Five Trading Steps

  • 1. Define risk
  • 2. Define a trade style that matches personaility and beliefs
  • 3. Define one or two strategies for choice of style
  • 4. Back test and forard test method
  • 5. Trade with partial risk and earn the right to increase risk.

Thursday, January 29, 2009

Equity curve minus impulsive trades

In working with a client today we reviewed the recent equity curve. In doing so we indentified those trades that was not traded based on an indentified strategy. I suggested that he take his equity curve and remove any trades that were impulsive and re-plot the equity curve, keeping only those trades that were made based on an indentified set of rules.

Here are the results and his comments.

Hi Kerry,

I've omitted some of the trades that we determined as impulsive or no strategy trades...

Attached is the result.. I've printed it out and it is hanging on my wall now, to remind me what is possible and what can happen if I impulsive trade again.

Wessel



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