Just as I quickly look back at my trades this week - as I see at this point- my mistake is this constant urge to add to the positions instead of taking profits at obvious target levels or just to pull the stops to highs/lows. This might come from my expectations based on my EW counts.
From the 6 trades I made this week 2 of the losers would have been winners and 1 others loss would have smaller summing up to 4 winners/2 losers.
I will go trough my records again later...
Spent my last week mainly with going trough my trades of the last 9 months. I wanted to find out the reasons why my index trades pulled down my stats. I think I have it and the reason is of course pure mental.
I deleted my index trades (both winners and losers) from my records and after that my equity curve looks like this:
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The first arrow shows the deepest reading of the equity, that was around May. I clearly remember that this was the point when I realized that I was over-trading and began to be more selective with my trades. I also kept myself more strictly to the money management rules, which is also visible from the distribution of the losers after that point - all of them maxed at 2%.
But still there was something I could not figure out, because this is not how my equity curve looks like now with the DAX/DOW trades included... I felt that I have an edge but the results did note come at all and my equity kept going deeper. I was desperate and did not now where to search.
The reason of this failure were my expectations... The EW count suggested the big moves which were happening in august, and like a maniac I was chasing every selling with a bigger position size (greed) that I normally have and with tighter stops that would have been ideal (fear). My thinking was that the sooner I get in, the bigger part of the move I can harvest. It was a stupid idea that produced every mistake a trader can possibly make: too big positions, too often, revenge trading.
Now I'll will follow the same approach I did with gold, oil and EUR/USD but with more discipline. There is still lots of room for improvement, hopefully I can make my % of winners better as well.
I wish I found out this earlier, I could have saved a lots of money... My equity is currently at its deepest level ever. It will be surely a challenge and lot of time to make it back.
The following user says Thank You to Balage for this post:
I know it's been a while since you posted this thread but I wanted to find other traders that use elliott wave as well. I've studied EW for probably 16 years and just recently tried using it in my trading now that I have some funds to trade.
I attached a really good pdf file that Jeff Kennedy wrote and it has helped me tremendously. I think you will find it very helpful. The key to trading waves imho, is that you have to have patience for them to form. Jeff's entry stradegies have helped me immensley. They don't always pan out, but no system is perfect, and you can't let the losers sagotage or scare you into noy following your program.
I'm still learning and by no means am I a professional trader, but I thought you might find this book helpful.
Let me know if you want to chat about this subject more
All the best
The following user says Thank You to smb2222 for this post:
Thanks for the pdf, I'll read it surely! Jeffrey Kennedy has lots of nice educational material, I have a new book from him and Wayne Gorman, you would find it interesting as well.
16 years of EW, thats impressive! You are absolutely right, it takes patience to wait for setups to form. Patience is a main area for improvement for me...
Recently I've been checking for possibilities to confirm wave counts via non-price related data/indicators (COT commercial net positions, options implied volatility ect..). I use RSI for momentum analysis, but having some confirming data gives extra confidence to pull the trigger and can put clarity into confusing price action.
I'm busy in the coming days and will not be near the computer but after that lets continue from here!