Hi Everyone,
I thought I would write a quick post on the above topic as after a few PM's with people I realized that the above concept is not completely clear.
As good technical traders we are to take every valid setup we see right? The correct answer is Yes :-)
So then what does the above mean? Well even though a setup maybe valid, certain setups are more valid than others. This is where experience helps a great deal but... Lets say we are in a down trend and we are selling the relief rallies. A valid setup would be a pull back... but there are various kinds of pull backs... Basically the cleaner the price action the better the setup.
So if I am in a trend that is labouring... it is breaking to new lows but it always seems like a laboured move and whats worse the pull backs are ugly too, so you don't have clean full bodied candles, instead you have spikey price action. Well in this instance even though a setup may present itself I may opt to take a smaller position size.
Whereas if we had strong momentum moves followed by clean pull backs... well then I would be in heaven... that is the price action I love to see because it usually leads to excellent risk reward trades and these are the ones I load up on.
Now I am not saying to load up and kill yourself, I am just saying that with the not so great setups take maybe only half of your normal position size. Save your full position sizes for those trades that make you warm and fuzzy inside :-)
Now ultimately this does come with experience, but I promise you the more trades you take (sim, backtesting or live) the better you get the GREAT setups start to jump out of the screen at you.
I hope that helps some of you guys out there and welcome some of the more experienced guys confirm this :-)
Ultimately as long as you are consistent in what ever it is you choose to do, your bottom line should improve.
Nexas
I thought I would write a quick post on the above topic as after a few PM's with people I realized that the above concept is not completely clear.
As good technical traders we are to take every valid setup we see right? The correct answer is Yes :-)
So then what does the above mean? Well even though a setup maybe valid, certain setups are more valid than others. This is where experience helps a great deal but... Lets say we are in a down trend and we are selling the relief rallies. A valid setup would be a pull back... but there are various kinds of pull backs... Basically the cleaner the price action the better the setup.
So if I am in a trend that is labouring... it is breaking to new lows but it always seems like a laboured move and whats worse the pull backs are ugly too, so you don't have clean full bodied candles, instead you have spikey price action. Well in this instance even though a setup may present itself I may opt to take a smaller position size.
Whereas if we had strong momentum moves followed by clean pull backs... well then I would be in heaven... that is the price action I love to see because it usually leads to excellent risk reward trades and these are the ones I load up on.
Now I am not saying to load up and kill yourself, I am just saying that with the not so great setups take maybe only half of your normal position size. Save your full position sizes for those trades that make you warm and fuzzy inside :-)
Now ultimately this does come with experience, but I promise you the more trades you take (sim, backtesting or live) the better you get the GREAT setups start to jump out of the screen at you.
I hope that helps some of you guys out there and welcome some of the more experienced guys confirm this :-)
Ultimately as long as you are consistent in what ever it is you choose to do, your bottom line should improve.
Nexas