Keep Calm and Don't Move Your Stops.....

A little risk management saves a lot of fan cleaning!

The Purpose of Life is Joy!!

Sunday, November 20, 2016

Simplify again

It's a beautiful day in Southern AZ....Cloudy, rainy and about 65 degrees....sitting here drinking coffee, watching The Grand Tour on Amazon Prime and feeling pretty decent about things.

Over the last few days and weeks, I've been working on reducing complexity again. Every few months I drift into more and more complexity. This is never a good thing. It leads to over thinking and second guessing and consequently, poor decision making and even poorer trade management. I know when I am drifting because I spend time reading blogs and looking at other trade ideas. This always results in draw-down. Although I ended the week last week up 3%, it could have and should have been more.

I've set a goal to be 100% dependent on my trading for financial stability within three months. This doesn't discount my re-entry into the mortgage business, it just complements it. The truth is this, I never want to be dependent on someone else signing my paycheck if I can help it. I'm not quite there yet and as this year has gone by, I've really come to realize two things. I am tired of dependency and I am tired of complexity. I like simple. Not necessarily in concept but in execution.

Another thing I've adopted is rethinking my size on every trade. As the risk decreases in terms of ticks, I will increase in terms of size. This will keep my risk constant across a larger number of trades and increase the profit potential of many trades. Another thing I've noticed, when the risk is more than 15 ticks, the likelihood of a successful trade goes down.....of course this doesn't hold true 100% of the time but the probability decreases. Once its around 20-25 ticks, the trade simply shouldn't be taken regardless of what the potential reward looks like. Last week I had a couple of trades with around 8 ticks of risk, those were the best ones.....So I'm looking for smaller risk trades going forward, mostly so I can get in with some decent size.

Anyway, back to enjoying the day.

No comments:

Post a Comment