Picked out several things to work on at the beginning of August and have been working on those during the whole month. This led to some insights and some refinements which are noted on blog too and it’s led to a development of a checklist (“What is a valid K7 setup”). which I then followed religiously over the last week and got a 89% hit rate (no, not in win rate, but the rate of how I often the setups passed the checklist). Finally there were some really good pointers I got from personally meeting with successful traders.
Thanks to all this my trading has improved over the last month.
But am also coming up with more and more questions. Often I scribble down some thoughts/notes/ideas during trading sessions. These notes then accumulate on my desk over days and weeks. I have just gone through a big bunch of them – leading to the list of questions below. I believe that working on answering ANY of these questions will make my better trading better. (I apologise in advance – this is EXTREMELY DRY READING for just about anyone. I only post it here because it’s a nice central location for me). I will try to work my way through many of these questions throughout September. And will add new thoughts that I have to it.
The K7 questions list
- Am I missing many valid setups?
- I am missing some by not getting in quickly enough – missed at least 5 on DAX & EURJPY in the past fortnight.
- Maybe investigate this one step at a time. Over the last fortnights how many valid setups were there on DAX and EURJPY between the hours of 7:30am and 16:30pm? How many of them did I actually get? How many did I miss? Start with that. Also think of doing the same for Cable. I can picture doing 2-3 instruments in this exercise, but six seems a bit much for now. I picked DAX and Cable because these have been earning the profits. In addition, I say EURJPY because I was actually trying to get into several setups on it and missed out!
- Bear in mind to look for longs AND short setups (see 3. below)
- Am I missing out on picking off low-hanging fruit? (firstly on the instruments I monitor, and secondly on instruments across the board?)
- Am I particularly missing setups on the short side? Remember this in the review exercise for DAX, Cable and EURJPY.
- What about this idea that I am working against myself by setting stops and targets? Why not simply go for 1:1 all the time and aim for 55% win rate, which would be a 10% edge?
- This would be far simpler and use up significantly less emotional capital in each session
- How effective is my trade management? Should I come out sooner on losing trades? Should I stay in longer?
- Is my trade management heavily influenced by fear and greed, rather than technical reasons?
- What really drives my trade management?
- With my valid setups, how many times did they actually work? How many times did they not work?
- Answer: Out of 10 setups, 6 work, 2.5 don’t and 1.5 are 50/50 (based on sample of 75 valid setups)
- Answer: Possible definition of “work” – ‘a significant move in the anticipated direction without first doing a significant move in the unfavorable direction’
- How quickly can I spot a valid setup on the chart, as it forms/after it has completed?
- How useful is this for the purpose of work with ForexTester2?
- Am I prone to cherry-picking – justifying why certain setups are, or are not valid, depending on how the setup ended up (winning or losing)?
- Am I effectively data-mining very badly?
- I need to do tonnes of testing – this will build faith in my strategy (well, or destroy it) and should improve the trading results – follow the advice from my hedge-fund running pal.
- Athletes do tonnes of practice both on the pitch and in their minds – I should do the same
- Have the market conditions in August actually been suitable for the K7 strategy?
- Can I answer this question accurately by reviewing the charts after the fact
- Does the K7 strategy work full stop, across all conditions?
- What does this say about the overall effectiveness of my strategy?
- Are some market conditions more favorable than others, examples:
- Reasonable level of volatility in the market – whether news-driven, news-schedule-driven, or technically-driven
- Certain level of cleanliness and/or trend
- Slow and steady? e.g. TY
- How much influence am I letting the leading pairs exert on my pairs – e.g. EURUSD on EURJPY, or USDJPY on EURJPY?
- Is there an argument for only trading the leading pairs i.e. the dollar crosses
- But sometimes the momentum is driven by another cross, such as EURGBP
- Or should I just look at the pairs in isolation and forget about congruences?
- What really are the leading pairs? And does this change from one session to another?
- Looking for the right timeframe – where price is respecting the EMA’s
- How can I find the “clean” charts?
- How can I find the trending instruments on a daily basis?
- Consider applying what I learned from TY-futures trading and apply here – i.e. quantifying the market conditions that I am searching for
- Looking for slow-but-steady type instruments
- Other strategy ideas
- Anti-EMA strategy for range days
- Post-News Leveraging e.g. Cable on UK 9.30 news
- Strategies that work well (or only work for) retail traders.
- Betting on S/R holding – e.g. support at 120 handle for USDJPY on Thu 3/9, support at 1.11 handle for EURUSD post-NFP on Fri 4/9