What does it mean to understand your trading strategy? What do I mean by that? Well can you look at your charts and recognize that the market is in an up or down trend? Can you look at it and immediately see that it is in a sideways movement or about to make a pivot?
I talk about this with my students all the time, your charts should be telling you a story as it moves throughout the trading session. In our momentum trading strategy all we use for indicators are a few moving averages and price action, with that we can read the entire story and take our trades with probabilities in our favor.
Through reputation of the same movement happening over and over again everyday you should be able to look at your charts and recognize right away the next possible setup that will be happening and react accordingly. When I think back it was only then when my trading turned a corner, I started to scroll through hundreds of charts writing down what I was seeing and after a few pages I seen the same thing over and over. Now those patterns within my own charts have turned into trade setups that myself and my students use today.
Now yes it does sounds easy but its not, understanding and recognising your charts and setups is one thing and pulling the trigger staying emotionally strong is another. Ill talk about that on another post.
So again the question is do you change your charts so much that you cant even picture your own setups? If so your going backwards, I always try to tell people stick to a couple charts and study them until you can see them in your sleep before bed. You should be able to picture the setups coming together when you close your eyes.
I know my setups so well that when I’m trading live with students they ask how did I know that was going to happen? its because I seen it before that’s all, just like when their is runner on first base that has a huge lead off and the pitcher knows he has to throw back to first to keep him close. He knows what a big lead off looks like and its time to react.
I have even named my setups as they happen so often and it just came to be as I started to show other and help students.
In conclusion, learn your charts, most of all your entry charts. Learn what it looks like when the market is ranging, choppy, trending etc. The faster you recognize that the fast you will learn when its time to take a trade and most importantly time to stay away.
Love to discuss these topics with anyone who is interested. Thanks for reading.