tnsn, I see ur point of view. u are forecasting the future price of an asset within a particular time frame using ur experience, and then judging urself on various parameters in an attempt to 'better' urself and move towards 'perfection' or 'near perfection'.
trading this way wd require a very high level of accuracy, but wd make life much simpler and the journey frm '100-200' wd be enjoyable and stress-free.
I, on the other hand, am not a good forecaster but I trade a system which has positive expectancy. I know that after a certain number of tosses (trades) my system would give me a decent return, though the same journey frm '100-200' wd be much more volatile.therefore, to me 'attaining perfection' wd b to have proper checks & balances in order to stick to my system throughout, as outcome of individual trades is inconsequential
to me.
two different ways to approach trading, though I admit that ur journey wd be less volatile and more relaxed with lesser chances of a burnout.

regards

 

[ashwani chadha]

I am trading a system where I am trading all the calls generated by the system. One day it generated seven calls and I took them all ending the day with minor loss. Today after three calls which went into a loss decided that from today, I will stop trading for the day after three consecutive losses. Fourth and Fifth calls went into a loss and I was patting myself on my back for my decision. Sixth call gets generated and goes on to give 130pts profit under the system. Arrrrrrrrrrgh. Could have ended the day with good profits in the pocket.
In trading we need consistency to win. We have to be consistent in what we do. Today, if I stopped after three calls, then everyday I must stop after three calls, I cannot pick and choose the number of calls that I will trade on each day.
(((((The way to make money is to find a method to trade profitably and blindly do it again and again and again and again and again and again and again! )))))
We need to practice the winning method until we get what we want!

you are absolutely perfect !!!!

 

[ashwani chadha]

Linkon, here your system is a combo of mechanical and discretionary systems. Entry is almost always mechanical as per the system but exits are either completely discretionary or part discretionary and part mechanical. This is wonderful if your 'reading' of the market is correct. This is also wonderful when the target is defined.

(((((Suppose only the SL is defined and the target is left undefined then discretionary exits can cause a lot of pain as mentioned in my post above of today's trade.))))) Some times we save losses but at times we give up profits. To me it appears it is best to stick to making the exits also mechanical. This would give a chance for systems' positive expectancy to make is appearance over a number of trades. The higher the number of trades the nearer we will be towards the systems' ideal results.

you are 100 % perfect,!!!to define both is a must,as you said,other wise we will loose lot of profit earned at the end,as exit left undefined and we may be holding the move,due to lack of stop loss trigger,where as trade has already reversed(when ever some thing is discretionary,in mechanical trading system,sooner or later we will be confused and will do mistake,in discretionary,we can not be always right)

 

[tnsn2345]

...

Tnsn, I see ur point of view. u are forecasting the future price of an asset within a particular time frame using ur experience, and then judging urself on various parameters in an attempt to 'better' urself and move towards 'perfection' or 'near perfection'.
trading this way wd require a very high level of accuracy, but wd make life much simpler and the journey frm '100-200' wd be enjoyable and stress-free.
I, on the other hand, am not a good forecaster but I trade a system which has positive expectancy. I know that after a certain number of tosses (trades) my system would give me a decent return, though the same journey frm '100-200' wd be much more volatile.therefore, to me 'attaining perfection' wd b to have proper checks & balances in order to stick to my system throughout, as outcome of individual trades is inconsequential
to me.
two different ways to approach trading, though I admit that ur journey wd be less volatile and more relaxed with lesser chances of a burnout.

regards

Dear Anurag,

I trade no different than you...i.e. I too trade on positive expectancy of the ourcome itself. But I would add a measure to it. It is not that I will always be right with my forecasting till T1, but the very fact that I am able to define what will be the P1 at T1, it gives me confidence to handle the trade.

Even trading a non discretionary system, one can still define P1 at T1 by forecasting decision making variables which have given the trading signal.

Since the belief - "Nothing new ever happens in the market" and my system helps me in defining the price target (which is in the same way how people define Stop Loss price).

The entire focus of this parameter may not necessarily be plotting A, B, C or D etc but one's ability to define P1 at T1.. If I am able to define that after following the chart, I improvise my strike rate.

Regards,

 

[tnsn2345]

Once in the trade...comes trade management..and measuring the trade performance.

(I am skipping other params viz, position size - which is based on volatility of the UL and TF of trade, as all these variables can be feed in to a calculator or software which will provide us instantly with the position size to trade)

Ok..when in trade (atleast the for me), the trade management starts with defining the stop. I would define the SL level only after entering the trade and not before it. (Pls note that this is not advocating/promoting my style and readers should use own discretion and judgement)

Why defining the SL after entering the trade? Simple because when I am geared up for a trade, my method is showing me something why the UL will move in that direction. My mind is built to think in that direction and in no way I can think of UL getting in the opposite direction for me to define the SL.

e.g. if the UL is at 100 and my method indicates that it will be 110 at T1, my energies and mind is focusing on making this decision of P1 (i.e. 110) at T1. I have to use all my thinking on this to predict the movement and the magnitude. At this moment I cannot multitask my mind to think of a Sl (viz 96 etc) as it will create a chaos in the mind, which can not only affect my DM of P1 of 110 at T1 but also affect my thinking at review intervals. Hence the need of not defining the SL before taking the trade. So when do I define the SL.

Once in trade, the very next moment (even lesser than a 1 second) the mind will then forget the DM of P1 at T1 (since it has already been frozen and we are in trade) and start thinking in the reverse order i.e. defining the SL. Infact, I would use the the same chart now (which I used for entering the trade with positive expectancy) and use it to prove my decision (of entering the trade) as wrong. And then define the extent (magnitude) of being wrong and this is the mental SL.

This SL remains valid till T1 and is measured on continous basis (by audible alert) so whenever the alert is given by the system the position is exit - without looking a the chart. And this part is not very difficult as it is system based.

The difficult part is to exit the trade at review period and before the SL (audible alerts is triggered). E.g. entry is 100 and SL is 96. At the first review period if the UL is 98, then the decision has to be made either to hold or to exit.

....

Regards,

p.s. friends request you all to share your measurement tools to for discussion and delibrations.

 

[tnsn2345]

LAST THING IS VERY IMP , as hitting rate tells me ,my capability as trader, ....as if i can not hit 70% , i must stop.

Dear Oilman

my my hit ratio is 30%

regards

Would like to understand your evaluation techinques with the above strike rate. I for sure will find it very interesting and look forward to learn.

Regards,

 

[anuragmunjal]

Would like to understand your evaluation techinques with the above strike rate. I for sure will find it very interesting and look forward to learn.

Regards,

hi Tnsn

someone once pmd me a question..'how wd u trade the mkt. after a big breakaway bar.' my response was that the only way I'd want to trade is to be in that bar...
I follow around 28 diff. futures and am either in a trade or close to a trade in all of them.(I have bid close to the mkt if I am not in the trade)..

I always enter with a predetermined sl (put actually in the mkt, not mental).
studying the mkt fr a while after entry, I make the desicion..either I revise the sl.( bring it closer to my entry) or leave it at the predetermined level.
when in a trade I keep on revising my sl..
I do not have a defined p1. as a matter of fact, I do not have a target..
I never book a profit. I always get out when my stop is hit..
but if my trade is good, my stop is way above the price that I bought at or way below the price I sold.

At the end of the day, when I analyze my results..
20% of trades give me a decent loss.ie. my 'predetermined' stop is hit.
around 50% of trades range somewhere between a small loss to a small profit.
balance 30% are profitable..

regards