Monday, March 22, 2010

New Beginnings

As you all know today was the first day of my restructured trade plan and setups. A lot is riding on my performance over the next two weeks to execute the trades as perfectly as possible and allow the results to speak for themselves. I find that its much easier to execute trades correctly if your setups mimic your own personal traits.

One of the things i've really tried to do is tailor my setups to my personality. I'm just not a very patient person. I'm not saying that if i'm in a trade i'll bail because its failing to achieve my first target within 30 seconds but I prefer to be in and out quickly. Furthermore, I perform better if I walk away with $87.50 on two trades rather than a par and $175.00 on one trade. That's just me. That type of trading suits my personality and allows me to have more faith in my trades, which in turn allows me to execute more reliably.

I only mention this because I know a lot of you out there who are still learning methods (probably not your own) often think you have to trade everything like everyone else does. Not only do I disagree with this, I would go further to say that it can be counter-productive to try and do this. Trading isn't a "one size fits all" profession. You could give the same 10 rules to 100 different people and you would end up with 100 different results ranging for horribly unprofitable to amazingly profitable. Those results are a direct result of different personalities interacting with not only the marketplace, but the rules with which they are told to do so. This all in turn affects execution which rolls over into a direct correlation with profitability.

That's all for my thoughts of the day, now onto the days trading. I had one trade around 10AM this morning in the 6J. It was a reversal trade that worked perfectly. The thing I found a bit eye-opening was that when your backtesting I would see this trade, record it as a win and think nothing more of it. The reality is that in real time it took 33 minutes from entry to exit to achieve and at one point it was down 5 ticks against me. Now in my backtesting I don't record times in trades (nor even think about it) or do I think about what those adverse wiggles can do to your psyche in real time.

Its very easy to see a binary outcome in backtesting of win or loss. I would encourage you all to take a minute to consider the reality of each of your back-tested trades. What is it going to be like in real time? Will that draw down make you question your motives? Will the market not going in a straight line to your target give you doubt? Will all of these things make you surrender the position for anything less than your back-tested outcomes? Its not something we often think about until real money is on the line. And by then it often becomes all too real all too late.

Trade Results:
1 Trade, 1 Winner
Gross P/L: $87.50/per

1 comment:

E-Mini Player said...

You make some good points in this post! You have to make the method your own :)