Hello all, Was referred here by a few friends who have been trading for a very long time. I've been trading stocks for a little while now and have recently gotten into Forex, because I like the challenge, the technical analysis and the pace of it all. I've read a book on Forex and played around with a practice account for a few months and have been getting my feet wet trading live for the past few months. I've had a good amount of good trades, and a decent amount of bad ones as well. Overall, I've done ok. But the one thing that has been getting me in trouble is trading discipline. And by that I mean, when I look over the results of bad trades that I had made, I let my losing trades run for too long before I closed my position, making it so that in some cases, my losses from one bad trade might be larger than 2 or 3 winning trades. I guess my question is, how much leeway do you pros generally allow in your trades before cut the cord on it? Obviously, there needs to be a decent amount of leeway to handle the swings on the way toward a winning trade, but I tend to get screwed when I convince myself that a 25 pip loss is just a "swing" on it's way back to my winning trade Some background on how I trade, for those of you interested... I'm not rich so I am trading with a mini account and I generally only move 1 or 2 lots of 10,000 at a time. I almost always open positions with an OCO attached and sometimes when I get a winning trade I'll just set a trailing stop and run with it. I still haven't figured out entirely if I'm a longer term or medium term type trader, but so far I generally only hold my positions for a few hours, however I'm starting to lean toward holding them a bit longer. I generally only trade USD/JPY and EUR/USD mainly due to the tight spreads. Probably way too much information. Thanks in advance for you help!!
good luck in your journey. Just be aware it takes a few years to get down a system and be confident in it . Forex trading is not a get rich quick scheme even though a lot of people promote it as that. But when you get there it is very lucrative.
Thanks watchdaride. How consistently should I be expecting to make profitable trades once I reach the "expert" level of forex trading? Should 85% of my trades be profitable? 60%?
"Plan the trade, and trade the plan" meaning look at your trading plan logically and rationally before trading it, once in the market you are bound to be biased and risk doing irrational things. Discipline is a major hurdle in trading, psychology has burned more potentially profitable traders than anything else, that and money management.
It all depends i am about 60% . The hardest part of trading i think is putting in a stop and sticking to it . I use to put in a stop then move it when it gets close and befores you know it its 100 pips. The best thing is to take the lost quickly if it goes aginst you and wait for a new setup . I go for a 2:1 win ratio . You could sit on a looser for 2 days and miss 5 good oppertunities over that time to make what you lost and less stress . The best thing is to read a few books on trading plans. Get 3 setups and print out 10 charts per night and study why they succeeded or failed. I use to waist time reading trading books. All i do know is print out charts and fine tune my setups. To take the stress out of trading is to put a order in and protect both sides and walk away or check every 15 minutes or so . Trading is no fun staring at the screen for 8-10hrs like a did in the first few years.
cabletrader, How long have you been trading ? Is it still stressful for you when taking a loss. I have been working on trying to get the stress out of my trading and try to be more mechanical even though its hard.
Recommendations: 1) Stay away from Jack Hershey, Spydertrader, SCT or anything related to it. They will wrap you up for months, and you will be exhausted and poor by the effort. 2) Stay away from Fib/Fib levels, Gann, Elliot Wave or similar things 3) Technical analysis or indicators do not work. Most trader try to use them and most trdaers fail. Notice the link. Some here will argue vehemently to the opposite, but they will only furnish beliefs/opinions, not exhaustive PROOF. Many studies have shown TA as relatively useless, especially after transaction costs. There are many studies, here is one book that hits the nail on the head: http://www.amazon.com/Evidence-Based-Technical-Analysis-Scientific-Statistical/dp/0470008741 4) Learn money management: stop losses, risk control, leverage, position sizing. 5) a) Paper trade for awhile. When you regularly make money that way, b) move on to trading a very small account. c) When you regularly make money, then take it from there. DON'T skip a) or b) no matter what anyone says. 6) Put ideas of 20% a month out of your head. Everyone claims it, few really do it. Very few do it for lengthy periods. It is the biggest newbie killer. Bigger returns bring bigger risk (note: blowups). 7) Forex is the worst way to start. The markets are VERY efficient. I recommend futures or stocks instead.
1. When you think you have it figured out, stop right there, you probably don't. D. If you want to open a mini account with $5000, stop right there and only spend (and I MEAN spend) $2500. Otherwise, have a good weekend. Over and out David.
I was one of the first clients on Deal4Free (CMC's old name in UK) back in '96 so I've been banging away at this for a while now, profitable since around 2k or thereabouts. Yes it certainly is hard to overcome the stress, the easiest way I found to get over trading stress was to.... a) Thoroughly test my strategy to make sure it's profitable across a series of trades, for example monthly. b) Carefully work out a money management plan which will amply allow for a worst-case drawdown, and set a maximum drawdown allowance (small to start with) c) Knowing 'a' and 'b' I can then comfortably trade each set-up in the knowledge that win/lose/draw at the end of the trading cycle (month) I will show a profit regardless of the outcome of one individual trade, or worst-case I can only lose the maximum allowance I set. It's no big deal whether I win or lose a trade, it's the overall result of xx number of trades which matters......end of stress! Of course if you have an unexpected series of losing trades then it may alert you to changes in market conditions (like this past couple of weeks for me), maybe then it's time to watch from the sidelines for a few days until the market settles or you adjust strategy accordingly. I think having confidence in your proven strategy and having the ability and discipline to trade it is the key, get those right and it's nearly impossible to lose money.