It is really amazing how writing crystallizes my thinking. I think that is the real value of writing a business plan, a trading plan, writing to you and writing weekly in my “business/status meeting”. As today is Wednesday, it was time this afternoon for my regular weekly meeting with myself. I find that the character of the meetings has changed a great deal. I’m now really on top of organization, so that doesn’t occupy a great deal of my attention, any more.
I think getting organized has freed up a lot of fixed attention and allowed me to write what I think may be the origin of a trade plan that is really me. It is the most simple set of rules that you can imagine but it is based on very sound principles that I have learned from the Wavy Tunnel Plus. It is actually more of a “system.” Following these rules makes me a system trader; whereas, up to now I had myself labelled a discretionary trader but found myself constantly seeking out a system!
So, what am I really? Maybe, I’m a system trader who has a fantasy of being a discretionary trader. Now, to be fair, I have now taken two personally developed paper trades on Forex and both have been stellar winners. Both were based on combined analysis from the Monday webinars, my own Elliott Count and the Wavy Tunnel BO-3 setup. So, I am capable of developing a plan and applying what I know in order to generate a high-probability trade. I’ve also done the same for stocks. I’ve been generally successful so far on real-money stock trades.
But, I keep feeling like I want a system as the backdrop to all of my trading. I want something that I can count on week-by-week that will generate healthy profits without having to do analysis. Instead, I want to simply follow a set of rules that, while not perfect, generate reasonable and consistent profits. Then, on top of that, I can look for discretionary trades on the Forex.
I would like to be making consistent money but I think I could literally be months away from getting off of Demo on the Forex, although I’d be happy to start trading the Ultimate Signal Service with real money as soon as I get the go-ahead.
So, I’ve developed such a system. It has only seven rules which cover (1) setup, (2) entry, (3) initial stop (4) trailing stop (5) where and how to move to break even (6) exit and (7) change to dollar risk. Each rule is extremely simple, so there are very few degrees of freedom. Right now, I’m in the process of going back through 2013 and documenting each setup with screen shots and annotations. The results so far are good, not stellar, because the rules are so simple. And, there is the risk that I see only what I want to see when I go back and back test, but that’s another advantage of such simple rules, it is easy to verify and re-verify.
So, I feel like I’m coming into my own. I have to maintain really strict discipline in allowing myself to only take the best of the best discretionary trades. And, I need, at some point, to begin to ratchet up my risk tolerance on my discretionary trades. But I am gaining more confidence, weekly.
Of course, then again, it’s just when we think we have things figured out that trouble comes to town. So, I’ll do my best to continue to be careful.