In this post I’ll try to answer a few questions: Why do I do my ASR (advance self review) weekly? What do I look for? How do I come up with ideas to check?
First of all, let’s remember, I don’t know what’s going to happen after I take a trade. All I know is that I can always improve.
I don’t know where the price will go after my entries
There’s an edge to our entry, we know that the probability of it going in our favor is X%
There’s one common thing that unites every successful trader I know. We all admit we do not know where the market is going to go after we take a position.
To take an example:
If I take a 4 hour script entry that fits my rules. I can tell you that in 50% of the time it will be a 3% win. The probability of it turning into a break even trade is of 8%. The probability of a loss 42%.
But that’s all I know. Well…
I can also tell you that in 22% of the time, the next two candles will go against my position. in 42% of the time the next two candles will chop around, one will be bullish and the other one bearish. In 36% of the time the two candles will go in my favor.
I can keep going more and more in detail, about every single entry type I have. The average return you can expect from those
However, I still can’t tell you where the price is going.
It’s just a question of probability and risk management.
However, I believe I can still improve my trading. Add new rules or filters. Discover new ways of taking a position. Rules I can remove etc.
That’s where the ASR comes into play.
ASR stands for “Advance Self Review”
You want to learn from what you experience in the market.
Let’s dig into how I do my Advanced Self Review
The first thing I do is go back through the week and look for all positions I could’ve taken, I look for trades I may have missed, trades I took and how the market moved.
At this point I don’t look at my trading journal, I look at the chart as if I was backtesting. I keep track of every single set-up that happened and their results.
I look for reasons why the market made a high there, is there something that could explain it? Is there a way for me to forecast it in the future? Does it bring up similar thoughts I’ve already had while doing my advanced self review?
Listing all the potential trades
Once I have tracked every single trade set-up that fits my rules I look at my execution.
How many trades did I execute that I was supposed to execute? How would I grade myself?
In my 4 hour trading, what I share here, I executed on 4 trades, two on NZD/USD and two on GBP/NZD.
After reviewing the week I can say with confidence that those 4 entries were all valid.
- Well there was CAD/JPY, it was a pretty trade set-up – however it didn’t fit all my rules, so I did good to stay out. It wasn’t a script entry, that’s the rule it broken, it didn’t close low enough
- There was also GBP/CHF, that one was pretty too, however, it didn’t fit my rules, it wasn’t a script entry. So I stayed out. Why wasn’t it a script entry? Because there was one bearish candle before the candle I’d have entered.
- NZD/JPY was another one. Once again it wasn’t a script entry, the price action had been going sideways for 20 hours. It was nearly a script entry. Just the question of the close 3 candles ago. The fact it was so flat cancelled the script signal.
- USOIL is another one. Well, I didn’t like the entry candle anyway so I’m happy I didn’t execute and it wasn’t a script entry either
- CAD/CHF wasn’t a script entry (I’d have been interested the 10th of Nov. at 11am French time) because it didn’t close low enough. However it was also outside of the area of supply so all in all I’m not sad I didn’t take it.
- EUR/CHF provided a script entry. However for me the price action was too slanted and it had spent too much time within the area of supply – so didn’t take it
- EUR/GBP didn’t provide a script entry either. A question of the close a few candles ago. So good I didn’t execute
EUR/NZD provided a script entry, however it was below the weekly stack so I didn’t take it. That’s interesting data point, those are rare, so I’m highlighting it for future references. I want to collect more data on those trades. It fits my plan everywhere except for that.
USD/JPY also provided an entry. After a clear double / triple top – I’d have been happy to take it, however to have a weekly stack I’d have needed to use two weekly candles rather than just one. Which is my rule. However, I’ve seen those trade set-ups play out quite a few times. So I’m highlighting this trade to compare it to previous trades that did the exact same. I want to see if the average return is positive
How well did I execute my trading plan? Is there anything I should look into?
