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Small Account Challenge aka Warrior Trading Strategy

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Ok guys, here comes the long awaited update :D 

So I went live in late March 2020 with a £1k account and had my first green month in probably about 3 years.

£262.40 of profit in the box. Amazing.

Unfortunately, I couldn't build on the success in April, where I had a bit of a losing streak and only managed to break-even on the month in the end with £3.06 of losses.

My winning trades % in April was 75%, although i was working with a Risk 4, Reward 1 strategy. To be profitably with that I need 80% + winning trades.

I then refined my strategy a bit in May and went with a Risk 2, Reward 1 strategy. In the end I had a winning trades % of again 75% and made £419.53 of profits. Not too bad. The strategy seemed to work.

June I upped my account to close the gap to £2k, so that i could trade with increased position sizing. And well, that was a good month. £1,253.39 of profits with a winning trades % of 84%. That's how I imagined it. By the end of the month I had £3,253.39 in my account and increased my position sizes for July once again.

This is where it all went wrong. In the first 4 trading days in July I lost about as much as I made the previous 4 months combined. :(

Consequently, for the remainer of the month I had to trade with way lower position size again, meaning I couldn't get back to break-even - not even close. Ended the month down £1,821.53.

Overall I'm still £110.73 in the green, although taken things back to the Demo account for August to refine my strategy once more.


Did I move away from my strategy, that previously worked in July? Nope
Did I take on too much risk in July? Likely. I should probably scale up my position sizing more slowly and also limit the total risk I have open at a time. In early July, 3 trades with £600 risk each, all went simultaneously against me, which was a £1800 loss in one week. It might be better to only have max one trade with full risk open (which was £600 at that time) and either not open any other trades or only trades with reduced risk (like£400 or £200).
Then these 3 trades which went against me, might have only caused a loss of £1000, which means I still had a realistic chance to come back by the end of the month.

image.png.d934ad424942aeff962e72347d3d02d3.png

 

Anyway, now in August I was experimenting with the good old Risk 1, Reward 2 set-up. Although I have found a way to actually backtest various Risk-Reward setups, so at the end of the month (next Monday) I will know for sure, with which risk-reward set-up I will go back to live in September.

I'll keep you posted.

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image.png.841ac9ea53f103e272447568b7c1408d.png

 

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😮

@DSchenk

I've not been in here for a while now.  

It's good to hear you're still in the game, but saddening that you were still somehow playing 4-1.  I don't get it.  Can you tell me how many times you were initially wrong on your 80% wins?  How far did they go the wrong way before they went the right way?  Or did they all work from where you got in?

 
I've almost given up on Spreadbetting shares, especially Low Cap and have instead moved my money to Shares.  I've only just started and missed growing my account 100% in the last week.  Even this week I was in NiO @ 14.55 and over night it went up about 13%, but I'd mis-calculated my Stop too close and Stopped Out shortly after the opening bell.  As is now clear, it's over $20.  I've caught some other great moves too with Virgin Galactic in at $16 and out at $25 for instance and Velocycs 6 up to 9.

Today is a new IPO in Xpeng or Xpev.  Chinese Electric motor company.  However, I think it's over priced.


In hindsight, the ability to simply Swing the trade till it recovers, without actually risking a huge pullback Loss while SB'ing has eased my conscience a little.   I've learned more about timing actually trading shares than I ever did with SB as the losses can almost always recover, but the real world loss in SB now makes me physically sick.  Investing is better for me for now.

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4 hours ago, DSchenk said:

This is where it all went wrong. In the first 4 trading days in July I lost about as much as I made the previous 4 months combined

That's a shame.  If I could make £1000+ a month I would be f*king ecstatic.  

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What strategy do you use for deciding that a position is to be taken?

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2 hours ago, nit2wynit said:

It's good to hear you're still in the game, but saddening that you were still somehow playing 4-1.  I don't get it.  Can you tell me how many times you were initially wrong on your 80% wins?  How far did they go the wrong way before they went the right way?  Or did they all work from where you got in?

Jo @nit2wynit old pal. How's things?

You didn't read the whole post. 4-1 was my intial set-up, but changed to 2-1 from May and had a good run with that until early July.
The analysis you're asking is quite difficult to make, but often times the position went against me quite heavily and only reversed close to my stop. This is where I added the next 25% to my position and riding the reversal back down.

