Sunday, September 14, 2014

How I Use Tradervue with BOWS Bootcamp

Last month, I enrolled into the Bulls on Wall Street (BOWS) 60-day Bootcamp training program for daytrading stocks, and it has surprisingly exceeded my expectations.  After years of studying trading and joining various chatrooms, I initially thought, what else could I really learn or gain?  

Before joining, I asked several prior students and they all said the same -- the Bootcamp was well worth the time and cost.  And yes, I was still a bit skeptical, I thought I was different.

I was wrong.  

I've realized that you never stop learning something new, even if you think you already know a lot. A surprise value-add has been the highly focused / low noise content within the private Bootcamp Google+ community from all the current and prior students, where I continue to learn and also try to help pay it forward.

I'll write more about the Bootcamp and why I joined in a future post.  

One interesting and reassuring topic within the Bootcamp has been the use of Tradervue for journaling trades.  I've written much about Tradervue in the past here and it has been great to dust off some of my old Tradervue tags from back when I traded stocks more actively.  

Posted below is a slightly modified crosspost I made to the private BOWS community regarding how I'm using Tradervue now to create and refine my trading plan.

* * * * *

OVERVIEW
"Better decisions through data" was the motto for a company I used to work for many years ago.  It's something that I still strongly believe.  And analyzing data has been a big part of helping me to make better trading decisions.

In this post, I'll explain the Tradervue analysis of my SIM (simulated) trades to determine whether the setups I outlined in my initial trading goals are still applicable.  

Based on the performance of the setups, I will then create and refine my trading plan.  This is working somewhat "backwards", but given my trading background, this process works for me.


PERFORMANCE MEASURED IN R-MULTIPLES, NOT $'s
Trading in the Clique Fund (BOWS hedge fund) is my goal, so the trading conditions (trading share size, daily loss limits, etc.) I used are similar to initial conditions when I go live.  

However, I still chose to measure my performance on the R-multiple scale within Tradervue, which is simply a ratio of how much you made/lost compared to what you initially risked. 

Examples: 
a) Risk $10 and make $20, you made +2.0R
b) Risk $10 and lose $5, you made -0.5R

That way, I focus on reward/risk for every trade, NOT absolute $'s.  It's easy to brainwash yourself and become overconfident with big fat $ returns under SIM, only to get smacked hard with reality when you go live.  

It's also harder to "fool yourself" with the R-multiple returns.  For example, you can make up a big losing day with one last huge unrealistic 50,000 share winning trade, whereas the R-multiple returns will still likely show you with a losing day.  

I've fooled myself too many times in the past, so I've learned some lessons.  Use Tradervue or any other journaling tool/spreadsheet to look at the cold hard facts.  


TRADERVUE TAGS
It was a decision filled with pros/cons, but I decided to reuse many of the tags from my prior experiences in stocks.  Therefore, some of the tags you see in this analysis may not be a part of the BOWS vernacular.

Once the tags are entered for each trade, it's very simple to filter the results to only view or report the performance for a specific subset of accounts.

Example: 
To only show or report on trades that were long bullflags that were in a ascending triangle, I would type in the tag field:

       long AND bullflag AND asctri


OVERALL SIM RESULTS


*  Results are based on SIM trades (beware of the *fantasy fills*!), gross (no commissions), 25-100 shares per trade (with few rare 200 share trades), $150/gross daily max loss.  My goal is to get used to initial Clique fund conditions.

*  R-multiple return was +59, based on 400 trades from 8/19/2014 to 9/12/2014.  "Probability of random chance" = 4%, so results are statistically valid.

*  If a consistent 1% of portfolio was risked per trade (R=1%), that's an almost 60% return.  And if 2% was risked per trade, it's almost 120% return. But this is NOT a realistic assumption -- it's hard to daytrade with a consistent R value.  Reality for me will likely be more like 0.5%.

*  I overtraded, surprise!  And only trading 100 shares on lower priced stocks, even if in super-juiced-momo-mode, is very challenging to make decent net dollar returns consistently.  Commissions and errors also start to compound dramatically with overtrading.

*  Winning accuracy was about 50%, which is not great given the lower profit factor value.  I was not as selective as I could have been.  In the back of my mind, I was thinking, "I'm collecting data, so I'll just do this to see what happens."  Not a good habit to make.


KEY FINDINGS

Under my initial goals, I thought focusing on flags, ORB, and 123 tops/bottoms would generate the best results.  

WRONG!  Well, kinda...  Here are some key findings.

*  The long side performance dominated over the short side.  Perhaps that's just the current condition of the markets, as well as bias of stocks.  Or maybe the chatroom's bias.

*  Therefore, the bull flag and 123bottom setups also significantly outperformed the short side of those respective setups.

*  I always thought the bearish "h setup" was a good setup for me, but based on the past month, that's WRONG.  Although that setup might do better if overall markets go into correction mode.

