Like all traders, when I started learning about the markets I had big expectations for the amount of money I would make. Since I have started trading, I have failed miserably at making any money, although I felt I could not have been more prepared. I want to wipe the slate clean and start again using a different strategy with a modest goal. I know most seasoned traders will roll there eyes when they read this, but I want to trade more using my instinct and judgement, and rely less on specific rules. I personally believe that 99% of rule based systems have an expiration date on them. They may stop working next month, or 10 years from now, but they all go through extended phases of not being profitable. Trading a rules based system seems to be impractical at this stage in my trading, because if I did use them, I would like to have 3 or 4 of them going at the same time, with a new one in development in case one of them starts to degrade in performance.
I'm going to trade only when I feel their is an overwhelming amount of evidence that the market has likely reached an inflection point. I personally believe a system or strategy is strongest when it is based off of causes instead of correlations. My technical trades will be taken in such a way, that 9 out of 10 technicians should agree I have identified an area of possible trend reversal. This is how I will justify my trades. I also give myself permission to trade based off of fundamental reasoning as well. My trades will be infrequent and have a high reward:risk ratio of at least 2:1. Most of my trades however, will likely be in the neighborhood of 2.5:1 to 3:1. For now, I will limit my trading to the most liquid currency pairs, because these are most conducive to trading a smaller account. I would like to trade some commodities eventually too, but I've noticed that the currency markets trade slightly differently than many commodities. Both markets have proven profitable in my research, but I think getting to know one market (currencies) really well at first would be best. I will risk $50 per trade to start and work my way up. The goal is $1000 of profit. If I take 50 trades and haven't reached at least half of my goal, then I will consider this experiment a failure.
**I'm swing trading and position trading. My schedule won't allow for day trading.**