As I learn a new system, my initial goal is to understand and trade it straight from the book. But a funny thing usually happens along the way to trading system enlightenment -- especially if you have already spent years researching various systems, indicators, charts patterns, lunar cycles, tea leaves, etc.
Everyone has some baggage
That's because there's always a
certain amount of "baggage" (positive and negative) that never goes away -- you know,
identifying certain chart patterns, drawing trend lines a particular
way, an affinity to a certain indicator with your special parameters, etc.
worked well in the past based on how you used them, and
well, gosh darn it, they continue to work well for you now. But the new system
under study doesn't use them, so I really shouldn't use them, right? But if I
don't pay attention to "them", I'm sure they will continue to haunt me!
Is it rogue?
Today was a case in point. I did my best to trade the DS system based
on an aggressive style that seems to work well for my personality.
However, there were a few setups that utilized price levels that were
not necessarily a part of the system.
So does that mean the trade I took was a
rogue or a non-strategy setup? I was fully aware of what I was doing at
the time, but the levels and setup were based on a something that I know
has worked well in the past, and they just happen to mesh well with the
DS system. And just because the trades worked, does that mean it's
OK? But how would I had felt if the trades lost money?
Make it your own
And then I started to think about the whole concept of "make it your own." I recall very clearly Renato telling me "...just make sure you know your own 'most comfortable' style"
and then trade DS accordingly. From what I have read, it seems as
though nearly every trader continues to evolve their trading methodology
through the years.
Do you still trade the same way you did a year ago,
2 years ago, or even 5 years ago? Chances are, you have evolved your
methodology to adapt to the markets as well as your own
A great framework
What I'm starting to realize is that
Renato's Diamond Setups has provided a solid framework upon
which to refine a trading methodology, that especially fits me. Although you can take it out of
the box and trade by the textbook very successfully, it can also be
adapted to various timeframes and levels of aggressiveness. The ways to
determine and trade key support and resistance areas, are surprisingly
Therefore, I believe embracing some of my past experiences and
incorporating them into this framework is something that seems to make
sense and seems to feels right. However, I need to remember -- learn how to crawl before I walk, and that changes to the
trading methodology needs to be done in a very calculated and methodological manner.
* * * * *
Monday, November 14
Total gross profits: $462.50
[SIM adjusted gross profits: $287.50]
Total trades: 9 [1 scratch, 1 loss]
Contracts per trade: 1
NOTES: Today was another experimentation day, although I'm starting to tighten up the rules.
The market gaped down today, and the gap never filled. My bias until the last hour
was to short, so any buy setups were scratched promptly in the
event they didn't move relatively quickly in my favor.
Since I believe recognizing the trend and trying to trade with the trend helps
to save you emotional capital, I spent a lot more time today
identifying and tracking the key swing highs and lows that determine a
trend change. This was a key process change vs. prior days. This activity meshed well with the DS system, and I
believe it helped me to achieve the performance that I did today.
Nearly all my trades took place prior to noon. I took detailed notes today during the trading day, which will help create a record of the positive and clear mindset I maintained throughout the morning. This day is a good example of how I traded to my strengths, and I will use this as a template for future trading days.
Another change was that I
left the computer and went out to lunch, since my wife had the day off.
The only unfortunate part was that I ate so much, I had food coma for
the rest of the afternoon and missed or chickened out of a couple +2.00 trades.