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Update:
Day trade 1 is -6% loss on initial capital in USD (41.06% drawdown)
Day trade 2 is -26% loss on initial capital in USD (36.66% drawdown)Funnily enough, when converted back into AUD the losses are nearly neutralized because we bought USD at 0.78 – 0.80 and now its 0.64.
So I see this as an opportunity to learn on the profit from Jan 2022, and then the exchange rate funding the rest of my learning journey
The initial loss on capital feels very comfortable, it is the breaching max drawdown in testing that has me feeling the most uncomfortable at the moment.
Been thinking through ideas on whether I add a regime filter to the MOC, wait for X months of profitability, wait for Close > XdayMA, wait for the 50bps+ rate rises to stop, rebalance the portfolio, trade a new version of MOC (eg change leverage, position sizing). In some ways I am reluctant to change my MOC too much, I currently use a mixture of different leverage/position sizing as I wasn’t comfortable using full leverage. I found using a mixture of leverage had a good risk/reward (for me) and the daily volatility of the system was within my comfort zone. So something like a regime filter or dynamic stretch may be a simple solution, or trading the equity curve (as per article Nick posted).
I know I keep saying this but…. the initial plan/strategy when I started trading in November 2021 has really helped me during this time. As soon as my predetermined limit was reached I followed my plan and exited right away. A plan is not emotional. I will be readjusting this plan when I re enter the market.
The goal is not to be one of those traders that sits out for 6 months due to fear.
Wow Ben – hats off to you for sticking to the process.
Didn’t you say you started the MOC in May? Had you started in 2020 or 2021 you would have looked like a genius.
For what its worth (and I’m no expert) I had a rule when I started trading MOC.
If I lost more than X% of my initial capital then I would either stop trading and/or consult with Nick about the system.
For example, if the max back tested drawdown was 30% then I set a rule that if the drawdown exceeded 35% then I would stop and reassess.Start date dependency can play such a bit role in the amount of profit we make (or don’t make). Still, it doesn’t make what you are going through any easier. The best person to speak to about it would be Nick or Craig since they’ve been around the block a few times.
For what its worth, my MOC trading hasn’t been profitable since April. Since June it has hit max DD 3x. There is a pattern of the system making healthy profits (5% – 10% profit MTD) and then having them all wiped out in 1 or 2 trading sessions. Considering this my initiation into becoming a decent trader
Have been in the US a few weeks, returning to Australia mid September.
Will add EOM numbers soon.
Have continued to trade the MOC systems whilst here and its been relatively easy. Usually my husband drives whilst I upload the orders. Because we are here for 5 weeks I chose to continue operating the trading business. If it was a 1-2 week trip I probably wouldn’t have traded.
Being in the US has made me grateful to be an Australian trading the US markets. We really have it easy in the sense that we sleep through the session and have no choice but to accept the outcome when we wake up, and then get on with our day.
My #2 MOC strategy reached maxDD in June. July recovered out of that MaxDD from 35% to 28%. Currently retesting the maxDD again in the last trading week. Because of all the research and testing in June (thanks Nick for the tips), I have mentally been on my game and continued trading through it.
If I want to be a successful trader, I must also be willing to deal with the pain and challenges that come with trading (eg max DD / extended DD). If I am not willing to deal with the challenges and the pain, then I am either in the wrong game or I have an unrealistic fantasy about trading.
Most of the August DD was attributed to a R2000 system that copped a few trades (eg CAL) that dropped over 10% in the trading session. The cool thing is, with position sizing, whilst the loss on the position was high, the overall system loss for the day was minimal. One day I lost -11% on a trade yet the system loss for the day was only -1.48%.
Whilst its been a challenging year trading so far, I am grateful that the systems/testing etc that we have learnt here has kept us in the game – emotionally and financially
