When I started trading, I set out to trade only strong signals. That is why I follow so many markets for a novice — strong signals are relatively rare, so you have to look around for them. After I started I had to make a few novice mistakes, such as overtrading. Now I feel rather more settled and am starting to get a better idea of which technical signals work and which do not. My sugar trade is the kind of thing I am comfortable with because it has several elements that mean the odds are in my favour:
- Breakout from medium- or long-term range.
- Strong breakout — confirmed by a wide range (and by volume, although I will be able to see this better with my new system).
- Fundamental story.
- Entry on a pullback at the top of a short-term trading range (which means faster profit and more chance of getting out for zero loss if the market wanders about for a few days and then goes against you).
Should I trade only signals like this? At the moment I am inclined to think “yes”. The ability to back-test will help me resolve the question — so I am very much looking forward to the new system.