Today’s result is painful, extremely PAINFUL. I practiced on MU again, hoping that I can do better than the previous practice. Given that I have been practicing whenever I can, I expect my chart reading skills to have improved somewhat.
It is f*cking disappointing that not only did I not improve, my new results are abysmal compared to the previous results.
| Date | Trade | Quantity | Entry | Indicator SL | Actual SL | Exit | Percentage Profit | Remarks |
| 24 Mar 10 | Buy | 1 | 10.62285 | 9.8 | 9.8 | 10.17 | -55.03% | |
| 30 Jul 10 | Sell | 1 | 7.55 | 8.61 | 8.61 | 7.05 | 47.17% | |
| 13 Jan 11 | Buy | 1 | 9.79 | 8.36 | 8.36 | 10.92 | 79.02% | |
| 23 May 11 | Sell | 1 | 9.74105 | 10.93 | 10.93 | 10.2 | -38.60% | |
| 2 Jun 11 | Sell | 1 | 9.4724 | 10.17 | 10.17 | 8.43 | 149.43% | |
| 29 Sep 11 | Sell | 1 | 6.0695 | 6.94 | 6.94 | 5.16 | 104.48% | |
| 19 Jan 12 | Buy | 1 | 7.78875 | 7.05 | 7.05 | 7.55 | -32.32% | |
| 15 Feb 12 | Buy | 1 | 8.4018 | 7.7 | 7.7 | 7.82 | -82.90% | |
| 28 Feb 12 | Buy | 1 | 8.83395 | 7.92 | 7.92 | 8.2 | -69.36% | |
| 23 Apr 12 | Sell | 1 | 6.55 | 7.55 | 7.55 | 6.82 | -27.00% | |
| 8 May 12 | Sell | 1 | 6.3879 | 6.97 | 6.97 | 6.12 | 46.02% | Stop loss was based on bar high |
| 4 Jun 12 | Sell | 1 | 5.373 | 6.01 | 6.01 | 6.02 | -101.57% | Stock gapped up |
| 22 Oct 12 | Sell | 1 | 5.4128 | 5.86 | 5.86 | 5.79 | -84.35% | |
| 4 Feb 13 | Buy | 1 | 7.8792 | 7.54 | 7.54 | 7.68 | -58.73% | Stop loss was based on a recent low |
| 6 May 13 | Buy | 1 | 9.7485 | 9.31 | 9.31 | 10.92 | 267.16% | |
| 24 May 13 | Buy | 1 | 11.54745 | 10.57 | 10.57 | 13.14 | 162.93% | Stop loss was based on bar low |
| 9 Aug 13 | Buy | 1 | 14.2509 | 12.31 | 12.31 | 13.63 | -31.99% | |
| 27 Sep 13 | Buy | 1 | 17.61765 | 16.23 | 16.23 | 16.84 | -56.04% | |
| 22 Nov 13 | Buy | 1 | 20.21055 | 18.9 | 18.9 | 21.81 | 122.04% | |
| 10 Feb 14 | Buy | 1 | 24.89385 | 22.65 | 22.65 | 24.26 | -28.25% | |
| 16 Jun 14 | Buy | 1 | 31.758 | 28.47 | 28.47 | 31.26 | -15.15% | |
| 1 Jul 14 | Buy | 1 | 33.24 | 31.16 | 31.16 | 31.98 | -60.58% | |
| 8 Dec 14 | Buy | 1 | 36.53175 | 34.62 | 34.62 | 34 | -132.43% | |
| 4 Mar 15 | Sell | 1 | 29.2331 | 31.91 | 31.91 | 27.82 | 52.79% | |
| 6 May 15 | Sell | 1 | 27.69085 | 29.45 | 29.45 | 28.13 | -24.96% | |
| 21 Jul 15 | Sell | 1 | 18.67615 | 20.24 | 20.24 | 19.75 | -68.67% | Stop loss was based on a recent low |
| 14 Aug 15 | Sell | 1 | 17.5916 | 19.47 | 19.47 | 15.67 | 102.30% | |
| 9 Feb 16 | Sell | 1 | 9.8903 | 11.17 | 11.17 | 10.81 | -71.87% | |
| 15 Aug 16 | Buy | 1 | 15.09 | 13.6 | 13.6 | 16.86 | 118.79% | |
| 8 Dec 16 | Buy | 1 | 20.75 | 18.18 | 18.18 | 21.74 | 38.52% | |
| 25 Jan 17 | Buy | 1 | 23.4 | 21.75 | 21.75 | 23.12 | -16.97% | |
| 2 Mar 17 | Buy | 1 | 24.88 | 23.01 | 23.01 | 27.64 | 147.59% | |
| 10 May 17 | Buy | 1 | 29.0445 | 27.45 | 27.45 | 27.45 | -100.00% | |
| 5 Jun 17 | Buy | 1 | 31.5369 | 28.88 | 28.88 | 30.53 | -37.90% | |
| 11 Aug 17 | Sell | 1 | 27.29285 | 29.43 | 29.43 | 29.5 | -103.28% | Stock gapped up. Sold just above EMA150 |
