With my previous styles of trading I had some great years, and the occasional shocker.
The great years coincided with trending years, that’s where the market consistently moves in one direction.
However, the market spends about 80% of the time in a trading range; this is where the market bounces up and down, seemingly erratically, between levels.
A trending strategy, used when the market cycle is in a trading range, does not work.
The market cycle of trend and trading range is evident in all timeframes.
Understanding the market cycle, and applying a strategy for the part of the period that we are in, is the first key to consistently profitable trading, or more accurately the control of losses.
Some traders will trade many markets and watch for one to provide the cycle that they prefer. Momentum traders are an example.
Other traders, like us at present, watch one market (or a few) and have strategies to trade that market no matter what its cycle.
It does not matter which method. What is important is understanding the market cycle and using the appropriate trading strategy.
That understanding, I have to say from experience, eliminates the ‘shocker’.