|
So, the market has been a little sideways of late. Does that mean you should wander off, diverting your attention elsewhere? A game of cards perhaps?
Or should you use this time to not only keep stalking the market, but doing some further study? Perhaps you could revise a chapter from one of the manuals or re-watch the DVDs? Perhaps try reading a book on Trading Psychology.
As well as doing some study I have spent some time recently further backtesting a market I’m interested in. I have a spreadsheet set up where I list all the ABC trades (1 day, 2 day, weekly, etc) that occurred over a period of time, ensuring that I cover a bull market, a bear market and a sideways period.
To gather this information from ProfitSource turn on the ABC highlights and then right click on the label in the top left and select Copy. Go to MS Excel and select Paste. You will need to do some simple formatting which I won’t go into here, but the data then becomes easy to use.
Once I have the data in my spreadsheet I then analyse each trade to determine if I would have taken it and record results for each of the different stop management styles.
It takes time to work through this process but if I want to know my market well it is essential. By totaling the profits for each stop management style I can determine which is the most profitable overall.
I can then put this information into a specific Trading Plan for that market. This way I can plan what I will earn in a year and how much trading I need to do.
If you’re not specializing in a market yet, you might use this time to set up price resistance cards as saved charts for your preferred markets or even for the whole ASX20. If you don’t have ProfitSource yet you could still do this on paper copies of the Pressure Point charts from the No 1 Trading Plan and keep them as ready references when a trade comes up on one of those stocks.
If you want to earn an income from trading then you must be prepared to put this type of work in to it.
Before I go, I’ll make a quick mention of CBA, though many of you will be following the commentary in the Discussion Forum. We have seen the small picture double top reach 200%, and this week the bigger picture double top has pulled up at 100%. There are at least 3 resistance cards with price support also at this level. See if you can work them out. I’d love to hear from you on the Forum if you have. Chart 1: CBA Daily Chart with Double Top Pattern
click chart to enlarge
Remember, sideways markets as we’ve seen on the SPI lately require patience, yet there are still profitable trades to be found such as this one on CBA. Keep up the daily market analysis and when your patience is being tested apply this energy to your study.
It’s the Journey
Lauren Jones
|