But indeed a good question. This is what I'm currently analysing with my demo trades during August. Got a sneak peak for you below.

(The numbers here are now reverse, 2:1 means Reward 2 - Risk 1)

Front runner currently is 1-1, followed by 0.25:1 (which is the 4-1 I started with). See the 0.25:1 curve is much smoother though, with a lot less drawdown.
Still I'm thinking going back live with a 1-1 strategy this time, also amended a few of the other variables. Will post further details beginning of next month.

image.png.08c9ce0e7a76ca49c735fda9ce3e7307.png

2 hours ago, nit2wynit said:

but the real world loss in SB now makes me physically sick

How much you down pal?

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1 hour ago, dmedin said:

That's a shame.  If I could make £1000+ a month I would be f*king ecstatic.  

Yeah, I was celebrating myself as well haha. Reason why I probably lost all of it in 3 days afterwards :D 
Never get overconfident, just cause you had a few back to back winners lol

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1 hour ago, thrillster said:

What strategy do you use for deciding that a position is to be taken?

In the past couple of months I was playing essentially the reverse of what Ross from Warrior Trading does.

Gap Short instead of Gap and Go.

Much of the procedure is exactly the same.
Scanning for gappers (gap-up) before market open.
Filtering by shares below $20 (preferred below $10), low float (typically smaller than 200mil) and small spreads (smaller 2%, better smaller 1%).

Then instead of jumping in long on market open, I wait until they had their initial run and found a potential high of day. This is when I go in short and ride the downwards momentum.
I see it as such, when Ross is finished with trading the long side, I go in short.

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22 minutes ago, DSchenk said:

You didn't read the whole post. 4-1 was my intial set-up, but changed to 2-1 from May and had a good run with that until early July.

No, i did read it pal, but was wondering on the results.  If you're saying 80% they actually went against and you doubled up on the way back up then technically they failed.  But i think I understand where you're coming from now.  I did this yesterday with FLDM.  Got in high, it retraced, so I 4x up at the bottom and made a profit as it returned to my Buy In.....but it's not something I'll do often.

I totally figured out where my losses were previously.  I thought every trade was a winner and technically they were, but only like 5-20%.   I wouldn't take the profit soon enough thinking they were going to the moon.  From now on it's 2:1 profit and tight stops like always.

In 18 months I'm down £1900, but I was going to pay 3k for a course so I've saved and learned along the way.  

You can be taught almost everything except your emotion or how to understand your own motives ans reasoning.  I think I've figured it out.  

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My last £500 was revenge trading.  I was in Long and risked it all on Novavax at 7.50.  It went to £10 but i bottled it and got out.  Next day it opened at 15, and since then it's gone to 170 back to 100.  Small fortune missed again.

 

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Hi I've been following this and just wondering how you are doing @DSchenk on the Spread betting as I have been doing this too, trying to day trade on the US markets. But finding the spreads very difficult to make much profit.  So am considering moving to share dealing like @nit2wynit 

Can I ask if you are doing better at the share dealing @nit2wynit ? It would be great to have an update from both of you if possible. That seemed a nice little win on Novavax. 

Just trying to work out strategies and interesting to see other peoples styles. 


Thanks

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Alrighty, time flied again.

Here is how my testing phase worked out in August.

25 Trades placed. £1000 account at the start.

It's been a bit of a slow month, but that's how August typically feels.

I tested 4 reward-risk ratios:

  • 2:1 (2 reward, 1 risk)
  • 1:1
  • 0.5:1
  • 0.25:1

As you can see from the chart below, none of them were super profitable.

  • 2:1 sucked the hardest, only 7 winners, 18 losers. 28% success rate. Break-Even would've been at 33%.
  • 1:1 came out on top. It did have some nice profit during the month, but then couple of losers at the end made it come down quite significantly again. Success rate: 52% (Break-Even at 50%)
  • 0.5:1 negative as well. Success rate: 60% (Break-even at 66%)
  • 0.25:1 profitable and the most stable growth curve, although not the highest. Success Rate: 80% (Break-Even at 75%)

image.png.1733fe84c11ab13420fc7ccf139f3465.png

 

So, not really exciting results overall. Profit target would've been at £500 and no reward:risk ratio was able to hit that, even temporarily.

