Paper Consolidation Trading Journal
- Thread starter almx
- Start date
No, I have no limit of stocks but I was thinking that at least 100 or 200 if that's is statistically significant and it could be more or less depending if I'm able to grab something really important from it or not at some point or not.
Regarding the position size, yes, it's an unknown variable here that I could resolve exactly by doing what I'm doing. If by luck I find some common traits in what works best and what works less, that could help me to set a weight on my real trades, if not, then the weight would remain equal meaning that all trades start with a 50% change of win or loss.
But there is not only that, I want also train my eyes to what I'm doing, so one day I can remove any fear or greed from it and make it normal business without caring about the outcome, I'm not there yet. And other details like finding out if some entries are valid or not for example if they are under ema 200 or above ema 100/50.
I know that part of this if not all could be back-tested and I already did the back-test job, now I want to get used to it in real time, when 1 day lasts 1 day and not 1 computer tick. It's also necessary to get the feeling (if I ever get it) in real time when a trade could not work and eventually get out of it, you cannot back-test that.
At the same time this also helps me to optimize and stabilize my routine of screening and classifying the stocks to trade, not so long ago I had something like 6-8 watch lists from different sources that had duplicates and in which I was sometimes lost, now I have put good order in it and have only 2 active lists for trading and some others as archives.
My goal at the end is to reach that level, where you know, less is more, I mean, when I have removed all the noise, when I'm sure that my pool of stocks to trade is strong and that I don't need to watch elsewhere fearing that I'm missing out something, and finally that my system works at least 50% of the time.
This are the main reasons for this.
Regarding the position size, yes, it's an unknown variable here that I could resolve exactly by doing what I'm doing. If by luck I find some common traits in what works best and what works less, that could help me to set a weight on my real trades, if not, then the weight would remain equal meaning that all trades start with a 50% change of win or loss.
But there is not only that, I want also train my eyes to what I'm doing, so one day I can remove any fear or greed from it and make it normal business without caring about the outcome, I'm not there yet. And other details like finding out if some entries are valid or not for example if they are under ema 200 or above ema 100/50.
I know that part of this if not all could be back-tested and I already did the back-test job, now I want to get used to it in real time, when 1 day lasts 1 day and not 1 computer tick. It's also necessary to get the feeling (if I ever get it) in real time when a trade could not work and eventually get out of it, you cannot back-test that.
At the same time this also helps me to optimize and stabilize my routine of screening and classifying the stocks to trade, not so long ago I had something like 6-8 watch lists from different sources that had duplicates and in which I was sometimes lost, now I have put good order in it and have only 2 active lists for trading and some others as archives.
My goal at the end is to reach that level, where you know, less is more, I mean, when I have removed all the noise, when I'm sure that my pool of stocks to trade is strong and that I don't need to watch elsewhere fearing that I'm missing out something, and finally that my system works at least 50% of the time.
This are the main reasons for this.
I take it then that you are just going to monitor each pick and see what happens.
Do you have an exit strategy? Your stop is at 10%, a stop would be a loss. At what point do you take a profit?
Yes, I have 3 strategies for exit that become active once the trade is in profit by at least 20%
1st one is automatic once I reach 20% profit, I set a stop loss at BE, so whatever happens, a 20% profit doesn't transform in a loss.
2nd is a SMA 10 crossing EMA200 any time during the trade.
Last one is when reaching 30-50% profit in a new swing high, which is my target as I look for a 1/3-5 RR Ratio. I should exit when the price crosses down the SMA 10.
1st one is automatic once I reach 20% profit, I set a stop loss at BE, so whatever happens, a 20% profit doesn't transform in a loss.
2nd is a SMA 10 crossing EMA200 any time during the trade.
Last one is when reaching 30-50% profit in a new swing high, which is my target as I look for a 1/3-5 RR Ratio. I should exit when the price crosses down the SMA 10.
1st: why 20%? Why not 10%, then trail a stop?
2nd: what happens when you start below the 200ma?
3rd: that's quite a range 30 to 50%. How far do you let the price retrace before you exit?
How will you deal with gaps, both up and down?
1. It's an arbitrary choice, good or bad, I will see. I'm not fan of trailing stop, I prefer to give the stock room to breath.
2. When I start below the 200 ma, I expect the stock to move above it on the next swing, if not, it will be a sign of it starting a new down trend instead of a consolidation and rebound, then I should exit if I'm capable to see it.
3. It's quite a range because you never know how far a stock will extend on any swing, at that point, how I let it retrace depends on exit rules, as long as it doesn't break them I should let it evolve.
Gaps are an additional risk I must live with. At least I look at not entering few days before an earnings release and if already in, to have some buffer to keep the trade on the release date.
2. When I start below the 200 ma, I expect the stock to move above it on the next swing, if not, it will be a sign of it starting a new down trend instead of a consolidation and rebound, then I should exit if I'm capable to see it.
3. It's quite a range because you never know how far a stock will extend on any swing, at that point, how I let it retrace depends on exit rules, as long as it doesn't break them I should let it evolve.
Gaps are an additional risk I must live with. At least I look at not entering few days before an earnings release and if already in, to have some buffer to keep the trade on the release date.