- The horizontal parts, or those showing a small decline, are the periods where trades initiated have failed, resulting in small losses. It is critical that any losses incurred are kept to an absolute minimum, to avoid any nasty drawdowns;
- I wrote in my e-book about how 80% of your trades over the course of a year will cancel each other out, and it is the remaining 20% of the trades that generate the overall profit. The problem is that, you never know which trade will trend in your anticipated direction;
- When a trend does develop, those trades are left open until such point that the trend has finished, and an appropriate exit signal is given. No profit targets are used, and these trends can run for a matter of days, or even better, weeks or even months. If you are fortunate to get into several of these trades, they will tend to generate exit signals fairly closely to one another. When this occurs, this provides a sharp jump in the equity curve, creating another 'step' up along the way.
As mentioned on several recent posts, my goal is to control my risk and keep any possible drawdowns to an absolute minimum. The profits will take care of themselves.