cash, I just noticed something. lescor had said
"1. Stop trading and write down your trading plan. Entry and exit rules, position sizing, risk management, etc.."
In your reply to him, you said
btw... if you are trading with a 1 point profit target and a .75 point stop loss, you need to have a large win/loss ratio to come out ahead, after transaction and other fixed costs (I am assuming you aren't trading a million dollar account). A lot of traders do not understand the crucial relationship between win/loss expectancy and average profit/loss per trade. You can have a strategy that puts you in winning trades more than 50% of the time and still lose money.
There is one thing that, as much as anything else, allows me to trade effectively - taking positions which I can leg out of. I would not know how to trade if I had to make a decision to sell the entire position I bought into, on each and every trade. Legging out of positions (and pyramiding into positions) allows me to take advantage of my good calls by letting winners run. Of course your transaction costs must be as low as possible to make this work.
"1. Stop trading and write down your trading plan. Entry and exit rules, position sizing, risk management, etc.."
In your reply to him, you said
However... when he said that you should write down your rules, I don't think he meant that you need to trade one way only. You just need to clearly define what your rules are for entering and exiting trades. If you follow your rules, you may be in many different types of trades. Risk management and position sizing rules should be fairly consistent, since they are based on account size. Holding periods, stops and profit targets might be variable - this isn't a bad thing. These are dictated by the chart. If you had tried to write down your entry and exit rules before getting rid of all those indicators, it would have been very tough. It should be easier for you to do now.
btw... if you are trading with a 1 point profit target and a .75 point stop loss, you need to have a large win/loss ratio to come out ahead, after transaction and other fixed costs (I am assuming you aren't trading a million dollar account). A lot of traders do not understand the crucial relationship between win/loss expectancy and average profit/loss per trade. You can have a strategy that puts you in winning trades more than 50% of the time and still lose money.
There is one thing that, as much as anything else, allows me to trade effectively - taking positions which I can leg out of. I would not know how to trade if I had to make a decision to sell the entire position I bought into, on each and every trade. Legging out of positions (and pyramiding into positions) allows me to take advantage of my good calls by letting winners run. Of course your transaction costs must be as low as possible to make this work.
