The first step I made when I wanted to start trading was having an idea about the impact of: winning trades losing trades win/loss ratio After that I had an idea about how big the waveshad be to let me make profit. How good the win/loss ratio had to be. I used for this an excel in which I could simulate different scenario's. Slippage in this example is market entry and targetprice out. So only 1 tick in and 0 ticks out.
If you're struggling in your trading, NEVER EVER trade the ES. I can't comment on you specifically (b/c you don't say what you do) but you're probably in the same boat as Electric Savant and a fellow from India around here who swears up and down he's a stone cold technical analysis expert of 10+ years: they want high winning pcts (past 70% and you will have to risk more than you can make per trade...DON'T DO THAT) The only way you can cure yourself of that kind of ego-driven trading disease is to find the biggest baddest trading instrument in the world (b/c it MOVES) and work on your reward to risk ratio as being the main factor in becoming long-term profitable. Go sim trade the HSI on the Hong Kong Exchange until it no longer scares you and you can control your risk. If you let a trade go against you on the HSI more than around 30 ticks ($200 USD) on a 1 min chart then you had better work on your entries, preferably pullbacks in trends, NOT leaps forward on high/low breakouts . The real-time data cost is dirt cheap on Interactive Brokers and in the US, their morning session is 9:15 PM to 12:00 AM EST. If you can't sim trade great trends on great voltility then don't ever quit your day job. The ES will end someone in your current frame of trading mind. Note: People like Handle123 can trade the ES, take 1:1 RR at 70% long term simply b/c HE GOTS SKILLZ AND YOU DON'T. Accept that. The easier trading is found with avg winning pcts and high reward to risk ratios in super volatile instruments by trend trading (easy stuff, price close thru 9 wma, pull back to 9 wma, TAKE IT, the 1st and/ or 2nd pull back to a 20 ema, on a 1 min chart and ANY red closing candle in an uptrend, ANY green closing candle in a downtrend [YOU have to decide correctly that you ARE in a trend in real-time at a 40-50% success level then the super high reward to risk ratios work their wonders for you]. I am correct. It works for everyone who understands you have to dump bad trades quickly. The way you get good at that is to look at the umpteen 1000 ones that work out and to not tolerate the ones which go against the typical case. For example, on the HSI, if I'm going to take a pullback to the 9 wma (weighted moving avg) after a close through it, I AM GONE if price closes against me (on a 1 min) at the entry area. Why? Because price will take off in your favor quickly when your context is correct (context is TREND, price is imminent to MOVE). Lastly, the HSI is so good that even sideways gives you a 1 leg move good enough to have 2 to 1 reward to risk ratios. FACT.
Hello John9999, I am not a profitable trader, but I can only share some simple ways to think about this. I can only offer my advice as I have been there and I am currently there now. I am in the trenches just like you. The biggest issue traders face is the Lack of Improper Education in this trading business. Everywhere you look or research someone has a strategy. Noone never mention this to us but the reason we fail is Because we don't know what we are doing. And we can't read every thing right? We can't try every trading service right? We can buy every system right? We can't take everyone advice right? We don't have cash flow to trade everything right. So here is what we can do to increase the odds of success: 1. Forget strategy and system and focus on the odds of a win per trade. We can't rely on one strategy to work all year for years. 2. Open a chart with no indicators at all and just stare at it. Take the experience you already know and make decisions where you think the odds of winning will happen over and over again. 3. Repeat step 2 for many many charts until your predictions of winning is getting better. Basically, what I am trying to say is you know how to trade already. Now you just need to find out where to finds the win. I just simply don't believe in strategy and system anymore. Just look at the chart in real time. I could be wrong, but I really don't think buying systems and strategies is the way. I think getting as much experience as possible is the best solution. If you going to use indicators, use only 3 max. And make sure they are the popular ones with the default settings.
SteveH, I can appreciate your writing. Thanks. Can you please elaborate a bit on the part in blue I quoted so I am sure I understand you? I trade small time frame charts as well. Are you stating that if I take a trade within the trend, let's say on a retrace within a trend of the day, I enter, I set my stop loss in logical place, and I know my profit target, I am waiting. At this point, i am waiting for my stop to be hit or my profit targe to be hit. But are you stating that if instantly (or maybe even a few minutes) if price does not move toward my profit target, my context is wrong and odds are better to exit the position, RATHER then letting stop loss get hit? Are you stating this with respect to keeping risk to reward ratio high? Or getting the context correct? Please explain context?
Time is way more important than price. The longer you sit there, waiting for one of your physical stops to be hit, the more crap can happen (almost like they start magnetizing to your loss stop). If it's not going your way when you want it, gtfo. There's always another trade. Better ones. Ones that tell you how much they love you right off the bat.
FibonacciNinja, The problem with just instantly exiting, is what happens as soon as you exit, the trade would have gone in your favor. Then the mental brain regrets it and that leads to more force trades. I am really not understanding to just respect the stop loss you chose.
I didn't say instantly exit. I said exit when "it's not going your way when you want it". Better way to phrase it is: If it's not acting how you think it should be acting, with respect to time, magnitude, etc., get out. Don't wait. And it's whatever your threshold is. Not mine. Some people expect things to act in 2 min. Some people expect 20. Your example of "regret... leads to more force trades" is a mental/discipline problem. If I expect to be right in 5 min because it should be taking off by now and it's sitting unch for 6, then I'm already wrong, aren't I? It hasn't hit a stop yet but it's collecting dust, typing up capital and my time. If it bugs you that right when you get out the next minute is when the move happens, you need to address if that's an issue with you, the clock, the thing you're trading, or your strategy in general. If it's the clock, then make it 7 minutes, etc.
Thanks FibonacciNinja, I respect your posting. It's very logical and make sense. Especially the part regarding "Your example of "regret... leads to more force trades" is a mental/discipline problem." What you said made sense to me. Would you say that "it's not going your way when you want it" is part of money/risk management or how the trader expect that trade to behave? or both? Thanks
It's both and more. It has to be in your approach; how you view the market and yourself. You should always be expecting YOUR scenario to happen or else why are you in the trade? Not that it should always happen how you want it, but if you're long /CL then there's a reason you went long /CL. It better do what you figure it's going to do and every bar it doesn't, means the more chance that you'll lose money. But hey, if you want to set a stop and forget about it, fine. But I'm betting those times you've let the trade call the shots it's picked the stop loss over your pocket. You have to be a tough boss. I mean it's your money after all. Think of it like your employee. Would you give your employee an infinite deadline for a task? No. You're going to give a deadline that you/your department/your company finds reasonable or one that has worked in the past. Or you fire them and find someone else who can perform (and only after you've fired everybody/they all quit, do you change your ways. Like a real company! lol)
Thank you FibonacciNinja for the good comments. I like your logic and example. It put trading into prespective for a disctretionary trader. I track my trades along with time in trades and I will start monitoring this while I am trading. After all, it relates to cut losers short and let winners run comment that is often in trading discussions. Good discussions