I guess lately I’ve been thinking a lot about what “style” of trading I want to do. There are a couple of things to be pondering. Pretend that no reliable back testing was done on the TT or ITT system. Which to trade? If you think about it, it’s a stylistic choice: If you trade TT, you state that you like to trade based on breakouts and, more often than not, continuation patterns. In a mostly bull market, you’re trading mostly bull. If you trade ITT on the other hand, you state that you like to trade based on false breakouts and, more often than not, reversals. In a mostly bull market, you’re trading mostly bearish
1. What indicators to be using
-I’ve been seeing the indicators I’ve been using as largely useless, and some people trade without them completely, but I think 1 or 2 indicators can’t hurt. Just because you put indicators on your chart doesn’t mean you HAVE to use them. But, if you’re going to be using indicators, they should line up well with how you’re trading. This is where I think things get a little tricky and difficult but I’ve been trying to think through these myself. Lets say I’m using ITT; If my strategy is based on reversals, I should probably be using oscillators that might show potential reversals, such as RSI.
2. Scaling into positions
-I know (from reading) that a lot of successful traders like to scale into positions using “probes” or scouts. Lets say I want to ultimately establish a 100k position. I might first start with 10k or 20k to see how things go before putting in the rest. I’ve been doing a lot of testing with scaling out of course, because that’s how the TT and ITT system work.
3. Scaling out of positions
-By now I’m familiar with using 3 postions when I get out, but what about 4? Or maybe 3 positions, but instead of splitting 33/33/33, do something like 20/40/40, or 20/60/20. Considering the volume and variability of where exit points are, these decisions make a difference in the profits that come out.
4. Triggers for getting out of a position
-At first it seems like this is the same as number 3, but it’s slightly different. The question to answer here is how much am I looking to make? I know of some traders who set a target of 50 pips or 8% or something, whereas others just let the stops do the work. Others do a mix; I know of someone who gets in a position, gets 50 out at a designated stop, and lets the rest get stopped out if the trade is still in his favor. Interesting ways to trade.