Is your 40% win rate only based only on those trades in which you adhere to your rules or does it also include those trades that ignored your rules. If the former then you need a new set of rules and if it is the latter then you need to work on your self-control. Until you stick with your rules you have no way on knowing if your approach is going to work over the long run. Buying a 1 min candle that you think might make 60 ticks without retracing is subjectively trading by intuition and not rule based decision making. Rules are based upon past and present price action and not upon what you hope will happen in the future. You can create and test a methodology based on price behavior events like new highs/lows, double bottoms/tops, tests of support/resistance, etc. You cannot create a reliable trading method based on what you think / hope might happen. How many times in this journal have you mentioned trades made because you intuitively thought price would make a new high or would reverse and push lower and make new lows yet not have that work out? Successful strategies generally have three components: a way to identify a directional bias, a setup event that announces a high probability outcome trade is likely at hand, and a trigger... what has to happen to get you into a trade. It is not possible to know what any one bar is going to do and to plan to only trade a bar that will move >60 ticks after you enter is unfortunately just not realistic.
I went through 3 days of trading with 30 sl and 60 tp (October 20, 21 and 22) and found that I had taken a total of 35 trades with a 37% win rate. Only 21 of those trades were allowed to be taken with my rules. 8 of those lost and 13 won...which is a 61.9% winrate. 11 of the trades clearly went against my rules and all 11 lost. 3 trades were not clearly following or not following my rules and all 3 lost. I re-read what I wrote in the journal on those days. It didn't seem like I was focusing on getting the trade right as much as I was focusing on not taking too many trades. I don't know why I keep getting stuck in this pattern of forgetting to carefully critique my trades on the basis of using my trading plan. I know I do sometimes, but I definitely missed seeing my errors on those 3 days. OK. I'll grade each of my trades on here according to those 3 criteria and post them. That SHOULD help with both the discipline of waiting to take only trades that follow the rules and should help with getting better at recognizing them. That was my secret sauce for getting away with a smaller stop loss than I should be using. However, looking at today's chart, I see that had I taken the right set ups, I didn't need high volatility to kick the trade quickly into profit. The trades would have worked, just taken a little longer to get to the target. Thank you for sharing your insight!!!
Made 58 ticks! And only took one trade, no demo trades today. A big thank you to @Pivotas for the reminder to look for directional bias, set up and trigger. I wrote it out on my chart and checked carefully for each before I took a trade. My trade wasn't perfect and maybe I should have stayed out of it because I got in a little late (set up) and a little early (trigger), but it did work! Trades List since last Friday: Statistics since last Friday:
"with my rules. 8 of those lost and 13 won...which is a 61.9% winrate" So if you adhere to your rules you have a chance of making all these years of effort pay off. "11 of the trades clearly went against my rules and all 11 lost. 3 trades were not clearly following or not following my rules and all 3 lost." Trades made when you do not adhere to your rules have a 0% winrate and if you continue to do this you are doomed to fail. Wake up and smell the coffee.
From your very first post on 11.10.19: "I've been shown a way to trade that is most likely going to be profitable and doable for me... I can see it working on the charts after the day is over, and many times I do take trades following the rules of the system. Those trades do really well. However, I'm making so many mistakes that I'm currently at a 40% win rate using a 1:1 risk to reward ratio...I find that the majority of the losing trades have been due to my lack of self-discipline to follow the rules exactly... My goals for this next week: Take only trades in accordance with my trading plan." From your post on 12.02.20: " I now see the difference as trading by intuition vs trading patterns with rules. There's still too much subjectiveness with my setups but it's a lot better than the guessing I used to go by... I think with time and careful record keeping what works and what doesn't will become more and more clear and that will help with gaining confidence and trading better. From you post on 12.03.20: "I'm still not very confident about trading live yet and really want to get the best set up...especially because I only have a 40% win rate (for all trades taken)... Only 21 (out of 35) of those trades were allowed to be taken with my rules. 8 of those lost and 13 won...which is a 61.9% winrate. You have known since the start of this journal where the problem lies and it is not going to be solved by tracking the constantly adjusted targets and stops or the changing number of contracts or the instrument you trade. There is an interesting slip of the tongue in the above last sentence: "of those trades allowed to be taken with my rules." Allowed by whom? I assure you that you have my permission and the permission of everyone who has posted to this journal to only take trades that adhere to your rules and to become successful as a trader. But what you really need is permission from yourself.
