Institutional Equivalent Education?

I have had a small bout of loss of discipline and revenge trading since I last posted. However I have recovered all the losses plus more and the account is healthier than at any time in December.
Sometimes I feel that I am the only trader in Ray's room who suffers so much from lack of discipline, since other traders almost never post about it. Ray says that at any decent institution lack of discipline such as mine would be a sack-able offence. Though he also said that my results last week were good even though I took profits too soon and missed all the big Macro trades. I think he was just trying to encourage me, since he knows that I trade using a bigger risk than an institution would allow.
My results were +13% profit on the week with a 79% win rate (lowest win rate on a day was 68%).
Daily profit (based upon daily compounding was :+1.7%, +1.1%, +7.1%, +1.2%, and +1.3% (so most within my expected daily result range of between +1% and +3%).

On the subject of trading discipline, Boris Schlossberg has something useful to say in his latest email:

************************************************************************************************************************************
I Can Definitely Improve Your Trading
by Boris Schlossberg


Here is what you have to understand.

We are all deeply flawed human beings. We never really change. Our personalities are set in stone from our childhood. Deep down what we were in high school is what we are today.
Not only that but all our attempts at self-improvement are destined to fail. That’s not my opinion.
That’s the latest scientific view backed by reams of data from cutting-edge brain research.

Our attempts at self-discipline sap so much mental and physical energy from us -- especially as we constantly try to censor ourselves and live up to the “standard” -- that in the
end we crumple and revert to our old habits. That’s why losing weight is so hard. That’s why quitting smoking is so hard and that’s why “disciplined” trading is so hard.

Modern science teaches us that the only way we change behavior is if we make it as pleasurable as possible. Punishment and sacrifice, while very nice, proper Calvinist concepts,
do not work in real life.

I started thinking about behavior modification after reading a Business Week article in which a professor was able to quit smoking by substituting another pleasurable activity
(in his case it was sucking on hard candy) every time he had the urge to smoke. After a long period of time, the urges lessened then disappeared and he dropped the candy habit
and was smoke-free.

Nicotine is one of the most addictive substances on earth. Its rate of recidivism is higher than that of heroin, higher than cocaine. In fact, the only substance more addictive
than cigarettes is crack cocaine, so to beat the habit with a simple candy trick was quite an achievement and it confirms the latest scientific findings that in the long run,
we can only change our behavior through pleasure, not pain.

Which brings me to trading. Forget every bullshit piece of advice ever given by a trading guru. You will never let your profits run and cut your losses short. You will never take only
those trades that qualify for your setup. You will occasionally lift your stop and you will sometimes revenge trade.

But despite it all you can still win and prosper as long you don’t let the perfect be the enemy of the good.

First and foremost you need to ask yourself -- are you fearful of greedy? And be brutally honest with your answer. I am the biggest wussy that ever lived. Kathy, on the other hand,
is greedy beyond belief. She never met a trade that she did not want to take.

So here is how each of us improved our own trading style without forcing a change in the underlying behavior.

Kathy overtrades horribly. When it comes to day trading she can easily do 20-30 round turns a day in just 3 hours of North American trade. She is excellent at cutting her losses but
never lets her profits run. A while back we noticed that her 3 to 4 first ideas of the day were always the best trades of the bunch, and if she simply let those ideas run to target
she would have often banked 50-60 pips for morning’s work. Easier said than done. No matter how many times she told herself that she needs to hold to target, she would always fiddle
with the positions and collect half as much winnings as possible.

Finally, we hit on the idea of separating her trading. We created an account where she just traded the 4 initial trades to target -- do or die. We also created a separate account
where she was able to take discretionary trades to her heart’s content. After that, trading improved markedly and she was able to hold most of her initial trades to target because
she found a psychological valve to satisfy her strongest fear-of-missing-out desires.

I had a completely different problem. I was very selective in my entries, but very fearful of losing profits, so the net result was that I would let many good setups pass me by and
worse when I did find myself floating a trade I never, ever let it reach the target. Like a 13-year-old boy, I was suffering from “premature profit taking”.

Until I started using a dynamic trailing stop on every one of my MT4 robots.

I know.

Trailing stops are for suckers. They are a mathematically inferior strategy. They take you out of the trade too early. Yadda. Yadda. Yadda. All that is true and all of it is immaterial.

