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In
my humble opinion
Just a suggestion but in
the analysis of many systems over more than forty
years of trading I have
found that the problem with a system is more likely
to be found in an analysis
of the winning trades. All trades should be analyzed,
winning or losing, every night. A good trader will
maintain very strict control
of the losing trades and the variation of the
losers should be very small.
However we have very little control over the
winning trades. You
should control of all your trading. winning or losing, long or short, with
or without options. Common problems are:
1. Not enough winning
trades and too many losers. Is it the system or
the trader? Solution is to use wider
stops and increase your
winning percentage. Larger stops mean larger loses.
If you keep increasing your stops to accommodate a loss, why have a stop
at all? The system should dictate the stop and if the stop is wrong
then the system needs an overhaul
2. You may also be
eliminating some winning trades by having entry
conditions that are too
stringent. The more the indicators the more the
problems. The solution is to reduce the number of
conditions needed for entry
so that there will be more trades and the system
will be more robust because
it has been simplified. I use a maximum
of three conditions in my system
3. Your winning trades
may not be large enough to offset losses and produce
a profit.
Once again, system or trader? The solution is to try and
let your profits run if you are
following a trend or to
take the profits before they turn into losses if you
are trading short term or
countertrend. I believe that a system should
have specific entry, exit and stop parameters.
Losing trades are seldom
the root of the problem with a system. It
is usually the trader. We can
control those very easily.
Its the winners that I have a problem with. How
do you make a small winner
into a big winner? You understand your system.
Instead of trying for the whole at one time elephant, try it a bite at
a time. That is hard to do.
And I have only been in the market since 1957, so what could I know?
Ira
Chuck LeBeau
www.traderclub.com
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