I've stated in other threads that I've mainly been concentrating on tight consolidations in volatile stocks that are trading with unusually high volume. However, I've also stated that this comes with a win rate below 50%. There is a lot of decision making in the moment, and although I've done very well, I'm 55 and in my 27th year of trading and it's becoming an exhausting grind. On the bright side, I've also been implementing a mean reversion strategy over the last few years. And after about a decade of back testing and painstakingly verifying those results, I finally have it dialed in. The entries are automatic after a stock hits my scanner and that's what I've been looking forward to for many years. I just had to put up with the grind until I got here. I know last week was only a 4 day week, but more than 90% of my trades were mean reversion, and for the first time in months, I didn't have a losing day. And although I did more than 10x the amount of trades I normally do per day, it was surprisingly relaxing. In short, trading is fun again. I'm sure I'll still do an occasional consolidation breakout here and there, but the potential risk/reward will have to be so good, I'll have hit the buy or short button before I even have a chance to think about it. But if I were to only do those trades, I would maybe do 15 to 20 trades per week, and the waiting in between them would be a grind in and of itself. I've always loved deer hunting, but I suck at sitting in a stand all day and waiting for them to come to me. Come to think of it, every deer I've ever bagged was when I was walking. It's just how I roll. I just don't have the patience to sight tight when I feel I could be doing something more effective. Obviously, I won't get into specifics about my strategy, not to mention tactics. But I'd be glad to address general questions about the transition, and I'd also like to hear from others who have had any similar experiences. Happy Easter everyone.
27 years of trading 10 years of backtesting It will be hard to find someone with that background that hasn't either quit or found an edge already. Would you share the specifics of those patterns that you are sure that don't work? Since you are not willing to share your hard earned strategy, maybe share what didn't work for you? For those periods of sitting that you have to be waiting for something to happen I found that audiobooks made a great difference for me. For example commuting to the office sitting on public transport or stuck in traffic on my own car. Those books made me spend the time in a much better way.
They're just classic patterns you'll find in most books. For example, a descending triangle in a weak stock with a tight consolidation at the tip. I would short it when it broke down beyond the tip and my stop would be above it. I didn't say it didn't work. It worked great over the long run since I had a way of systematically letting my profits run. That's why I will probably still use it occasionally. It just turned into a grind. I got tired of waiting hours for the ideal setup only to get stopped out in a few minutes or even seconds more than half the time I'd still do it if it were my only option. But I found something which works much better for me.
I can't imagine how long that would take, or if it's even possible. My scanner has just about every parameter possible, and I would narrow those down as tightly as possible. But I would still have to decide whether to take the trade or not. A computer can't do that. I also have 2 27" monitors full of charts that I check every few minutes. Same old grind.
Then it is not a true niche. A true niche is one you can explain to others but they cannot duplicate your performance.
I gather your strategies, both mean reversion and chart patterns, are very short term such as day trades.