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The main thing I noticed is that while the market had a nice steady trend to it last year, it's been up one day and down the next since the beginning of this year. I took a whole lot of losses on shorts in the last couple of months, because I believed that trading with the trend was the safest thing to do. Now I'm not so sure anymore.
I posted my basics of what I do some time ago, but to cut to the chase, I basically was buying hammers at support areas and selling shooting stars at resistance lines. The change in volatility probably has affected what I was doing to a certain extent.
The suggestions I've received tell me to go back from square zero basically and forget about trading and focus on the chart. That's the kind of thing you'd tell to a person who looks at a chart for the first time imo. I can't help feeling that perhaps systems run out at a certain moment in time.
Could you really find a method that works and then trade it for the rest of your life? Sounds nice in theory... |
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zeon,
A few observations if I may:
1) The markets change, we know this. You do have to adapt whether that's an overhaul or minor changes. Personally, I am always tweaking something, no matter how minute.
2) With regards to the candle plays at S/R, they still work (and well) but ultimately it depends on how you define your S/R. As you know well, what you see as a level, others may not.
3) I agree that finding one way of trading and doing it the rest of your life would be very hard b/c, as stated above, markets change. They change and will continue to change.
So the question is - do I revamp when I hit a drawdown or do I work with that I have? If you made money with your method, I would try to figure WHY you made money when you DID and what CHANGED. Did YOU change or did the MARKETS? And how did either/both change? It's not as easy as saying the volatility changed. The markets are volatile at different times for different reasons in differing degrees.
My view would be if you were making money on your hammer/inv hammer method, work with that. Of course, you know I am biased towards candlestick analysis. But you proved that it could make money. You just needed to work with it and tweak it.
There's so many questions I could ask about your previous system...
How did you define S/R?
What timeframe(s) were you trading on?
What other confirmations, if any, did you receive before entering?
Why just hammers/shooting stars?
How long did you trade it live?
How long did you backtest it?
Where did your S/R come from? why?
etc
etc
etc
Just changing a few item(s) could turn that into a profitable system.
Forgive my saying so - but changing 100% when you hit a drawdown is a very amateur move. I did not mean for that to be degrading, so please do not interrupt that way. My point is that every trader goes through drawdowns, even the guys referenced in this very thread. Even DB.
We all have drawdowns and rough times. The key is whether you work with what you have or jump ship trying to find the next grail.
Maybe you found a system that works in a certain market environment and only that environment. Once you can diagnose what that environment is and how to spot it going forward, you have system A ready to go.
Now it's work on system B.
There's no rule that says you can ONLY have 1 system to trade from and ONLY that system. For example, I have two systems that I rely on currently - one for a trending market and one for a range-bound market. Once the type of market is identified, I switch on the appropriate system. Of course, there are plenty of times when I am wrong in my initial diagnosis of the market movement. But I also know that over time, I will be right approx 80% of the time and when I am, I capitalize on it.
Good luck zeon and feel free to stop back over in the CC and we can discuss candlesticks.