Sunday, September 10, 2017

Perpetual Dilemmas

Since my last post, I have been system hopping again. I have evolved the discretionary range compression trading system into a mechanical trading system. That is one reason that I stopped posting. The other reason is that I have started trading Crude Oil after many years, so my free time has reduced by that much.

By now, the trading system is almost the opposite of the narrow range consolidation system that it evolved from. Now, I am looking for a sustained move in one direction that could potentially build into a bigger move in the same direction. The Stop Loss is wider, but not too wide. The system hopes to catch at least 95% (or 19 out of 20 times) of the big moves early on - but whether it will be able to remain in position to catch the bulk of the move is open to question. And it is still evolving, even during runtime.

So, the perpetual dilemmas continue.... discretionary vs. mechanical trading systems, wide stop losses vs. narrow stop losses, fixed stop losses vs. trailing stop losses, limit entries vs. trigger based entries, price action vs. statistical trading, scalping vs. swing trading... the list of alternatives goes on.

Sometime what works doesn't work at other times, on other scrips or on the same scrip.... as in Friday's trades below. System that worked for me for months, just stop working after some time. This has happened to me multiple times with the Opening Range Breakout system. Even the Range Compression trading system worked very well for sometime. The Princess Trading system that I traded for 11 months- that is longest that I have traded a single trading system - did not work during the first half of 2017, though it has started to perform again recently.

Friday's trades:

Nifty was clogged in a range. Not a good day with my current mechanical trading rules....

NIFTY M3 Price Action Chart
NIFTY M3 Price Action Chart

Crude Oil has been a revelation. The plan is to catch the momentum moves. I have decided to watch Crude Oil only after 5 PM, because it is usually boring and misleading until then - but sometimes moves to start right at the day beginning like on September 5th.

The plan was also to close the chart at 8 PM, unless I had an open trade, but Friday's move will make me keep the charts open longer, I guess.

CRUDEOIL M3 Price Action Chart
CRUDEOIL M3 Price Action Chart

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