Properly - a different look at trading

Hi,
last week was full of macro data and lot of uncertainty. We lost 260 pips but remember #onetrendpaysforeverything

Finally!
After 5 months of profit, a period of losses came. In fact, this is the moment that shows the actual strength of the strategy.
Over the past 3 weeks, We have returned the profit that we generated in less than 10 days in May. The most interesting thing is that one good day is enough to make up for a worse period. Will it be the same this time? time will tell

In such moments I see the advantage of automatic strategies over manual trading. I am sure that if I was involved in trading, I would probably start combining with the strategy. Trading using automated strategies, I am a bit out of the way, watching what the computer is doing and I know that sooner or later the markets will favor me because I know the statistics of my strategies.

On average, we have 4-5 months of loss each year.

And now substantive ...

As you have noticed, I publish "trading rules". I decided to create them because many novice traders have wrong expectations in relation to the market.
I know that they may seem trivial, but in the end you'll admit it's right, even if you disagree with me now.

Write me your opinion! I will gladly get to know other views

Rule # 3 Understand the project you want to invest in.

Attached Image (click to enlarge)

Do you know in which market it works? What competition does he have? What makes it different?

By investing your funds in any project you are actually a shareholder in a given company. Do you think that any fund would buy companies without checking what they buy? You must act in exactly the same way.
Maybe there is something that will not be consistent with your approach. Maybe the investment horizon will be too long? or maybe the risk is too high?

It's better to know all about it at the beginning.

Also remember that a given project does not work in a vacuum and encounters different problems just like any other company, and despite the best efforts of the creators, something may go wrong. Also, try to assess the environment in which the project competes. Why should it go? Where is his advantage? The creators of the project will always look optimistically into the future, does your objective eye share their enthusiasm?

It's better to reject two good deals than to lose on one very bad. Therefore, before you make a transfer, understand the industries, understand the project.

Warren Buffett did not invest in technology companies for a long time, because he did not understand them, did he lose it? No, he earned and slept peacefully because he invested in what he knew.

I am starting work on another strategy. I want to share my results with you and I will gladly get to know your ideas.

Initial outline:
Time horizon: daytrading
Trade type: for false breakout or for impulse exhaustion
Stop loss for the last top / bottom
closing the position: at 18:00 (at the end of the day)
Trend following
In the next post I will describe the assumptions of the entry.

On June even BE didn't secure us from losses, so we had to give back some profits.

Another trading rule:

4 Never invest all funds in one project.

As Warren Buffett says - "never put all eggs in one basket." Despite the sincere desire of the originators, there is always something that might go wrong. Your task as an investor is to ensure the safety of capital. If you focus only on one project, in fact you become its biggest believer, because the fate of your funds depends on this project. If you diversify your portfolio for various assets and wisely share funds, you are able to withstand the loss of part of the capital, because other projects will allow you to make up.
Be independent, share funds for various projects, thanks to which your capital has a better chance to survive and multiply

Another thing to consider:

04 I understand that the results should be considered in a one-year horizon.

Every beginner trader thinks that one can be profitable on the stock market everyday. That is why he sets goals of 1% a day, 100 USD a day, 10 pips a day. When it turns out that maintaining such targets becomes unrealistic, it goes to a higher interval. In the week of 1000 USD, etc. But this also will fail.
Why?

Well, because as in any business, the same is true of the stock market cyclicality. There are better and worse times. A lossy month? Normal thing, and 3 or 4? Also. Why? Because on trading you need to look long-term. The investor's goal is to patiently wait for a great time for his strategy and to survive the worse time and so on and on. Best of all, sometimes it takes 1-2 months a year to get a magical average of 100 USD a day.

Well, but right? This is only average ... and as it turns out, a person looks at what is in the middle, and forgets that the extremes determine the final result.
That's why the best investors are not those who earn every day, or every month, but those who are patient and can use opportunities. Because one good trend will pay for everything and will make your results much better than your dream of 1% per day.

There is no strategy that earns in all conditions. Our main strategy is based on breakouts, which is why we need strong, daily trends to make money. This is perfectly shown by the last two months. May, which has strong trends and June, an extremely consolidating month.

This reflection brought an interesting idea for a new strategy.
In the previous post I have already indicated what I mean, it is about playing the false breakout formation or to losing the momentum after a strong movement.

