Strategy development is a process, each process requires definite steps. In this case:
3- Initial Strategy Development
4- Execution of Strategy
5- Review of Results
6- Error Correction
8- Final Strategy
Let us take the first step and see how we go about it:
The webinar can be found here: Consistent Profits - Strategy Development
forex for a living(starting cap at the time: 1000 USD).
What's the realistic Goal?
• This makes it easier to decide the factors/elements to consider in our decision making.
• The factors:
a) Starting Capital
b) Experience/Expertise Level
c) Acceptable Risk
d) Screen/Analysis Time
Taking the above into consideration:
•Goal: 0-6% per Month
•Now that we have our Goal its time to Plan.
•While this is counter-intuitive, I prefer to plan before going to strategy development.
The things to consider when planning:
This topic can take up a lot of time. We will discuss in-depth in future articles.
•Remember the aptitude test in High School?
•Demo’s are forex trading aptitude test. They help us to recognize our aptitude to various types of trading.
Not so useful if we aren’t able to comprehend the results.
•I was very surprised by my aptitude test after high school, didn’t have a clue about how to comprehend the answers luckily the testing authority gave me the result in a few words. No such luck in trading.
Clear the clutter:
The above would be easier with a Trade journal.
The process is simple, ask a question and look to find the answer from the data:
Gives me my most successfully traded market.
b) Was at any point in these trades the Position size so high that a Stop-loss hit would be 3% of
Gives me a check on whether I was gambling and got lucky.
The above two questions help us find 1 strength and 1 potential weakness.
There is a lot more we can learn about our strengths and weakness’s from this data, just keep asking relevant questions.
1- Max Loss: 1% per week
2- Time-frame: 4H, Daily
3- Only trade our strength: Market Type
Let us add one tool which is used by professionals, intermediate traders and anyone else who uses charts: TRENDLINES.
We can now get our Basic or 1st strategy:
- Entry: Based on Trendlines, our filters (1% max loss per week, Preferred market type) keep us out of trouble.
- Stop-Loss: Based on Trendline Support or Resistance. Again the filters will act as check.
- Exit: Again Based on Trendline.
In webinars I have covered indepth: Goal and Planning. Will send out the articles and links for the same soon. Delaying the last part: Strategy Development and subsequent steps till we I get the articles up here.