Just equally in that location tin dismiss hold upward patterns--and faux patterns--in markets, these tin dismiss too be inward our trading. One daytrader I worked with had apartment results over several months. When nosotros dissected the P/L, it turned out that certainly hours of the trading twenty-four hours (early morning) were consistently profitable. Other hours were losers. The patterns beingness traded, which involved momentum, were to a greater extent than probable to occur during periods of higher liquidity.
I too met with a portfolio managing director who was having problem making money. When nosotros examined his returns, it turned out that newly initiated positions were getting stopped out for losses unusually often. This was because, inward a lower volatility market, he was waiting for forcefulness earlier going long in addition to waiting for weakness earlier selling. He kept stops tight in addition to thence was whipsawed when the short-term cost displace failed to extend.
There is tremendous create goodness inward dissecting your returns equally a trader. Yes, nosotros tin dismiss overinterpret in addition to perceive patterns that create non exist. Many times, however, in that location are rational explanations for why the returns are patterned. Perhaps we're trading differently later having made versus lost money. Perhaps we're trading differently equally a component of marketplace conditions. Perhaps we're trading differently equally a component of how nosotros convey prepared for the twenty-four hours or week.
I uncovering it over again in addition to again: Successful traders pass pregnant fourth dimension non trading, studying their markets, in addition to studying their performance. Successful sports teams review game films to cook for the side yesteryear side contest. What is your review process, in addition to how rigorous is it?
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