Sharing some thoughts and insights gained from recent months in trading various markets. Idea of now anticipating and looking for my desired setup in specific locations based on the bigger picture – i.e. in the sweet spot.
In 2017 & 2018, I worked on coding a trend-following strategy. TraderDi has been trading this strategy for many years and has been consistently profitable with it. We worked together several months trying to automate her strategy, using my elementary coding skills and her hands-on experience trading it.
Unfortunately earlier in 2018, TraderDi become unavailable to work further on our project, and I put things on hold around July/August as I seemed to hit some challenges that I wasn’t able to overcome without her input. Extensive backtesting results continued to produce near break-even results – nothing to write home about, nothing to justify taking things further for now.
Fast forward till today. After several months of being a member in the subscription-based virtual SmartForexLearning trading room, I am realizing that I could incorporate some of the support/resistance framework in finding sweet spots at which I should be looking for the coded trend-following setups. As opposed to blindly trading the setup regardless of where it occurs. My experience and research on basic principles of support & resistance and market structure concepts (see Voigt and Pepperstone), also helped here.
It has become quite easy for me to spot the trend-following setups on the chart – I know what I am looking for. However, to date I have not focused on where to look for it.
Could it possibly just be a matter of making a judgement call of which ones to take and which ones to ignore, based on where it occurs? Introducing a big-picture filter into the strategy programming code might be difficult – but making that decision on a manual/discretionary basis, should be fairly simple.
This should help improve the profitability. Possibly change from break-even to profitability. I am going to focus on this over this week and the next.
My increased attention on DAX and US30 markets over the past fortnight, (pursuing a reversals strategy for the lower timeframes) is also relevant. Identifying the key S&R levels at the start of each trading session, should equally allow me to find ‘sweet spots’ for the trend-following strategy. And thanks to the tight spreads, and the consistent volatility in those markets, the low transaction costs should also allow me to trade the setups on the lower timeframes.
Let’s see whether this approach helps my trading. I will be taking real money trades – also find that helps me learn quickly – though with significantly risk on each trade.
I’ll report back in a couple of weeks how I got on – and update on progress with the DAX & US30 reversals strategy (hopefully) at the same time.
Happy trading everyone!