My trading style has morphed to the simplest of things. I determine that a trend has ended and that a new one is in place. Wait for the 1st substantial dip and I jump in. Small stop and target at least back to the top or more. It works well but it is so simple even a monkey can do it. I am afraid everybody can do this. Is it my contextual understanding that is better or my money management or my discipline? Where is it at? What will make me better than the last guy? (The lion eats the last guy.)
Sometimes simpler is better. Whatever is making you money at the moment - that is the proper strategy.
I agree. I have simple strategies as well. They work for a while and then peter out. Take what the market gives you. By the way, monkey's throwing darts beat 75% of fund managers but that doesn't shut down the mutual fund business.
but then do they start working again? is it just about having to keep finding new strategies, use them until they stop working, and then try and fnd a new one? must be near impossible to keep coming up with new stategies? that's what i dont get. People often talk about how the market changes and so you have to keep finding new things, but i also hear about how it takes YEARS to develop a proper strategy? So does that mean that you spend 3 years to find a method, use it for 5 months until it stops working, and then spend the next 3 years working on a new one not earning any money? Is there anyone who's method has worked for 10 years for example? (or longer?)
Yes, simplicity is always the best. I'm sure that there are some quant algo guys that would disagree, but for the average retail trader simplicity is best. If your strategy is working then it would seem silly to change it. What sets consistently profitable traders apart, and I stress the word consistently, from the average trader is that they are willing to buy and sell when most traders aren't. I know this sounds kind of simplistic but it is true. They have figured out a way to frame the markets in a way that allows them to enter and exit based on the emotional reactions of most losing traders. This point should be obvious in the fact that the majority lose and so a trader certainly has to be doing something different or unorthodox from what the majority is doing. So to be consistent you have to be on the opposite side of the inconsistent traders trades right? Look for situations that would cause other traders to panic (and you will learn this from panicing yourself several times) and take the opposite trades as them. If they are panic selling, then you buy, and visa versa. In the beginning I would recommend you stay with the trend until you can get a feel as to when a trend is due for a pull back. This type of trading will get you started in looking at the market in a different way. To be a successful consistent trader you have to be able to not be afraid when everyone else is afraid. You want ultimate control over your actions but not through fear. If there are any points during your trading that you notice fear, then take note of them, and realize that most people were afraid there also, which caused them to make a poor decision. Then figure out how you could have done the opposite and made money from them. And the beautiful thing about this type of trading is that it never goes out of style because fear and greed will always rule the markets. Lastly, I realize that this advice is unconventional and not taught by most teachers or authors, but I don't teach or write books, I make my living actually trading the FX markets every day. Hope it helps.
When you are not sure as to why you are wining-you do not know what you are doing. When you are not sure as to why you are losing-you do not know what you are doing. If you do not know what you are doing-you will eventually get badly burned-and just become one of the many stats that continually churn thru the financial markets. Learn to know what you do-then you decide when and what you will win-or lose. Another way to describe this-is-professional trading. The General
Not necessarily. Most losing traders don't necessarily lose because they're on the wrong side of the market, they lose because they lack the discipline to manage risk and they don't fully appreciate the concept of probability. You don't need to be doing something unorthodox or different to profit, if anything you need to be more orthodox and follow some of the traditional trading wisdoms. The OP's strategy is a classic example. It's extremely simple and obvious which he admits himself even a monkey could trade. Nothing unorthodox or different about it but it works, so why isn't everyone making money? Because it's not the strategy which makes money, it's the way it's traded and the way money and risk are managed, that's what makes money. 90% of the alleged 95% losers probably spend most of their energy and focus on searching for an indicator or system to tell them which direction the market is headed, but even if they found it they probably still wouldn't be able to make any money!
I agree with the above. Also I think that having the accurate context understanding helps. After many many hours of screen time, I am starting to develop a better understanding of that is going on. This helps me filter the opportunities. This also explains why not all auto-traders are successful. It is easy to code the mechanics of a trade. It is more difficult to code the context. I do not have a good definition of what I mean by a context. For me it is MP and this sort of things but it is also the news of the day, the statistics of the day like average daily range, volume etc.... The variables are to many to be able to code it. I guess a bigger institutions with many programmers could be able to do it over 100,000 of code lines but for a single trader it will take for ever. It is like coding MS-Word at home.