| 29 Aug 17 | Buy | 1 | 31.36605 | 29.77 | 29.77 | 34.87 | 219.54% | |
| 28 Sep 17 | Buy | 1 | 37.33575 | 35.02 | 35.02 | 43.74 | 276.55% | |
| 19 Dec 17 | Buy | 1 | 44.09 | 41.71 | 41.71 | 42.25 | -77.31% | |
| 26 Feb 18 | Buy | 1 | 47.034 | 43.13 | 43.13 | 54.21 | 183.81% | |
| 30 Apr 18 | Sell | 1 | 46.95405 | 51.39 | 51.39 | 48.48 | -34.40% | Sold just above EMA150 again |
| 11 Jun 18 | Buy | 1 | 61.908 | 56.65 | 56.65 | 55.54 | -121.11% | Stock gapped down |
| 16 Aug 18 | Sell | 1 | 46.9043 | 52.85 | 52.85 | 49.94 | -51.06% | |
| 6 Dec 18 | Sell | 1 | 35.66 | 40.24 | 40.24 | 32.75 | 63.54% | Stop loss was based on a recent high |
| 20 May 19 | Sell | 1 | 34.75 | 39.29 | 39.29 | 34.49 | 5.73% | Entry bar was a gap down |
| 14 Jun 19 | Sell | 1 | 32.45 | 34.36 | 34.36 | 34.29 | -96.34% | |
| 9 Jul 19 | Buy | 1 | 40.81305 | 38.05 | 38.05 | 44.89 | 147.55% | |
| 19 Aug 19 | Buy | 1 | 45.3054 | 40.7 | 40.7 | 42.44 | -62.22% | |
| 30 Aug 19 | Buy | 1 | 45.4461 | 42.55 | 42.55 | 48.51 | 105.79% | |
| 25 Oct 19 | Buy | 1 | 47.3958 | 43.23 | 43.23 | 46.26 | -27.26% | |
| 12 Dec 19 | Buy | 1 | 49.5867 | 46.25 | 46.25 | 54.03 | 133.16% | |
| 7 Jan 20 | Buy | 1 | 55.76745 | 52.66 | 52.66 | 55.41 | -11.50% | Stop loss was based on a recent low. Stock gapped down |
| 22 Oct 20 | Buy | 1 | 54.27 | 50.08 | 50.08 | 50.08 | -100.00% | Stock gapped down |
| 16 Nov 20 | Buy | 1 | 59.72 | 54.33 | 54.33 | 70.53 | 200.56% | Entry bar was a gap up |
| 16 Dec 20 | Buy | 1 | 73.73685 | 70.54 | 70.54 | 70.54 | -100.00% | |
| 4 Jan 21 | Buy | 1 | 76.48 | 69.65 | 69.65 | 79.51 | 44.36% | |
| 11 Feb 21 | Buy | 1 | 84.4803 | 78.48 | 78.48 | 84.33 | -2.50% | |
| 17 Mar 21 | Buy | 1 | 95.1534 | 85.31 | 85.31 | 85.4 | -99.09% | |
| 9 Jun 21 | Sell | 1 | 79.60995 | 84.98 | 84.98 | 82.03 | -45.07% | Stop loss was based on bar high |
| 19 Nov 21 | Buy | 1 | 78.93 | 73.12 | 73.12 | 81.62 | 46.30% | |
| 23 Dec 21 | Buy | 1 | 91.5957 | 84.03 | 84.03 | 90 | -21.09% | |
| 22 Apr 22 | Sell | 1 | 70.29675 | 76.23 | 76.23 | 71.26 | -16.23% | Stop loss was based on recent high |
| 12 May 22 | Sell | 1 | 66 | 72.56 | 72.56 | 71.92 | -90.24% | |
| 30 Jun 22 | Sell | 1 | 54.99 | 60.08 | 60.08 | 58.85 | -75.83% | |
| 14 Sep 22 | Sell | 1 | 52.8743 | 58.8 | 58.8 | 53.96 | -18.32% | |
| 21 Oct 22 | Buy | 1 | 56.1996 | 50.64 | 50.64 | 52.21 | -71.76% | |
| 11 Nov 22 | Buy | 1 | 60.6819 | 54.82 | 54.82 | 57.16 | -60.08% | |
| 26 Jan 23 | Buy | 1 | 62.58 | 55.86 | 55.86 | 60.3 | -33.93% | |
| 16 May 23 | Buy | 1 | 65.19435 | 59.55 | 59.55 | 67.06 | 33.05% | |
| 27 Jul 23 | Buy | 1 | 70.48 | 64.25 | 64.25 | 64.37 | -98.07% | Entry bar was a massive gap up (almost 5%) |
| 17 Nov 23 | Buy | 1 | 77.83725 | 71.72 | 71.72 | 76.12 | -28.07% |
Profitability
Using 5% risk per trade, strategy 4 for position sizing (ignoring days to exit), with an initial starting balance of $100,000, I end up with a grand total of $104,445.67, with a maximum drawdown of -19.99%.
