As a short-term trader, I’m looking to take trades that are usually 1-3 days.
If the market does not show me quickly that it is working out to my advantage, I’m going to get out. There is no reason to stay in a trade if there is any question that it is going to work out.
Even though I focus on the short-term cycle, I will always consider the longer-term trend to get my bearings as to which direction to take my trades. Having the longer-term trend on my side simply increases my odds of winning.
When the trade is moving into profit, I will look to scale out. It is better to start taking some profit along the way so that losing does not become an option. The key is not to get greedy.
I always have a game plan before entering a trade. If the trade starts to deviate from that game plan I get out. If I don’t know what the market is doing then I have no business staying in the trade because my edge is gone.
It is my resolve never to let the market put me in a position where I have to react. When I enter a trade my protective stop-loss is placed. When it moves into profit the stop-loss is adjusted. If I believe the market has lost momentum, I look to tighten stops or just cash out.
If the market closes against me I know that the odds of the trade getting worse has gone up and I bail. There will always be another opportunity to trade and often at a better price.
Cycle tops and bottoms make for important support and resistance levels. When price breaks these levels they serve as future support and resistance. Entering trades close to these levels provide additional support for taking the trade.
Sticking to one way of trading is key to better consistency. Jumping around from one method to another is foolish and will churn a trading account for the worse. Once you find a method of trading that can provide a good positive equity curve, stick with it!
I find it always a good idea to note the rhythm of the swings in the market. Getting a feel for the up and down swings helps with timing the trade entry. Always look to buy the higher swing bottoms and sell the lower swing tops and not the other way around.
Having a couple of oscillators on the chart can be a great aid in getting a sense of the market rhythm.
When I’m not sure about a possible trade that doubt serves as a warning to stay out.
It has been my experience that putting on positions bigger than my comfort level cause me to make poor decisions and increases anxiety. Therefore, I try to avoid going in heavy and usually opt to get in light as it helps me trade with a clear mind.
At the end of the day, week or month it is not the number of wins and losses but the positive equity curve that tells me I’m doing a good job. If that curve starts to dip then I know that I better straighten up and not deviate from all that I have already stated in this reflection.