We hear it all the time. I use this strategy or that strategy works best. But what really is a strategy? Is it a set rules, indicators, personal mental thoughts? Perhaps it’s a little bit of everything. Think about it. There can be one strategy with specific rules written down. And you can take 5 traders and instill those rules into they’re minds. However after a few weeks of trading, I can guarantee you that each one will have different results. And not because of simple variables like fill prices and entries and exits. The simple key is everyone has a different mental attitude and mindset going into trading.
What I mean by mental mindset is that everyone deals with a certain level of emotion and also a certain level of trading ambition. Which simply translates to whether they are conservative or aggressive traders. Mentality like it or not plays a huge role. So in essence a strategy per-say also depends on the individual trader. Like it or not you have to develop a strategy based on your particular style. Conservative, aggressive or just a swing trader. Everything else is investing which we don’t cover here. Those damn cowboys! Who said investing long term was safe. Anyway, back to the topic at hand.
The best way to develop your own unique strategy is take a blueprint and refine it. As you all know by now, I am a contrarian trader. I love momentum and trend reversals. This has worked best for me because I am patient and wait for those prime entries deep into a trend right when they reverse or at least close to. Sometimes I’m off or completely wrong. That’s when trade management kicks in. I developed a set of rules and spent many months refining them to match my trading style and mental mindset.
Mental mindset is interesting because it is ever-changing. As is the market. Some days we have a nice range and some days we have complete blowouts. So your mind has to adapt and be able to react to any market situation. This is what separates the rookies from the pros. It all takes time to develop. You’ll take some small losses. Maybe some bigger ones. The important thing is to not panic and just recap your trades and see where you went wrong and how you can fix it. This can all be done by creating mental stops, being more patient in entries and exits and sometimes just risking losing a trade rather then catching a bad one and kicking yourself right after. We have all been there.
In the end, a strategy is a combination of strict technical rules and a developed mindset that is ever developing. Take the time to work on it. Sometimes we skip this important step and just dive right into a trade. That’s what kills accounts. Patience always prevails and some does preparation. Hope this little tip helps. As always happy trading!