I’m back! I didn’t realize how long its been since I last posted, almost 3 months!
Since then I’ve signed up for a trade coaching/system, found it to be too time-consuming, quit that, and did a little soul-searching.
I’m ready to start again in the new year. A couple of improvements I’m making:
- Using correct position-sizing
- Following trends
- Using proper risk-to-reward ratios
- Using a journal to capture what I saw at the time I took the trade
I was taking losses that were way too large (i.e. 5% of the account) which is a surefire way to take myself out of the game before I learn anything. So I’m going to correctly size positions by maintaining a maximum risk of 1%. My goal is to keep things as simple as possible by only taking trades off 4 hr charts in the direction of the prevailing trend or within bounds of a range (keeping in mind support/resistance levels as identified on the daily charts and looking for consolidation on the 1 hour charts). I will only take trades where at least a 2:1 risk/reward is feasible.
I intend to “paper trade” this week and see what it looks like before going “live” next week. I know a week isn’t much (particularly a holiday week), but this new approach is restrictive enough that I’m not worried about overtrading.
I’ve been reading “Market Wizards”, a classic book on investing wherein successful professional investors are interviewed and their trading and investment principles are shared. Many of them employ a trend-following approach, albeit on much longer time frames than I will be working in. The concept is the same though: reduce risk by going along with where the market already seems to be going and winning enough along the way to pay for the inevitable losers when the trend changes or doesn’t continue as expected.
I’ve had one paper trade work out so far, a short on USDCHF that gave a 3:1 winner.
So, that’s my plan. We’ll see how it goes in 2019. Until then, Happy Holidays!