Starting A Strong Equity Curve

24 October 2012

Yesterday was more of a normal day as my win streak came to an end :( Every week or so I catch a 6-10 trade streak that helps keep the balance of statistics in place for my 80% average. This balances off maybe a day or two of lackluster results. I often see people beating themselves up for a series of trades emotionally that they do not see objectively and that can cause them to do very very stupid things. Such as over leverage in order to make up a loss, overtrade because they had a series of losses or are down. All of this is an emotional response to something you have no control over. This is where discipline and habit will save you a great deal of roller coaster to flatline results. As in nature things are reflective so big ups and downs equal the opposite as well which would be very little movement in your equity curve. The goal in trading is singular to create a positive equity curve, most people are focused on so many other things but the foundation of what you are trying to do is singular. What does a positive growing equity curve say about all other aspects of your trading? They say this – consistent – methodical – disciplined – balanced – money management – stable – adaptive – { WINNER } Everything you do will be reflected in your equity curve/bottom line. This is why its important to focus on it, because it tells you exactly what is going on with you and your trading. After I go through my trading day yesterday I will continue with some healthy habits for making a strong equity curve.

To start the day off with I had an EU buy from 6:54 to 7:00 am a very tight window of 6 mins, the actual signal was a bit longer till 7:02 but the expiry time I could get was right @7am and I would not have taken it to 7:05 expiry so I was just able to get the entry on this trade. It was a very unremarkable trade and from the way the price was so lathargic to begin with I was a bit worried the day would continue like this, which it did not. I went into protection mode and reduced my leverage to 2% a trade. Though this trade was ITM by its conclusion I was not happy with the price action being demonstrated.

This Dax trade was a much cleaner setup then the EU trade demonstrated before and all the elements I look for were in perfect synchronicity, still I did not get much of a move the range again was restricted. Yet it was valid and ended the call option in the money, so you can’t argue with success. Still used less leverage on this trade around 2%.

My best trade of the day – the DOW POW! This trade had every element perfectly in sync on the 10sec 1min 5min all in alignment showing the same exact thing, a very STRONG UP coming. This trade I had no choice but to take the full 5% of max leverage due to it being absolute PERFECT. I timed it exactly for 2pm expiry waited for after 1:50 to get the call options for 2pm expiry and as you can see it was on the money for in the money! I screamed this one out in the chatroom at the top of my lungs lol and some of my friends caught this and were ecstatic as was I :) A really stunning example of a perfect ALGO entry for me. Not a 100% day but I have no control over that ;) Still 6 out of 8 trades for 75% win rate a pretty ok day.

“Healthy Habits for a strong Equity Curve” Part 1

Looking at the two images above which one would you rather be over time? I think most would want the first :) The second image if that was a rocket being shot into space well “Houston I think we have a problem…” The second image as you can see is not going anywhere fast. This person if that was reflected over a period of so many months for both of them, the first guy slowly increased and grew the second guy went way up and way down and in the end the first guy keeps growing and continues on, the second at some point either gives up because he is not going anywhere or is institutionalized after a nervous breakdown from all the stress lol. Now how do you develop habits to create a smooth equity curve. This is where you become OBJECTIVE instead of SUBJECTIVE – You constantly monitor your trading results and stay focused on making them objective results that you can measure and plot out over time. I am going to stop here and continue in the days to come, because our brains are only able to compute so much data at a time and by spreading this out it will be far more effective to you over time even if you are not cognizant of this at first. So first think of what is being stated and in the future I will go over how to implement this into your daily routine so success becomes a habit for you. Until next time enjoy!

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