The Goal I Am Focused Most On
Passing my TFD account, with consistency.
Highlights / Wins To Celebrate
- This week I cut out some noise. I am trying to permanently leave a Discord server that I kept leaving and rejoining. There were some good conversations there, but mostly it is just noise. I also am trying to focus my trading talk to fewer and fewer people. Some things I notice about this industry:
- There are people that enjoy watching others lose. When you lose, they always have something to say. It is fine when the feedback is constructive or helpful. It is just plain silly when what they say is nonsense though. Cut these people out of your trading circle. They are rooting for you to lose. Funnily enough, when you win they are silent.
- There are also people that I think just enjoy wasting time. Not just their own, but others as well. Cut these people out too. If you don’t want to be a time waster, then don’t be around others that waste time.
- Surround yourself with the right people. What is “right people” will vary based on what you think that means. You better be a version of whatever “right people” means to you, because they might be wanting the same. If you surround yourself with the wrong people, then you may end up finding yourself just like them.
- I am ending the month on a positive note with my personal account, which is nice. It’s not where I want it which is why I need to trade prop firms. In fact, I need to trade less personal and more prop. I don’t have the habits I want. I don’t have the equity curve I want.
- “Up and to the right” isn’t everything for me, and it is more about how I get there. Up and to the right can be done with luck. Maybe that is my February in my personal account, just luck. My fear is that whatever I was doing works until it all disappears.
- I need it done with thousands of trades over time. I need to be able to replicate it with a solid belief that it can be executed indefinitely with the results I want.
Lowlights / Things To Work On
Daily Loss Limit Week – “The Curse of DLL”
I’ve discovered when I have a bad trading day, I basically will use up all of the drawdown I have available. I know I’m not alone in this because I’ve seen too many traders blow accounts in a single day. It is why I want a daily loss limit, and recommend one to others.
You can call it lack of discipline and lack of self control, and I will 100% agree with you. I used to work on it, but realized I won’t succeed in the long run in controlling my losing days. I’d rather just use a daily loss limit to save my account when I can’t save myself. That is the main issue: there will be days I can’t save myself. Prop firms use a daily loss limit with their traders, so I should get used to it.
In my TFD account, my parameters were a $2,400 daily loss limit and a $1,000 profit target. At the time I started, this sounded reasonable. “Make $1,000 before losing $2,400” sounded easy enough for me. To be honest, I thought hitting that $2,400 loss would be rare for me (how very wrong I was!).
Here is the reality: if I hit my daily loss limit ~30% of the days and reach my profit target all of the other days then I’ll slowly sink. (30% x -$2,400) + (70% x $1,000) = -$20 daily expectancy. In January I did better at just 8% of traded days hitting daily loss limit for the account. In February I was basically hitting my daily loss limit ~40% of the days traded.
So I decided to start over with new account parameters. One that will hopefully fit me better. I now have a $1,200 daily loss limit and a $860 profit target. Now the ratio of my DLL to base hit is 1.4:1 vs. 2.4:1. This small nudge may help keep my losing days smaller, while I aim for my usual winning day.
If I hit my daily loss limit at the same rate of 40% of days or less, and the profit target on all others then I should still be okay. Of course this will require some adjustment to my sizing and I will probably have a new rate of hitting my daily loss limit, but I’ll have to wait and see how it looks. Hopefully I’ll hit it less frequently.
The Mental Game of Drawdown
For my second lowlight, I want to dive deeper into handling the inevitable drawdown. We all get into it, and we all try to claw out of it. We should all expect it.
I already knew how a daily loss limit could prevent me from destroying my account in a single day, but I didn’t give too much thought on what a recovery could look like. In the past when I traded with a daily loss limit, recovery felt easier when there was no ceiling on how much I could make in a day. I could make the recovery in a day or two in most instances.
I found myself trading in an unhealthy way when in drawdown. Losing $2,400 in a day wipes out more than two day so of progress for me. Often, this causes me to take trades I shouldn’t just to escape the drawdown. I also felt very limited in my ability to escape the drawdown because normally I would aim for $1,000 in a day. I could aim for $1,500, and in nearly all cases of drawdown I did aim for it, but it’s not like that is easy to “just make more” when it comes to trading.
And that is where the mental game of drawdown hit me. Aiming for 50% more in a day than I want to normally target does add pressure. It has to be either done with more trades, more size, or aiming for larger moves. I tried all of the above and sometimes it worked, and sometimes it didn’t. Aiming for more probably led to hitting daily loss limit more often.
This week I hit daily loss limit twice in a row. The first day was me trying to get a big move to get out of the drawdown I started last week. The second day was me trying to get out of the even deeper drawdown! I felt like I fell in a hole and could barely see the light, and if I hit my boosted base hit 3 days in a row (which isn’t exactly easy) then I’d still be underwater!
My account was still positive with a $3k balance but my profit target is $12k. At the rate I was going, I knew I’d hit daily loss limit again on the way. The target just felt further and further away. So I ended the account and started a different one with different parameters. I am not proud of the reset, but I do feel it was necessary to protect my mindset. Losing days are inevitable, so make them survivable.
Lesson learned: Don’t make your daily loss limit 2.4x your daily base hit. Seems obvious in hindsight now. Losing days are inevitable. I need to learn how to handle them better, and more importantly, how to handle the days after. I need to learn to balance a reasonable daily loss limit relative to how much I can earn in a day.
Top Lesson
Account parameters matter: daily loss limit, personal profit target / consistency target, trade size, etc. Losing days are inevitable, so make them survivable.
I say this because in my personal account I want to trade with a daily loss limit and daily profit target. I need to learn the balance that works for me.
Trading Week Grade
I give my week a D. It just wasn’t my week, and starting over feels a little bad. However, I’m starting from scratch for a reason. If I’m right in that my daily loss limit matters, then it will be the right call. Time will tell.
I have two accounts now at TFD and I don’t want to copy trade them yet. Not when I’m trying as sloppy as I did for the week.
Trading Performance
Net negative in my accounts at TFD. Breakdown by account is below:
The Futures Desk (Cancelled Account)
- MON: $1,505.25 Profit
- TUE: $2,415.10 Loss
- WED: $2,379.80 Loss
- THU: N/A
- FRI: N/A
- FULL WEEK: $3,289.65 Loss
- Evaluation Progress: +$3,044.42 / $12,001 | 25% complete
- Cancelled Account; I know it seems backwards given that this account has static drawdown, and I was still in positive balance. The distance to maximum loss limit was a little over $9,000. However, I decided the account was not “right sized” for me. Time will tell if it was the right call.
The Futures Desk (New Account 1)
- MON: N/A
- TUE: N/A
- WED: $1,245.25 Loss (What at start… I should have just ended the day early and waited till Thursday).
- THU: $1,286.45 Profit
- FRI: $1,215.90 Loss
- FULL WEEK: $1,174.70 Loss
The Futures Desk (New Account 2)
- MON: N/A
- TUE: N/A
- WED: N/A
- THU: $944.45 Profit
- FRI: $873.80 Profit
- FULLWEEK: $1,818.25 Profit