So I searched for further optimisations.

I concentrated on a reward:risk ratio of 1:1 as that seemed to have worked the best.

First of all I was looking at not adding to positions as I have done in the August test and see how that would've performed.
Quite well. Apparently, my position adds were doing more  harm than good. Without the adds, my success rate jumps from 52% to 64%.
I was thinking, if I don't add to my position, I can also double my position sizing from the start.
With these two optimisations, my profit would've come out at £335, already way closer to the £500 target.

Secondly, I was thinking, what if I normalise my position sizing in a way, that I always make £200 loss/profit. Meaning, when I get to enter closer to the resistance, I can double down on my position size even further. While when I'm entering further away from the resistance, I'm scaling down position sizing.
With that optimisation, risk-reward stays the same (same trades, just different position sizing), but profit jumps to £800 on the month. That's a juicy 80% and well above the 50% target.

See the optimisations in the chart below.

image.png.347207e3ea0d929a6115c8cb12f2df03.png

 

So, as a result, I'm currently testing the final optimisation on my Live account.

  • Risk-Reward: 1-1
  • Not adding to positions, hence increased standard position size
  • Normalised position sizing according to max loss/profit target (£200 on a £1000 account)

 

Next update, once the month is over and I have the Live results.

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On 17/09/2020 at 13:01, Lavendertrader said:

Hi I've been following this and just wondering how you are doing @DSchenk on the Spread betting as I have been doing this too, trying to day trade on the US markets. But finding the spreads very difficult to make much profit.  So am considering moving to share dealing like @nit2wynit 

Can I ask if you are doing better at the share dealing @nit2wynit ? It would be great to have an update from both of you if possible. That seemed a nice little win on Novavax. 

Just trying to work out strategies and interesting to see other peoples styles. 


Thanks

Hi, My Share dealing is going far better than my Spread Betting.  I put about £800 in share dealing to see if I could notice a difference.   However, I made some rash trades early on.  Then, the my account grew on Virgin from $16 to $28 where I took the profit.  I grew the account to £1200, but it came down to £1000 as I sold other Stock.  I added another £400 to make a total on £1400.  I've bought and sold so many times I've given a lot of profit back in commissions.

On the whole, I'm where I started.  £800 +£400 = £1200.  My account is actually @ £1245 as of now, but is down 13%.  Total Book cost is £1445.

Spread betting the same I'd be wiped out already.

I think Fine Tuning on Share Dealing is far more preferable and wise than learning Spread Betting and actually losing.

Since November, here's what I've seen and missed.

Virgin Galactic @ $6.50 went to $42. I bought after the drop at $16.50 and got out @ $25
Velocys Plc at 2.5p and missed it go to 16p.  Got in at 6.5p on the pullback and back out again @ 10p.
Novavax @ $7.50, got out at $10 only for it to go to $15 overnight then on to $170.  FML!

This week i was in Fusion Antibodies @100p, it opened up next day and I got out at 50% profit, only to watch it go to 150%.  

So yeah.  Share dealing is sooo slow compared to Spread Betting.  It's too difficult to get in and out quickly.  The platform is limited.  I've not been able to put a Stop in place before I place the trade.  I'm literally looking for a workaround now.  I'm also looking at other platforms to use.

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On 22/09/2020 at 10:00, DSchenk said:

Alrighty, time flied again.

Here is how my testing phase worked out in August.

25 Trades placed. £1000 account at the start.

It's been a bit of a slow month, but that's how August typically feels.

I tested 4 reward-risk ratios:

  • 2:1 (2 reward, 1 risk)
  • 1:1
  • 0.5:1
  • 0.25:1

As you can see from the chart below, none of them were super profitable.

  • 2:1 sucked the hardest, only 7 winners, 18 losers. 28% success rate. Break-Even would've been at 33%.
  • 1:1 came out on top. It did have some nice profit during the month, but then couple of losers at the end made it come down quite significantly again. Success rate: 52% (Break-Even at 50%)
  • 0.5:1 negative as well. Success rate: 60% (Break-even at 66%)
  • 0.25:1 profitable and the most stable growth curve, although not the highest. Success Rate: 80% (Break-Even at 75%)

image.png.1733fe84c11ab13420fc7ccf139f3465.png

 

So, not really exciting results overall. Profit target would've been at £500 and no reward:risk ratio was able to hit that, even temporarily.

