Trend Trading

Losing well. (Part 2)
It may be obvious that if price moves against us quickly after entry, odds are tilted in the direction that this isn't a good entry. It's equally obvious that we need to get out of bad entries quickly and stay in good (profitable) entries to let our profits run. The difficult part is deciding how far to let a bad entry run against us before closing the trade. We don't want to use the stop as a crutch or excuse to let the trade run against us. The stop is there for emergencies, like unexpected news or a loss of internet. Normally, we'll want to cut the loser short before the stop is hit. The size of the stop that is used depends on volatility and the anticipated trade duration. For my swing trading with an average duration of 3 days to 2 weeks, I'll usually use about a 1 ADR stop, so I'll go with that for an example. Letting the loser run all the way to the 1 ADR stop would be counter to my trading strategy of cutting losses short so I'll definitely want to close the trade before it reaches that point. Generally I'd like to cut the loss as short as possible and not even take a chance of hitting the stop, so I'll look at 0.75 ADR as a hard mental exit. Just that small improvement improves my reward to risk ratio by 33%. Imagine how hard I'd have to work to improve my win/loss ratio by 33%. I could probably never do it no matter how hard or how long I worked. This 33% improvement to my trading was, dare I say it, easy.

The obvious question then is, if that first bite was so easy, is there more left? What is the most we could get out of this little trick? When we enter a new trade we are immediately going to be at a loss because of spread or commission, so we can't cut our loss shorter than that or we'd immediately exit the trade. That's a hard limit to cutting entry losses short. Allowing for spread and a tiny bit of noise, we can arbitrarily chose 0.25 ADR as a minimum movement to trigger a mental exit. We then arrive at a reasonable range to cut losses short, 0.25 ADR to 0.75 ADR. If we split the difference, we should be able to cut losses short at 0.5 ADR on average without too much difficulty. Some trades will really look like they will turn around soon and we might want to hang in there all the way to the mental stop of 0.75 ADR loss. Obviously this should be the exceptional trade and not the norm. Some will obviously stink shortly after entry and it's obvious they should be exited as quickly as possible. If we work very hard at this single aspect of our trading, reaching the 0.5 ADR average isn't that difficult and it increases reward to risk by 100%. That's an improvement in my trading that would be impossible to achieve by improving my average 50/50 win loss ratio.

Is that the ultimate limit to cutting entry losses short? What is the limit? I can't say I really know what the limit is, but after years of concentrating effort on this single aspect of reducing entry losses I've been able to reduce entry losses to 0.33 ADR on average. That single change in my trading has improved my reward to risk ratio by 200%. It was well worth the effort but it's a continuing challenge that I will probably never be able to say I've perfected.

So all this thought and effort goes into just one small aspect of cutting losses short on entries, and we've barely entered the trade. Surely there must be more progress to be made over the long course of a trade, and indeed there is, much more.

(to be continued)

Losing well. (Part 3)

Before I continue, Let me emphasize once again that I am presenting this discussion from my view as a trend following swing trader. Obviously if you are a scalper you aren't going to trade with a 1 ADR stop and if you position trade holding trades for months, a 1 ADR stop won't be sufficient to keep you in most good trades. My strategy is not to buy low and sell high, it is to buy high and sell higher or to sell low and buy lower. If you don't trade as I do, and admittedly most traders don't, then perhaps as Renn said, there will be some "food for thought" here.

