Following last week’s fiasco my account had retreated to it’s end-2006 level of 9600, with a drawdown of around -4%. For several weeks I had been looking for a loss, hoping it would test my discipline and that I would prove myself. Well, I was tested and I failed miserably, giving myself a road map score of just 1 out of 10.
This week however, I benefited from a run of good fortune and grew my account by 20.8%. There are two points of note:
– Despite the strong results this does not signal a return to the good old days because a portion of these profits can be attributed to an intuition-based trading experiment, which I am no longer pursuing. The intuition-based approach proved profitable but it lacked an obvious rationality. More importantly, employing capital in this approach meant I would have had less capital to devote to my core strategy (to use economist speak, the approach had a potentially high opportunity cost. I will discuss this concept in greater detail shortly because it forms a core part of my trading philosophy).
– I ended the week with three losing trades. I was about to chase these losses with a much larger trade, but instead I stepped away from my trading station and went downstairs to have a late breakfast; it was the better trade. I am giving myself a road map score of 7 out of 10 this week, which I think is reasonable.