January Review

I'm done trading for January. My performance has declined over the last few months. I haven't been seeing many good setups and even the ones that look good don't fully extend. And of course when there aren't good setups there is always that temptation to trade less than stellar setups. I overtraded at the beginning of the month because I had too much of a preconceived idea about January's. One would expect an increase in volume and for certain sectors to start pulling ahead of the crowd. This is usually the month when new money goes to work, but that hasn't been the case. Over the last few months I've been trading less and trying to wait it out until conditions improve but now I have to assume that this is how conditions may be for the next few years. I need to find a way to trade low volume, choppy, directionless markets--the achilles heel of any trending system.

I reviewed my trades during a successful period last year. What I noticed was that not many entries were that great, but most trades at least went my way for a little while and I was quick to bale out of trades that weren't doing much. Lately, I've been "going down with the ship" too often and stubbornly staying in trades that I know aren't working in the back of my head. I'm considering using time stops. For example, I will start a stopwatch at the beginning of a trade and move my stop to the point where I would only lose .25R after 10 minutes. Then I would move to break even after commissions after 30 minutes. I'm going to be paper trading some new ideas in February so I might not be posting much...