Moving on, above I discussed what happens when we enter a trade, it either goes up or down. Always assuming a long entry for simplicity, we discussed what happens if it goes down and how to minimize our losses there. We set aside trades that went up shortly after entry for later consideration and now is the time for that. In this discussion let's also include trades that initially go down a little but don't hit our mental stop, and then go back positive in our direction. Within these positive entries are our future supertrades and the basis for future heartbreak and loss. Conveniently, the market sorts those out for us. In this early stage, the trades that go up in profit still have potential, and those that turn around and head against us have a special potential of their own. Remember earlier I said we can't reduce our losers to less than less than the spread or commission cost of the trade. Well, I'm going to amend that statement to say that if the trade initially goes into positive profit and then turns around and heads against us, not only can we reduce it's ultimate loss to less than commission or spread cost, but we can actually exit some of those trades with a few pips profit. Why exit a trade with a few pips profit, since that's so small it will never affect our account? Because other than zero or exactly even, at this point in the process we now have a choice for every remaining trade. Hold winners and exit losers with a very small profit or loss, or exit losers with a larger loss. Of course exiting with a very small profit or loss rather than a large loss agrees with my trading strategy of cutting losses small and letting profits run, so that's what we do. Some of the small profits will offset some of the small losses and that is an offset we want to carefully track and seek to maximize.

At this point, our entry is finally completed with the absolute minimum risk of loss that we are capable of producing, and we are ready to transition into the trade management stage with the surviving trades that are now moving well into positive territory. Any trades that fail along the way in the future (and there will be some) will be exited with a few pips or more of profit or even fewer pips of loss (No! Fewer.). It's important to always remember that in this different world of statistical randomness and uncertainty, there will be unpredictable winners and losers, but we are like a casino that wins at the roulette table over very many trials with it's built in edge. We really don't care much if any particular trade goes up or down. It's just one of the next 1,000 trades we will take. What we really care about is doing everything humanly possible to maintain our edge over very many trials.

In the trade management stage we are focusing like a laser beam on our central strategy, cut losers short and let winners run. The answer to every decision going forward is contained within that simple proverb. The losers now are trades that had once moved well into positive territory and are now giving back their profits. Certainly we can't exit every trade on it's first down tick, or we would never let winners run. But we do need some objective, deterministic, and repeatable method to cut losers short. Let's dig deeper. Since every down tick doesn't identify a loser, what does?

(to be continued)

hey g you say say your initial stop is 1 adr . what amount of average days is that.

As a quick aside, lets consider uncertainties and probabilities. If we have a coin that is weighted so that when flipped it comes up heads 60% of the time, we will still be very uncertain what the next coin flip will be. In fact, the more times we flip the coin, the more likely a particular long string of tails will show up. But we can be certain that if we flip it enough times, 60% of the results will be heads. This is the world we've now moved into. It's one of probabilities and random distributions. There are large areas in this landscape where there is no certainty and if we find that uncomfortable, we'll need to not only live with it, but master it and ultimately take some bit of comfort in it. Once we accept this lack of certainty, there is comfort in knowing that it doesn't matter if the next coin flip is heads or tails, a win or a loss. All that matters is that if we have the correct position sizing to last long enough to make enough coin flips, no matter how many tails we get in a row, we can be certain that 60% of the results will be heads. That takes all the stress off worrying about winning the next trade. It's not stressful because it's only 1 of 1000 trades we will make to collect our edge. We aren't surprised and we don't feel betrayed by the market if the next trade loses, or even if several in a row lose. In fact, we rather expect that to happen from time to time. When it does, we can take a small comfort in watching the probabilities fall into place just as they must for us to ever collect on our edge. That's as close to a certainty as we can expect here. - G

MJ, I'm not sure if you mean the number of periods for the ADR? I'm just basing my ADR on 4 periods (4 days) now. If you meant something else, let me know, OK? - G

yes that was my question. Thank you

Losing well. (Part 4)

At this early point in the trade management process we have exited entry losers with minimum loss or perhaps even a bit of win. We do want to let profits run, so we'll wait until price is up at least 1/2 ADR before adjusting stops up any at all. If price moves back down again, we'll always exit with at least a small profit before it gets back to our original entry. From this point on, we will never take a loss to our balance. From here on out, we can chose what losses we want to take and we chose to take none at all. It's just a choice.

In an up trade, we may get a warning that sellers are taking control when price makes a new down bar that is greater than any recent bars down. ATR can give some indication but it's not a reliable indicator since it also includes up volatility that is in the direction of our trade. That's the sort of volatility we like!

