T4L Rethink

• T2W = Trading to Wealth. T4L = Trading for a Living.
• Approach here until now = identify long term trend, get on board and ride it to conclusion. This worked well with nice long uninterrupted trends in 2007 and 2008 to play with. Supernormal returns were then possible. Ever since, I have kept trying to apply the same methodology. T4L is my stated objective but in the back of my mind, I am always trying to leapfrog into T2W (greedy!).
• Because market conditions are not favorable, riding on so called trend positions the past 2-3 years has on many occasions seen me riding profits into eventual losses while keeping to fuzzy exits (giving trends every possible leeway to perform).
• What I am absolutely certain of is - I am always able to make money. The problem is with keeping it.
• Thus, by way of experiment, I am going to make the following fundamental changes in my trading :=
• Set fixed monthly target (and by necessity, a corresponding monthly stop loss). Once achieved, EAR to be AUTOMATICALLY REDUCED to <= 6% of Total Equity. Usual 25% EAR limit is maintained for normal trading. Monthly target is set consistent with a normal salaried job.
• So its back to T4L basics. Abandon dreams of T2W, at least for now.
• Locking in open profits now take priority over beauty of chart patterns and trends. Once "salary" for the month is earned, that's it. Lock it in and leave the table till next month. The 6% remnant should give me some kind of handle (however small) on the trend still.
• This "limit your profits" approach clearly goes against the central tenet of trend trading. But going by my past trading records, I would have many less sleepless nights and a better overall financial performance had I been on it. For sure P&L volatility would be much reduced.
• [This modification means that I will rely more on daily charts from now on instead of weekly].
• If this limited upside, limited downside approach works, I envisage account growth will be achieved by a slow measured increase in monthly parameters over time. But ... first things first.