4/29/2008

To Trade or Not to Trade

Some wise old men have told me the key to successful trading is identifying when you should not be trading.

When traders do static back testing with their chosen indicators they are usually checking to see if their system captured all the moves. A better use of time may be checking to see if their system kept them flat when there was no real trend in place.

Today's 34 tick range bar crude oil chart shows 2 nice short moves to trade. Virtually any trading system would have identified these 2 moves.

Looking backwards, with the clarity of hindsight, does your trading plan keep you flat outside of these 2 moves on the crude oil chart?

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