Complete Analysis of 1st Challenge
Background : Call me crazy or a fool, I never had a proven trading strategy before I started this challenge. To others it very well sounded like my target was to earn a fixed amount in the given time to prove somebody something. (This was very much clear in everyone's comment that I received in Traderji and also in my personal circle), But to me right from the beginning my goal was pretty clear. i.e. To be that person who can make 300% in 5 months. So my intention was not on the capital gain but squiring all those attributed that a successful trade holds. (Now why 300% ? Well that was just a number, After seeing the comments I knew I have kept my target big enough)
Prior to this challenge, I was very care free in my approach all the time, and there was a lot of
Knowledge-Action Gap. i,e I knew all the time what I should be doing, but I always failed to put it in practice. sometimes its just the care free attitude and sometimes its laziness or whatever, the result was same, I never got consistent in anything, be it following a system, or maintaining a journal, or log file etc etc. I always gave up and took break when a loosing streak started, So all the time I was living in this denial of accepting the loss. So this was my 1st challenge to face myself during a loosing streak and turning it around. Not to run away.. Along with this there were many other challenges to be disciplined in maintaining a journal, log file and being consistent in my strategy also.. So I just made up my mind its now or never, I can not see myself being known as a person who is not committed to anything.. Something had to be done. So I started that challenge to connect all the loose ends.
Stage A : I started the journey. At this point I still had not developed a concrete strategy. I just had the points in my mind about how I am going to evaluate the trend, where my trade areas are, how I am going to enter etc. I have done only hindsight backtesting, Again no proper documentation of backtesting data. So I just got started with this mental strategy. And here my strategy was more about catching tops and bottoms, i.e. finding the weakness and strength in the market and thus trading the market turns.
I was not properly applying the concept of trend and as a result I had many scratched trades resulting in whipsaws in equity curve. Because sometimes market turned sharply and other times it spent quite some hours till all the supply/demand were absorbed..
Stage B and Stage C : This stage shows my scratched trades and some win trades in between. The loosing trades are failed attempt to catch the reversal and win trades are where my mental strategy worked.
Stage C to Stage D - By this time I had come to know the fault in my approach, and I slowly started to apply the trend. But since the introduction of a concept happened just suddenly with no prior hand on practice, there was a lot of mistakes in real time, also I was getting affected by the psychological road blocks of missing out a move and thus jumping ahead early without confirmation of HTF price action.. All this was finally represented in the slow decline in my equity. A continuous 22 loosing trades with just 3 small wining trades in between..
This was the time where I would have ended the project before, but I was committed not to get back to my comfort zone of quitting ever again.. I have to continue..and I did.. Now there was no shame of accepting that I am making loss, I had already accepted.. Coz I can fake it before the world but I can not fake it to myself.. The good thing I did was through out my previous loosing streak I have never stopped my journal and trade log file..
Stage D to Stage E - I reduced my trade risk to only 100rs. Took one day break. Wrote down my startegy of how I am going to evaluate the trend, my trade areas and setups etc. I practised for 1 day ( i know that was not enough). and then resumed trading. Slowly I started seeing improvement in trading outcome. An uptrend started in my equity.. gradually I increased my trade risk from 100 to 300, then 500 and like this to my full trade risk of 1% i.e. 1500, and I almost recovered most of the lost capital..I was happy with myself, for the first time I knew I had done something right, I did not hide, I did not lie, and I was proud for me..
Stage E to Stage F and G - But at the same time I had gone over confident,. I knew my lacking point was I had not practised enough on my startegy, so during the uptrend of D to E, everyday I was testing 2 days of historical charts (one before market and one after) to improve my skill on my trading system. But after the satge E, I stopped. I did not stop intentionally, it got stopped in one weekend, and by the time next week started I had become cold foot, I was casual again thinking "I have made profit, I have got good hand already, So I can manage if I dont practice it for few days".. ( A BIG MISTAKE)
As a result my decision started getting wrong, and I again started making loss. And this time there was a new psychological demon to tackle. "FEAR". I knew the pain and hardship I went through when I recovered my lost capital. I just did not want to go there again.. So this time when I was loosing and my equity curve was declining I was living in a new form of denial..i.,e. not to accept loss the way one should..I started fearing loss, and started expecting every trade to be profitable.
Stage G to H = I was almost close to the previous bottom.. took another day break.. I said to myself, that I can do it again.. becuase I have done it earlier, I know what it takes to make profit.. I again lowered my risk, started daily practice, controlled my emotion. and as a result there was 4 consecutive profit, I knew I am back on track..
Stage H to I = May be I was possessed with some GHOST or something, but today I understand whatever happened, happened for good.
I changed my trading plan of trading equity intraday to trading NIFTY and BANKFNITY future...suddenly my trade risk was higher than what I was comfortable psychologically. In just few loosing trades, I made a new equity bottom.. and then it hit the sense back to my mind.. I was like what have I done !!! So finally my equity curve was showing a strong downtrend with a new bottom.
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I understood it was all m,y fault I risked more that I can afford to loose. So I had to switch back to equity intraday, I thought I can be fine with loosing around 300/500 per trade, But then 2 more loosing trades and I found myself I am even uncomfortable there as well. Thats where I realized its not the amount of risk, I am
just not able to accept loss at all, Every profitable trader knows that loss is a part of this game, but be it a new bottom, or a continuous downtrend where I lost nearly 8% of equity, I was not able to accept more loosing trades..
I had to fix this psychological issue as I came to know, as long it is there I will always fail to pull the trigger, I will miss good trades, I will do mistake and I can not be that person who can make 300% in 5 months.
So I felt it was time to stop, not to quit (I am still here with the same challenge). I felt it was time to heal. So I accepted my defeat on the 1st challenge. But all through that journey I came face to face with many of my hidden demons from whom I had always ran away and found my comfort zone in quitting.. But not this time. I said myself I will be back one day on the same challenge being a better person to handle my emotions.. All the loose ends has to be connected this time..
.>>> NEVER GIVE UP <<<