*  The ORB setups were profitable overall, but didn't generate a decent average R per trade.  In addition, some of those ORB setups should have gotten runners that run the entire day. Likely I'm doing it wrong.

*  The triple tap breakouts as well as the sideways consolidation type flags were surprise solid performers.  However, need bigger sample for the triple tap breakouts.

*  I thought I'd be a pretty good trader of 1min charts by now, but the data clearly says STAY AWAY.  I need to focus primary on the higher timeframes, and rarely use 1min except when absolutely necessary.

*  Revenge and rogue type trades were a small percentage (< 4%) of overall trades.  But still, total R-multiple profits could have been about 20% higher without them, these trades are a huge negative impact!


OTHER COMMENTS AND REPORTS
*  There is an opportunity to do an even deeper dive to optimize what combination of tags do best, as well as time of day type analysis, and more. This will be something to explore in the near future. 

*  I will need to focus on creating tags to help determine how best to optimize exits.  Exits are arguably more difficult than entries.  

*  Additional reports from the upgraded version of Tradervue have been attached.  These are just a very small number of interesting reports that could be used to further refine your trading, I've only scratched the surface.  Most of the reports should be self explanatory, but please feel free to leave questions in the comments.
A trend report of average P&L
Determine optimal stop amount
Trend of average heat taken on trade (MAE)
Evidence of trade mis-management -- letting winners turn to losers
Report based on tags

NEXT STEPS
Now that I have a clearer idea of what works and what doesn't, the findings from above will be used to modify and tighten up my initial trading plan.  

Focus on your strengths is a common mantra. Therefore: 

I will most likely focus my trading plan on the setups with the magenta values under the PF (profit factor) column of the INITIAL PERFORMANCE BREAKDOWN report.  
Why should I use a lot of energy to try and become a profitable 1 minute chart trader when I'm already doing pretty well with other setups?  

Markets ebb and flow -- what works now may not work in the future and vice versa.  So all these setups will continue to be monitored, and as the market changes, adjustments will most likely be made in the future.


7 comments:

sleepytrader42 said...

Hi, Nice to see you posting again. I have some questions regarding your sim trades as I wish to replicate the process you used.
1.Did you use Ninjatrader and then import your trades into tradervue?
2. How long did it take you to sim 400 trades? Hours? Days?
3. Did you use market replay and at what speed did you run it at?
4. Do you have any other recommendations?
Thanks.

Grove Under said...

Hi Sleepytrader42,

1) I used Tradestation, so the import process was pretty simple for me. Tradervue imports based on your broker (many supported), but there's also a generic import layout that's very robust.

2) The output of the analysis is based on about 3 weeks of trading

3) Unfortunately, Tradestation doesn't have replay, but it sure would be nice.

The trading was all based on a paper account at Tradestation, all executed in real time during live market hours.

4) One approach would be to set forth with a relatively broad trading plan/setups, and then do your best to execute them over a period of a few weeks.

Make sure you document very carefully which setups you're taking on every trade.

Then you can look back and evaluate which types of setups worked best for you.

A different approach would be to limit your setups to 1 or 2. Really focus on only those setups. See if you can do it, easier said than done. Easy to take other setups that "look good." This is a good test of your discipline.

After a few weeks, evaluate how well you did on your results. Not just based on the actual P&L, but more importantly, did you follow your rules? Did you stick with just the 1-2 setups, or did you stray?

Again, only executing 1-2 setups over dozens of trades is much easier said than done. You either followed your setup thru thick and thin, or you didn't. It's black and white.

Good luck!

TraderAm said...

Hello

I came across your blog when doing some research on traderVue. Like the info and layout etc. I'll add it to my blogroll as I day-trade stocks as well.

CameronJ said...

Great analysis. Going to use some of your analysis for my own TraderVue review. Looking forward to you updating the journal again.

William Winters said...

Hello

I was reading your blog to find any insight on being a trader for Clique Fund. If you have any information or can point me in the right direction let me know!

Grove Under said...

Hi William,

Check out BullsOnWallStreet.com and their education program. It's a requirement to take the class before being allowed to trade in the Clique Fund.

TheLincolnList.com is also another program that has partnered with the Clique Fund, and it's similar in that you need to take the training program before being allowed to trade in the fund.

Just note that getting into the Clique fund can be expensive, due to the class tuition, as well as the ongoing monthly platform fees.

In many ways, opening up an account at Interactive Brokers could be cheaper from the up front cash perspective (assuming you're not trying to avoid the pattern daytrading requirements with a > $25k account) .

However, both the BOWS and TLL do provide great education if you're just getting started with trading. In that case, they both provide a solid program. For me, I never opened up an account with Clique, but just meeting other similar minded traders was very well worth joining the programs.

@grove_under

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