Fully incorporating these guidelines into my trading regimen helped me a great deal:
1. Identify a style of trade you want to implement.
Make rules/guidelines, test them and stick to them once you start trading.
2. Examine your past trades: Make a list of all trades and analyze them in order to observe patterns.
For example in my discretionary trading > 90% of my profitable trades were initiated before 12.00 PM eastern time.
Profits were smaller after 10.30 AM.
Most of my losing trades were fairly small, a few large losses accounted for 70% of the total $ lost.
This info enabled me to create some rules which have improved my profitability. Such as no trades after noon, smaller targets after 10.30 etc. tighter trail after a certain profit threshold. Low risk limit per position, etc.
3. Define an acceptable % of $ risk per trade and skip all trades that are too risky.
I plot my equity, my average win, average loss, average trade , standard deviation for all the above and several other stats.
This has helped me get to know the idiosyncrasies of my method. When things are going well they tend to go well for streaks likewise when things are going poorly.
I scale down quickly once the bad streak threshold is crossed...
The key is to define an approach and stick to it. Otherwise the measurements will be meaningless.
I hope this helps.
Best regards,
Alex