Since I’ve instituted a trailing stop strategy with my robots I haven’t interfered with a single trade. Not one. Sure, most of my day trades are 3, 4, 5 pips winners, but at least once
every two days or so I hit a 25 pip full target profit and that’s enough. Put 10 of those a month and you are doing 250 pips consistently without any mental stress.

Are K and I trading the best that we possibly can?

Of course not.

Are we trading the best given our individual personalities? Yes, we are. And that is how you really improve your trading.
**********************************************************************************************************************************

It is interesting, that I suffer from both of their problems! Though perhaps not quite as badly as they do.
And like them I have had to adjust my trading so as to minimise the effect of my own psych problems. Thus I mainly trade at set times (News and Volume Cycles), my initial position is always small (I allow for multiple scale-ins at better prices aka 'Averaging Down' or even 'Martingale') so that I don't exceed my Max Risk by taking 3 scale-ins (I do them at technical levels around a set theoretical scale for a 50% pullback getting me out at a net profit). I also take my first partial profit 'too early' and use a combination of interim targets and a manual trailing Stop to manage the other 2/3rds. Such that I almost never reach my ultimate target.
However despite all the above sounding really bad, my high win% means that taking mostly small profits works for me - and that is what matters!

Actually, using multi-unit, multi entry (at better prices) with multi-exits, is how all the institutions that Ray has worked for trade!

It is well suited to people with very deep pockets - like institutions. But this also makes it suitable for some (only some) retail traders with moderate sized accounts trading in mini or micro-lot units, provided they have the guts to both follow the staking plan and to take their maximum loss should the sequence fail!

It is good for people like me who get impatient and suffer from FOMO, and thus tend to enter a trade prematurely.

I don't suggest that you trade this way, merely present is for your consideration and for you to do hypothetical back-tests or demo-tests on.

Here is my own pyramid table (this is shorter and much less aggressive than the 'institutional' one that Ray showed us):
All entries must be based upon Value as well as at good technical levels - not just the numbers in the table!

Pips Drawdown from 1st Entry ......Units to enter ................profit (in pips) if price bounces to prior level in the table (allowing for a 1 pip spread)
0 ..........................................................1
-5 .........................................................1 .................................+4
(-10 to -12)
if @ -10 ................................................2 .................................+2
if @ -11 ................................................2 .................................+4
if @ -12 ................................................2................................. +6
(-25 to -30)............................................................................ Best case Profit............. Worst Case Profit
if @ -25................................................ 2 ................................+7 ....................................+3
if @ -26 ................................................2 ................................+9.................................... +5
if @ -27................................................ 2 ...............................+11 ...................................+7
if @ -28 ................................................2 ...............................+13 ...................................+9
if @ -29 ................................................2 ...............................+15 ...................................+11
if @ -30 ................................................2 ...............................+17 ...................................+13
(-55-to -65)
if @ -55 ................................................4............................... +41 ...................................+5
if @ -56 ................................................4 ...............................+45 ...................................+9
if @ -57 ................................................4 ...............................+49.................................. +13
if @ -58 ................................................4 ...............................+53.................................. +17
if @ -59 ................................................4 ...............................+57 ..................................+21
if @ -60 ................................................4 ...............................+61 ..................................+25
if @ -61 ................................................4 ...............................+65 ..................................+29
if @ -62 ................................................4 ...............................+69 ..................................+33
if @ -63 ................................................4 ...............................+73 ..................................+37
if @ -64 ................................................4 ...............................+77 ..................................+41
if @ -65 ................................................3 ..............................+57 ...................................+11 Note that the design is to minimise losses hence ..............................................................................................................................................the reduced entry size here.
If Hard Stop @ -75 best case max risk = -338 worst case Max Risk = -465
If Hard Stop @ -105 best case max risk = -930 worst case Max Risk = -1255

You may have an account big enough to withstand more levels.
Since I always use a multi-exit strategy, my minimum entry is 3 units - so I would multiply all the entry size and profit size figures above by 3.
For me based upon a 30K unit account a max loss of just over 12.5% is a loss of 1 week's profits ( I made +13% last week and expect to make over +10% ).

One thing I should clarify is that
A). The win% I track is the win% per part of a trade i.e if I entered 3 units and they made a net profit, that would usually be 2 or 3 trade parts because I take an exit for a small profit, then set a manual trailing stop and if that is hit that would be 2 parts to that trade. However if I reached my Profit Target 2 then that would mean there were 3 parts to that trade.

