TheStrategyLab.com Price Action Trading Support Forum

Reposted from EliteTrader.com @ http://www.elitetrader.com/vb/showthread.php?s=&postid=3130542#post3130542
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Trader Answer

His/her method may have been backtested on many different markets and he discovered it's more profitable on the S&P 500 Emini ES futures. In contrast, someone using a different trade strategy may find their method is more profitable on a different trading instrument.

Simply, it should be obvious these are completely different markets. Therefore, price action is different and that in itself alone will produce different trade opportunities and results in comparison to another trade instrument.

Too many traders get married to a trading instrument. To prevent trading an instrument with less profit potential...that trader must backtest a method on many different trading instruments and then determine which trading instrument to trade based upon the backtest results. Further, a trader must do the backtesting again whenever profit levels change from the norm to determine if a different trading instrument is more suitable for trading via the method because of key changes in volatility. I use the word volatility because more often than not it's volatility that has the most impact on trade opportunities and trading results.



However, there are exceptions like different time zones may not be desirable. For example, if you live in the U.S. and you're trading Emini ES futures and then you do a backtest review to discover currently the Hang Seng HSI futures produces the best results via the trade method...you may decide to continue trading the Emini ES futures because you don't want to be staying up awake through the night to trade the Hang Seng HSI futures price action. This is an example of the trader making the decision and not the trade method about what should be traded although that decision will produce less profits or worst.

In fact, I've come across many traders that were consistently losing due primarily to one fact...they were trading the wrong trading instrument. They discovered such when they backtested their method on different uncorrelated markets to find out their methods were profitable on a different trading instrument.

Don't get married to your trading instrument.

Best Regards,
M.A. Perry
Trader and Founder of WRB Analysis (wide range body/bar analysis)
Price Action Only Trading (no indicators)
@ http://twitter.com/wrbtrader and http://stocktwits.com/wrbtrader

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