This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
Over the last few days, I’ve taken a few trades from Renko charts, trying to follow some intraday trends on high-volume volatile stocks. I like that Renko charts define the trend for me, once I pick a box size. A retrace is also clearly defined, as a two brick reversal will reverse the trend. the problem is whipsaws, but so far I’ve been lucky and haven’t hit any to speak of. The idea is to go long on the first green bar, close the long and go short at the first red bar. The red / green lines on my chart are just visualizations of the trailing stop for me. Just playing small, pseudo-paper-trading this system–without $ on the line, even a tiny amount, I just can’t get interested in paper trading, so that’s why I’ve been trading. I’ve made about 4R so far with these, and even trades that reverse tend to let me get out at breakeven for the most part. Here’s the charts–sorry that they’re not more annotated-I’m in a hurry right now:
As part of working on my discipline and psychology, I’ve been focusing on reasonable trading goals and personal expectations over these past few weeks. Working on my self-image and success criteria. I have discipline, because I can force myself to look at the screen all day forcing trades, even when it’s painful. I’m driven by my goals for myself, and in the past, I have been racing. I’ve been too greedy. I want a fortune, and I want it now! Bad idea. Leads me to trade in the noise with positions that are too large, and force a trade that’s not really there, and overtrade.
After much soul searching and reading, I’ve come to a more reasonable expectation and goal. For me, right now, I have the goal to make +1R each day that I choose to trade. I think that is an achievable goal. Then if I make +2R on the first trade, I have one more opportunity to trade, knowing that even a 1R loss will keep me at my goal. Nice peace of mind! Only 1R doesn’t seem like much, but only +1R per day, if that’s 1% of my equity, over roughly a year (250 trading days) I will return over 200% on my account. Word.
Well, I took one discretionary trade (not Renko) in AKAM. Ragin Cajun called it on Wallstreak. Go to madstocks.com and read his blog–he’s been minting coin at a criminal rate lately. He saw the daily, and so did I. The 38 level was key–if it broke we’d go to 36:
Well, it did but I didn’t quite make it:
Traded on the 15′ with a wide stop felt good. My size was small, and even though I didn’t get the whole move I pulled out +2R without too much trauma. Exceeded my goal! Showed discipline, it’s all goodness. I accept where I am, and it feels good.
I need to work a bit longer on this mindset and discipline to make it stick, and then I’ll move on to Step 3 in my plan–laying out my trading roadmap.
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