For my previous practice session, using strategy 4 for position sizing and a sector and stock filter (EMA 50 > EMA 150), I had an ending balance of $261,086.86, with a maximum drawdown of -16.53%.
Analysis
After the 16 Aug 18 trade, I realize that I was doing worse than the previous practice session. My drawdown now is lower (about -16% vs -22%), but my final balance is also lower (about $115k, vs $158k). Increasing my lot size such that the drawdown is similar did not help to match the final balance.
I was frustrated and did an analysis of the difference between the trades then and now. I notice that in the previous practice session, I was less selective with my entry. As a result of being more selective now, I missed out on some trends.
Hence, I became much less disciplined after this analysis. After the 16 Aug 18, I missed a good trend because I was too cautious. From that point forward, I was pissed off and entered trades with less caution. However, results did not improve. I kept getting stopped out and missing good trends. Towards the end, I just couldn’t wait for the practice session to be over. It was too PAINFUL, honestly. So much hard work and yet I do worse.
I’m starting to doubt if discretionary is good for me if I am so inconsistent. But, what is the edge with a mechanical system? So far, I have been ‘profitable’ with my discretionary system. What if I switch to a mechanical one? How can I prevent curve fitting?
Looking back at my blog post for my previous MU practice, I did something different – I used a sector filter. In addition, for the stock filter, I only required EMA50 to be above EMA150 to justify a buy (and EMA 50 < EMA 150 to justify a sell). I did not require an obvious stage 2 and stage 4, which meant I entered trends earlier.
What is the difference that made the difference?
A sector filter does seem to help. However, my previous MU practice sessions convinced me that I need to use a stock filter as well, in cases where the stock does not correlate well with the sector ETF.
I dropped the sector filter for subsequent practices because I am trying to find a strategy that not only works for stocks, but for other asset classes like forex and commodities.
How should I proceed?
I’m keen to use excel to test out a sector and stock filter, since that can be programmed easily. Will I be able to find mechanical entry criteria on top of the two filters that work well?
Next Steps
- I’ll play around with a mechanical system first, using sector and stock filters. This can be tested easily using excel.
- If the mechanical system does not work, I need to resume my chart reading practice and re-incorporate the sector filter.
Regarding the stock EMA filter, how strict should I be? On the one hand, I want to reduce the number of trades. Hence, waiting for a stage 2 or stage 4 setup makes sense. On the other hand, I do not want to miss a trend. Perhaps being less strict on a weekly chart works better???
Am I switching ‘strategies’ too frequently?
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