week50: My evolution in the approach of defining good trades 2014 + Finalizing my trading concepts for 2015

It is through this blog that I document my evolution.

March-June

At the start of the year, I worked on finding “A trades” to hit my big positions on, and gave a scorelist to categorize them. The crux of the whole approach was based on quality and hitting hard on them, but I will say 60% it did not work out.

Reasons:

1. While I felt I was good in getting big picture, they do not necessarily mean the next 60-100 pips will move in the said direction.

2. Because of the rarity of the trades, I was more often than not, anxious to see what I want to see.. This is a dangerous mindset for a trader to have. I became wrongly focused on find the yellow-purple combination. To be always on the lookout for sharp extreme reversal.

3.I did not realize what I had done was fighting against the current, instead of using it to help me move to where I want it to be.

4. I was often charting on h4 or d1, but I did not have a h1 setup to let me get in with the capability to define my downside to about 50-80 pips. Definitely , I wont be able to survive 200 pips of paper loss on a big position.

June-Oct

It was a great time of nice USD strength which everyone should have profited much from.
However it was also a time for me to discover and pursue my idea of concertizing a h1 setup to identify my SL from and ride the bigger pattern.

I joined triggerpoint after seeing how Leon had made a trade which I was opposite from and got it wrong. The TA part itself was easy to grasp and soon I was getting much more trades. However the Entry point for triggerpoint was really terrible and when the trades did not go right I lost more often.

While there was a few good weeks initially, it became clear that triggerpoint had major flaws in the TA application:

1. It is trying to predict tops and bottoms, without respecting the higher timeframe and trading in fractal nature

2. The entry point is way far off from the low

3. The RRR is relatively poor at 1:1

4. Most of the time, the owner did not make many good trade calls. I was disappointed with the lousy application of TA, which was superceded by random understandings of FA to suit whatever bias that was presented.

I decided to take with me to continue and improve on the application of macd. I also took to strengthening my understanding of channel play. Not all channels are equal, but they should fall broadly into 2 categories: price channel or flags.

So likely situations I will encounter will be ” is this a bullish price channel or bear flag?”

Oct-Nov

Despite so many years of lessons , reading up , courses , gurus, i am still able to hit big SLs or read the trend wrongly!

Mastery of multiple timeframe is not an easy endeavor but I do agree that it is a must in order to ride big trades or know how to get out in ranging situations.

why was I still having major pip loss in this period?

1) Still was not able to trade the “now”. Keep thinking of reversing using channel and macd, missing out on the “now” flow

2) because positions were small. did not set an SL. However , entry was also to be blames did not see testing at all.

3) Position size were also not regulated. Profitable pips weeks were marred by losing on bigger weightage positions.

Dec

Solutions and Positives to bring to 2015 will be:

1) Direction bias – Trading the “NOW” in context of Trend, Momentum , Timing

Adopting h1 as defacto timeframe. Identifying the “now” is of priority if I ask myself
” where will the next 50-100 pips come from?”
Of course I will be integrating understanding of big picture to help me in riding my trades.
I acknowledge that while big picture may be on my side, Momentum is what will get me my next 50-100 pips,

and timing will make the difference between SL , winning 30 pips or making large TP with 100-200 pips.

2)Application of Michelle Testing on MY levels:

evidence of price testing SAR will come in the form of Batman or Hello Kitty which validates quick turn of price.

However, i do wish to use them to join in the flow n ride the current , rather than trying to pick the bottom with this testing

3) Application of Macd

macd divergence to be used in flag channels

macd top n bottom to be used as warning system to prevent buy high or sell low.

4) Channel types

1- price channel to serve as guide of entry into the “NOW”

2- flag channels to serve as continuation to ride the “NOW”

5) Money management

1. Advent of “Enforcer” to calculate position size and inculcate good risk management.
As my strategy has moved towards increasing quantity with taking relatively good quality trades, I need to balance out the risk across the basket of pairs.

2. RRR calculator- Visual aid to encourage good business proposition by having superior RRR. Having taking good RRR throughout, can ensure my overall success by following on age old adage on RRR.

So there they are , my trading concepts for 2015 in order of priority.

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