Entry rules:
1. Determining the last top / bottom according to the trend,
2. when the price hits the given level, I start searching for the moment of entering in the opposite direction.
3. Based on: stochastic / fractals / reversal candle formations.

Indicators:
1. Indicator for determining the trend - we are big fans of the averages so probably we will stay with it
2. Indicator / formation to determine the moment of entry - the simpler the better, we will test what we wrote above

Summarizing:
In the morning we set the last top or bottom (zigzag) according to the trend (MA), When the price hits the given level, we start to look for the opposite signal according to the selected indicators. We're opening the position. After opening, we put SL behind the last top / bottom, we close the position at the end of the day *

* we will determine exact hours during EA tests.

We're getting into coding and testing, we'll soon post the first results.

Oh, 98% of the strategy goes to the trash bin, so this idea can be exactly the same

Last week small part of profits given away.

The lossy month is something normal

I do not understand why losses are taboo. Although most people are losing money on the stock market, hate meets them instead of support. I have already written about it and will mention it again - win rate is not a measure of a good trader. Trading is not a sprint, rather a marathon. Only the hardest ones reach the finish line. The best traders in the world have not only losing days, weeks or months, but can also count the year in the red. Is it wrong? Of course not, the strategy had worse period. Do all companies always earn? Those who are in business know exactly how it is.

I often say that the best test for a trader is how he goes through the period of losses. Is he combining? Is he depressed? Is he changing the strategy? It is in these moments that we show our predispositions to trading. If we trust our strategy, we should consistently implement the assumptions and wait for the end of a worse period.

Trading is an occupation for many, but not for everyone.
When you understand that loss is a normal condition and that there is no super strategy that always generates profits, then you will take the first step towards success on the stock market.

Rule # 5
Remember about the barbell rule.

Keep an appropriate ratio in the portfolio between high risk and hedging projects.
If you've ever been to the gym, you've probably noticed that the same weight is applied to the barbell on two sides. Thanks to this, lifting the barbell we are sure that it will not overwhelm or crush us.

It's the same in the world of investment. If the funds are invested only in high-risk instruments, there is a high risk of losing all money in spite of potential high profits. On the other hand, if we only save money on deposits or bonds, we make the savings slowly, eaten by inflation and we do not give them the opportunity to multiply.

The golden mean is to choose the security and risk instruments so that our barbell is stable and allows you to beat new records in bench press.
Thanks to this approach, you take care of the security of capital, but on the other hand, you give yourself a chance to earn above average money.

Invest properly!

Slowly going back - last week.

Another week ended green

2 steps forward 1 step back

Last week:



And a whole month :

06 I understand that the stock market is associated with the possibility of losing money.

Such a simple, yet significant part of investors or traders do not understand this until they lose their funds.
The stock market is a great place that gives you amazing opportunities to get rich. But there is nothing for free. The more we want to earn, the more risk we have to take.
There are no shortcuts.
One could write a book on the approach to losses, but a man learns from his own mistakes.
First, the hopes for quick and high earnings without risk will fall in you, and then you will understand that loss and profit are closely related.
Remember that capital on the stock market is necessary to earn money. Therefore, if you risk a lot and lose a lot, in the end you will not have anything to trade.

Finally, we will remind you of two famous rules of Warren Buffett:

Rule No. 1
Never waste your money
Rule No. 2
Never forget about rule # 1

#6 Invest in accordance with your character

Some prefer peace and security, others risk. Do not invest in what is popular, but in what is consistent with your approach and character. The funds are meant to work for you for years, which is why you need to feel the psychological comfort. In the end, it's only you who are responsible for your money, so you have to answer the question if the project meets your expectations.

First week of August

2nd week:

7 Do not invest with emotions.

We hear all around that everyone is investing in a given project and making money. What are we doing? We enter the project as soon as possible without questions. Because we will pass a great opportunity to earn money!

And then it turns out that, in total, we really have no idea what we put the money into. That the results are not what colleagues said, etc.
Trading on the stock exchange under the influence of emotions is the worst harm you can do to your money. Is Warren Buffett buying company shares because they are popular now? No, before he makes a decision, he will get to know the company, learn its pros and cons, opportunities and threats. First of all, he will understand the business model.

What is fashionable is not always profitable. Therefore, before the next investment decision, put your emotions aside, take a step back. Look carefully and then take the appropriate action.