Trade Selection: Time To Step It Up

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It’s Good Enough

I have been posting Weekly Performance numbers for that past month or so. One of the more obvious reasons to do this is for accountability as well as keeping clients briefed on what is happening in the service. I have a fair number of clients who do not trade full-time and can sometimes miss updates due to the twists and turns of work, family etc etc…

To recap, the performance numbers are broken down into 4 categories:

  • NEW TRADE ALERTS (open)
  • NEW TRADE ALERTS (closed)
  • Technical Trade Set-Ups (open)
  • Technical Trade Set-Ups (closed)

The other reason to do this is for some internal examination. Given that most of my clients here at Aspen are self-directed traders, they only have to answer to themselves in terms of performance. In some ways, that takes an immense amount of pressure off oneself.

Since I am managing money for others (FX markets only) and offering forecasts, the accountability level goes way up. The fact is, nobody likes to be in losing trades.

There is no doubt that that can factor into what forecasts are labeled as NEW TRADE ALERTS or something less specific like TECHNICAL TRADE SETUP. There is less skin in the game with the later.

Quit The Overthinking

This is where it gets interesting and touches upon the mental aspect of trading. Overthinking one’s analysis takes the natural flow out of the process. I would argue, and while the sample size is still small, that a trader’s best trades are the ones where solid effort is put forth in terms of analysis but perfection is never chased. (see TSU’s below).

Markets are imperfect at best anyways.  Prices move within ranges of support and resistance. Rarely do prices get tagged to the penny and then react. Some of the best traders I have seen don’t expect that but they do expect a general resumption of trends and don’t get too hung up on finding the exact turning point.

So what does all this mean? I think the takeaway is that ALL sound set-ups deserve attention. This does not mean you reduce your standards for trade selection, but it does mean that you should keep the conclusions you draw somewhat loose and not expect markets to immediately turn in your favor. Get in sync with the ebb and flow of price action, pick your spots, position size accordingly and get on board. Agonizing over every last detail appears to be counter-productive.

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