I often trade visually and for a new trade, say just a day or two old I will just look for the largest recent move against me on the hourly chart over the last week and expect more moves of nearly that size to occur. To stay in a good trade long enough to let profits run, I don't want to adjust stops shorter than that hypothetical down bar if I can help it. In this early stage of the trade, the distance from current price down the length of that largest recent down bar is usually a minimum distance to my mental stop, with one exception. Below the entry point this winner will turn back into a loser, and we never let winners turn into losers. The mental stop may be much higher depending on ADR value and how far the trade has moved ahead, but never lower than the entry. I place an alert right at or just before my mental stop so I don't miss it while napping.

The actual automatic stop loss should be at least 1.3 times that largest down bar. It may also be much larger if the trade is well ahead and the largest recent down bar is very small relative to the ADR. When price starts to fall that much, it may be turning into a loser. It may not be, but it doesn't matter. As long we exit while there's still a small profit, that offsets a small unavoidable loss somewhere else and we can always re-enter the trade again later after the retracement is complete, or maybe even enter a better trade later. The bottom line is, once a trade has moved well into profit we should not ever take a large loss, we shouldn't even take a small loss. There is just no reason to. There will always be more trades, thousands of them. Many will be better than any that we are in now. We just exit when things look bad, like a loss may be coming and try again. We do that over and over until a trade doesn't go bad in it's early stages.

So we wait until price is high enough to move stops up, being patient, knowing the trade will wind up either a small winner or a large winner. We allow no other options. Once the entry phase is over and price goes well into profit, say 1/2 ADR or so, there are no real losers, there are only threats to loss of profits. Note that loss of profits is a real loss and it violates our central tenant of cut losers short, so we now turn to minimizing loss to profits as the trade matures and advances in our favor.

(to be continued)

Well, I'll take a break for a bit and allow my fellow traders to digest what I've written. Please understand that I am trying very hard to write down my own discretionary system in a rules based format and it is a challenge. Not only is there great uncertainty in the outcome of any particular single trade, but the whole strategy depends on accepting that trading with the trend, until it bends at the end, imparts a bias on the outcome of the trades. I could provide any number of audited equity curves of hedge funds and CTA's that trade profitably this way, but the skeptic could always say, they were just lucky.

One could complain that I'm just discussing trade execution and not trading trends, but I think trading trends profitably requires precise execution. It is the combination of precise execution and trading with the trend that creates the edge. The edge is like weighting the coin so it flips heads 60% of the time. It doesn't predict the outcome of any particular single trade, it predicts the outcome of a large number of trades. In this case, our edge doesn't even necessarily guarantee that we will have a win/loss ratio greater than 50/50. Many trend traders will win less than 50% of their trades, but their wins are so much greater than their losses that they are very profitable.

Many new traders will think that finding the right trend to trade is the single most important part, but in reality it has little to do with profitability. I use a simple method of the 50X200 MA cross to enter trends and I lose a lot of those entries. I'm sure there are others with better entry methods, but can their method be improved by 100% or 200%? In most cases no it can't. Incremental small improvements in their entry method wont help their trading much at all. I do propose though that their profitability can be improved 100% or 200% by improving their reward to risk ratio, and that's not really that hard. In this uncertain world of probabilities, the profitability isn't just the win/loss ratio, it's the expectation of the win loss ratio times the reward to risk ratio. The combination of trading with the trend and precise execution allows that expectation to be permanently shifted into our favor just as the casino has permanently shifted the expectation of the roulette wheel into their favor. At least, that's my own humble opinion. I'd be interested in hearing anyone's comets or questions. - G

I'm sure that even though I've insisted many times that it's not the entry, it's the execution, some people are still fascinated by entries, so I'll discuss one just to make those folks happy. Here is the weekly chart of UChf (All Live charts). It looks to be in a strong trend up. The MA is the 10X50 EMA, but that's not important. It just looks nice on the chart, to me at least. You really don't need any indicator to see this trend and some traders would prefer to trade this trend with no indicators at all. In any case, see the trend over the past 8 weeks there?


