Every Winning Strategy Has These 3 Ingredients

📈 MIND OVER MARKETS

Every Winning Strategy has these 3 Ingredients

1. Structure 🏛️🔍

   This is just a fancy way of saying will you trade continuation or mean 🔄 reversion? The implied bet of every trading strategy in the world can be boiled down to a binary↔️ choice - is price direction going to continue or will it reverse? Structure 📊 simply refers to how you will determine the optimal way to trade your state.

   The key to good structure is that it must be precise and mathematically 🧮 describable so that a computer algorithm could execute it if need be. If the trading behavior cannot be described by simple math and clear logic it cannot be replicated or traded systematically. 🤖

   You don’t have to take every signal 🔎 your system generates but you need a clean, clear idea of exactly how your trade sets up. 📈

2. Technique 🎯🔧

   This is the single most underrated element of trading. Recipes 👨‍🍳 are easy. Execution 🔪 is hard.

   Technique refers to the way you will execute the trade once the system flashes go. Some traders will only take trades on limit entries, others will only enter on stops letting momentum carry them into the move. Most traders just click away at the market eager to just get in. 🚦📉

   There is no right or wrong way to execute trades. Just like a master pitmaster at the 🍖 barbecue, you will discover the best technique if you keep doing the same set up over and over. One effective method of entry is the 📊 candle-on-close trigger. Instead of just confirming through price, you confirm through time as well. The process can be a singularly unique and unusual torture for an 🕰️ impatient traders, but the improvement in results will be rewarding many times over.

3. Risk Control 

   This is by far the single most difficult element to get right. Take any strategy, change the stop and target parameters and you can quickly go from a sure winner to a certain loser or vice versa. The subject of risk 🛡️management is a never-ending conversation and it is made doubly difficult in high volatility 🎢 markets. There is nothing more frustrating than losing money on a system that is right on direction but wrong on stops and many novice traders make the mistake of abandoning the strategy when in fact a pause and a revaluation of risk controls is usually a much more intelligent action to take. ⚖️

   One of the great ironies of trading is that most traders and investors abandon their strategy usually at the point of maximum drawdown and therefore never get to participate in the inevitable return to profitability. By taking an eagle's eye 🦅 view of how the strategy works, traders can be a little more dispassionate about their performance and stay in the game until they 🎲 win.