I thought by exposing my method, setups, risk and money approach it would give others an idea of what needs to go into creating your own trading plan and trading system.
It took me a long time to first find the trade signals that were more reliable than others, and to look beyond the standard system generated signals. Since this started with a bought mechanical system that by itself looked decent, I found myself spinning my wheels in the beginning since it is true that it is not the system, but whether or not you can work the system that is crucial. I had to find a way to qualify the signals beyond the canned system, and a way to actually make money consistently beyond the colored bars and signal arrows. So, the rules were devised as a result of using this canned system in real time and observing where it failed, and where it succeeded. Also, I had to find a way to reliably get back in if I hesitated taking the canned signal. The reasons for hesitating are many. Most prominent is that if you do not understand why a signal is generated by a canned system, then you must have complete faith in it to trade it. That is something no system has been able to do for me. My success rate to first target is greater than 80%. My style is a scalpers approach. I use the first contract to buy some or all of my risk for the second contract. I use the volitility marker to trail when I can, and sometimes I use the last bar hi/lo mark. I used the range bars that have been color changed to reflect a moving average, and a trade channel that is also color coded. I used the cci filter that has been color coded. The reason for the colors was to make it easier for me to visually identify confluence across the chart. I know there are a lot of purists out there that would choke on these charts. So what. What you need to do is find out what works for you and not listen to the spartans, or the purists, or anybody else. If you are butt ugly and your charts look butt ugly and your style is wild and weird doesn't matter. What matters is what works for you. However, I can tell you that the simpler the better in most cases, and the more you concentrate on the price bars the easier it will get. At this point I trade a bit differently than what you see here. I take long signals on the red bars, shorts on the blue, I get in sooner, stay longer, I turned off the arrows, eliminated the range bands and almost always ignore the CCi except when it approaches the zero line. Anyways, here is the method I used before I got past the colors. You can duplicate everything you see here using Trade Navigator or just about any good charting package. So I have omitted where I bought the tools so that you not focus on them. What you focus on is a sample of someones method and style and start to consider what you need to do to create your own based on your results and what you need to get consistent results. I was fortunate in that I started with a decent canned mechanical system, and took my time to make it work for me.
Also I have included two counter trend setups. It is a method taught to me and it is stepping in front of the freight train. The last setup is one I noticed as a result of using range bars for the last few years. If you are going to use it keep in mind it only works well at key areas of support or resistance or at the extreme outer ranges of a clearly defined price trading channel.
This is the first time I am publically defining my methods and setups, so I hope it is clear enough to give you a good starting point towards devising your own. I am not concerned about whether it works for you, since as mentioned before, it's whether you can work it that will make the difference.
09-27-2009, 10:40 AM
Linear Mode