Now let's look at the daily chart. Same pair, see the trend to the right for the last 36 days or so? Do you need the MA to see it? Not really. If you ask a 5 year old, which way is price going now? He'd probably say up.



The same UChf chart in the 4 Hour time frame below. Again, the MA isn't necessary. The trend is obvious without it:



The 1 hour Uchf chart is shown below. Looks to be going up to me. How about you?



Finally, here is the 15M chart. Still looks like a buy to me, how about you?



My point is, these entries are simple. Will this trade win or lose? I have no idea, anymore than the casino can predict the next number on the roulette table. But I know that if I trade this trend, or one like it, with perfect execution enough times, I can generate a positive expectation. I'm not claiming a trader can enter any pair at random and be profitable with precise execution, though I have heard of that done in training classes. I'm claiming that any reasonable method to identify a trend can be used in conjunction with precise execution to generate profits. OK, off to dinner. - G

MJ, sorry, I misspoke. 4 Periods for my ADR is 4 weeks, not days. - G

You are right about execution. The ability to execute is very underrated. It's very easy to say the next thousand trades but living them are a whole other thing especially considering that for somebody like myself the next 1000 trades will take over 1000 days based on my trading frequency.

As for moving your stop and never letting a winner turn into a loser I do it differently.I trade price and time breakouts and my backtesting and actual trading has shown moving my stops would affect my profits negatively. The best trades do breakout and never return to their breakout points but some very good ones do and quite frequently at that.Were I to move my stops to breakeven for any reason I would be stopped out on many trades that otherwise would be very profitable.This is again down to fear of losing.I have lots of trades that return hundreds/thousands of pips at time of closing, initially move for hundreds of pips after breakout then turn around and come back to the breakeven point then continue on their way. Average traders just can't bear to see a 10:1,15:1 winner come back to their breakeven point so they move their stops and get stopped out and then the market continues in it's original direction. All because somebody out there said don't ever let a winner turn into a loser.If anybody cares to backtest these so called pieces of 'wisdom' they could learn something that might improve their trading.

The same goes for 'you can't go broke taking a profit'.You can go broke taking small profits.

People pay too much attention to winning rather than making money.If you are to be successful in this business you have to find low risk methods of entering the market which have a provable edge.People are scared of losing so they have really large stops.For instance the method I use indicated an entry a few weeks ago with a stop of 3 pips.I was asleep and didn't take the trade but that same trade in now up over 400 pips for a risk:reward of over 130:1 and still going.Imagine the profits possible when dozens of add on trades are placed and all these trades are held until their final closing some months from now.The profits would be astronomical but because the method has a win percentage of around 25% people can't trade it.

Somebody said it and it's true...you can't make big profits taking small profits.The reason people take small profits is because they've never made a big profit.Train yourself to make and take big profits and you'll never go back to trading for small profits.The way to do that is to find strong trends and milk them for all they're worth.

Thanks Nivad. That's an excellent post. You are 100% correct on all points. As far as never let a winner turn into a loser, I presented an absolute rule that should be tempered for the specific strategy of the trader. I should have clarified that more. Of course I take trades with very large profit potentials and very small risks when ever I can find them. A better way to put it is to say, never let a winner turn into a large loser. Large can then be defined in terms of the traders objectives. Certainly, if your breakout strategy (which I like) yields 400 pips for a 3 pip risk, you'll take those trades all day. But, you've defined large already in your system. Would you take a 400 pip risk for 400 pip gain? Probably not. Would you take a 200 pip risk for a 400 pip gain? I don't know your trading strategy, but I'm guessing no. There is some maximum risk that is optimized for your strategy that you feel is optimum for you to take. That might be adjusted for the specific pair, current volatility, anticipated profit, or other factors. Anything beyond your maximum risk level will be considered "too large" and left on the table. With my 50/50 win loss ratio my optimum maximum risk is around 40 pips for a 3 to 1 reward to risk ratio. I'll take those trades all day long. Are you at the optimum minimum risk for your specific strategy? From the sound of your post, I'm guessing you have already thought this through and you are close if not already there.

