Ok, just some thoughts. I had 2 stops this week. Both I consider to be great A+ trades, not just great but outstandingly great setups. If I see them again I will take them, much weaker setups work much better, so these too are very nice... Which in turn just failed miserably. Nothing is wrong with having a few stops, no, the wrong is to let these stops put me back 2 months behind. This is really wrong.
I will try to give some reasons for myself, on which I should seriously think to improve the situation. I mean nothing has really changed in 5 years, I have lots of small winners, then a few trades put me back a few months behind. I am not saying that this is my philosophy by which I live now, this is just some observations I made trading J16 style for soon to be 1 year (five years trading in total) and the things I want to think, test, feel for the next few months…
1. There is no such thing as A+ setup and being picky.
There are setups. All must be taken. Because when I try to filter the setups that fit into ALL my criteria I will sometimes filter out winners and take lossers. We never know WHICH setup will fail which will not, pretending to know this is like claiming to see the future. So I need to have a criteria by which I see a tradable setup and just execute it without some intuitive thoughts to it. And I do have those criteria, I believe they are objective and solid. But I also have this supersticious A+ thing on my mind, so I will skip a lot of trades that later will be proven winners. So the problem is not in general “Weak setup choice” it is a more twisted I think, more complex than that some of the reasons may be the following:
2. Pinbars are not reliable for the most part.
As I spend hundrends of hours eye-balling my charts I did a few interesting exercises, I marked the Pinbars that failed and then analyzed them only - would I have taken them or not, and I saw that most would fit into my criteria of a tradable setup. So why bother taking weak PA bar that usually will fail for the most part? On the other hand BUOB, if taken every time without any filter the most setups will work. So I more and more think about taking off a setup called Pinbar, I have not seen any prove that it works myself (series of trades) and I have never seen a demo brokerage statement by anyone who made to make them profitable. Interesting trick with Pinbars (whoever reads this can try for yourself) is that when you first see the chart your eye is automatically focuses on peaks and valleys where you see a nice profitable pinbar, and you say oh yeah, super, but if you stop for a minute and investigate the move before that pinbar, you will see that there were a few even better looking pinbars in better location which failed.
3. Win Rate is meaningless the need to focus on Risk to Reward.
This one to me feels as to be the most important aspect I need to work on. When I first got acquainted with J16 Ideas I thought wow! I was living in conspiracy where every book, every trading course, everyone would tell me that I need to have my win to be bigger than my loss. RR thing, and it felt logical and common sense. With good RR I can have less than 50% winners and still make money. Then I read hundreds of posts in J16 free thread and I slowly believed as it was mentioned thousand times there “RR is meaningless” because the win rate is very high. 90% or more was mentioned too. Well I agree win rate is high trading BUOBS and Pinbars, for example I have 75% win rate at the moment (BE is a winner). But that translates into -0.5% account loss so far. Will I ever reach that 90% or more level? Someone at the thread said something like “ If I had 90% win rate I would have more dollars than Scruge McDuck and Warren Buffet altogether”… and these funny words really made me think, isn’t that a true? Have you ever in your life seen anyone trading with 90% win rate? Honestly? Me not. I saw a lot of statements on Facebook (you probably too if you have trader friends from Asia usually (and there is nothing wrong with Asia I live here myself, is just what I noticed) where they will put 1 day brokerage statement (usually it is 1-2 hours of some 1 day) where they have 90-100% win rate, without ever using stop-loss orders. They can teach you the same trading style if you spend some money following the link they have on the info section of their Facebook. Other than that I have never seen anyone making 90% win rate, but everybody claims he is. I will not. Because I can’t fly as a bird and I can’t trade consistently with 90% win rate. Trading profitably I mean, yes you can have a TP on 1 pip, and SL of 100 and you will make that 99% until the day SL will be hit, and it will be hit that’s life.
4. Breakeven.
In general I like this concept. I will move to BE soon and my mental state is back to normal. No one cares what happens next because the worst I can have is zero loss. Feels good. Now, ok, feels good, but does it help financial wise? This question is still to be investigated on my side. I see some BE that will turn to be a winner and I see some BE that otherwise will turn to be a losser, so for now I keep it and continue investigating. One thing I like the most it brings me peace of mind. But if I learn that it negatively affects my performance I will take it off my plan without any hesitation, because all the “peace of mind” thing is quickly dissolves when you learn that 2 stops put you back 2-3 months behind…
I feel like I can go on, but I will wrap it up. I need to be able to read through this post many times later on, and I’m afraid it becomes borring, lol.
So in conlusion I would say this.
I will investigate my plan again, to straighten my criteria for a “tradable setup”, I think there should not be a room for concepts like A+ or being picky, I need to see the setup which fits to all my criteria, if so I trade it. So maybe I need more strict criteria.
I will more carefully approach Pinbars, maybe that means to add some more strict criteria (which I have no idea what it can be… stochastic confirmation? ), if I don’t come up with something I will take this setup off for some time until I find how to trade them.
I will seriously think about RR thing. The losing game should be reversed, the believe in “never wrong trading” must be erased. So to me this looks like a lot of backtest to be done with SL and TP being at the different spots initially or as a part of trade management process (to reduce SL after entry).
I will continue with my quick BE approach, that is move to BE if next bar closed even by 1 pip in profit (or before that at the FTA if I am there to monitor the trade).