And B). for trades which offer me better and better prices, I scale in as shown above, thus I only need a better than 25% win rate on the trade parts in order to have an overall winning trade.

Naturally I monitor my percent win rate. If it is low then I am not feeling the market. So then:
1. I can take action to cut out any lower probability trades. Ray suggests that we score trades adding points for all the items in their favour and subtracting points for any negatives.
2. I can start to trade with the smaller maximum risk by setting my ultimate Stop loss from 105 pis from the first entry down to just 75 pips. This reduces my worst case maximum risk down from 12.5% to only 4.6%

The cut off point I use for taking these 2 actions is if my win% on part trades get below 60% on the day.

It is quite rare that I ever have to do this, since my win% on trade parts is usually comfortably above 68%.
( Today I made a profit of +4.5% with 38 trade parts and a win% of 78.9).

Do you know what your major trading problem is?

I ask this because I feel that Ray's students are quite savvy. Then amongst Ray's students, members of my Self Help Group should be even more savvy and they have access to more good advice and information.
Yet today I found a member who was saying that he admired my consistency and that he was struggling to progress:
'what kills me is "hope" for a bigger move or inability to accepot loss'
'most of the time the failures seem psychological'
'how many times have I wished i held on to a position longer'

What he didn't realise was that he is actually doing very well and is so close to his goal:
'i noticed most of the time im able to enter with less than 5 pip accuracy, my goal is to become as accurate as possible, this way you can maximize your pip value'
'And im doing that on MT4 without any order flow tools'

My reply:
'Wow, if you can have anything less than 10 pip accuracy (unless you are trading the Futures) is very good indeed. Steven Patterson (Ray's original co-instructor ) tried for 5 pip accuracy in FX and he failed miserably and consistently.
I would suggest that your accuracy seems to be already better than mine. So I think you need to look at other ways to maximise your overall profit (not necessarily on each trade) and to keep your losses under control.
My ultimate stops are huge: If I am feeling cautious or not getting a win% (on parts of trades) of at least 60% then My hard stop is 75pips from the first entry. If I am confident (or hitting better than 60% wins on trade parts) then the ultimate stop is 105 pips from the first entry!'

'Multi-unit entry is the answer to the Hope or Panic problem. I used to have that problem. Now I always enter with 3 units - I take initial profit at just 3 ot 4 pips and move the Stop Loss on the rest to Breakeven +1 to guarantee at least a small profit. Then I manually trail the Stop 3 pips or so behind price up to my 2nd profit target ( a technical Level) if it ever gets there. After that I leave the Stop Loss where it is and try to get a big 'runner' on the last unit of the trade, again to a more ambitious technical level.
When you make 1% to 3% per day, you probably won't care so much about missing big moves. I have only caught 1 big move this year (today in fact when I made almost 3% on a single trade).
Test it out on paper or in a demo account first, It isn't right for everybody, but it is absolutely vital for my tradin, I couldn't trade an all-in then all-out single unit style - I would be losing all the time, a consistent loser - LOL !'


Here is an example of a market that I trade - the DAX30. I drew the 'Fib' in when on the down trend it made the middle congestion. It is a really a measured Move measurer - not a Fib tool. To guage a measured Move target you take the distance from the top of the starting Balance Area ( the 100% line) to the middle of the POC congestion (the 0% line) then the measured move target will be the -100% line (don't get hung up about the numbers -it is just an equal measure). Unfortunately I had already stopped trading and so was just treating it as an Analysis practice. See the first pin low near the -100% line? That is at 13192 and the -100% is at 13187 ( so 5 ticks). If you can do that on entries and targets then just look at how many ticks you could have made !

Break out/down from middle congestion area in anticipation of attaining a measured move: The low of the lowest pin bar that can be remotely considered to be part of the middle congestion area is at 13239 so with a 1 tick spread you might enter at 1237 if you are confident about your 5 tick accuracy, but cautious so let us say that you went for a Maximum of 3 entry levels before your Hard Stop. So say 2 entries in reserve at 13242 and at 13247 with a Hard Stop at 13252.
On the 1st entry you are risking 15 ticks per unit (and we will assume trading my style so it will a 3 unit entry) for 45 ticks Plus 2nd entry of another 3 units with a total of 30 ticks at risk Plus a 3rd entry of 6 units for another 30ticks at risk. So total risk is 105 ticks.

