Well a virus crash of my trading computer system has given me some time to stop an evaluate what has been happening with my trading over the past few months. A shame it took a system crash to make me do it, but anyway whatever it takes.
Sometimes it takes outside influences to alert you to the realities of what works for you in the trading world. A lot of people here know that I was an active contributer here before being diagnosed with cancer early in 2007, this forced me to stop my day trading practices, to peal my face off the screen (painful, and left some scars, it had been there a while), and evaluate what is really important. What it also did was take my trading away from the quick fix, and made me look into the workings of the markets themselves rather than ask a squiggle line to do it for me. Why someone needs a 10 day moving average to tell them the short term trend is up is beyond me, but that is for another day.
Anyhow, I post this here, rather than in the Trading Room or on my own forum for the benefit of those starting out in their trading journey, that perhaps it might help you skip a couple of the painful steps you are about to take, and if there are question you are able to throw them out there for others to think about.
Around October 2007 (i.e. 5 months from time of writing), I started recording all trades (I have been trading for much much longer than that) I made from that point on live and automatically (thanks to MT4's ftp capabilities) to my site, I am still recovering from my treatment, and so I didn't have the energy or time to be doing it by hand. It also meant I also didn't have the time and energy to trade any more than once a day usually, in fact usually it was much less than that, but I did have some time to look into price itself and where things changed on a chart.
Due to not being able to post external links, I have attached the statement to this post.
This is the latest copy I have of the live statement that is updated hourly since October on the site, but for those that can't be bothered reading it, here is a summary that might help prove that you don't need to be right 100% of the time (far far from it), you don't need to trade short time frames, you don't need excessive risk, and you don't need to have your face surgically removed from the screen at the end of a trading day.
A summary of 100 trades since October 2007 (well 98 actually)
- Starting capital: +$10,000
- Net profit: +$9,172.08
- Capital as of March 2008: +$19,172.08
- Long positions won: 38.10%
- Short positions won: 54.55%
- Average profitable trade: +$314.94
- Average losing trade: -$136.98
- Maximum profitable trade: +$1590.30
- Maximum losing trade: -$758.73
- Profit factor: 2.39
etc. etc. ... anything beyond the above can be seen in the actual statement. Here is a rundown of how many trades per month, and then interestingly, the net profit (winners - losers +- interest) for the month, what do you notice?
- October 2007 - 15 (Net profit: +$3,726.40)
- November 2007 - 34 (Net profit: +$903.43)
- December 2007 - 29 (Net profit: +$3,050.06)
- January 2008 - 7 (Net profit: -$1,436.40)
- February 2008 - 13 (Net profit: +$2,928.59)
Clearly the amount of trades has little bearing on how much you win (or lose as in January).
All trades were made with a maximum of (but usually less than) 5% risk of the account balance (not equity, balance) and all except one experimental trade, was made from price action alone, no indicators to be seen.
So what to take out of this little snippet of my trading activity? ...
- You don't need to use indicators ... if you want to then go for it ... but you don't need to.
- You don't need to be in the market all the time to make money, in that period a trade was only place on 19.6 days of the month, a little over half.
- I didn't spend any more than 2 hours a day looking at the market, plenty of time, in my case for recovery, but for others to live life as it should be.
- Almost all, except for two in late February, trades were placed off 4 hourly charts, you don't need to be watching every tick.
- You absolutely don't need a fantastic winning percentage to make money, this period only had a 46.325% win/loss ratio ... yet the initial capital was almost doubled over 98 trades with a sensible risk.
- The usual keep winners larger than your losers theory hold true.
Before anyone asks, all the above trades were mirrored exactly (excluding spread differences) on a live account.
I think I have probably bored you all enough with the statistics, but please understand, this is not a chest beating exercise on my part, those who know me well will believe me on that one, I have lost my share in trading like anyone else (thankfully these days it is less often), and this is only a small part of my trading history, but it is also the only part that I have recorded accurately enough, and in an accountable fashion to make it worthwhile showing it as an example for others to get something out of.
No I am not selling anything, no I don't want your money or to trade it for you, and no I am not a 6'11 amazonean yeti.