It seems that while my TP is based on discretionary variables, there are some constant factors to it. Lets take my risk management aspect for a second, there are component within that which could be back tested to see if the strategy used is more beneficial to having differing factors.
Because I am reviewing my TP in real time against my personality, its hard to know what you are really like until you start trading real money - for me anyways, a dummy account, as honest as I can be on it, wouldn't yield the same emotions as a real-live account. I am still making certain decisions to adjust my risk tolerance which is up to an individual. I thought I was able to handle a 1% drawdown of my total PV per stock but I am starting to understand that 1% is a little too high for my liking. I have fine-tuned it down to 0.7% to see how I go with that.
I use Stock Doctor as my research tool and my maximum risk allocated to a stock is based on the fundamental soundness of a company - Triathlete will know this one. My max risk per stock
used to be 1% for strong or satisfactory financial health, 0.7% for early warning and 0.5% for marginal or distressed financial rating. But after 2 months of using the financial health model as my backing, I am changing it to 0.7% for strong, satisfactory and early warning ratings and 0.5% for distress and marginal ratings.
My main goal right now is to stick to my trading plan, clarify any loose statements on my TP so that I know exactly what action is required in the moment, fine tune my portfolio & risk management techniques and experience the market.
The goal would result (logically speaking) a more developed trading plan attuned to my personality, some experience for myself in the market on what I see (what works and what doesn't) & exceptional portfolio & risk management techniques.
Portfolio & risk management is the number 1 step for me because if I don't have a sound plan for P&R management, I won't last in the market.
My winning ratios at the moment is 40% win 60% lose - not good at all but the idea is that if I can control my risk well from the start, I can focus on how to increase my winning ratio as the next important step. Truth to be told, my "Scanning" abilities are sub-par at most and there is still a long way to go in that department - hopefully, through my experiences and self-education through books, I might be able to improve it.
Long run - Controlled P&R management + Improved stock picking abilities means better profitability, even if it's from -$1000 to -$100 hehe
Do I need to back test my TP? Well it may be good to do it but having experienced a pretty crap P&R management with sub-par stock picking abilities between
March 16 to Dec 16 I still managed to pull a tiny profit from the market. I am somewhat confident that an improved system will yield better results! Only time will prove me wrong haha