The measured move target is at 13187 but allowing for your 5 tick accuracy you will take final profit at 13192 (wow you bottom ticked it!). OK perhaps you are not quite so confident so lets say you though it would at least penetrate the round number of 13200, so you take final profit at 13197 for 40 ticks. But you would have also taken profit earlier on the 2 other units. Now I normally take profit after +3 or +4 ticks, but this dropped like a stone - so I am saying that I would expect at least 5 ticks profit from the 1st unit. then lets say you took the 2nd profit at the halfway distance of the Measured Move- that is at 13221 (with a 1 tick spread that means you got 13222, for a 15 tick profit. So overall you made 60 ticks for a risk of 105 ticks.

Now My Maximum risk is 12.5%, and my Maximum risk when extra cautious is 4.6%, but let's say you are much more cautious than me so you use a max risk of 2%. Your profit on the Down move is 2 x 60/105 % = 1.14%. If you find just 1 trade like this per day and can execute it this well (or at least not ever being more than 19 ticks wrong on your entry. Then the absolute minimum you will have made in a 200 trading day year is 85K from a 10K account.

And there are approximately the same amount of ticks possible to be made on the upside too!

$1K to $1.2Mill in 12 months? You have probably seen Hype like this before, but this isn't hype - just not easy to achieve.
Ray did a session today on Money Management and Models and Value and some Oil trading special tips..
But the big thing for me was that he did a recap on why he thinks that a profit of 3% per day is attainable for us students of his. I had missed this the first time he did it.
It is all very reasoned and although his original arithmetic was slightly out, I have corrected that and added my own extra detail and reduced it to a single image:



PS. I made 3.7% today.

(10:26 am) Ian Foster: Unless a trade jumps out and grabs me, I am done for the day. Poor trading overall. I got lucky with the Cad Int Rate for Just over +3% . Overall +3.7% 21 trade parts only 57% wins

What if there was a fantastic indicator suite for Scalping and for Value Trading?

What if it was designed using the knowledge of a top Quant?

What if it combined the best of several different high cost indicator packages?

What if it came with FREE world class training?
What if there was a sensationally good catch to it?

Well there is !
Students of Ray have built a base level of an Orderflow and Value Line Analysis 'indicator package' and the package itself is dirt cheap - like the cost of one of those scammy EAs!

So what is the catch? - It is only offered to students and ex-students of Ray at CompassFX, because it has been built by some of his students and makes extensive use of his teaching.
So the fantastically good catch is that you have to take Ray's course and then you can get get ' OFTEN' at a dirt cheap price!
Thus for the price of NOFT or OFA you get a superior indicator suite plus training from Ray!

Comments made in in our Self Help Group Skype, about the OFTEN package :

(23:56) Jerry V. : Awesome work by our group members
I've been using TradingView since rejoining the group in late July. Even though I have the year paid up for, it's time to move on. Does anyone know if there is a video or a file that shows how to setup intrinsic value lines on SC? It would be much appreciated!

(02:53) Nicholas K. : David T., so sorry...I missed the last 30 mins of your presentation on OFTen for us on Sierra on Compass Group. I just purchased the NinjaTrader8 and am going to cancel now that I know you've created this special Sierra suite for us. Could you please contact me and let me know how to proceed as I have just a few questions to make the entire Sierra / OFTen enrollment seamless. Might be better to email me directly so our chat does not get "lost" in all the Skype posts here. Thank you for your hard work and dedication. My email is: ......

And in my personal Skype:
(09:00)Yi W. : Hi Ian,did you attain David's presentation？I missed some part of it.Does his indicator sold $199 include the y... package? And he said the y.... is updated for every one minute,so that means the y... package is lagging, will this affect the trading? And will you recommend to buy it? Thanks!

(09:11) Ian F. : Hi, yes I attended it. If you are a Futures trader (or use Futures data for your charting), then it is a MUST HAVE! The $199 is for the indicator package, from what I understand you would probably also need the y.... package to make full use of it. There is no actual cost for the y... package, but there is a voluntary donation in order to help David cover the cost of the Server and extra Sierra Chart that he requires in order to send out the data. You can go back into the Resource Room again using the same login/password and view the recording of the session if you wish. The recording can be found in the 'Documents folder' on the bottom right of the Omnovia window. Does the Yield data lag? - Yes it does a little. Does this cause analysis problems when trading based upon it - probably not unless you are a short term scalper. But if you are a scalper then the Orderflow indicators are an amazing tool.

(09:15) Yi W. : thanks for your answer Ian,I will contact David to get the indicator,thanks!

And in Ray's trading/trainingr room:

(04:18 am) Ian Foster: Good morning folks. What an amazing package David T. has put together with help from Sam van D. and others! It seems to combine the best of {other orderflow indicator packages} plus it has an auto analysis of up to 4 value lines at a time. All that plus the y... and most of the commonly used E... etc for Value analysis all delivered to your Sierra Chart screen. Fantastic. Just one warning: OrderFlow (imho) requires a Futures data feed to work properly. So if you don't trade the Futures, you would probably want a futures data feed to make best use of it..

(04:21 am) Vanessa H.: GM Ian,thanks for those comments. We agree; it looks a great package.

(04:44 am) Ian Foster: It really says something when 3 people ( Me, Vanessa and her husband) are so impressed by an Orderflow and Value Line 'indicator' package and none of us : A). Had anything to do with its design. B) We don't trade the Futures, and C). From what I understand none of us is a Scalper !

OFten Value Line Trade - it analysed 4 weighted Value Lines to find this solid Oil trade to the short side.
It can do this on non-Futures markets too e.g Spot FX pairs.

An image of the follow-through on that OFten indicated Oil short. Here is the chart as on my charts (CFD's rather than Futures).
I have marked the Anchor with a vertical blue line and put arrows above the bars on which it placed its indicator gold stars.



And here is the updated OFten chart. Incerediv=cly it told you when to exit the trade as well as the entry!
These are not cherry-picked. They are a live as I can upload them

+10.8% profit for the week, +2.3% profit today. - Looks quite respectable doesn't it?
Those are my figures for today and for this week, but I want to concentrate on what I did wrong - particularly yesterday when I made just +0.25%.

Now to some people any day in profit is a good day, but Ray teaches that this IS NOT TRUE!
What really matters is HOW WELL YOU TRADED - even if you made an overall loss !
And you should always analyse your poorly traded trades in order to correct the problem.
Looking at it optimistically, a trading mistake is a good opportunity to improve!

Today I got this PM :
'Hi Ian

Hope that things are going well- just wondering how much the cost of the indicator is.'

Well since I had been thinking about my mistake yesterday, I decided to really reply to the first part (purely politeness on the sender's part) as well as the second part. (Note: I don't react any better to politeness than I do to a straight to the point approach).

So here are some of my posts from Ray's room yesterday plus an entry from my 'Self Accountability' thread in my Self Help Group members room and my reply to the PM:

---- Thursday January 18, 2018 ----
[5:47 PM] Ian Foster: (12:05 pm) Ian Foster: I am done for the day. I was up by 1.4% but made a stupid mistake. On a bounce I tried to trade for a continuation into the Pivot Point and major IMA and the Round Number  -  just didn't look at the chart which had them displayed. Oh well, there is always tomorrow. Profit for today +0.25%, 33 part trades 69%wins but obviously I took some bigger losers than my winners.

[5:53 PM] Ian Foster: Why did I make that mistake? Was I trading when not fully prepared/ill/upset/tired ?  - OK, yes I was tired because I stayed up past my bed time to attend the webinar on Often, then the strong wind noises overnight made my sleep less settled than usual. Was I aware of this whilst trading? - Well, yes I was at the start of my trading in the morning, but as time marched on the adrenaline from trading and the caffeine from many cups of tea masked my fatigue.

[5:55 PM] Ian Foster: Attempted preventative steps: 1. Be aware that the problem can occur. 2. Write a note & put it on screen for Lunchtime, so when I come back to start trading again I am reminded of it.

_______________________________________________________________________________________________________
Have I put this into practice - yes I have done just that today, since I had another disturbed night's sleep!


Now for my reply to the PM:

'Hi Fxxx,
Things are going OK overall. Had one bad day this week. Yesterday I was extra tired due to a later bedtime (due to attending the webinar on the OFten indicator suite). Then we had big storms in the UK that night which disturbed what little sleep I got. Then due to lots of caffeine plus adrenaline from trading I forgot I was really tired and missed seeing a confluence of 3 items in a market where normally I would ba cautious about trading against just 1 of them and NEVER trade against 2 of them. This meant that I turned a +1.4% profit day into just a +0.25% profit day!. I recovered a bit today, still very tired, but conscious of it and adapting to it ( +2.3% profit on the day, +10.8% on the week).

The Often indicator suite is dirt cheap like I said. It is comparable to suites costing more than $2k but it only costs $199 BUT it is only offered to students of Ray at Compass FX and it isn't an MT4 indicator, it is for a more proffesional charting/trading platform. So you would need to contact Kim@CompassFX or skype her ( ForexKim ) to get a price for Ray's course.

Ian'

I have just had a thought that perhaps some readers of this thread don't understand why I post here:

1). It is to help fellow students of the art of trading and the workings of the markets. During my working life I came to realise that I enjoy solving puzzles. In the case of my work those were things like : Why did the Mainframe computer crash and how to fix it as fast as possible?, How to make the database and applications more efficiently to get better response etc.?
But also I discovered that I also enjoy helping people and even teaching (provided that people actually want to learn).

However, may main reason is this:
2). My trading style is that I take multiple parts of trades per day - often over 30 of them, and my trades are usually short/very short because I trade the News Events. This makes using a Trading Journal almost impossible /impractical. Also I have no 'trading buddy' (even though I have hundreds of trading contacts - the members of my Self Help Group). This is because I have not found a reasonably competent trader who shares the same #mentor' and who both trades a similar style to me and trades the same hours/sessions as me. I consider those are important in a trading buddy - otherwise you can't have a 2-way conversation about the nitty gritty trade and psychological details of day to day trading life.


So what I do it to use this thread and Ray's trade room and the Self Help Group to fill these gaps in my trading journey. In some ways to document all my embarrassing trading mistakes so that I can never forget they are out there. Thus I am motivated to take action in order to (hopefully) never repeat them again!.

Ian

you talk away mate. That is the problem with trading -its very solitary.
Totally get the issue when you are news trading- there is a lot to consider and if you are aiming for 20 pips, then that obviously has your focus.
The only thing with FF is that it can take up a lot of your time.
Have a good weekend

Fader

Thanks Fader,
You are right about trading being a very solitary thing.
In many/most cases a prospective or a relatively new trader will be completely isolated except for whoever they are trying to learn from.
They find that their spouse , family, friends don't understand what they are attempting to do.
Or worse still they think it is reckless gambling and so oppose it.

Of course then there is the other problem, which nobody reading this thread should have, of deciding if the 'mentor' is for real.
How do you know if this supposedly well-known retail trading guru is really who they say, or has really 'cracked the secret code',
or was really given 'inside information on how the Market Makers, the Bankers or the Governments rig the markets'?
Or even if they actually make any money from trading?

There are so many people pretending to be something else - someone else on forum like this.

How can you know who to trust?

Yes, you're not kidding that it is a solitary, lonely, isolated etc.

Fortunately there are only a limited number of things that you can do right in trading. But unfortunately there are an unlimited number of things that you can do wrong.
That is how it feels, and to a certain extent it is true.

Trading is also complicated by how to distinguish between skill and luck, and by the fact that what might be right for one trader may be completely wrong for another trader because of personality, interests, skill, location, available time to trade, account size etc.etc.

Here is Boris Schlossberg's latest email on this subject (which in general I agree with) One small note, his email had an obvious typo which I have corrected:
******************************************************************************************************************************

Making Pips is not Like Making Donuts
by Boris Schlossberg

Trading is a very tough challenge because the relationship between effort and success is almost non-existent. You can do almost everything right and lose or you can do everything wrong and win. While luck plays a role in almost all human endeavors ( you just need to see last week’s American football matches to see how a random bounce made all the difference) in trading the variance is far greater than in any other field.
There is absolutely no way, for example, that a pudgy 5 foot 6 teenager with coke bottle glasses could walk on a professional football field (be it American football or soccer ) and score. Yet in trading, that very same novice who knows nothing about finance or markets could easily beat the pros, at least for a little while.
Part of the reason why this is possible is simply the unpredictable nature of news. At any given time newflow can flip price action completely around. This does not happen in the real world where 99.9% of the newsflow has no impact on price whatsoever. Imagine if your donut businesses were affected by every new Trump tweet, and you get the idea of why trading is very different from making donuts.
Precisely because trading is so arbitrary you need to create a system of control that is ironclad. We can’t control price, but here are some of the things that we can control and should.
1. Control size. Of all things that get traders in trouble, size is the biggest problem. Trading 0.01 lots for as long you need is still the best trading advice there is. Trading 1X equity max is a close second.
************ My note: Trade in multiples of 0.01 Standard Lots for as long as you CAN. This makes both trade management and the compounding your account so much easier - see posts above which show the difference between compounding Daily and Compounding Monthly. I disagree that you necessarily need to trade as small as a maximum of 1x equity, but 100x equity is just asking to have your account wiped out!

2. Control entry. We can't control exits, but we can always control entries by either letting price come to us or waiting til price touches a key point of momentum.
3.Control how we exit. We can’t know where the market will take us, but we can control the trade once it’s in the money by using a dynamic stop. This a terrible method mathematically, but the best method physiologically and since trading is as much about keeping your psyche sound as it is about keeping your account positive controlling how you exit is the only way to control yourself. My bolding and Italics - this is extremely important to understand! What id statistically the best method in't always the best for a real human trader, because trading psychology has a very major impact - possibly more than everything else combined!
4. Control your approach. What makes you trade better -- defined strategy or discretionary trading? Discover your inner truth and you will be much more successful at controlling the game.


4 comments
EMILIO migliore says:
Thank you, i couldn’t of said it better, you could know nothing about trading and fluke your way to good wins and of course even the top pros lose money daily, it’s a mugs game so trade like a mug and be street smart, cheers
Actually it isn't true that the Top Pros lose money daily. They may have 1 or more losing trades daily, but losing days can be very rare. The guy I consider the 'Carlsberg' of retail traders (who has requested I don't mention him buy name because of unwanted contact requests). Goes several years yes YEARS between losing days! I myself last year had 2 periods when I went 2 months between losing days.

water man says:
If it is so why we shuld not trade at all ?When I observe price moves as per my anticipation correctly.But when I enter everything goes wrong.So often I even doubt whether market has AI and very particular about my failure. When I am in sideline everything from candle pattern to harmonics works well luring me.Once inside nothing works, only lose money..
One very interesting thing about humans is that to a large extent we see patterns that don't exist and we see what we either want or expect to see. Thus merely 'eyeballing' a chart cannot tell you if you were/would have been analysing the market correctly. However once we get into a trade (even in Demo mode) is is much harder to ignore the actual facts.

sami Ajram says:
Boris, Hi i really admire your insight about trading. I have been reading your note for awhile now, you and Kathy great approach and understanding of the market i must admit. I’m always looking forward to read from you guys on the situation of the market and what drives it. I really appreciate your knowledge and advises more power to your knowledge sir.
cheers
Sami
This is the kind of mistake that most retail traders make - trying to learn from the self-taught, self proclaimed retail trading Gurus rather than from a real professional who actually designs the Algos that either move the markets or the Algos that take advantage of the aforesaid Algos.
Law Chusom says:
January 20, 2018 at 12:18 pm
V. useful tips to navigate the risky world of trading. Thanks.

Calling all FX traders in Europe and the UK, the authorities want to meddle with the accounts of EU based Forex/CFD/Spread Bet Brokers. Read about it and have your say by following the instructions in the document below:


I have responded to the ESMA proposals. I hope other traders will also do so. I consider the Margin proposals to be ridiculous - worse even than those faced by US Forex traders. I have said that I think all they will do is drive traders to use Brokers in other (less well-regulated) locations.

I don't know if there are still doubters among the people who read this thread,
Here are recent comments from 2 people who have taken the leap of faith:

First a PM in FF to me today from Ray's latest student:
"Hi Ian

Have just started the course.
Just blown away. It really is a market makers view.
Will do the NDA tomorrow.
I think I just need to take notes step by step and slowly weave elements into what I do now.

Cheers
S**** "

Next a little longer sequence of posts to me in Skype from somebody who read this thread and skyped me starting 2 weeks ago:
"Hi Ian, I am about to enrol in Rays course via compass and have seen you posts on forex Factory "

