Monday, 16 April 2012

Rule Based Structured Trading System Part 1.

Achieving CP (consistent profitability) is the goal of discretionary trading. With CP, it's a business. Getting to CP requires consistency as the expression implies. To get consistency, I need structure to trade within. I need to do the same things over and over. That's consistency.

If you accept that, then the next step is to have rules wrapped around the structure. When that is achieved, you have consistency. Now you can be consistently profitable or consistently unprofitable. To achieve the former, your rules need to be rules that lead to profitability. We can know whether our rules are ones that have a high probability to lead to profitability by testing. There are many ways to test and choosing a way that is scientifically sound is important. For me, that means both backtesting and forward testing.

I started this blog in October 2009 and since then there are many many readers who have reached CP through following the ideas I have written about. Everything you need to know to achieve CP is, I believe, in the blog. I congratulate you for all the hard work. But there are others of you who have not reached CP, yet. I want to try and bring together all the elements I have previously written about and define a rule based structured trading framework that can be made into a discretionary trading system.

This is the first in a series of posts over the next few weeks that will try and do that.

As you can see, the first trade was doubled down. This was an outside in trade and picking tops often requires this so I enter on a max 50% position so I have ammo to double. The next trade was very easy. The one after a small loser and the last was also easy.

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