My trading thought process/plan these last few months has been to wait until I’ve achieved a string of consistent profitable trades for an entire month and then post all my monthly performance returns up to that point to mark the turning point in mastering my new methods.
The fly in the ointment has been it’s taken me longer than I anticipated to complete the fine tuning needed for the precision needed for the entry/exit points I desire. My old nemesis the volatility spikes in pricing has proven to be a difficult nut to crack. The difficulty lies in entering the market, and setting a short range stop price, which means I have to be fairly accurate on price direction at the point of entry or else I can get stopped out if prices move far enough against me to trigger the stop.
While stops are extremely important to protect you against big losses if your trade is wrong, volatility in price movement can get you stopped out easily if you enter a trade at the wrong time or have the stop range too small. Since using wide stops increases losses when wrong, I veer towards much narrower ranges. Now a narrow range stop reduces the loss when stopped, but has a much higher probability of getting triggered as there is also a smaller margin for error.
So using narrow stops has put me in a position of forcing me to fine tune my system before I can move forward.
So the days and weeks have gone by with me trying to lock in certain price patterns that are both recognizable and repeatable with much higher precision, which means keeping focused on all the tiny details.
When I announced a few months earlier that I can now see how price moves, I thought that I was basically done with the main research since I was able to trade profitably using what I learned. The problem was my techniques at the time lacked the exact precision I was looking for. It was at a level that was good for scalping but not for longer term moves. I could figure out certain patterns that led to a minimum price target, but I had no idea how much further the price could move. The pattern I was looking at was also complicated and could take a few days to find a good set up versus daily trades.
So it wasn’t back to the drawing board, although at times it sure felt like it, but I had to take what I learned and continue with the refinement which turned out to take much longer than anticipated. When it comes to researching unknowns, you wind up with “Microsoft Minutes” – such as when you are told by your computer that a program will load in “X” minutes and seconds, but takes MUCH longer than what an actual clock reads. 😕
I have to say it can feel frustrating at times when you think you have it, only to need to reanalyze and recalibrate.
I’m ever hopeful that I’ll complete this phase in the near future and go back to posting monthly performance stats for the year. I am making slow but steady progress so it may be, dare I say, sooner than later.
The final system will have the following qualities:
1) On cruise control once entered with target price and stop price input and just waiting to see which is filled first.
2) Precision entries that is basically the main goal in market timing- knowing when to enter the market for a predicted move.
These two points have been my overarching goal for years and I had no idea that it would take this long to bring it forward. Those Microsoft Minutes!