There is no strategy that earns in all conditions. My main strategy is based on breakouts, which is why I need strong, daily trends to make money. This is perfectly shown by the last two months. May, which has strong trends and June, an extremely consolidating month.
This reflection brought an interesting idea for a new strategy.
In the previous post I have already indicated what I mean, it is about playing the false breakout formation or to losing the momentum after a strong movement.
Entry rules:
Determining the last top / bottom according to the trend,
when the price hits the given level, I start searching for the moment of entering in the opposite direction.
Based on: stochastic / fractals / reversal candle formations.
Indicators:
Indicator for determining the trend - I am big fan of the averages so probably I will stay with it
Indicator / formation to determine the moment of entry - the simpler the better, I will test what I wrote above
Summarizing:
In the morning I set the last top or bottom (zigzag) according to the trend (MA), When the price hits the given level, I start to look for the opposite signal according to the selected indicators. I am opening the position. After opening, I put SL behind the last top / bottom, I close the position at the end of the day *
I will determine exact hours during EA tests.
I am getting into coding and testing, Iāll soon post the first results.
Oh, 98% of the strategy goes to the trash bin, so this idea can be exactly the same
My starting supposition in TA of any chart is that price in a trend tends to continue moving in the direction of the trend. Whereas you describe June as āan extremely consolidating monthā, I just donāt recognise this. The first 10 days did indeed give me a loss. But from that point onwards to the 30th, my trend-following strategy pulled in a double-digit % increase in the account.
Maybe you might want to take a second look at what happened in June?
Negative month is nothing bad - it just happen from time to time. As I said, in specific market condition every strategy has its bad time ;). Sure, I can optimize procedure of indicating trend but it do not secure me from negative months. What do you think about it?
Well that is true of course. As long as OVERALL for, say, one year the thing is profitable monthly ON AVERAGE. Thatās pretty much how my own core trading system performs unfortunately. All depends though on your needs I suppose i.e. Iām in a situation right now where I have to pay bills MONTHLY so I no longer have the luxury of being able to take losses in any given month or sitting around waiting for profits hence my now trading something else intraday.
Got two threads going and thatās all I do. One is Connorsā TPS system and the other is trading pivots (which has now turned into a combination of my own method as well as Welles Wilderās Trend Balance Point System). Nothing more to it really.
I do not understand why losses are taboo. Although most people are losing money on the stock market, hate meets them instead of support. I have already written about it and will mention it again - win rate is not a measure of a good trader. Trading is not a sprint, rather a marathon. Only the hardest ones reach the finish line. The best traders in the world have not only losing days, weeks or months, but can also count the year in the red. Is it wrong? Of course not, the strategy had worse period. Do all companies always earn? Those who are in business know exactly how it is.
I often say that the best test for a trader is how he goes through the period of losses. Is he combining? Is he depressed? Is he changing the strategy? It is in these moments that we show our predispositions to trading. If we trust our strategy, we should consistently implement the assumptions and wait for the end of a worse period.
Trading is an occupation for many, but not for everyone.
When you understand that loss is a normal condition and that there is no super strategy that always generates profits, then you will take the first step towards success on the stock market.
Keep an appropriate ratio in the portfolio between high risk and hedging projects.
If youāve ever been to the gym, youāve probably noticed that the same weight is applied to the barbell on two sides. Thanks to this, lifting the barbell we are sure that it will not overwhelm or crush us.
Itās the same in the world of investment. If the funds are invested only in high-risk instruments, there is a high risk of losing all money in spite of potential high profits. On the other hand, if we only save money on deposits or bonds, we make the savings slowly, eaten by inflation and we do not give them the opportunity to multiply.
The golden mean is to choose the security and risk instruments so that our barbell is stable and allows you to beat new records in bench press.
Thanks to this approach, you take care of the security of capital, but on the other hand, you give yourself a chance to earn above average money.
small part of profits given away.
: