Slow Journey to Discipline

Hi, this is a trading journal I've made mainly for myself but you might be interested in following along. I trade a little differently to conventional wisdom. I’ve been trading for some time and have had a few years of being profitable. But I have always struggled with discipline. So the main reason I'm doing this to force myself to stick to my rules and hold myself accountable. I will link my account because I always find looking at the statistics the best part of other people's journals. It makes the post interesting and easy to check progress.
I have decided to start with $1,000, while this isn't a small amount no one can live off the profits of $1000 while risking only 2%. So, this is more my choice to make this account less stressful and is more a tool to show myself the outcome of sticking to my rules no matter what the result is. I'm sure it will be stressful enough being public.

Some of my main rules are;

1. Each trade will be 1-2% risk, closer to 1% as possible. It’s a little tricky with a smaller account
2. A maximum of 5 trades open at once.
3. I trade pullbacks. Never with the trend (mostly 1H chart)
4. I have a risk to reward ratio of 1 : 0.33. I like to risk 1 dollar to make 33 cents.
5. To keep this simple I'll have a 20 pip Tp and 60 pip SL. (I might change this if problems arise)
6. If the trade results in Ioss I cannot place another trade on that pair in the same trend
7. Revaluate risk per trade at the end of the week

I will try and post some charts when I can to keep this interesting to follow. Thanks for reading and hopefully you might find some knowledge or at least entertainment if this goes horribly wrong.
Thanks for reading feedback is always welcome

Also here is the link to MyFXBook if that's more your style: https://www.myfxbook.com/portfolio/s...ipline/6744309

I thought I might explain my logic for my risk to reward ratio of 1: 0.3. I really haven't seen many people who trade with a negative ratio and some who adamantly say it’s a long term recipe for disaster. Trading with a negative risk to reward has vastly changed how profitable I have been. The floors are that with poor money management it will only take a few losing trades to blow your account. Progress also looks really slow from a long term view. My mindset needs gratification. I cannot have 10 losing trades before one big winner puts me back into profit.

I have tried many times trading with a positive ratio and I tend to make mistakes or feel like I must make the money back when I have too many losing trades or the drawdown gets out of control. This might be that I lack faith in my strategy or just the way I need more winning trades than losses to feel comfortable with my trading.

I subscribe to the idea that the market has a 50% chance to go up or down at any time, but in my back and forward testing, I have found that it ranges back and forth far greater the 50%. I have a greater profitability with wide stops and tight take profits. This must be within reason too. You don’t want to have 10 pip tp and a 200 pip sl.

Many people who have told me that you must have a positive risk to reward are also people who are comfortable adding to losses which can be a negative ratio even if it’s only one the first trade. But I won’t speak for everyone, there are endless ways to make money in the markets. What doesn’t work for me will surely work for others.

Maybe it's all mindset but the ratio shouldn’t be a standard rule without knowing your win rate and capital risk tolerance.

This is a trade I took on the USDJPY 1H chart. I looked for the 100 pip or so trending in one direction. This trade was trending down. As you can see price didn’t really retrace in that one move. It then consolidated in the last few candles with a final push down. This was where I like to take the counter trend trade. The stop loss was still 60 pips even though it only went about 3 pips against me before finally getting a small retracement. I see the consolidation as a time when the market is unsure about the price, this results normally in a ranging market then a breakout in either direction. My strategy will make money on ranging markets or pullback. This is the perfect time to enter the market. The USDJPY was close to a best case scenario. I will post another analysis when I have a loss in the account

Here is a trade I took on NZDUSD off the 1H chart. Although it was a losing trade, it is still a trade that follows all my rules. The NZDUSD was in a downtrend. Price consolidated the pushed down again. I missed this and entered as it was pulling back when it then continued its downward trend and my SL was hit. Lossing trades are never fun but it's all part of the strategy.

I also took another loss on EURNZD. With a very similar chart. It has crossed my mind that maybe having 2 trades with the same currency at the same time is being overweighted. But with a 2-1% SL this is more than enough to justify having more than one trade with overlapping currencies on as long as it sticks to my previous rules when looking for setups. I am however going to be doing some more backtesting on EURNZD because I have noticed that it isn’t as profitable with this strategy as some other pairs. This might be a result of having a 20 pip Tp and a 60 SL for all pairs. AS we know they all behave differently, and a blanket rule might not be wise going forward.

I have spent some time backtesting this weekend because I have some concerns about the account. I'm running this method on 25 pairs (all the majors and some minors with reasonable spreads) it has become apparent that the standard 20 pip TP and 60 pip SL isn’t the best approach as a blanket rule. I can prove that it doesn’t work for EURNZD. Over the last year of backtests, it is profitable 71.43% of the time. This was after running over 500 trades. A 75% profitability would be a breakeven without taking into consideration the fees. Instead of adjusting the tp and sl for this pair I have just cut it for the meantime. My backtesting showed that a 40 pip tp and 60 pip SL was profitable, however.

