Trade Aptitude
Results of Monday’s Best S&P Turning Points: Buying 3864.50 stopped out in the pre-market.
Today’s Best S&P Turning Points (consider wider stops and less size in fast moving markets):
Buy 3833.00 stop 3827.75. Short 3999.00 stop 4004.75.
The World Sentiment Index: (+100/-100) increases from -57 to -29 in a world of mixed sentiment.
Catalysts: CPI @ 8:30. Eyes on financials.
Quick Tip: A Different View
You’ve probably heard the phrase “trading is simple, it’s just not easy.” Indeed, trade plans can be simple to execute but because of our thoughts, emotions, and behaviors we make it hard to follow thus missing the result we want.
Let’s say your “simple” trade rules were based on 1) Determine the big picture trend, 2) Sell rallies in a downtrend on a shorter time interval, 3) Buy dips in an uptrend on a shorter time interval. This is not only simple, but it makes sense. Price moves in waves of impulses and corrections within a trend.
It turns out that your results can also move in impulses and corrections. If you plot the equity curve (cumulative results) of your strategy, you’ll find periods of increasing equity (winning streaks), decreasing equity (losing streaks), and flat equity (win/lose repeating).
Why is this important? Because it gives you proper perspective and expectations. It’s easy to get trapped psychologically thinking you’re doing well or poorly by only focusing on short term performance. Regardless of your style (day, swing or position trader), knowing the frequency and duration of your equity swings should keep you committed to your strategy without the emotional baggage of your recent trades.
Another benefit to equity curve analysis is you can establish parameters to “halt” the strategy when it’s going into a drawdown (extended losing streak) and “re-start” the strategy when it’s performing normally again.
Our team day-trades multiple strategies with edge in a live online environment. The equity curves are updated weekly to uncover “halt” and “re-start” signals. Join our team, learn the strategies, and trade live with us daily for 30 days. Money back if you’re not blown away!
Trade Fearlessly,
Mike Siewruk