Longer-term tranche adopted by Factor Prop Account

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Thoughts on a Weekend Afternoon, September 24-25, 2022

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Factor Member Webinar September 2022 – Drawdowns

Recorded live September 13, 2022

This webinar is specific to the Drawdown document issued on August 29, 2022, "The Dreaded “D” Word, August 2022"

Live questions from Members  

  1. Factor's underwater curve changed dramatically around 2014. Is this due to measuring DD using closed trade NAV, or due to aggressive risk management? 13:50
  2. What's your most remembered drawdown period? 16:01
  3. How much of the drawdown period is self-inflicted as in we make the period worse ourselves rather than sticking to the trading plan we all should have? 18:01
  4. What is an "acceptable" drawdown for those who have retirement accounts and do not have the ability to do shorter-term trades, hence, needing to hold longer? Whether that be an index fund, BTC, etc. 20:18
  5. I started paper trading eight months ago and have had equity vol but no progression; still at around break even. Very difficult to know if this is a natural DD or just not a working system! 23:22 (A Brief Introduction to Probability Theory and the Random Distribution of Results: Understanding the Concept of Sequencing in a Trading Operation
  6. What practical steps do you take to deal with mental torment? 25:57
  7. My data over two years shows that if I take every trade my total performance would be 6 X greater with fewer drawdowns. Common reasons for not pulling the trigger are: Pattern extended from MA's, Support/resistance close, pattern looks loose, not text book pattern, looking for more compression before breakout. However, looking back, they have more going for it than not. Do you have any advice here? 29:07
  8. You mentioned "be able to take many small losses", does limiting risk to 1% but not moving stops aggressively satisfy this? 31:38
  9. The first line in your how to have success in trading is having Defineable and Comprehensive trade. Is this a written document that you continually update? If so, is it fairly detailed and includes all of your trading weapons? I would love to see an outline if this is something that exists. 34:23 (BOOK: Thinking in Bets by Annie Duke
  10. How do you decide when to move stops and to where? 38:05 (A protocol for Entering Trades Using ATR Stop Levels
  11. What was the pivot to introducing varied bet size? My struggle is when to increase bet size, and if the next is a big winner then I'm missing out. 42:08
  12. Do you think it makes sense to start cutting trade size if you see lots of tradable patterns to limit the risk in having more signals than normal? 44:44
  13. Experience is the best answer to many trading questions ... Knowing your "edge" & knowing how to calculate that - Before! - placing a bet ... discovering this changed my life ... Thank you, Peter, for this discussion! 48:20
  14. You scale out of trades and less frequently add another traunch. Could you elaborate on when and how to take a second bite? 49:06
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What a difference a line makes, September 22, 2022

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The Monthly | Blog Edition | August 2022

A glimpse inside the Factor Member Portal

From the just-completed month

August Numbers

  • Tweets posted on our Private Member Twitter: 87
  • Updates and Special Reports posted on the Member site: 6

Snippets from Thoughts on a Weekend Afternoon

Peter’s thoughts on the finished week and the week ahead | Issued most weekends

A short clip from a member webinar –

An excerpt from a 10 page report on DrawDowns – 

Why do drawdowns occur?

Following I discuss two types of Drawdowns:

• Drawdown ending in destruction or disappointment
• Drawdowns within long-term profitability

Drawdown ending in destruction or disappointment
Here is an important point: Technically the concept of “Drawdowns” applies to long-term profitable trading programs because eventual new NAV highs are implied. A trader whose account zig-zags in a downward slope over time or never really gains traction technically does not experience Drawdown per se.

Over the years brokerage houses, regulatory agencies (such as NFA and CFTC) and academic researchers have consistently reported that fewer than 20% of futures and forex traders are profitable after three years. After five years the proportion increases because of survivors’ bias. My guess is that the data for crypto and equity traders are very different. Crypto traders who began prior to 2021 would have much higher success profiles – crypto traders who began since 2021 would be similar to futures and FX traders. Stock traders who are longterm holders have also done well. Short-term stock traders would fall into line with futures/FX traders.  There are many reasons why a trader might never gain traction. I will highlight several.

Absence of a trading plan.

As insane is it sounds, many people who engage in market speculation do so without a conceived organized plan or goal. This applies to the process of identifying a candidate trade, the sizing of
trades, overall risk management and managing individual trades.
Note: There are a very small proportion of traders who do quite well, even from the start, based on instinct and feel rather than rules, but these individuals are a huge exception. How does a person know if he or she is in this group?

Answer: Profitability comes naturally and continually. I am NOT in this category.

Non-commitment to a trading program (lack of conviction). A trader may have most or all the pieces for a successful trading program, including:

• Insightful market analysis
• Trade identification
• Entry process
• Risk and trade management guidelines/rules
• Organized procedures
• Performance reviews
• Process for adopting modifications to plan
• Safeguards to protect plan from emotional swings

But still, traders may have lacked the conviction to go “all-in” following the plan. Self-doubt and second guessing are huge enemies of trading success. A trader who does not follow his or her trading plan does not really have a trading plan.


Factor Member Private Twitter

Top Nine Tweets



Recommended Reading

Contains an affiliate link to our Amazon Store

Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History by Liam Vaughan

Become a Factor Member

Members receive:

  • Trading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print book
  • The Weekend: Thoughts on a Sunday (Weekend) Afternoon
  • The Monthly: Issued monthly, will provide an overview of the completed month and highlighted member content
  • Private Twitter Page: Real-time alerts on interesting charts and observations, member dialog, the process of trading, the human aspect of trading, and risk/trade management (streamed on the member site as well)
  • Webinars: Periodic member-only webinars where Peter speaks about current conditions and fields member questions
  • Knowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of trading content
  • Automatic notifications: Email and social media notifications are sent out when new content is published
  • Factor Report Educational Papers: Periodic educational and instructional documents

View your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work. My goal is to shoot straight on what trading is all about.

I hope you will consider joining the Factor community.


Thoughts on a Weekend Afternoon, September 17-18, 2022

This content is for members only

The Monthly – August 2022

This content is for members only

MEMBER WEBINAR: September 13, 2022 at 2p Central – Drawdowns

This content is for members only

Thoughts on a Weekend Afternoon, September 10-11, 2022

This content is for members only

Factor Member Webinar August 2022

Factor Member Webinar - Market Review and Q&A with Peter Brandt - Recorded live August 29, 2022 Market Review with Peter  Live questions from Members  
  1. Can you talk about deciding what patterns to trade? I find myself unable to decide which patterns I should pass up and which I should trade. If I only trade "pretty" patterns, I miss the winners. But if I trade everything, my losers stack up quickly. Any advice on what to look for in this journey of discovering my sweet spot? Is trading every horizontal pattern longer than 2 weeks a fool's errand? 26:33
  2. You have previously said you need a "measured risk" to take a trade. But won't every pattern give you a "measured risk" using LDR? 29:11
  3. Will you add to a position if it gives you a buy signal and you can move your stop up on the existing position to allow for a larger position with no additional risk? If not, why not? 30:04
  4. As a price action trader, do you follow any Wyckoff observations on volume when evaluating a chart pattern? 31:16
  5. For those who have 401k's through their workplace that are equities only (ETF's, S&P 500, etc), do you have any recommendations for investing in equities...i.e. buy and hold, trend following, moving averages, etc? 32:56
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