As far as moving a stop, I mostly am concerned about a winning trade going into a loss while I sleep at night and I can't respond. If I can stop out near even rather than have the trade go far into losing territory while I sleep, I'm ok with that trade off. In fact, it happened last night when a very profitable 2 stack trade on the EU short stopped out with just a few pips profit while I slept. EU price is still moving against me at this moment and had I stayed in that trade any longer I'd either have taken a large loss this morning or be sweating bullets right now wishing I'd gotten out while the getting was good. I'm too old to sweat. I might strain something. I might be right back in that EU short trade after the counter trend reversion to mean completes in a few days, but it cost me nothing and it's as if it never happened. The market just has to breathe out a bit to be able to breathe back in later. The past can't hurt us, unless we let it.

Of course, being too aggressive on tightening stops is counter productive as well. I can't count the number of times price has retraced back to near my entry point or even a little beyond only then to take off to new highs (or lows for shorts). When I traded breakout strategy, I called those trades, Kiss and Go trades, because I thought that was cute. Mostly my stops are there just for emergencies. I trade with a mental risk limit during the day which is constantly adjusted real-time and almost all of my exits are manual. Stops ruin good trades and save your ass. They need to be used wisely.

As far as letting a trade run to 10:1 or 15:1 or more, what a great feeling of accomplishment. I wake up every day looking for that. If a trader has never managed it, I say just try! If for no other reason, do it just to say you did it at least once in your career. It will be a learning experience. It's really hard as hell, like making a hole in one. Actually, once most traders accomplish that lofty goal they will be like us, completely addicted to letting our profits run. But of course, that's only half the game. The other half is to cut losses short and I bet there is something you and I both could do just a tiny bit better to cut losses shorter by just a little here or there and not affect our profits. To be really successful, we must master the art of reducing losses while still letting our profits run. It's mentally feels like like juggling while riding a unicycle or maybe it's a little harder. Then when we think we have it mastered, we go back and study it again to see if we missed something. Yea, we probably did. Best success in your trading. Thanks so much for the relevant coment. - G

obviously Nivad has a longer-term view than Graviton: generally months/years compared to days/weeks.
it follows that the stop is a lot wider for Nivad once the trade is going.
in an uptrend, the stop might be activated if price closes below the last higher low provided that the last swing is not too shallow?
hope that Nivad is prepared to go into details of how he trades.

Losing well. (Part 5)

So at this point we are proceeding through the trade management phase. We've made it through the entry phase. We probably had some little small losses along the way to get here, but we kept them very small. Let's give ourselves a pat on the back for accomplishing that first goal. If we had a loss greater than our goal was going in, then that is a problem in the psychology of our trading that we need to correct before going further. I'd suggest more reading and study and practice in a minimum cash trade like 0.01 lot per trade before proceeding. My book shelf is full of many good books on correcting the psychology of trading and it's absolutely required reading to trade profitably.

As always, price will now either go up or down. If price goes down, we should always already know where our exit point is. If it goes very far, we have choices, exit with a smaller profit, exit with a little loss or exit with a large loss. In this trading strategy, there are no large losses allowed, so that option is out. Large losses are a choice we decide to make for all the wrong reasons and we don't ever even need to consider it because this strategy depends on eliminating all large losses from our trading. When price is collapsing at this early stage, we don't want to be too aggressive with our exits. Often just after a breakout or a continuation of trend there is a small "shakeout" reversal before price moves higher. Large scalpers, counter trend traders and others will pile on to move price sharply down and take out weak traders. Usually they take their quick profits and get out of the way.

