So net net
1. Set realistic goal on profit, if you want more, deploy more. 2 rupiah leke Surma Bhopali ka Jangal kharid ne Mat Niklo
2. Trading system- if you had such a consistent mind for manual entry exit rule-following system, to make prudent decision, Aaj mere post nahi padte hote, is forum main. Don’t under-estimate your capability of making mistake (have a look into your ledger otherwise, if you wish for last 2-3 years). Delegate to a system. Winrate does not matter much, something with 30-40% is fair enough, check drawdown and recovery factor.
Check for 5 years data
3. Deployment- trade each trade with 0 expectation, just follow the system. Let it lose. In a row. Stick to size and same risk. The edge and recovery factor of the system will pull you out
4. A system with higher TF , typically 1 hour or 4 hour is better to avoid extra brokerage and less slippage. But again some system in a particular TF will not work on a particular instrument- so make the selection of system, TF and instruments with proper testing
5.
Acceptance of loss before losing (this is the most important thing my game in these days):
As we don’t know (And no Bose D * knows) outcome of a trade, size it properly, and deploy only that much you want to lose if you are wrong. Then pull trigger and
no scratching, it should be win or loss
6.
A cool hack: this is something I have mathematically checked and will improve profit factor of a trend following system ( not the others) - Suppose you are having 2 Lakhs and optmized lot size as per system drawdown statistics of backtesting is 20 mini lot of crude. That is if I trade with 20 mini, I will end up in profit without blowing it out, regardless of consecutive loss.
Lets call it the
SAFE SIZE.
What is enemy of the trend following system-
whipsaws. But why we still end in profit - trending move will yield more.
Now do we know which one will lead to big move - no, Fractal break down indicates but can fail.
What I am doing, I will trade with 50% of max allowed safe size (ratio 10 qty per 2 lakh ratio). Now this is what I do. When market start ranging, I encounters the first whipsaw. I will keep size same for second trade (10) as well. Assume it is still ranging , loss - 2 in a row, erroding profits of previous trades.
But this is where the fun starts, if you backtest any trend following system (MA, or STI or something else), typically after 3-4 whipsaws at max, you will get a big trending move. After encountering 2nd whipsaw, I will increment my size by 25- 50% each trade hence forth, so here it is in an ideal case)
And I will hold the size
(if we hit max allowed as per Safe Size = 20) or the one with trending move, for 2 back to back swings, before coming back to default safe size (10).
This what I meant -->
Points to be noted (so that you dont blowup):
1.
System should be thorughly backtested
2. Find fund to size ratio to avoid Drawdown, I am using DD probablity with 0% for Monte Carlo numbers , I can trade with way bigger size with the money I am playing witth (no bragging), but I dont have to, I am in no hurry
3. When you increase size after 2 whipsaws (I do it by 50% after 2 whips), you
never exceed your safesize
What it does, you let the market tell you when it is ready for trending move (2-3 whipsaws, means - "Kundi na khdakao raja..sidha andar aao raja" baas ready ho jao).
You never exceed your safesize though you are varying sizes - keeping yourself safely away from drawdown.
The trending move with increased size, recover the loss in whipsaws much faster and increases your system's recovery factor. Whipsaw are beautiful, I am already in love with those. LoL
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