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Huck’s Discretionary Trading

Oh, boy! Looking at my annual stats now, I can tell my discretionary trading needs work. The funny thing is I actually started the first quarter of the year quite well, winning 8 out of my 10 trades!


I feel like I’m not as in tune with macroeconomic factors as I should be… which is dangerous because I don’t think I can afford to completely do away with fundamentals, especially since most of my trades are swing trades.

There were lots of times when I found myself getting burned by some trades that looked nice (almost perfect) technically, but were against fundamentals.

Ultimately, I think I’ll need to put more effort into my analyses next year if I want to really be successful at discretionary trading. I’ll definitely have to add more tools to my trading toolbox to become consistently profitable. But this girl’s got no problem with that! It’s just like adding more makeup to my makeup kit! Teehee!

Anyway, right off the bat, I can already list down some of the changes I can make. First, I’ve been told that my hair looks a lot better short so I think I’ll have it up to my chin next year. Oh, right, we’re talking trading.

Hmm… One thing I’ve noticed is that my average losses are larger than my average wins. I think that’s a clear sign that I need to work on trading setups with better risk-reward opportunities.

And, as a lot of people have suggested, I should also start paying more attention to longer time frames. Sometimes, I UNKNOWINGLY take trades against the trend because I failed to consult the daily charts. Gah! The trend should be my friend… BFF even!

I’ll definitely be giving my discretionary strategy more thought and come up with other potential improvements over the holidays.

The HLHB Mechanical System

huck.hlhb.pngLooking at the stats, I have to admit that I just love the HLHB system’s high reward-to-risk ratio. The maximum percentage of my account I could lose per trade is just 1%, but the 150-pip trailing stop allowed me to have huge rewards. In one trade, I was able to gain 4.88%, which was 5 times what I risked! Pretty neat, huh?

I think it could’ve performed a lot better though. For one, the signals were faaaaaaaaaaaaar too few. I only had TWELVE trades for the year… That’s an average of just one trade a month! Secondly, I only gained 4.60% this year, less than the 1% gain per month I was initially hoping for.

Also, while I do admit that I was saved so many times by my filters, they also caused me to miss some big trades. The challenge now seems to be finding a way to generate more signals while also making sure that the system is able to filter fakeouts.

I have no definite plans yet, but I am thinking of replacing the Stochastic filter with the Average Directional Index (to measure the strength of my trade) or reducing my 30-pip filter (to get in more trades). What do you guys think? Should I change the rules of my HLBH system? Or is the 4.6% gain of my HLHB system good enough for a “noob” mechanical system?

The BOTTOM line

I think it’s fair to say that the HLHB system was my saving grace this year. Even though it only logged in a total of 5 wins this year, those wins were big enough to make up for my discretionary trading net loss and keep me positive for the year.huck.overall.png

Overall, I can’t say I feel too badly about my results. Not only did I NOT blow out my account, but I managed to come out of 2010 with a small profit. Not too shabby for a noob, eh?

The best part is I know I still have plenty of room for improvement, which means things will only get better from here! I’m determined, I work hard, and I’m willing to constantly push myself to become a consistently profitable trader. So 2011, you’d better be ready because I’m gonna be back better than ever!

So I guess that’s it for 2010. Thanks for following me and commenting on my blogs this year, guys! May you all end the year with a bang! This is Huck, signing off!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.