These are my least favorite articles to write, because they require me to think very hard, and deep about a problem I am having in my trading, that demands immediate attention. Of late, and this hasn’t always been the case, I have noticed that I am not being patient enough with general market conditions and the stocks that I am either buying or shorting, is such that I am paying a premium, in many cases, for my entry prices.

Generally, I have no problem with determining market direction – I take what the market is giving me and I run with it, however, I have noticed in my trading that I have not been waiting for general markets to pull-back before getting into a new trade. Now, I’m not having issues with the particular trade setups that I am getting into, instead I am having issues with combining those trade setups with ideal market conditions. And while, I’m not getting into all my stocks positions when the market is overbought, I am, however, getting into enough that are in overbought conditions, that it is having an impact on my overall performance/returns.

So my job over the upcoming days is to come up with a trading rule that will prevent me from being overzealous and thereby going long/short in overbought/oversold conditions.

I’ll keep you posted on it for sure; I already have a few ideas that I am working on involving stochastics and other widely used indicators. I not looking for some kind of algorithm that is an “end-all, cure-all”, instead I am just looking for a means to which will keep myself honest and away from chasing overheated markets.