This brings me to my next concern, which is over trading. I used the 25 pairs originally because my main account uses a similar method but only with a few pairs. My hypothesis was that my rules would work with all the pairs. This was clearly naïve, as every pair acts in its own way. I didn’t want it to be boring taking only 2-4 trades per week. So that’s why I tried all 25 pairs. I will start cutting a few as I investigate some of the new ones. Starting with EURNZD. I took 27 trades were taken over 4 days of trading. This is in my opinion too many for this method of trading even though I haven't broken any of my rules. While I was happy with the gain, I think it would be beneficial to try and be a little more selective going forward.

My last concern was the percent swings. While having 8 winning trades was a great start, a 4% gain in 2 days is too fast for what this method should be producing. I know you can only trade the opportunities that come your way but last week just wasn’t that great leading me to think that losing streaks will be greater than anticipated. I had backtested with a max drawdown of 15%. That is something that I would be proud of if I could achieve it. I won’t be changing anything just yet except if the account grows, I will be concentrating on keeping the risk per trade closer to 1%.

Finally, a member has recommended that instead of having a standard TP of 20 pips and a SL of 60 pips that I should use ATR or ADR. This was a terrific idea that I wish I had thought of myself. If anyone is following along this is the way you should be approaching your TP and SL. It’s a far more logical way of viewing the market. I however won't be adopting that just yet. I want to keep it as simple as possible to just stick to the rules. I don’t want this to take away too much from my other trading.

Have a great week trading everyone, hope you are profitable!

Losing trades suck and no matter how much back testing you do it’s always a bad feeling. But what makes my trade on the CHFJPY patricianly bad is that it broke my rules to begin with. I don’t remember why I took the trade or what was going through my head but when I looked at my computer and I was down 40 pips I couldn’t work out why I took it. So I decided after being down 40 pips to just leave it on and it went straight to my SL. Was I trading against the trend on the 1H chart? Not really the trend didn’t look extended at that point or even overbought. It also didn’t show any signs of a pullback that I normally look for. Very frustrating. I will have to be more patient and look closer at my trades before I place them in the future. This is something I need to work on going forward.

After a tough week with what looked like not much movement till Thursday. I am finding it hard to manage so many pairs at once. Even 24 pairs to becoming a bit of a headache. The surprise news of the Japanese prime minister really threw my account around too. I experienced a 5.47% drawdown but finished in profit after all the trades were closed. Going forward I might change my strategy slightly because the swings are a little high and I’m still not sure I have the best and simplest approach to my strategy. The problem with the current strategy is big news events can really damage the account. I'm happy with the 7% gain but It didn’t feel like a good week after I broke one of my rules on the CHFJPY trade. I will update everyone when I have finalised the changes in my rules. Good luck next week everyone.

I have decided to just trade 5 pairs with the 20 pip Tp and 60 pip SL. My backtesting has shown them to be the most profitable. So no other rules have changed. I'm sticking with exactly what I have stated in my first post. I concluded that if I was to try anything else then I should start a new account and not mix the two. The five pairs are:

1. USDCAD
2. GBPUSD
3. GBPCAD
4. EURCHF
5. EURCAD

I hope this makes the whole thing clearer and easier to follow.

Not much to report on this week. It was a gain of 4% with a strong start to the week of 3% then just treading water for the rest of the week with a strong finish into the close. I'm much happier with just managing the 5 pairs from here on. It makes it feel more systematic and less discretionary. It also gives the feeling that the trades are less of my option and more just the system following the rules without me. Good luck next week traders

Monday crushed me and Tuesday broke me. I honestly just wanted to abandon this. I had 7 losses in a row followed by a small winner and then another 8 losses. Then another 7% of losses on Wednesday for good measure. It was a disaster!

I guess I failed and didn’t learn any discipline because I no longer want to trade this way. I'm just staring at a negative P/L all day just draining and unnecessarily draining. Being down 1% can feel like the weight of the world. This isn’t fun and I have a new admiration to anyone who can trade like this. I am trading another account with success with this very method on just a few pairs. I think that one works and this one doesn’t because I don’t have it open often and I'm not looking at the P/L all the time.

Instead of just shutting this down and not showing any trades I have decided to experiment with different ways of trading and report back when I've learned things. I am well aware that you shouldn’t change methods of trading all the time. But this is just an account to mess around with and I was supposed to have some fun. It has turned into something that is stressing me out. I would rather blow the account in a way that I learn something then taking 15 steps forward and 13 steps back every few months.

This will probably turn into a mess but there has been little engagement so I will trade as goofy as I want with it.

Well I'm guessing that now the title is misleading, and I have failed my challenge. This has disappointed me a little, though at the same time I feel like a weight has been lifted and I can trade stress free. I have clearly been risking more than 2% per trade. I am however sticking to all the other rules. So I am trading exactly the same way but risking 10% - 20% per trade. I don’t believe that this is a way to long term success but It helps me with picking opportune moments to trade. If I make regular withdrawals this might still be a very profitable experiment. I'm sure many will criticize the amount I am risking and fair enough. It is too much and I will scale it down as the account grows.

