Monday and Tuesday were about learning to (a) learn to control losses and (b) learn to execute trades with Tradestation.
I went hog-wild on Monday morning and traded AAPL (twice), CAT, RIMM (twice) and WNR on opening gaps. Because I am dispositionally disposed to going against the crowd, I shorted them all on something less than stellar signals. The net results were:
AAPL: -.12R
AAPL: -.06R
CAT: -.84R
RIMM: +1.17R
RIMM: -.28R
WNR: -.57R
As you can see, I didn't make any money. I had 5 losers and 1 winner, which is proof that I still don't know what I am doing as far as picking trades is concerned. OTOH, none of my losses exceeded 1R and only two were as much as 1/2R. I am getting a better handle on how to limit my losses. I was tempted to be down about my results for the day, but frankly, I was pretty dang happy that I had figured out how to cut my losses short.
Tuesday was "learn to execute trades with Tradestation" day, and I had an execution error that was the result of not understanding my tool. I traded GES and LDK twice. Results are:
GES: +.65R
LDK: -.63R
LDK: +1R
The loss on LDK was four times higher than it needed to be, because I thought I had set a stop loss, but in fact had not. Today was a 1R day, and woulda been closer to 1.5R if I had understood the tool. After the markets closed, I spent some time with Tradestation's video tutorials and learned what I should have learned before trading. Ah well. If it was easy, everyone would be doing it, right?
I have an observation that I would like my fellow bloggers to respond to: It appears to me that Tradestation exceeds Interactive Brokers Traders Workstation in every regard but one: execution time. When I trade with IB, my trades are usually filled in less than 2 seconds. In Tradestation, it takes a good deal longer. Otherwise Tradestation beats IB in every area.
Tuesday, October 9, 2007
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2 comments:
Hi Atticus, thank you for the lessons. The last one might be helpful for me as I will start using Tradstation soon. Will do the videos to start off.
About the fisrt lesson, did any of those losing trades end up going your way after being stopped out?
Why do you think your loosers were so small and far from -1R?
Did you set your initial stop loss too far from your entry? (or too close?)
How much of a whipsaw were those loosing trades with small R?
Miguel: lots of good questions.
Some of the trades did in fact go my way after being stopped out, but I'm a Day Trader; I have to assume that the stocks are going to go up and down during the day. My job is to ride them one direction and then the other, not try to capture all of a single day.
Why were my losers so small? I set my stops pretty close: by rule they were no more than 50 cents, sometimes less if the ATR was less than $2.00.
As for whipsawing: I was trading in the first hour, and if you watch the 5 minute bars, you'll see a lot of up & down movement. I'm just trying to catch the major movement in the first hour. Brad says that he thinks this "Gap & Trap" method has a success rate between 55%-65%, which means you're gonna be wrong almost half the time. I'm okay with that since the stops are close.
And remember - I am very new at this.
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