Evolving my understanding of things.
Okay, a lot has happened since my last post.
I feel like I’ve gained so much more knowledge about NOPE.
I’m switched to futures trading from options trading.
Promptly started over-trading and losing money.
It’s so easy to see a billion opportunities a day, and try to take them.
It’s a natural human response, to feel that doing *more* rather than less, will result in success. Because you are working harder. Doing more. Making more decisions. Evolution hasn’t gifted us with a mathematical mind that fully understands probabilities. And I think the concept of scalability is completely foreign and alien to our minds.
Nothing in nature is close to infinitely scalable. You plant crops, you harvest crops with the max being the seeds you’ve planted. You hunt, you can’t escalate the number of animals you’ve shot, with a single bullet, just because you think “I can’t miss this. It’s the easiest shot, I’ve ever seen!”.
But finance is different, especially in scalable markets like ES.
I’ve become fully convinced that my natural response is completely opposite the behavior and response that is necessary for success.
One thought experiment I had, that I feel like revealed some insight.
If you ask yourself the question:
Why are institutional traders so bad? Basically if you are bench-marked to the S&P 500.
The smart thing to do, the incredibly obvious thing is to: decide to make one decision a year. And the rest of time to simply buy SPY.
To wait, to observe, until all the variables line up in your favor, till the decision becomes incredibly obvious and even a moron would go long.
And make one leveraged bet on the S&P with options or whatever.
I don’t understand why people don’t do this.
Achieve the 3–10% above benchmark and take their 2 and 20 and go home happy.
If I had to guess it’s ego. If you spend your life trying to understand the complexity of the many different people trading in the market, then avoiding so many “opportunities” would probably be really difficult.
*We all think we are better than we are*
So with that aside how am I doing with trading the S&P 500?
Terrible. Because I’ve fallen into the same traps as everybody else.
I’m made trades:
Only to get bounced out by conservative stops, while picking the direction correctly, or getting a bad entry because of FOMO, and then selling off because the natural tendency to question yourself when things aren’t going your way.
If I didn’t have experience with winning at poker(at one point I calculated I was in the top 2% worldwide *despite being mediocre*), I would quit at this point.
My futures record: (because I feel it’s important to be honest on the internet).
ALL TRADES (from 4/13–5/15)
Gross P/L$(3,809.25)
# of Trades
663
# of Contracts
2008
Avg. Trade Time
3min 18sec
Longest Trade Time
1h 15min 45sec%
Profitable Trades34.99%
Expectancy$(5.75)
Trade Fees & Comm.
$(1,250.88)
Total P/L$(5,060.13)
Basically dog-shit. And why? because I feel into the trap of thinking I could always recognize a profitable spot, when really, the 75% spots I picked were good, the 55% were more like 35%, losing spots.
So moving forward I’ll be re-funding my account, and taking max one trade per day and seeing how that works out.
Hopefully +EV.