In the last 2 days, since realizing that for 3 days in October I took 14 trades out of 35 that were not following my rules, I've been contemplating these questions: 1. Why have I struggled off and on for almost 2 years to follow my rules for each trade? (Before then I really didn't see importance of rules and so didn't have many, if any.) 2. Why didn't I notice that I wasn't following my rules? 3. Am I going to always revert back to trading without rules, even years down the road? And those questions have led me to wondering what the root of the problem is for taking a trade not following my rules. Why do I do it? There was a time, a while ago, that I felt like if I traded every thing that moved, I'd learn what it was going to do. I've stopped that, but I don't think I've recognized that this is really a dangerous, faulty way to study price action and form rules. Many times when I take a trade not according to my rules it's because I think I know what price is likely to do. For example, I sometimes will trade what I think is the very top or very bottom just to see if I can find a "feel" to it that works, even though my rules say to wait for a retracement to get into a trend. It's not really wrong to want to improve on reading where tops and bottoms are....but I think here is the difference.....it isn't a good or safe practice to experiment in order to create future rules, when actually trading. I think that is basically what is at the root of the problem I've struggled with for years now. I really need to let it sink into my mind that I should not be trying to find what works while trading in real time. I like what you wrote in an earlier post: "Rules are based upon past and present price action and not upon what you hope will happen in the future. You can create and test a methodology based on price behavior events like new highs/lows, double bottoms/tops, tests of support/resistance, etc." There is one other underlying root to the problem....and it is partly why I struggle with overtrading: it is much more exciting to experiment in real time than to build rules based on looking at still, historical charts. So, I have a second issue going on, and that is the desire to use trading for ...Oh no, do I admit it? Entertainment. Trading isn't suppose to be a fun hobby for me....it might be for others, but I want to trade it as I would any other business opportunity: hard work. Now I will make a rule to only follow my rules. Oh wait, I've made that rule before, and I didn't follow it. So now, I will make another rule that I must follow my rule to follow my rules. So the takeaways are no more trying a trade not in my plan to see if it works, when actually trading. Instead, study still (not moving) charts to work at improving. Especially keep in mind that experimenting when trading can lead to a "gambling" mentality for the thrill of it, which I'm very prone to becoming addicted to. My goal is rational, rules-based trading. Thanks for pointing out the key to success: "...to only take trades that adhere to your rules and to become successful as a trader."
Lost 30 ticks. Did I follow my rules. Yes. Could I have changed anything to do better? I really don't know. Price had been choppy and the push was still to the upside and I shorted, but it looked like the right trade. But maybe it wasn't the BEST trade. Maybe I should have waited longer...I think having waited for 1 1/2 hours made me feel like I wasn't going to find anything if I didn't take something. So, that's something to work on too. As much as I really want to take another trade to have a chance to make back my loss, it really is best to limit the number of trades I take. It helps to keep the focus on accuracy. I took one demo trade today because I have decided to take one demo trade only and one live trade only, each day. Eventually I want to take 2 trades a day in my live account. I'm posting that one, but I'm really sad that I took it. I wish I could say I had followed my rules on it, but I can't. Even after thinking all weekend about how carefully I would follow my rules, it is really hard to do. I looked back to see if I could justify going short where I did, and I couldn't. Two days I thought were interesting to compare with both had more of a directional bias to the downside, and still a short exactly how I took it, would not have been right. Today, we broke through previous highs, so there was no reason to have taken a short. Live trade Demo trade
"Did I follow my rules. Yes." As someone who wants you to suceed... QYBS Not if those rules include directional bias. The final 10% of your journey is going to take as much effort as the first 90%.
Thank you for marking up the charts!! "Did I follow my rules. Yes." Not if those rules include directional bias. Right. Directional bias is the basis for each trade, so....gonna try to get it right tomorrow.
It's hard to come to the realization that I'm still not trading well after all this time. Took 1 losing trade in the live account. 1 losing trade in the demo account. Overall, I am still in profits in my live account. By using a 60 tick target with 30 ticks for a stop loss, I can have a low win rate and still come out ahead. But that doesn't mean I should be trading live. I think I was a little too quick to trade live. For one thing, although I was profitable for about a month in demo, I used a different method and most of those profits were from getting larger winners. The 30 stop loss and 60 target were something I had only tried for about 2 weeks and then occasionally, and it seemed profitable, but it really wasn't enough time to get good at it. I am going to switch to demo only trades and take 2 trades a day, only....because taking only one trade a day will make this progress drag on for years and taking 2 trades a day will still help me to focus on accuracy and work on controlling my desire to over trade. I don't plan on going back to live trading until I can show that I'm making consistently good trading decisions. The fact that so many of my trades up until even now are simply not well taken is really bothering me. Some of it is because the market is difficult to read....what works one day doesn't always the next, but a lot of it might be me both with not being able to pull together what I know to make good trades and the self-control to wait until I see the perfect opportunities which means not taking trades that are hitting resistance. So, back to the slow process of learning by demo trading...but with a renewed determination to be very selective in what I trade. And something else I've been thinking about doing....all these little rules, like, don't trade into resistance...I haven't been writing them down. Somewhere around the beginning of this journal a few people wrote about all the rules they have. Well, maybe it's time I start writing down meticulously all the patterns of price action I see and make a long list and write out the rules and exceptions. My plan, I've known for a while now, allows me too much freedom/subjectiveness in taking trades. I should write down EVERYTHING. And go over it. And backtest it. And not give up--(unless I really can't make it work) but I DID make demo money last month...why? Can I repeat it? Do the 30 sl 60 tp trades work with my demo trades from last month? I have a lot of chart work ahead of me.