STEP 1 to MASTER TRADING: Hindsight trading. Train your eyes.
A common mistake that traders make after learning any kind of trading setup is jumping into backtesting using a replay tool, or even live trading.
However, if you think about it, trading is very much about pattern recognition. And when you force yourself into live trading without a proper understanding of what your patterns look like, most likely you’ll need much more time to succeed.
A different approach and much more effective would be using hindsight, that’s when you see what actually happened.
During this process, try to find at least 50 high-quality setups, that represent your trading system. So you actually see everything that happened and find situations, where your edge played out, document it in your journal. That’s great training for your eyes and brain.
You don’t need to guess, you will not feel anything, because you already see what happened, you’ll notice that sometimes your edge, your system doesn’t give you entries and price goes without you, sometimes, you’ll see a loser or a breakeven after your entry, start to get used to this, as it’s all part of your system.
After that, you'll have a much better understanding and vision for your setup - and that could be the time to try some backtesting and forwardtesting.
I’ll talk more about a different kind of backtesting in future posts. Meanwhile, take care, send your questions, and comments, will be glad to chat with you.
Dima
However, if you think about it, trading is very much about pattern recognition. And when you force yourself into live trading without a proper understanding of what your patterns look like, most likely you’ll need much more time to succeed.
A different approach and much more effective would be using hindsight, that’s when you see what actually happened.
During this process, try to find at least 50 high-quality setups, that represent your trading system. So you actually see everything that happened and find situations, where your edge played out, document it in your journal. That’s great training for your eyes and brain.
You don’t need to guess, you will not feel anything, because you already see what happened, you’ll notice that sometimes your edge, your system doesn’t give you entries and price goes without you, sometimes, you’ll see a loser or a breakeven after your entry, start to get used to this, as it’s all part of your system.
After that, you'll have a much better understanding and vision for your setup - and that could be the time to try some backtesting and forwardtesting.
I’ll talk more about a different kind of backtesting in future posts. Meanwhile, take care, send your questions, and comments, will be glad to chat with you.
Dima