In this world of probability distributions the depth of the counter trend move cannot be predicted, but we do know one thing for certain. If price goes below our original entry point, every pip down is one pip we could have bought it cheaper. If we had exited with just a few pips profit, we could always buy back in the trade cheaper if the counter trend continues for a while. If the counter trend move ends just at the moment we exit with only a few pips profit, we can always buy back in and no harm is done. That's a very low risk course of action.

Another option is to stay with the trade a little longer and perhaps exit taking a few pips loss, but no serious harm done. I usually consider the momentum of the move against me, prior s/r lines, candle formations and every tool in my bag of tricks in a few seconds and make my best decision. It's usually to get out with a few pips profit. But if the momentum of the counter trend move is already weakening as shown by smaller down candles forming, and/or I have very good reason to believe a prior s/r line will hold, I may risk a few pips. Since I'm trading with the trend when I do take the risk I win it about half the time if I have a very good reason to take it. It's rather like entering a new trade on a pullback.

The final option is to ride this counter trend move deep into loss territory. As noted earlier, this option is out. It isn't allowed in this strategy. This is one of the next 1000 trades and if we get out a few pips ahead or behind it doesn't really matter that much. If we ride a trade to a large loss it indicates a major problem in our trading psychology (we don't want to be wrong, we can't accept a small loss, cognitive dissonance, etc.) and we need to stop, and fix that before we can continue.

Often price wont reverse quickly right after we are well ahead. It keeps moving in the direction of the trend with only minor pauses and retracements along the way. The further it goes, the more profits we stand to lose on any major retracement. As always, our prime directive to to cut losses short, but we have a new equally important goal now, to let profits run. There is no way we are going to let price dive deep back into loss category after it has been well ahead, say around 1/2 to 1 ADR or more. I'll usually cut my original hard automatic stop from 1 ADR below entry to about half soon and my mental stop (marked on my chart with a horizontal line and with an alert set) will be somewhere above entry. I'll usually look at all the bars against me on the 1 hour chart for the past week and figure another is likely to come along that big and I'll move my mental stop just below that point. If I have an old S/R line to tuck it under, even better.

That provides a careful balance between cutting loses of our earned profits short and allowing price enough room to let profits run. As price works it's way up, I'll trail my mental stop up about 1 pip for every 2 pips price increases so half of the profit goes into the (mental) bank and half to allow price more room to breathe. If price continues in my direction, it slowly gains more room to breathe over time. Some use a trailing stop here but I have trouble constantly adjusting them to achieve my objectives. Always using a long trade as an example, in the first day it should have at least as much room to breathe as the largest 1 hour down bar (bar against my trade) that occurred in the past week. If the down bars were all much smaller than ADR then I'll just use ADR. I let it grow a maximum of 1/2 that amount per day so it's about 3 times that largest down bar (or ADR if I had to use it) by the end of one week. I'll let it run a second week with a little slower growth in breathing room (like 1/3rd ADR per day) and faster growth in banked profit if I'm confident. Usually I don't run trades more than two weeks, but I know many do, so I'll let them speak for themselves on the cushion they allow to let their profits run. Once I'm up between 1.5 to 2 adr, I reset my automatic hard stop to break even to permanently lock loss out of this trade.

If everything still looks good by 1.5 to 2 ADR, I'm usually ready to add to the position of this trade, but that's the story of pyramiding a good winner. I'll leave that story for another day. Best trading success to all. - G

It would appear we come at trading from two different perspectives G.You pay attention to losses whereas not letting winners run as far as possible or getting taken out by some swing before the big move is what keeps me up at night.
My stops are simple and very low risk. I put in my stops every single trade and they stay in until either stopped out or whatever trailing method I am using takes over. Simple.Robust.Mechanical.Nothing to think about or tinker with.End of story.

BTW G my winners come from outliers so I don't aim for 10:1 or 15:1.My trades have open ended,unlimited profit potential...in theory.I also don't hold for years. Months are as long as I'm willing to hold profitable trades.

Good trading.

