Consistent profitability in trading – It’s about the whole thing
…Not only about the edge (system) itself.
It is important that it is easy for you to check how your system performed in the past. With ichimoku it is rather complex to check how it performed in the past because of the different timing of chikou span, price & the cloud. It means that the historical data is all piled up and it is rather difficult to make sense of where the chikou span, the cloud and the price all were at a certain point in time. This makes it hard to grasp the past price action when trading ichimoku. Yes, it is bothersome to check what happened with ichimoku in the past but the point is different.
The point is that to achieve higher performance in trading you have to be aware of the limitations, inconveniences, lacks and minuses of your system. After you find these inconveniences you will have to find a solution to them or overcome the limitations and get used to them. You really have to decrease the negative impacts of the limitations of your trading system.
1. With candlesticks one inconvenience could be that candlesticks do not give price targets.
2. Candlestick patterns are much more meaningful when traded on higher time frames ( 4 hours to monthly).
3. Candlesticks that have not closed yet are basically delusional and can lead you astray. You have no past data nor statistics on candles that have not closed yet. Even if there is a way to develop a system for half closed candles I think that it would be too complex to be worth the effort.
4. Trading candlestick patterns requires leaving a wide enough stop far enough from the previous reversals at your chosen SR level. This means that leaving a stop without looking at previous reversals at the support level will stop you out unnecessarily. Stops should be below a full number (140.00; 145.00 etc).
5. Candlesticks have weak and strong signals. Every signal is not equal in reliability and impact. A reversal pattern which has longer candles on the reversal side than the previous trend side is a stronger signal. Shadows that are pointing in the direction against the preceding trend are signs of a stronger signal.
1. Channels and trendlines are often abstract guidelines for the direction of the trend rather than solid SR levels that will hold no matter what. It is often difficult to make sense of which lines are the real lines and where only fake breakouts happened.
2. Trades that are taken with the trend, on the corresponding line are usually the better ones.
Having a system means that you will have to “live” your system and be aware of different aspects of your life with your system. You will have to be comfortable with many aspects of your system – you’re gonna have to become comfortable with looking at the past data of your system, become comfortable with predicting price movements according to your system, become comfortable with taking notes about your system and the trades it offers to you. You will have to be emotionally comfortable with trading your system – otherwise the system will not be executed by you. You will have to be comfortable with the drawdowns and moves that will happen during your trades…otherwise you will tend to make irrational decisions about your trades.
Using your system for a longer period of time will make you notice more limitations of your system as well as ways of overcoming and tweaking the limitations. To trade a system well you have to spend a lot of time on trading the system as well as working on the system itself.