Okay now that I’ve mentioned every trade that I could see that worked with my daily zones was there any trades that I should’ve executed?
The answer is no, I executed the 4 trades that presented themselves to me and that fit every single criteria of my trading plan.
However, there were two trades that I didn’t execute because I wasn’t the biggest fan of their weekly stacks.
Now I know I want to go back and check previous occasions where the weekly stack required two candles instead of one AND if it’s okay to take trade entries that are just outside the weekly zone?
Time to look back in my data set
Not going to share the results about that analysis to keep my trading plan more or less “private”even tho I’m sure you can reverse engineer it if you spend enough time here.
Now once that is done I try to understand why the market offered so many potential entries? The reason – price had finally been pushed to areas of supply / demand since institutions removed their hedges to cover their asses during the US election.
That was my ASR for the 4 hour strategy. I’ve been using it a lot longer than my script so it’s normal I take less lessons out from it than my script trading.
A shorter version of my ASR for my scalping
Let’s quickly look into my scalping, I promise it’ll be quicker since I won’t go into as much detail. I want to mention it because I discovered something important while doing it.
The fact that last week was the worse week in terms of result of my scalping strategy over the last few months definitely made it interesting.
While doing my ASR, I noticed there had been 21 valid set-ups.
I took 15 of those set-ups.
However that’s because one day there were 8 trades, where I limited myself to 5, I wasn’t feeling too good after 5 trades that resulted in 1 BE and 4 losses. So that’s 3 trades I had identified and could’ve executed. I took Friday off too, there was only one trade that showed up, a BE. So that makes up 4 trades.
So I’d have executed 19 out of 21 valid set-ups.
That’s already pretty good, I’m quite happy about that. Sure I missed two trades.
Focus on your execution of your trading plan, not your results.
Executing a profitable trading plan will pay out in the long run. That’s all you need to do to become a profitable trader.
For a third week of living trading this plan I’m quite happy with that. In university you get an A for an 85% – I’d have scored a 90% here.
Is there any lesson here?
From there I need to understand why this week was so poor compared to previous weeks.
In my previous trading I was able to identify that the market could either be trending or correcting. I figured my scalping – which mainly focuses on short moves works better in a correcting market.
First I discussed it with a trader, a good one, that trades a very similar strategy.
We agreed that we want to avoid trading the market in such condition. Or at least, trade differently.
That made us realize that it was the market type that “caught us”.
If you’re dressed for a summer day in winter you’re going to suffer if you live in Canada. You have to adapt to the conditions. You can’t tweak the external conditions to fit you.
You have to adapt to the condition of the market
Anyway. I then looked and did some research on my side of things into market regimes.
I came across this video: https://www.youtube.com/watch?v=VMqXstX4ALs
I thought it was rather interesting.
So I kept digging into it.
Here’s my scalping returns:
I then added his market regime indicator to my chart, I edited it slightly and changed the time frame.
I then went through every single trade taken in my data set for the last three weeks and figured out what market regime they’d be in:
I don’t know about you but I find that quite interesting, the average return of my strategy in “Neutral” market is over three times higher than in other market conditions.
I kept digging into this. However it’s important to mention two things.
1- To make a change in your trading plan I recommend having a lot of data. Ideally I’d have 100 neutra trades, 100 quiet trades, 100 volatile trades. That would be better,
2- Make sure you are not curve fitting your data. I could correlate my trading returns with the amount of rain a specific region gets if I look deeply enough. You need to be careful with this.
I kept digging and searched for a way to improve the results while having a higher amount of data, so I split those three categories into two.
And the results looked even better.
I hope that helps.
I’m not saying you have to look into the market condition, it could be interesting for you, sure, but that’s not the point of this post.
You have to reflect on why your trading plan stopped you form executing winning trades and what you could add to your trading plan that would enable you to remain “safe” from conditions that do not fit your trading style.
Once you have collected enough data you’ll be able to tweak your trading plan to increase even more your profitability.
On that note, have a fantastic week!