Spoon boy: Do not try and bend the spoon. That's impossible. Instead... only try to realize the truth. Neo: What truth? Spoon boy: There is no spoon. Neo: There is no spoon? Spoon boy: Then you'll see, that it is not the spoon that bends, it is only yourself.
Personally I am a supply/demand guy and I watch for restests of known levels. I rarely use any indicators or trend lines but may occasionally use fundamentals to help determine size. The reality is there are many different ways to trade successfully but unfortunately there are exponentially more ways to fail at trading. You must first learn everything you can from multiple sources and figure out what works for you. No matter what methodology you choose though, you have to have a plan and be able to execute the plan without emotion. Some quick rules for any type of plan: 1. Learn to eliminate the big losses. (Protect your capital) 2. Never make a trade that will put too much of your trading capital at risk. (see rule 1) 3. Never trade when you are in a heightened or agitated emotional state. (see rule 1) 4. If you have a bad day of trading, take some time off. (see rule 1) 5. Trade on paper only (fake money) until you can do that successfully, before trading real money. (see rule 1) 6. ALWAYS use stop losses or protective option positions. (see rule 1) Why is Rule 1 so important? When trading there are only 5 possible outcomes: 1. Big win 2. Small win 3. Break even 4. Small loss 5. Big Loss Small wins and small losses cancel each other out. Break evens don't count. That only leaves big wins and big losses. If you can eliminate the big losses then you are left with the big winners.
Find a strategy then back test if for 6 months to 2 years. If it works then start paper trading on your brokers demo account for 1 month. Do it without emotion. The most important part is find a strategy that really works. Do that by back testing for at least 6 months. Doesn't matter if you are unemotional or have a good mind set if your strategy doesn't work. You really have to have a good plan/strategy first before anything else. Then the emotional part comes next.
It all depends on the win rate and avg. win to avg. loss ratio. I know people who make money with many small wins and a few big losses. I also know one person who makes a lot of money with many small losses and a few big wins. Generalizations are dangerous. What you described is a normal distribution. Trading returns are not normal. You cannot find ways to cut big losses and keep big wins. If a model generates a normal distribution of returns and you apply a filter to cut big losses then you also cut big gains. Ain't that simple.
There is a simple starting point for answering this pertinent question. Potential traders do not have the mental resourses to pace the market's activity. They cannot keep up mentally. The solution is to use a display that can be completely annotated faster than the market moves. For making money as soon as you begin to use charts, I recommend using a chart that forms bars slower than you can think at this time. The five minute chart is a good one for teenagers on up. ES is fun to begin with. Here you can annotated three fractals of trends. Make a heirarchy of the three fractals by using the fastest fractal to build the middle fractal. Similarly, use the middel fractal to build the slower fractal. Annotate bar to bar as the fastest fractal. Always treat internal bar pairs and laterals as one bar when annotating the fastest fractal. Plan on trading the trend moves on the middle fractal. Fortunately, price lags volume. Because of this you can discern a trade coming up well before the moment of the trade. Annotate volume so you can discern dominant and non dominat moves. I recommend that you just trade dominant trends on the middle fractal until you triple your money in two weeks or so. This way you can catch up with your annotating between dominant moves and be ready when each dominant move begins. Using this as a beginning you will avoid whipsaw and you will learn to dicern a retrace from a reversal right at the beginning of each. You will not trade retraces and you will trade reversals. By beginning in this manner, you will not be encountering losses. Some handy notes: Dominant trends begin with volume troughs. Dominant trends end with peaking volume Holding a dominant trend is done by observing that volume is always increasing. To "see" volume you need to have a Pro Rata Volume "shadow" showing behind the forming actual volume. PRV is the volume height that will be reached by the end of the bar. For example, you know a price extreme is occurring 5 minutes before the end of that bar. Sometime during the bar formation the price extreme will occur. This allows you to be a more steady trader since you are looking to see the price extreme just before you know it will occur. There are no trades at the end of any bar. Extremes occur as bars form. After a while, you can consider "acceleration" and "deceleration" of volume to be able to put a finer edge on carving the turns. Just start slowly with dominant only trading and triple your account every two weeks or so. In this way you will have more contracts to trader sooner. As you see, this is a simple automated trading setup. It is just on an entry/exit new beginner orientation. To begin to use a hold/reversal level of advanced beginner will take a few more weeks. You also do not get stuck in the PA beginner level of trading from which PA traders do not emerge.
For one traders chop is another traders bread and butter. What is truly great about trading, although you don't see it when you are first learning, is you get the see how so many traders don't have patience. So many do "breakouts" and over small time durations, they don't work very well, triangles, wedges, flags, etc...BUT, if you have the patience to wait for a longer duration pattern, they are more often to work with a greater reward to risk, but it requires one to sit on their hands. We are taught more is better, but not in trading, less is better, less trades