Trading Strategies

The past few weeks of trading have really been quite amazing, especially last week. However, with some of the trades I made last week, I felt somewhat uneasy about my trading and that I was deviating from things quite a bit.

Not all profits are equal. Yes, it's great to have profits and that's what we ultimately want. But, if we make profits due to bad trading, that's not good. It gives you a sense of false confidence. The feelings I was experiencing last week of somewhat euphoria were a bit disconcerting, as it's sort of like the "Evening Star" candlestick pattern.

Not a good thing, but it's a good thing my intuition (I'll call it the Holy Spirit prompting me) kicked in and I'm getting more in tuned to that side of me. In the past, I would ignore those things and it has been quite detrimental.

Over the weekend, I connected with a very experienced trader whose trading style is similar to mine. We had a lengthy discussion for quite some time. He shared with me some journeys of some very good traders, and I would like to think I'm a fairly decent trader. He shared of their tales of how they've taken small accounts into very large accounts, only to lose it all or most of it.

That's just all too familiar and hits very close to home for me. Not something I want to dwell on, but to take note to use it as a reminder to serve me now in the present to be aware of those uneasy feelings, especially when you're making profits. Most likely, that means you're not doing something correctly.

Today I got bit in the butt with a trade that really went against me very bad, which I refused to get out of until it was way too late. It's not like I haven't taken costs before, but that cost really got to me. In the middle of the trade, something else happened with me, which caused me to get a hold of my former trading coach to ask him some questions. This turned into a 3.5 hr discussion.

He asked me some point blank questions like:

1. Are you following your trading plan?
2. What are your trading strategies?
3. Which ones are you using for which trades?
4. Are you following your trading strategies to the "T"?

What came out of the discussion were:

1. My trading strategy was way too complicated.
2. My one strategy had multiple strategies incorporated into it.
3. I wasn't following my trading strategy completely, rather deviating a lot.
4. Take all the ambiguity & vagueness out of my strategy.
5. Be clear, concise -- keep it simple.
6. If the setup is made, TAKE the trade, each and every one.
7. If the setup is NOT made, do NOT take the trade EVER.
8. Create a checklist.
9. Backtest the strategies & find out the percentage profitable trades, as well ROI.
10. Backtest on varying trading days/conditions.

This was quite humbling to have this discussion with my trading coach. Didn't realize I had made things so complicated, but I had.

I've spent all afternoon & evening working on simplifying my strategies. I have one bear and one bull strategy. Took the prior strategy and greatly simplified things. I no longer use Bollinger Bands or Parabolic Sars, and I cut out the EMAs for the Volume. My charts look a lot cleaner.

Tomorrow I'll spend the day testing it on various trading days, as I've only gotten through a couple days so far. I'd like to see at least 50 trades on each strategy. That's still not a huge sample, but enough for right now as I've personally done thousands of trades already.

I'm feeling much better with regards to my Trading Strategies. Wednesday I hope to do it on various timeframes. Today I've only gotten to do things on a 3-minute timeframe.

The truth of the matter is if you have one really good strategy that works in a multitude of trading scenarios (volatile and non-volatile days, trending or non-trending).
1 Response
  1. Anonymous Says:

    From my website:

    A victorious army always seeks battle after his plans indicate that victory is possible... Whereas an army destined to defeat, fights in the hope of winning but without any planning.

    Sun Tzu: The Art of War

    It's over 5000 years old and you described it in your article.

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