At risk of jeopardizing positive momentum, I’ll say it anyway: July was a great month. The final two weeks brought the incline of my primary account’s equity curve back to a more reasonable angle, but were still fantastic weeks. Overall, the preceding 6 weeks have been an amazing streak that have more than doubled my equity from mid-June.
Perpetuating success means looking around for failure. Bad habits go away, making room for others or become dormant only to return more forcefully than ever. I’ve elaborated some on what I feel I’ve been doing right in previous posts; but what have I been doing wrong? Well, the usual answer: ineffectively managing risk. My win ratio has been through the roof across this 1.5 month period (well, what I regard as “through the roof”: 70-80%), but those times where I have been wrong, especially one instance of multiple pairs on together with a correlated risk profile that I didn’t properly account for, I’ve taken hits that I think are unacceptable. A related issue is volume: “high probability setups” is just fine, but when you’re taking quite a few of those and managing them a little more shoddily than you’d like because quantity overwhelms your patience, availability, etc., then there is a problem, “high probability” be damned.
This month, I’ll be concentrating on 1) moderating trade volume. No quotas or that kind of nonsense. 2) In tandem with that, evaluating trades-in-progress (TIP) a bit more rigorously. I usually time stop any TIPs two times a day (once around 7-8 a.m., the other around 12 p.m-1 p.m. ET) whether in profit or not, but there is always the occasional trade I regret letting go of because of further potential. Sure, I’ll dip back in later if variables align, but fewer trades and less analysis for re-entry would follow from letting those “winners run”. Or maybe I shouldn’t screw with a good thing. We’ll see.
In other news, a randomly answered question over the weekend about fibonacci retracements and extensions rekindled my interest in their application to my own activity. I’ve never been much for mucking around with indicators, methodologies developed and peddled by others, systems (automated or not). My toolbox has accumulated odds-and-ends over time, but is relatively lo-tech, simplistic and without novelty. Thankfully, innate temperament has always dissuaded me from hopping on the custom indicator/EA/method-o’-the-week hamster wheel. Fibonacci – and Ichimoku – is, really, about as “sophisticated” as gets, and I realize I’ve missed how my use of fib studies complemented those tools I more typically use. My plan is to use retracements, projections, extensions and fans more extensively, and if I’m inclined I’ll get back into some Gartley and other harmonic patterns.