Hi Nivad. Thanks for your reply. That's very fascinating. How long have you been trading? Unless you are some sort of savant, I'm guessing many years. Your reward to risk ratio must be quite high. It also sounds like you have very strict control over your losses already, so congrats on that! If someone hasn't brought their losses under control yet, they can read my 5 part series on them and see if they get any ideas. If not, they should go study what others have to say and practice cutting losses short at a minimum position size of 0.01 lot per trade some more. The psychological inability to keep losses small is the worst problem. There are many good books on the subject and lots of good info on the net for newer traders. Losses can always be reduced without hurting profits, even for experienced traders, but at some point it may not be worth the bother. OK, losses aren't nearly as much fun to talk about as wins, for sure. Sorry if I bored everyone here to tears lecturing about reducing loses for days. Not to worry. I've said my piece on them. But if anyone has a problem cutting their losses, I'm your go-to guy. You'd probably be interested in hearing what's going on in my Forex room on Skype. We have a small mix of traders there. I'll shoot you a link. I'm sure you are busy, but as you have time, please feel free to stop in and contribute to help new traders here. Some are just like we were once, a bit confused. We do need someone to take the other side of our trades. Best success to you! - G

I've been trading for about 8 years now.The first 5 were a waste trading pinbars and 'price action'.Then I discovered that in order to trade successfully I needed robust,objective,mechanical systems with no curve fitting that would work into the future.Then backtest,backtest,backtest.

This may seem odd but I try as much as possible not to hang around trading forums/chatrooms etc.There's nothing positive for my trading from hanging around places like that.In fact it could only hurt my trading.I know what I have to do and I do it regardless of the opinion of anybody.I do go through the same issues as any other trader but the difference is that my backtesting allows me to know that if I keep placing my trades I will come out profitable.If I know I am doing the right thing I really don't care about my stops being hit over and over and I don't fiddle with my stops.I know that 5% of my trades will be outliers and will make up for all the losses.
Sorry for rambling.
Good trading.

That's great Nivad. As I told a newer trader the other day, as long as you are alive, you haven't failed until you quit. No problem rambling. This is the place to do that. I'm sure there are many traders out there that have a burning question they would just love to ask a professional. So I'll open the thread up to them. Come on traders, here's your chance! Thanks for the reply. - G

While waiting for the shy but curious to ask Nivad a question they've been dying to ask a pro trader, I'll ramble a bit. When I left off my series on Losing Well, we had managed to enter a trade without (much) loss. Of course, we will lose a few pips here and there trying to get into a good trade, but they should be very few. Since everyone was so tired of talking about not losing, I promised to talk about winning next, so here it is. The best way to win is to not lose. Beyond that, winning is easy and fun. The market does all the work. Let's look at the 1 Hour winning live chart of NJ long below.

I've just completed the entry phase discussed in Losing Well (with very few pips lost) and we are near 1 ADR ahead. I moved the stop up to about half it's original value (1.5 ADR) because this is now the most risk I ever intend to take on this trade no matter what happens. Even if all the sheep in New Zealand are abducted by aliens (cause who doesn't like a good lamb shank) or Exxon discovers massive oil deposits under Japan, or both. This stop is the maximum risk I will ever take on this trade no matter what. My mental stop is just 10 pips below entry. I really don't think I should have to risk more than 10 pips from here on out to do what I want to do with this trade. So price will either go up or down. I can no more predict that random outcome than I can the next number on the roulette wheel. If it goes up, I'll make my next adjustment at around 1.5 ADR or near 100 pips in profit. If it goes down, I may lose 10 pips. That's a 10 to 1 r:r and I'll take those all day long. The next step at +1.5 ADR is the most difficult yet. I'll want to add to this winning trade without taking any risk to my account. I'll post it if it makes it. If it doesn't, I'll post another that did. There's always another trade. Happy trading. - G

Hi,Nivad
After it all, I decided to quit all other pairs and stick to only one pair,its working fantastic for me because if there is no trade I stay out.Plus my equity is the factor that im working on.