Rally Diary Entry: 

I know you keep saying it’s best to find strategies and trades that fit my personality and lifestyle and focus on those but I’m having a lot of trouble doing that. I’ve traded a million different strategies but I just can’t find one that stands out above the others. I’ve got about three things I’m doing right now but I’ve left about ten things on the side just in case these don’t work. I just don’t feel like I’m making any progress. Any suggestions?

Response from Preston:

This is where patience and focus become difference makers. Go back and look at how long you actually studied, tested, simulated and traded previous strategies as well as what the market environments were like when you simulated and traded them. It could be that you didn’t give some strategies the amount of attention and time needed to get familiar enough with them to feel confident in them or to build a rapport with them, or that you were simulating and testing them in a market environment that wasn’t favorable to them, or both. You’ve got to get intimately familiar with each strategy, which means understand why they were created, when they do well, when they struggle and why, how they can be changed or tweaked to adapt to a particular environment, and how difficult or easy they are to execute in the live markets. And then you’ve got to be patient enough with them to find out if they might ultimately fit into your core approach. If they do, then you’ve got to focus on getting better and better at them because they might end up becoming your money makers. This can be a very time-consuming and difficult process but also extremely rewarding.

It took me a long time to finally identify swing trading strategies that I was comfortable with and could really focus on as strengths in my core approach. I struggled for years with it because I just wasn’t patient enough to let the various trading plans work themselves out and, frankly, I wasn’t paying close enough attention to my market environments. I’d see a bull flag or pennant forming in a stock and take a position for a breakout but I didn’t realize the S&P was at the top of its short-term range (at a pivot high) and about to come down, so there was little momentum for breakouts at that point. And when the stock would fall I’d talk myself out of my stop loss because I was so sure it would break out. Eventually I burned myself out on swing trading for a while.

It wasn’t until 2017 when the market was going straight up and I was more confident in my chart-reading skills that I put a plan together that began to work and make money. I started buying dips in stocks based on relative strength and although it was ridiculously simple it was highly effective. This is because the S&P was stair-stepping its way up, basically along the moving averages. So I just let the market dictate to me what was best – what had edge at that particular moment in time. And that’s when it clicked for me. I started getting more confident with swing trading, so I got better at it and finally began moving forward with it. 

You just have to put the work in. I wish there was a short cut but, unfortunately, there just isn’t. This is why staying in the game is so important. You have to work through this in order to get to the point where those winning strategies eventually reveal themselves to you. This is when the development of your unique and profitable approach starts to really gain ground. Keep working at it!