Hi everyone, (sorry if its a long post, just want to get my thoughts out and see if anyone has comments)
I wanted to know if there was a topic or experience someone has had on having your rules too strict & it affecting your trading?
June 23: I was on SIM / QR (Quote Replay) for 4 months (took about 60 trades) and had a profitable edge at the end of those 4 months so I decided to go live. In the first week I had a decreasing equity curve (8 trades over a week) and no green trades past 2R. Firstly, I re-evaluated why I was losing and thought I was not choosing the same stocks as in my SIM/QR. So and went back to compare the trades I was doing before, I made some small tweaks to my trade book (added more required confirmations) and went back to live. Another 4 red days in a row.
July 6: Next I thought it was my psychology because I was breaking a lot of my rules , I ended up finishing Trading in The Zone (which is a great book) and I began to understand myself more. I thought I was breaking my rules because I thought I was outsmarting the market and ignoring my rules because I expected the market to behave how I wanted to. (Which was wrong and since thing have fixed this mindset; I truly believe the market is unpredictable and must follow my rules like a casino). Went back to live and 3 red days in a row.
July 28: At this point, I'm like wtf man. So I dig deeper into myself and my 4 months of SIM & I think have found the source of my problem. During my SIM / QR training I tried many different strategies but really enjoyed (& saw the potential) trading at open specifically 60 min Breakouts. Using Aiman's tradebook as a starting point, I began just focusing on these set ups. During this training I still felt unsure about the direction of the breakout can go and felt it was very random. I wanted to know which direction it would go and predict it well. In order to fill this fear of entering into a "wrong trade" I went to learn more about the market. (I know understand this was a wrong mindset because I was looking for certainty in the market where there is none.) Doing some youtube searches I came across the MACD Indicator and instantly loved it. It made me feel more confident and certain in my directions / timing of breakouts; so I added criteria to my tradebook based upon repeating (successful) MACD patterns on the 60min chart. Maybe around month 3 of training I added these criteria.
Solution: Looking at all my recent live trades in retrospect I think my problem for not being consistently profitable is my over reliance on the MACD indicator in my 60min BO tradebook and too many other requirements to enter a trade. By having created such a strict tradebook (to compensate my previous fear of uncertainty) I have created another psychology problem in my trading. I have been breaking my rules many of the times in LIVE because I simply can't find stocks that match perfectly with previous MACD patterns and other requirements to enter a trade.
1) I am going to stop trading LIVE for now and really review all my trades I have previously taken in SIM / QR.
2) I am going to remove the MACD indicator from my charts and tradebook. Then I will need to re-trade all my trades again to see if I truly have a winning edge. (I'm pretty sure I do but numbers don't lie so I need to redo my stats to make sure before I go back to live)
3) Instead of over relying on the MACD indicator, I'm going to continue improving my daily chart patterns and selection. (Which I have improved a lot in the past weeks)
4) I want to get more feedback / advice on how I should go about adding requirements or rules to my tradebook. For instance what I have been doing is cross refencing criteria on all my trades and analyzing common patterns (ex. Do not enter if 8am 60min candle is Long Wicky Hammer) because I noticed the stock never went my way (4 out of 4 times the candle appeared) so I would add that to my tradebook to avoid. In retrospect, I do not know if by adding avoiding criteria is in fact a psychological compensation of fear avoidance or if its smart because it will save me money.
Note: Quote Replay was used for trades during Jan 2021 - Feb 2021.
See my tradebook for ref.
Any feedback on my entry would be super helpful! (Takeaways: over reliance on indicators, too strict tradebook, thoughts / experiences of adding a rule to an existing tradebook based on failed trade(s) / pain avoidance)