Just bouncing around the 50-55% return mark. Nothing real exciting (equity curve shown at bottom).
The Trading Process - Step 06 - The Trading Strategy
The last few steps in the Trading Process series have dealt with developing goals and objectives, and putting these in your Trading Plan. The idea is that once you know what you want, it is much easier to create or find something that meets your goals. Of course, depending on your objectives, it still may be very difficult to come up with a strategy. BUT, that is much better than losing money with an ill fitting strategy.
In the next 3 steps, I'll briefly describe how to take an idea, and turn it into a strategy. Each step alone could be a book in itself, so I'll just give you a high level overview in those steps.
But first, let's backup a step. At this point, you know what you want to achieve trading. So, why not just subscribe to a trading newsletter, or watch CNBC and trade off their reports, or lease or buy a "robot," and start trading? Many people do just that. I knew one "trader" who based decisions on the color of the financial commentator's ties! But jumping into trading at this point is a terrible idea.
The bottom line is you want to have confidence in whatever approach you choose. The only way to get that confidence is objectively evaluate the system's performance in the past (historical backtest) or in real time. Without one or both of these "tests," you won't know if you have an edge. And you need an edge to survive.
What I am really saying here? Basically, when you start trading, you want to be able to shout "I have a trading strategy with a proven edge! I can make money trading this strategy!"
Next time we'll discuss the preliminary research you need to do to get a trading strategy.
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