So I searched for further optimisations.

I concentrated on a reward:risk ratio of 1:1 as that seemed to have worked the best.

First of all I was looking at not adding to positions as I have done in the August test and see how that would've performed.
Quite well. Apparently, my position adds were doing more  harm than good. Without the adds, my success rate jumps from 52% to 64%.
I was thinking, if I don't add to my position, I can also double my position sizing from the start.
With these two optimisations, my profit would've come out at £335, already way closer to the £500 target.

Secondly, I was thinking, what if I normalise my position sizing in a way, that I always make £200 loss/profit. Meaning, when I get to enter closer to the resistance, I can double down on my position size even further. While when I'm entering further away from the resistance, I'm scaling down position sizing.
With that optimisation, risk-reward stays the same (same trades, just different position sizing), but profit jumps to £800 on the month. That's a juicy 80% and well above the 50% target.

See the optimisations in the chart below.

image.png.347207e3ea0d929a6115c8cb12f2df03.png

 

So, as a result, I'm currently testing the final optimisation on my Live account.

  • Risk-Reward: 1-1
  • Not adding to positions, hence increased standard position size
  • Normalised position sizing according to max loss/profit target (£200 on a £1000 account)

 

Next update, once the month is over and I have the Live results.

As usual a very thorough feedback breakdown there Daniel.  Very impressive.

I'm pretty sure you're only a few steps away from success.   Looking forward to your next report.

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On 27/08/2020 at 15:16, DSchenk said:

In the past couple of months I was playing essentially the reverse of what Ross from Warrior Trading does.

Gap Short instead of Gap and Go.

Much of the procedure is exactly the same.
Scanning for gappers (gap-up) before market open.
Filtering by shares below $20 (preferred below $10), low float (typically smaller than 200mil) and small spreads (smaller 2%, better smaller 1%).

Then instead of jumping in long on market open, I wait until they had their initial run and found a potential high of day. This is when I go in short and ride the downwards momentum.
I see it as such, when Ross is finished with trading the long side, I go in short.

This actually makes a lot of sense lo..  I've never considered simply Shorting on reversals.  haha.  Simple when you think about it. :D

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Sounds like John Carters - Opening Gap trade from his Mastering the trade book

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On 23/09/2020 at 13:34, nit2wynit said:

Hi, My Share dealing is going far better than my Spread Betting.  I put about £800 in share dealing to see if I could notice a difference.   However, I made some rash trades early on.  Then, the my account grew on Virgin from $16 to $28 where I took the profit.  I grew the account to £1200, but it came down to £1000 as I sold other Stock.  I added another £400 to make a total on £1400.  I've bought and sold so many times I've given a lot of profit back in commissions.

On the whole, I'm where I started.  £800 +£400 = £1200.  My account is actually @ £1245 as of now, but is down 13%.  Total Book cost is £1445.

Spread betting the same I'd be wiped out already.

I think Fine Tuning on Share Dealing is far more preferable and wise than learning Spread Betting and actually losing.

Since November, here's what I've seen and missed.

Virgin Galactic @ $6.50 went to $42. I bought after the drop at $16.50 and got out @ $25
Velocys Plc at 2.5p and missed it go to 16p.  Got in at 6.5p on the pullback and back out again @ 10p.
Novavax @ $7.50, got out at $10 only for it to go to $15 overnight then on to $170.  FML!

This week i was in Fusion Antibodies @100p, it opened up next day and I got out at 50% profit, only to watch it go to 150%.  

So yeah.  Share dealing is sooo slow compared to Spread Betting.  It's too difficult to get in and out quickly.  The platform is limited.  I've not been able to put a Stop in place before I place the trade.  I'm literally looking for a workaround now.  I'm also looking at other platforms to use.

 

 

Maybe one day you will stop looking.  The answer is right in front of you, but you won't acknowledge it.  Most people here are in denial ;)

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