I've been finding that by adding structure and consistency to my daily approach, I'm staying out of trouble. This is something that I've slowly discovered over time and has been forming a clearer
picture in my mind with more experience. I don't know anything for sure, but it seems like as we progress as traders, there are many different layers and many variables to tune. I have felt like this was a big swirling ball of chaos for a long time but now with experience I'm finding I can isolate certain areas of "chaos" and add a little structure to them. This kind of feels like the main underlying current of our progress, this ever-constant refinement, tweaking, discovery, fixing, and iterating. Keeping risk small fits neatly into this structure because it allows us to be patient and learn the nuances that are too subtle to discover at first. I used to wonder what a "trading plan" meant, but over time, you figure it out. I still don't know what my "edge" is, but at least I'm finding some more ways to add structure to my trading plan. The longer I do this, the more areas of my approach I now see are rough and maybe a little misunderstood, or went unnoticed.
I never really had much of a plan for how to know when and how much to scale up. There is no right answer, and essentially all I really want right
now is something to use as a reference-point to compare against in the future. I don't want it to be based on money, but rather on consistency. I'm starting with a really
simple, naive approach:
1 contract - 1 profitable week -> scale to 2 contracts the following week.
2 contracts - 2 profitable weeks in a row -> scale to 3 contracts next.
3 contracts - 3 profitable weeks in a row -> scale up to 4...
and on up to 5 contracts or so. This is flexible and easy to change. I may find that I want to increase the number of weeks at each level over time for example,
in order to ease the incremental risk. If I fail to be profitable say on the third week at 3 contracts, I'll drop one level lower and try for 2 profitable weeks in a row
with 2 contracts. This is not intended to be a perfect plan, just a beginning that adds structure and a point of reference for modification later.
I also see that if I eliminate disaster days I can always be in the hunt for profitability. Eliminating these is one end of the spectrum, stretching winners and hitting further targets is the other. I am working on becoming "hands-off" once in a trade, but it is one of the hardest challenges for me, as I seem to love micro-managing trades :becky:
I think it stems from being on the wrong side of the market so many times in the past, but I've added statistics to my daily routine that track how often my target would have been hit and the number of targets I've actually hit. As that number rises I hope to see better overall results.