Quote from martys:
In my trading development, I "try" to implement things at my own level and work my way up slowly but I have to know where the danger is... If I don't know where the danger is then I might not even have a chance to get to the next level of development.
The danger usually is rushing the development stage or any stage of the trading path. Everyone wants to be making millions now. Although I believe that can be achieved long term, there are many years of development required.
I should also clarify, for the purposes of full disclosure, that I am currently trading on a simulator. A while back amongst all the failure I decided to implement a plan of attack that required certain hurdles to be reached before reaching the next stage. Here is my development process:
1. Ideas on how to use tools or combination tools in a unique way
2. Research to develop trading rules based on those initial ideas
3. Manual backtesting of those rules to prove their validity and that overall there is a positive expectancy.
4. Forward Test Stage 1: Just getting use to recognising the setups in realtime, building self trust in the signals and making any slight refinements that may be necessary. Final stage for any adjustments.
5. Forward Test Stage 2: Passing a defined profit objective over a 1 month time period.
6. Part-time trading to build a grubstake of 100k from 7k initially. I estimate this will take a maximum 4 years of part-time trading.
7. Full time trading. First year trading a 50k account and using the other 50k for living expenses. That way the account can build over time with no monthly withdrawals. The aim is to make a similar withdrawal on a yearly basis to cover living expenses for the year ahead.
8. End goal is to increase contract size, in line with max 2% constant risk of account equity, as account increases up to a maximum of 200 contracts per trade. Not sure how many years that takes.
The point is to split each stage into small goals. The development process I thought long and hard about to make it very rigorous. I wanted to "graduate" from every level. I guess it is maybe a bit like a fighter pilot training course. At every level you can fail, and many do. But, for those who reach the end they are very good at what they do.
You never lose anything by being conservative in the futures game. Nor is their any rush, in terms of time, to get to your goals. Futures trading is after all a losers game until you prove you are one of the 5-10% who can trade successfully.
I don't expect my system will stop working at any point. I wanted to trade something that should always work. However, if that happens it will be obvious if it is too much out of line with historical results. On the other hand, when the market has fundamental changes over time I do expect I might have to adjust the profit/stop criteria in line with changes in volatility. There's no denying if I was trading this system in 2000 when there were 70 point days in the ES, I might be using different stop/profit methods.
Cheers.