My Reply: Hi J***, I'm glad you like my posts. Ray's course isn't easy. It is so different from anything else any of us have seen because it is so comprehensive. It's basis is in determining Value (for all except the shortest term scalping style). Then adding Structure, Price Action and Volume analysis and finally Order Flow. Most people take at least 6 months (pretty much studying full-time) to really get it. In my case I found 1 thing that struck a chord for me within 4 months, but kept trying to learn and trade too many other styles and Markets. I made that mistake for over 2 years! I think the best way is to A). Take the course and hear all the basics, then B). Work at trying to find one Technique or one Market that you think you can trade at least on a break-even basis. But trade it in a practice account for at least 1 month to prove that. C). Trade your initial market with a real account while slowly adding more components to your trading. D). Start to trade other styles/markets as you gain confidence.
This last one is the stage I am at.
If you think that this all seems like too much work, then perhaps you are not yet ready to learn to trade like a top institutional trader. There is no point in doing Ray's course unless you have a passion for finding how the markets work and how to trade them. At weekends, most of us look forward to the markets opening again.
If you decide to take this step forward in your trading, then you don't need to wait to join our Self Help Group. So long as I can verify with Compass that you have paid and signed the Non-Disclosure Agreement , then you can join us so long as you agree to our simple rules.
We can help you with both the learning process and with the technology side as things such as charting and resources.

"Thanks Ian
I have just paid compass and am fully committed I will sign the bad when Kim sense it and will then be set to go. I am ready for the hard work, I just hope I can understand the concepts and find a way to apply them.
Sorry bad mean n d agreement"
"Hi Ian, I’m up and running. The video course is brilliant
Such great content "

My Reply: One thing that is almost unique to Ray is that for every Process and type of Analysis he covers, he tells us the reasons behind it in a way that it fits in with the Business Process of one of the major players in the markets (from Market Makers, Market Makers on the Options for a market, right through to the longest term player - the Pension Funds). The fact that it makes sense from a business perspective gives you the confidence you require in order to use it.

"True. I can see the hard part is going to be finding which bits to focus on and fit in with my trading. I’m used to eu dax nq
It’s the first time in 5 years of trading that I have felt that this is learning about the REAL market and what’s happening
Looking forward to joining the group"

Then a couple of days later:
"
Quick bio or where I’m at:
Before joining I was aware liquidity existed above highs/below lows.
I’m pretty adept at reading price action and totally get rays explanations of cliq and pay check
No concept of value or how to determine which direction the value was headed.
Begun investigating delta absorption and poc on volume profile over a whole session and bar by bar.
Never used book map or jigsaw but aware of them
Have worked at a prop firm few years back but a cowboy outfit
My aims are to be able to trade 2”sessions” per day ideally open/close/data release dude to volatility and focus
Due not dude!
Run fx trades on longer timeframe.
Currently taking a step back to try and grasp rays concepts of value
Your oil trade document is excellent!"

Note that the Oil Trading Document to which he refers was written by me about different ways 3 of Ray's students trade Oil and in particular the EIA Oil Inventories Release - the trading highlight of my week!

January trading profit is +39% increase in my account, I made 815 portions of trades (multi-entry & multi-exit) of which 75% were wins.
But despite this I am dissatisfied with my trading so far this year. There were some areas where i should have done better:

1. I had 2 losing days (out of 22 trading days including 4 part days). I don't really have valid reasons for those 2 losing days. Both were caused by single trades and one due to losing response from my Broker's server. In that case I didn't know for sure that it had accepted my trade until I got through to the dealing desk after over 10 minutes (my fault - not theirs). Part days of trading were due to a funeral , then 3 times due to response problems ( I think twice at my Broker's end and once due to my internet connection).

2. On 2 successive EIA Oil Inventory Releases I failed to trade well - only making a small ( less than 1% ) profit each time. I expect to make over 1% on the inventory release itself and over 2% on Inventory release day overall.

3. On some occasions on at least 4 days I didn't stick to my scale-in plan - getting in too soon.

4. On some occasions in fact on most days I didn't stick to my scale-out plan - exiting too much too soon.


Do you analyse your trades and trading patterns like this? I feel that I am doing only the very minimum analysis.

If you don't do trade analysis, why is that? Is it that your trading is so good that it couldn't be improved?
Or are you just lazy?

Actually I do both quick check on my %win of portions of trades and analysis of how I handled each trade, several times per day, plus at the end of every trading day. This is because my trading plan or strategy calls for me to take only the better (looking) trades when my %win starts to fall below 60%. That is for trades that day - I start afresh each day.

Then I do weekly and monthly stats of %Profit/Loss, and %win.

I also track my Oil Inventory trades separately, because they 'should' be my best trades.

I know some people do trade analysis and stat analysis to a far greater depth than me, but again there are those who find excuses not to do any at all. And how is it possible to improve something if you don't measure it and track progress?