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I would just caution you to be sure you are clear about all the other rules, too.
One that confuses a lot of people is the trailing max drawdown. It starts out, for the 50K I am in, as a flat max loss of $2,000, so the plug will be pulled if you lose down to 48K. But as you make profits, it trails up like a trailing stop on your account balance, which means you can suddenly find yourself knocked out when you think you have a lot of room to fall. (It stops trailing when the cutoff level gets up to the original starting balance.)
Today is probably the first day I have felt good about not taking trades. I had committed to not taking any counter trend trades but most of the good set ups today have been counter trend. Go figure. I was good and didn't take any of them. Otherwise, there just weren't any good set ups that met all of my criteria for entering a trade. A couple of them would have made money but I didn't take them because they weren't ideal. A couple of them would have lost money as well.
Sometimes not trading is a win.
I have been working on a way to take certain counter trend trades but so far the risk is still greater than the reward.
I actually understood the trailing drawdown part. LOL!
I was reading over One Up Trading's rules and they even have a calculation for consistency as a part of their evaluation. They take 80% of your biggest winning day then they add up the 2nd 3rd and 4th biggest winning days and they have to total at least 80% of your biggest day.
What are your thoughts on good old fashioned trend lines? I have never actually traded with them but I see some interesting opportunities on NQ for trading trend line breaks.
I am done trading for the day so I am trying to find a way to reliably enter counter trend or to have confirmation of going with the trend.
In some ways they are like MA's: they show the trend, and when the trend actually changes they will be broken. But like MA's, they can easily also have false breaks that don't lead to anything. In other words, every true trend reversal will break a trendline, and an MA too -- but you can have trendline/MA breaks that are not real trend reversals.
Sometimes when I draw them, they actually keep pace with MA's. I think of them (MA's and trendlines) as being very similar. But one problem is always which points to use for trendlines, whereas MA's just are put there automatically. Trendlines are also much easier to see after the fact, which is not too useful.
I end up with enough stuff on a chart anyway, so I tend to not use trendlines and channels much, but I think they can be a help. They do increase the amount of judgment you have to make, because there's the judgment of which points to use for them as well as the judgment of what to do when they break.
So this is not a rave review, but I think if you use MA's you can also use trendlines, with the same pluses and minuses, basically.
It depends, see this video. This is probably one of the most advance TL EA i have seen. You can even test TL on historical datas and scroll the chart and the lines will be drawn automatically. This allows you to test prior sequences. With such a tool all subjectivity is gone. A line breaks or not. What is subjective is your decision to take a trade or not. Also, if a trendline breaks but fails you can just reverse on a break of the prior swing high/low that lead to the false breakout. That is how i would go with TL's.
