Sunday, August 21, 2011

My strengths - Analysis of my best performing setups

Now that I have completed additional analysis beyond the preliminary trading journal analysis from 1 week ago, I know know which setups currently work best for me. Those setups will then be incorporated into my trading plan for next week. 

Improvements to Tradervue

But first, a significant change on my analysis has been the improvements made to the Tradervue trading journal by Greg, the developer of that website.  He has enabled the ability to split (and merge) groupings of trades to allow a more detailed ability to analyze your trading records.

Add to that the new ability for the use of the "AND" criteria in the filter, which enables you to analyze combinations of multiple tags (I currently these tags).  Based on my requirements and usage of a trading journal, this has really made Tradervue into quite a powerful journal and statistical reporting tool, and has made the results of this analysis much easier to generate.

Historical figures are even better

After I split some trades into more detailed records and retagged them, the revised figures now show that my profits were even higher than the results stated in the preliminary analysis last week.  At this point, the absolute figures don't really matter, since I already knew taking only A and B grade trades was the path to success.  The new data further reinforced it.

Focusing on my best setups

So for my next trading exercise, what I needed to do was to refine and focus which one of the A and B grade setups I would focus on, based on how well I did in the past (focus on my strengths).  I have to keep things simple, so that I can easily measure my ability to to execute.  Right now, I need to prove to myself that I have the discipline to follow a trading plan and to execute near flawlessly.

Here is the summary of the best/most interesting setups from my A and B trades.  Metrics are based on the R-Multiple:

"Setups" are the actual setups that trigger an entry, and I have tags for many different setup variations of each core setup (see glossary here) to produce better reports and metrics.  Note that in some cases, more than one setup tag will appear on a trade (which would drive some statisticians bonkers).  Therefore, although there appears to be a lot of setups in the matrix above, there are only 6 core setups in reality (see groupings by color coding).

"Setup conditions" are metrics for additional conditions that took place at the time of a particular setup.

Additional thoughts

I was a bit disappointed in the accuracy of the vlb (vwap line bounce) scalp trade (only about 50%), but I believe this is a factor on my ability to execute.  Therefore, I will be monitoring this closely.  I was also disappointed with the lack of success (and occurrence) of the 5 minute "quick hit" (2 bar opening breakout), so I'll be dropping those.  However, I believe the 15 minute version could likely work better, although I just don't have the data to prove it.  And I love the ascending and descending triangle setups, however, they don't occur as often, so I won't include them next week.

What next?

For my trades in the next week, I will focus on the following setups:
  • pb2rz - Pullback to the retracement zone - the classic Trader-X setup.  As he says, it has great numbers, and you really can make a good living on just trading this one setup.
  • btorh/btorl/btfe - Beyond the opening range high/low/FE - another classic Trader-X setup, this setup is generally based in conjunction with a cbo/cbd (consolidation break out/break down).
In the future, it will be interesting to look back and see how my trading evolves. But for now, I will focus only on the setups above, and prove to myself that I have the discipline to take only A and solid B grade setups.

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