I am up around 48% for the year (equity graph at the very bottom). That should put me back into the standings. If so, maybe I can actually stay there a while! My contest account has not been very consistent, to say the least!
http://www.worldcupadvisor.com/worldcupchampionships/default_nwcc2.aspx
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Since I don't show charts of my entries (because as I mentioned earlier, I don't use charts to make my trading decisions), I thought it might be useful for my esteemed readers to at least understand the process I used to create this contest trading strategy.
So, starting today, and maybe once or twice a week (hint: the more feedback I get on this, the more encouraged I will be to add more posts!), I'll walk you through the steps I used to develop this system. There are some things I did specifically because this was a contest system, so keep that in mind when you develop your own strategy. Hopefully you'll find value in this series of posts.
DEVELOPING A TRADING SYSTEM
Today we will start at the beginning. To succeed in any trading activity, you must HAVE A PLAN.
Sounds simple, right? You'd be amazed, though, at how many people don't have a plan for trading. Instead, they have some vague ideas of buying and selling something, and very specific ideas about how much money they'll make doing it. That "shoot form the hip" mentality almost never works.
So, step 1 is to HAVE A TRADING PLAN.
Some people will tell you that you need a 200 page, written plan. One that you refer to and consult with everyday. Well, that might work for some people, but not for me!
I keep things as simple as possible. Occam's Razor is a concept I always keep in mind.
(As an aside, you can read about my trading philosophy in a section I wrote for Brent Penfold's book "The Universal Principles of Successful Trading: Essential Knowledge for All Traders in All Markets (Wiley Trading)" http://www.amazon.com/The-Universal-Principles-Successful-Trading )
A Trading Plan should have everything you think you need, and nothing more. Of course, too little detail is not good, so there are some things that should be in your plan, at a minimum.
In the next installment, I'll list some of the important things a Trading Plan should have.
Comments and questions are encouraged!
Kevin:
ReplyDeleteThanks
Scott
Hi Scott - Thanks, and I hope it helps!
ReplyDeleteKevin
Kevin, let's hope your equity stays in that bull channel until the end of the contest!
ReplyDeleteThat channel is a little bizarre. I've never experienced that kind of equity curve before.
ReplyDeleteLooks good, seeing the kind of market movement this week, I believe you should be seeing some unprecedented equity highs this week and in the coming ones :)
ReplyDeleteThanks! Right now, I'd be content (for a little while) to just flatten out and hold this level, instead of all this up and down and up down.
ReplyDeleteTomorrow I will exit my most profitable position (a big winner that I added on to a few weeks ago), and I'll be down to 3 open positions: 1 small winner, 1 small loser and 1 medium winner (which I've added on to).
As you talked about the development of a trading plan, I thought it would be good to deal with some practical aspect of trading.
ReplyDeleteIn your experience,
1. what is the minimum number of markets a full-time trader should be trading in at any one time?
2. over the years, have you expanded into trading more markets?
3. should a trader strive to 'grow' by trading more markets every year?
Thanks for the questions. No right answer to these, but here is my opinion...
ReplyDelete1. The min number depends on the trader, and how he trades. Some people, because of time requirement or capital requirement, do just fine concentrating on just 1 market. Start with 1, and if it doesn't meet your overall goal, then look to add more strategies to complement or replace it.
2. Yes I have, and I've gone from trading 1 strategy to trading around 10. I've also expnaded the number of markets I look at.
3. I think most traders are always looking to improve their results. This may entail adding more markets (and using an existing strategy), or adding more strategies (on different markets). I'm big on diversification, so I like both of these approaches.