Saturday, January 27, 2007

January

Time to look back. I've told you, that in November last year my troubles started. I made dumb errors, I lost confidence, my trading system seemed to have stopped working. And there comes a time, when you have to reconsider the trading approach you are making.

I'm not trading a mechanical system, I'm trading a kind of discretionary system, where I base my trading decision not only on mechanical indicators but also on intuition, a subconscious trading impulse to take a trade or leave it. Problem is, that this impulse is subject to a conscious filter, which allows or disallows it to proceed. And this conscious filter itself is subject to my moods, to my past performance, to my evaluation, how I do, I see myself as trader.

So, if I make trading errors, this filter will start to hinder myself, just to protect my account. Unfortunately the means chosen aren't always in my best interests as old, bad habits start to creep into my trading. Like adding to losers or not taking stops or swing trading losers, you know what I mean.

I had to make dramatic changes to my trading charts to find my equilibrium again, to become again confident. I have taken you on this journey, a journey which began with a trader telling me to think outside of the box, to look at the markets in a different way. I'm most grateful and hope he's well as I haven't heard from him in a while. Still he was there, when I needed a new impulse. Now I'm going along this new path, discovering new ideas, new approaches, new Do's and Don'ts nearly every day. I feel confident again.

I have always seen my account not different than any other equity. So once or twice a year I chart my performance, just to see, where I am, whether I would invest in myself or not.

Interesting, how a trading account can show patterns similar to the one's we see on the charts we look at day in, day out. In July 05 a clear Head and Shoulders pattern formed, the neckline was tested in November and December 05, then a consolidation and sausage bottom was formed until in July 06 the account took off, exceeding the previous high, only to come back and test the previous high made in 2005.

I was about to write, that I would like to see that as an A-B-C pattern forming, but that would mean I have doubts.

Therefore I end this article by saying that I see the pattern evolving as an A-B-C pattern, with the B wave just completed.

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