A tweak to my trading plan. Weird, but stats don't lie.
My trading has been evolving at a rapid pace recently.
In the last 2 years I made a transition from being a swing-trader to day-trading. Some things, the backbone, of swing-trading carried over to day, but with a lot of extra thing that I didn't utilize prior.
I went from taking 5-10 trades a month, to taking 20 trades a week. Results didn't go up linearly, but they did go up nevertheless.
The reason for switching to day-trading was due to deeper understanding of my own personal character as well as my flaws. I wasn't that patient to hold a trade for 2-3 days, and if a trade is missed for any reason it would hurt me like hell because I had to wait another 2-3 days for price to develop another one. And what's worse is that when the missed one ended up making profits, and the next one was a statistical loss. That hurt me deep.
The switch to day-trading happened primarily because of that, missing a trade here doesn't hurt the same way because there are way more of them constantly developing. On top of that holding period went from 2-3 days on average to 30-60 minutes. I can be in and out quicker, and be less prone to making suboptimal decision after price has been stalling for 2 days in before breakout. In short, day-trading suited me better.
In day-trading style I was targeting 2-3:1 RR. Playing with different targets, I came to realize that -0.27 on Fib Retracement was a good target as it offered a perfect blend of RR as well as capturing that quick swing. But, I also didn't like when price almost came to target and turned around to loss, so I came up with a 80% rule. If price climbs up to 80% of the way to the target and fails to keep going - I manually close for 80% of the move's profits. This was pretty good overall.
However, after doing review for the last 100 trades I noticed a weird pattern. With my approach price often goes to 1:1. In 100% of times when price went to reach 1:1 it did the following:
* 30% price went to full target.
* 30% price either turned around SnD level, or reached 80% and turned around.
* 40% price touches 1:1 and turns around into a moved stop, original stop, or manual exit for around 0.
When I combined the average results of all these trades (and that's a pretty huge sample size) - I realized a new angle to my trading. What happened is that there is almost no difference in the long-term results if I were to simply target 1:1 fully and be done with a trade. This would give me way less time being in a trade, less teetering with it, even quicker in and outs, slightly better long-term profits. It's weird, but it seems that my personality and my trading is more suited toward HSR trading and not HRR trading.
HSR = High Strike Rate.
HRR = High Reward Risk Ratio.
But my average risk is also going to be much smaller, because my early exits are quite on point overall. In the last 100 trades my early exit accuracy is around 80%. It's weirdly huge.
So, there's that. Constant improvement, constant tweaking. For now I will be trading and targeting 1:1s only + early exits.
In the last 2 years I made a transition from being a swing-trader to day-trading. Some things, the backbone, of swing-trading carried over to day, but with a lot of extra thing that I didn't utilize prior.
I went from taking 5-10 trades a month, to taking 20 trades a week. Results didn't go up linearly, but they did go up nevertheless.
The reason for switching to day-trading was due to deeper understanding of my own personal character as well as my flaws. I wasn't that patient to hold a trade for 2-3 days, and if a trade is missed for any reason it would hurt me like hell because I had to wait another 2-3 days for price to develop another one. And what's worse is that when the missed one ended up making profits, and the next one was a statistical loss. That hurt me deep.
The switch to day-trading happened primarily because of that, missing a trade here doesn't hurt the same way because there are way more of them constantly developing. On top of that holding period went from 2-3 days on average to 30-60 minutes. I can be in and out quicker, and be less prone to making suboptimal decision after price has been stalling for 2 days in before breakout. In short, day-trading suited me better.
In day-trading style I was targeting 2-3:1 RR. Playing with different targets, I came to realize that -0.27 on Fib Retracement was a good target as it offered a perfect blend of RR as well as capturing that quick swing. But, I also didn't like when price almost came to target and turned around to loss, so I came up with a 80% rule. If price climbs up to 80% of the way to the target and fails to keep going - I manually close for 80% of the move's profits. This was pretty good overall.
However, after doing review for the last 100 trades I noticed a weird pattern. With my approach price often goes to 1:1. In 100% of times when price went to reach 1:1 it did the following:
* 30% price went to full target.
* 30% price either turned around SnD level, or reached 80% and turned around.
* 40% price touches 1:1 and turns around into a moved stop, original stop, or manual exit for around 0.
When I combined the average results of all these trades (and that's a pretty huge sample size) - I realized a new angle to my trading. What happened is that there is almost no difference in the long-term results if I were to simply target 1:1 fully and be done with a trade. This would give me way less time being in a trade, less teetering with it, even quicker in and outs, slightly better long-term profits. It's weird, but it seems that my personality and my trading is more suited toward HSR trading and not HRR trading.
HSR = High Strike Rate.
HRR = High Reward Risk Ratio.
But my average risk is also going to be much smaller, because my early exits are quite on point overall. In the last 100 trades my early exit accuracy is around 80%. It's weirdly huge.
So, there's that. Constant improvement, constant tweaking. For now I will be trading and targeting 1:1s only + early exits.
Lightwork Trading