My Roadmap to becoming a Consistently Profitable Trader (CPT)

19 Dec My Roadmap to becoming a Consistently Profitable Trader (CPT)

My Roadmap to becom­ing a Con­sis­tent­ly Prof­itable Trad­er (CPT)

Thought it would be a good idea to clear­ly map out what it would take from this point on to become a CPT. That’s what this post is going to be about. Most things will stay the same since they are gen­er­al to the path of becom­ing a CPT. There are oth­ers though that are more spe­cif­ic to my strate­gies since I recent­ly start­ed trad­ing in a dif­fer­ent way.

The Holy Grail Way

The more and more I think about it the more I start to real­ize that I was actu­al­ly look­ing for the holy grail. That was until I decid­ed to go with a ‘sim­pler’ method of approach. I had read so many arti­cles and done my own think­ing on indi­ca­tors and was con­vinced that because they are lag­ging they didn’t make any sense to use on the small­er time frames. By the time you get in based on your indi­ca­tor the move has already played out or you get in too late which results in a ter­ri­ble risk to reward ratio (R/R). I then set out to learn trad­ing sim­ply based on price action. I’m smarter than most. Sure­ly, I can do this. Well… No, I’m not. BIG SURPRISE! Well not really. 

Any­body out there?

So why did I change my ways I hear no one ask! Well, I’m glad you ask, my imag­i­nary friend. I actu­al­ly wrote a blog post about this already and I’m hurt you haven’t read that! So hurt. Here’s (http://bearmarkettrader.com/2018/11/27/guess-whos-back/) the link so go pre­tend to check it out 🙂 Basi­cal­ly, I went on a long trip on which I couldn’t stick to my dis­ci­plined rou­tine and basi­cal­ly took a two-month sab­bat­i­cal from trad­ing. When I came back to it, it had actu­al­ly opened my eyes. I had been telling peo­ple for such a long time that the way I drew my trend lines was con­sis­tent with the way mov­ing aver­ages behaved and thus I didn’t need them. Well, wouldn’t it be eas­i­er to already have a visu­al rep­re­sen­ta­tion of that what you’re need­ing already? Well, DUHH! So I decid­ed to play around with them and now it’s part of my strat­e­gy. I’m not going to dis­cuss my strat­e­gy in-depth here but if you’d like to know what my strat­e­gy is I’ll be hap­py to share it with you. Just hit me up with your email and I’ll get in touch. What was good about just look­ing at price action is that I have learned how price moves and can now put that into con­text with my indi­ca­tors. So it was def­i­nite­ly worth it, but can’t say at this time if it was def­i­nite­ly nec­es­sary to do so. Prob­a­bly not, but it def­i­nite­ly helped! With that out of the way let’s continue. 

I’ve seen the light (I think. Could have been head­lights, in which case I’m dead now and ARE see­ing the actu­al light?! Get­ting con­fus­ing 🙂 Back to this par­al­lel dimension. 

My strat­e­gy con­sists of find­ing points of inter­ests (POI) I call them. What this basi­cal­ly means is that I look for points n the chart where I think it is more like­ly that some­thing will hap­pen. For exam­ple a break out. When you have a Tri­an­gle pat­tern near­ing its apex that would be a POI. A break out is more prob­a­ble to hap­pen there. I like tak­ing the con­trar­i­an trades which basi­cal­ly means I wait for the mar­ket to make its move and then I take the oth­er side when it revers­es. Basi­cal­ly, what I am doing is decid­ing if a mar­ket is over­bought or over­sold and more prob­a­ble to reverse. How­ev­er, I am not mar­ried to this strat­e­gy because I will also take what I call con­tin­u­a­tion moves. That’s when price hits overbought/oversold ter­ri­to­ry but doesn’t show signs of a rever­sal. Remem­ber, my imag­i­nary friend, when the mar­ket is over­bought or over­sold it doesn’t mean it has to reverse at that moment. It can stay there for quite some time. Don’t ever for­get that. 

So uhm… Roadmap?!

Yes yes, get­ting to it. Now, that I have my ‘new’ strat­e­gy. I have to back­test it. Which I am doing man­u­al­ly so it’s time con­sum­ing, but I def­i­nite­ly feel that I have some­thing. You know what, let’s sum up the things I have to do first and then I’ll dis­cuss the fin­er details if nec­es­sary, shall we?

1. Back­test setups (ongo­ing process for the time being)
   1. Swing rever­sal
   2. Squeeze / KC VWAP divergence
2. Write ‘play­book’ setups (ongo­ing process)
3. Have 1 up week and scale up in sizing
   1. Cur­rent­ly I am using the fol­low­ing siz­ing (which I will call ‘con­ser­v­a­tive’)
      1. Exper­i­men­tal / extra cau­tious trades = 1 micro lot
      2. Cau­tious trades = 5 micro lots
      3. Con­fi­dent trades = 10 micro lots
   2. After scal­ing up (which I will call ‘opti­mistic’)
      1. Exper­i­men­tal / extra cau­tious trades = 2 micro lot
      2. Cau­tious trades = 10 micro lots
      3. Con­fi­dent trades = 20 micro lots
   3. After scal­ing up (which I will call ‘con­fi­dent’)
      1. Exper­i­men­tal / extra cau­tious trades = 2 micro lot
      2. Cau­tious trades = 10 micro lots
      3. Con­fi­dent trades = 20 micro lots
   4. After a down week I’ll scale down again
   5. After 3 con­sec­u­tive up weeks I’ll dou­ble the siz­ing of ‘con­fi­dent’
4. When my account is at break even I’ll increase my account size. Right now I am at ‑33% of my account.
   1. As soon as I break even I will dou­ble my account size.
5. Reassess at the end of April
   1. I’ll write anoth­er post on the hard ques­tions I will have to ask myself at that time.

This roadmap is like­ly to keep evolv­ing as I go on and I’ll be sure to keep you posted.

Share your thoughts

Get in touch with me and share your expe­ri­ences. Day trad­ing is a very lone­ly endeav­or so why not share the path to becom­ing CPTs?