My trading has been a little rocky lately. I've been trying a couple of new things (not sure why) and I have suffered a couple of big losing days (for me). Just need to get back to my basics and stick with that works. Wondering if other traders experience this? Step out of their comfort zone to try new things and immediately get clobbered over the head I guess the old saying of keep it simple stupid really applies when it comes to trading. I think that I just have been trying to do to much with trading. I mean after all it's not rocket science.... Leland
Leland, I dont really think there is anything wrong with trying out new techniques, but you must use a smaple size until the set-up has proven to give you a viable edge... PEACE and good trading, Commisso
There is always the danger of continually switching to the next best thing. This also has some relation to the everlasting search for the holy grail that some go through though it often seems innocent enough. Now don't get me wrong, we must always be learning. This dosn't mean that we constantly need to be switching trading techniques. A trader's bread and butter should be the mainstay and the other stuff should supplement, rather than the other way around. I think this thread is all about focus and keeping the eye on the ball instead of swinging for the fence and striking out.
my experience showed me that the best improvements in trading happen when I take one or two weeks off. Your brain can free up again and new ideas for trading based on all the experience you gained over the years are developed and combined in my brain. While acting directly in the markets I don't see the the forest anymore because of the many trees. In this moments I have to concentrate on my trading plan. When I want to try new things in these time frames failure is in sight. alain switzerland
Buy strong stocks when the futures go up, sell weak stocks when the futures go down. How is that for simple.
Just fine, Vinny. I know whenever I depart from tape reading and the futures, my P & L takes a hit, as it did for the past month...but I got a dose of reality from another regular here in ET (thank you!)and now I'm back to doing what I know...reading the tape and following the S & P. It is pretty simple when I do what I know. Jim
If we are making or can make $$ 'sticking to the basics' or by using a given trading technique, why do we feel the urge to try something new? For me there are three main reasons: First > the technique I'm currently using isn't working as well as it was. The effectiveness of certain techniques change over time with market conditions. Most of us don't have the patience to wait for the market to come back to us... and why should we, it may not come back. If we try a new technique, then we have a learning curve and as Commisso points out, proceed initially with small size. Second > my strategy may be working but have a limited profit potential. For instance, I was trading KEM and got pretty good at reading the specialist and the way it lagged the compq. But daily range has shrunk over time and it's become less predictable, and since it has low volume upping size is not a viable option. So as I apply this same technique (tape/specialist reading) to a different stock, once again I am on a learning curve and it will take some time. Third > I see big moves that are happening around me and feel that I am missing out. Most of these are news/warning/earnings related and "if I had been paying attention I could have participated." If my bread and butter strategy requires a constant attentive focus (ie tapereading), and I attempt to supplement that with another strategy, won't my tapereading suffer? This is one dilemma that we face, some strategies don't work well together. Is it best to fully focus and become very adept at one technique at a time? And once we have reason to change, give the new strategy our best shot? Perhaps if one has enough experience then we could develop a repertoire of strategies and would then gravitate towards the one that offered the best possibilities given current market conditions. I am by no means an accomplished trader, but I will become one. At this time I am feeling my way and constantly searching for answers
Thanks for the very thought provoking reply. It's funny that you mention big moves taking place with news stocks as that style is my bread and butter. I know exactly what you mean about trying out new things. I think part of the problem is that we are only human - I mean I only have one set of eyes and can only watch so many stocks at a time. I tend to "zone out" and look at everything under the sun and miss the great play that was under my nose the entire time.... Leland
If you backtest a new idea and it works, then try it for real. if it fails, don't. No money need be risked. Backtesting is absolutely critical to my mind. I so often have what I consider to be a great new idea, and when I backtest it, it turns out to be aloser in the long term. So often we see something happening 2, 3 or even 10 trades in a row, and we think, "wow, this is a great thing to watch for". But maybe it isn't really. It's the classic problem of too small a sample size. I use wealth-lab for backtesting, both EOD and intraday. If anyone has an idea they would like to see evaluated, I am willing to try to code it, just send a note to my elite inbox. I have 2 years of 5-min bars of the naz100 stocks.