The previous few weeks haven’t been very profitable, a lot of it is due to my life outside of trading. I haven’t been very selective with my trades. Its been a focus on quantity over quality. It's clear that being picky and patient makes a big difference to the win rate and therefore the P/L. This is especially true when risking 3 to make 1. I tied a few other ratios but I keep coming back to this because I have put in the work when back testing and forward testing and still believe I have an edge with it. I'll post some more examples in the coming weeks.

Hope everyone trades safe with the amount of uncertainty going into the weekend.

I took a loss in US500 and I'm lucky it wasn’t a lot bigger. This was a lesson in not falling in love with a position. I was convinced that the market was going to fall. Now I had previously taken a long trade because I believed that the whole trump getting corvid was blown out of proportion. Or at least just on the announcement. But with so much uncertainty I was convinced this thing was going down. Last week alone, Amy Coney Barrett was nominated as the Supreme Court replacement. We had the debate, Trump's taxes and trump got Covid. Now trump went to hospital and is released within days. The stock markets response is that everything is normal and on track. So to circle back don’t fall in love with a position because If I was a little less experienced I would have kept doubling down on this position till I blow it all.

I've had some questions asking for some clarification about my current trading rules. So here is what I'm currently implementing. They are still very similar to what was first outlined but more aggressive. Instead of changing it up too much, which I did for a week. I decided to keep it somewhat consistent. I would much rather start another thread instead of getting really confusing.

 

1. Risk no more than 15% per trade. This will only decrease as the account grows larger.
2. The SL is 60 pips and the TP is 20 pips. I have traded some with different TP’s but this was just so I could monitor something new. Stocks and gold also don’t the same TP and SL but no matter the pair or trade the ratio is risk 3 to make 1.
3. No more than 5 trades at once. This is my biggest weakness and the undoing of many accounts. I hate to miss out. This account hasn’t been too bad with respect to that.
4. All trades are reverse trades. The pairs I trade often are back tested and I know I have an edge. Some pairs have a greater chance of a reversal or range trade then just continuing the trend.
5. After a losing trade I cannot trade that pair in the same trend

I'll make a post later about the plan for what to do with the risk because that is the greatest weakness in the plan. It needs to be reduced sooner rather than later. Also just realised I had 6 trades on at the moment. That leads me to my last point that is each rule is going to be broken at some point. Ideally, they shouldn’t be but everyone is going to make mistakes whether on purpose or not.

(had to edit, one number was off)


This is the break down of risk per trade. Some trades are a little more and some are a little less. But here is the main guide I'm going by at the moment. I also want to note that trades like the US500 and AUS200 are just 1: 1 risk to reward. I trade a lot of options and I just saw this as a good buying opportunity.

I want to quickly address the returns before this is pointed out. What I have obtained over the last 2 months is just a run of luck, losses will follow at some point. The equity graph should look more like a mountain range rather then what it is currently showing. I am very proud of the results but it's not sustainable with the current risk. No one can make 100% returns every month. I have had many months of crazy returns and I've also had month were almost every trade result in a loss. This being an account just for fun has helped with the returns. It a way of acting less emotional towards trades. It would be a completely different story if I relied on this account to live off.

I might have attempted way too much this week. I definitely got carried away.

With what started as a fantastic week. I might have ruined it by overtrading as well as too much correlation between pairs. The AUD was hit hard over the last two days. This is exactly what I look for in my reversals. So, I liked all the setups and every trade meets my rules for entry. The problem is I took almost all of them. Once you're in too many trades and it's apparent you have messed up. It becomes very difficult to exit trades. Things that run through my mind are I don’t want to lock in a loss in case it becomes a winning trade. You’ve put in the work and you know in the long run you will be profitable because ill have more winners than losses. The problem is that when you have all the losing trades in a row and poor money management the that’s a recipe for disaster.

So the answer in case you're not already getting frustrated reading this is to trade with a lot less position at once and reasonable risk as well as keeping an eye on the correlation between pairs. I already knew this before the week started but that’s why it’s a slow journey to discipline. Maybe one day I'll learn from my mistakes or admit that I just love the stress of being in too deep.

This week was just all sideways, I made $112 with 32 trades. It felt like hard work. Some weeks you can tell on Monday what kind of week it is going to be. With 2 losing trades to start the week I had a feeling it wasn’t going to be as easy as it has been. Nothing to much to report on.

The NZDUSD trade I got a little too eager and entered early. It would have still resulted in a loss even if I had waited but still need to practice a bit more patience. I'm also seeing a lot of losses with the GBP pairs. They really have solid moves every now and then. I'll pick other pairs over the GBP if they have similar set ups going forward.

I withdrew $5,000 from the account. I'm happy I'm still in profit. But I feel burnt out. It's Monday and I'm already exhausted, so I decided just to go back to $1,000 and deescalate the account. I had already decided not to trade next week due to the nature of the election, so for the remainder of this week, I'm just going to take it easy. I won’t be updating the journal for a couple of weeks. Thanks