Morning guys, another puke to the upside overnight, and another loss for me!
Time to take stock of where we are.
That's 4 losing trades altogether, and a couple of break-evens.
I usually include break-evens as losers in these calculations, but it doesn't matter how you do it, you could count them on the winners side either, just as long as you remain consistent.
Total Trades: 6
Average loser: 7.5 points
Average Winner: 0 (so far)
Strike rate: 0 (so far)
Total loss: 45 points
Let's roll this forward a bit…..
Say for instance, I continue on down this path, trading at these average loser levels.
Say I trade another 14 times, so 20 trades altogether, and I only get one winner in those 20 trades. So that would be a 5% overall success rate.
We would be talking about 19 losing trades, at 7.5 points each = 142.5 points.
So my winner, when it came, would need to be 143 points, or higher in order for me to be profitable overall.
Do you think that is possible? Well, the little hissy fit the market threw at the start of October was 150 points from the underside of the trendline to the bottom.
Furthermore, I was very sloppy on a couple of my trades this week - there was at least one that I should have got to break-even a lot earlier. It was nicely in profit, but I was away from the screen and missed the retrace. So, in reality, that average loser figure of 7.5 points could and should be lower.
Which would mean that the average winner size required to be profitable overall would also be lower.
There is an important point to note here.
I don't need to convince you, or anyone else, that what I have laid out above is achievable. All I need to do is to be comfortable with it
myself.
It doesn't matter what trading strategy we use, what markets we trade, timeframes, styles, anything.
We must be thinking in the above way. We must project out into the future what will need to happen in order for us to be profitable, and we need to be able to have a plan in place and believe that we can achieve it.
I deal with this in great detail in the Foundation Section of the Video Course.
If we aren't doing that, and we are just trading from set-up to set-up, and hoping that profit just happens to show up at the end of the month, we are most likely going to be disappointed.
In terms of the chart - I think things look pretty clear on the Daily.
I don't think anyone can argue that we aren't above that trendline now, and in fact we are challenging the all time record highs. As implausible at it may sound, that is a fact, and unless we see some weakness and price gets back underneath that trendline, we have no business being short.
We need to be patient, wait and bide our time. Not always enjoyable, but having the discipline to stand aside when the market is telling us to get out of the way, is an absolute necessity.
The bulls are telling us now, in very clear terms, that they have control of the market now, and we have to accept that. The time for the bears to step up to the plate was yesterday, and they failed to do it. So there'll be no bearish activity for me until they show me that they might have a chance.
Right now, they are flat on their backs and the bulls are stampeding over them.