Enough.
Here are the recent stops. Red lines are stops and TP.
And the current account equity curve for 8 trades I made since beginning of the year.
I will try to give some reasons for myself, on which I should seriously think to improve the situation. I mean nothing has really changed in 5 years, I have lots of small winners, then a few trades put me back a few months behind. I am not saying that this is my philosophy by which I live now, this is just some observations I made trading J16 style for soon to be 1 year (five years trading in total) and the things I want to think, test, feel for the next few months…
1. There is no such thing as A+ setup and being picky.
There are setups. All must be taken. Because when I try to filter the setups that fit into ALL my criteria I will sometimes filter out winners and take lossers. We never know WHICH setup will fail which will not, pretending to know this is like claiming to see the future. So I need to have a criteria by which I see a tradable setup and just execute it without some intuitive thoughts to it. And I do have those criteria, I believe they are objective and solid. But I also have this supersticious A+ thing on my mind, so I will skip a lot of trades that later will be proven winners. So the problem is not in general “Weak setup choice” it is a more twisted I think, more complex than that some of the reasons may be the following:
2. Pinbars are not reliable for the most part.
As I spend hundrends of hours eye-balling my charts I did a few interesting exercises, I marked the Pinbars that failed and then analyzed them only - would I have taken them or not, and I saw that most would fit into my criteria of a tradable setup. So why bother taking weak PA bar that usually will fail for the most part? On the other hand BUOB, if taken every time without any filter the most setups will work. So I more and more think about taking off a setup called Pinbar, I have not seen any prove that it works myself (series of trades) and I have never seen a demo brokerage statement by anyone who made to make them profitable. Interesting trick with Pinbars (whoever reads this can try for yourself) is that when you first see the chart your eye is automatically focuses on peaks and valleys where you see a nice profitable pinbar, and you say oh yeah, super, but if you stop for a minute and investigate the move before that pinbar, you will see that there were a few even better looking pinbars in better location which failed.
3. Win Rate is meaningless the need to focus on Risk to Reward.
This one to me feels as to be the most important aspect I need to work on. When I first got acquainted with J16 Ideas I thought wow! I was living in conspiracy where every book, every trading course, everyone would tell me that I need to have my win to be bigger than my loss. RR thing, and it felt logical and common sense. With good RR I can have less than 50% winners and still make money. Then I read hundreds of posts in J16 free thread and I slowly believed as it was mentioned thousand times there “RR is meaningless” because the win rate is very high. 90% or more was mentioned too. Well I agree win rate is high trading BUOBS and Pinbars, for example I have 75% win rate at the moment (BE is a winner). But that translates into -0.5% account loss so far. Will I ever reach that 90% or more level? Someone at the thread said something like “ If I had 90% win rate I would have more dollars than Scruge McDuck and Warren Buffet altogether”… and these funny words really made me think, isn’t that a true? Have you ever in your life seen anyone trading with 90% win rate? Honestly? Me not. I saw a lot of statements on Facebook (you probably too if you have trader friends from Asia usually (and there is nothing wrong with Asia I live here myself, is just what I noticed) where they will put 1 day brokerage statement (usually it is 1-2 hours of some 1 day) where they have 90-100% win rate, without ever using stop-loss orders. They can teach you the same trading style if you spend some money following the link they have on the info section of their Facebook. Other than that I have never seen anyone making 90% win rate, but everybody claims he is. I will not. Because I can’t fly as a bird and I can’t trade consistently with 90% win rate. Trading profitably I mean, yes you can have a TP on 1 pip, and SL of 100 and you will make that 99% until the day SL will be hit, and it will be hit that’s life.
4. Breakeven.
In general I like this concept. I will move to BE soon and my mental state is back to normal. No one cares what happens next because the worst I can have is zero loss. Feels good. Now, ok, feels good, but does it help financial wise? This question is still to be investigated on my side. I see some BE that will turn to be a winner and I see some BE that otherwise will turn to be a losser, so for now I keep it and continue investigating. One thing I like the most it brings me peace of mind. But if I learn that it negatively affects my performance I will take it off my plan without any hesitation, because all the “peace of mind” thing is quickly dissolves when you learn that 2 stops put you back 2-3 months behind…
I feel like I can go on, but I will wrap it up. I need to be able to read through this post many times later on, and I’m afraid it becomes borring, lol.
So in conlusion I would say this.
I will investigate my plan again, to straighten my criteria for a “tradable setup”, I think there should not be a room for concepts like A+ or being picky, I need to see the setup which fits to all my criteria, if so I trade it. So maybe I need more strict criteria.
I will more carefully approach Pinbars, maybe that means to add some more strict criteria (which I have no idea what it can be… stochastic confirmation? ), if I don’t come up with something I will take this setup off for some time until I find how to trade them.
I will seriously think about RR thing. The losing game should be reversed, the believe in “never wrong trading” must be erased. So to me this looks like a lot of backtest to be done with SL and TP being at the different spots initially or as a part of trade management process (to reduce SL after entry).
I will continue with my quick BE approach, that is move to BE if next bar closed even by 1 pip in profit (or before that at the FTA if I am there to monitor the trade).
Enough.
Here are the recent stops. Red lines are stops and TP.
And the current account equity curve for 8 trades I made since beginning of the year.