From Concept To Profitable Trading

Hey Jgadefelth, I believe your first question can only be answered by that individual trader, based on their risk tolerance and confidence in their trade plan. I am sharing with everyone what I plan to do, but I am sure that is different with each trader. It is based on how much of a loss will begin to affect you emotionally. For example, when I go live I am planning to open a $1,000 account. I plan to trade 1 mini lot, which is $1/pip roughly depending on pair. I expect to have perhaps a 40-60 pip stop loss, so that means I have to be ok taking a $40-60 loss on each trade. Will that bother me and force me to make emotional decisions and go rogue on my trade plan - the answer is no. If another trader answers yes, then that trader needs to take a smaller position size, where the loss does not impact them emotionally.

The second piece is your trade plan. If you have confidence (through testing and live trading) that over a large number of trades your plan has a positive expectancy with favorable risk:reward, a loss or drawdown does not affect you. We are dealing with an open market, where there are no guarantees that any trade will be a winner. I am sure I am going to have a string of losers following my plan exactly, as well as a string of winners. Same concept as the roulette wheel. I have seen many times where there are a string of 8 red numbers in a row. But over the course of 200 spins, we know it will be around 47.4%. As I reviewed, if I can have a 62% win rate (which was the EUR/USD example) with 1:1.5 RR, then a loss or drawdown does not matter and let's one sleep at night.

Also, if a trader is starting out, they should start small. If one can develop their trade plan (and execute it live) to earn 20 pips per day, consistently, it does not matter the size of ones starting account. A trader will be able to quickly grow it and make plenty of money trading with that performance. This is what I hope to accomplish with this Forex plan. I hope that helps...

yes ok i understand but will you have 62 percent hit rate ? in your money management calculation i thout i see 54 percent ? 62 percent is very good you must be one of the best traders in Damiens thread

Best regards

We will see. That is what the thread is for.

Dear
Subscribed your Youtube channel even though English is not my native language.
Would you provide the word file in your video.
thanks in advance.

Traders, this last week started to work on entry criteria for next step in the plan. Using ABCD patterns is one element I plan to have, since the market has natural movements in these ABCD movements. This is an example of entering in the trend at the C point, looking for another new structure low. In this example, I was late making the entry after the price bounced off the 61.8 level and as you can see this impacts our RR, which was initially at 1.23. If I would have been in front of the screen and saw the rejection after the first candle off the 61.8, our RR would have been acceptable at 1.69. Price made a weak new low and I ended up exiting. However, price made a smaller ABCD and ultimately worked down to the full ABCD pattern for the full target ultimately reached. Entry areas for good risk reward on the ABCD pattern moves, gaining entry above the 50% level is important. More on this in the plan.

Traders, second set up I plan to test is the retail term double top or double bottom. It actually is a retest of the high / low which fails to break. In the trend, when this occurs, then breaks down the previous swing low, the 161.8 extension along with structure, provides a good risk:reward trade, anticipating another retest. See enclosed chart. In this example, over 2.0 RR. I need to go through and see what sort of probability this structure produces over a large series of trades.

Septell, thanks for your recommendation. I have adjusted the video settings on the channel, which provides the transcript. If you select the three dots for more information, you can open the transcript as you review the video. Hope this helps.

ABCD Pattern Criteria / Definition

Trade Entry Rules / Criteria

Trade Management

Hi Rush. I found your new thread by coincidence, and I like the calm and focused way you present your videos, and work on your plan. Probably because I share a similar past and experience than you (started 1997, also in my 50s) I feel inclined to write something here.

A not so small percentage of traders start like you, being serious, making a decent plan, not ignoring the hard work which is required, but ignoring the wannabees and gamblers which are part of the game, having some idea or even a little background in institutional trading. However if it only was that easy...

May I suggest another thought: Why is it that 99% of retail traders fail? What makes the difference between those 99% and the almost non-existant rest? How do I position myself to not belong to the 99%. Is it even possible to consistently make money as a retail trader when 99% cannot? Is focus, a plan and hard work enough to separate yourself?

You are talking a lot probabilities, but all probabilities say exactly the opposite. So I suggest to think about the general approach. Planning money management with papers from 2006 (Stridsman came from a futures background and discovered the tool of compounding) will not do you much good today. Forex kids laugh about compounding being a game changer. If it only was that easy...

Retail and institutional trading are two very different pairs of shoes, and an average successful prop trader will very probably fail as a retail trader. Why is that? Imho the answers to those questions make the difference to the final outcome. Unfortunately it's not the serious planning that makes the difference.

Wish you all the best and good luck with your thread

btw: Your intro to the videos remembers me on Morad Askar (FuturesTrader71) which I whole-heartly recommend to anyone.

Demo Trade #1 Set Up. Long USD/JPY 109.02, stop 108.74, target 109.45

H4 in uptrend, 161.8 extension, 61.8 of overall main swing and support area with first orange box.


Trade Management update: Interaction or Break of 109.25 and will move to BE

Demo Trade #2 Set Up. Long AUD/NZD 1.0778, Stop 1.0734, Initial Target 1.0845

H4 Long Bias with New Structure Highs, bullish ABCD pattern finishing at 161 extension, 61.8 of main swing and in area of interest with support.

Traded this as a D point completion, however, could also be used as C entry looking for a NSH and a 1 to 1 completion around the 1.09 area. We will manage the trade as a D completion with my rules. If price is strong, we can then manage per C rules looking for the extended target.


Trade Management update: 1.0822 would be 61.8 of AD leg. This would trigger a move to BE.

Demo Trade #3 Set Up. Long EUR/JPY 119.47, Stop 119.07, Initial Target 120.17

On 15 Minute - ABCD completing (D point), 161.8 Extension reached and 1 to 1 AB=CD reached.

H4 at 50% of overall swing, support with area of interest and has confluence with 15 minute entry point.

Demo Trade #4 Set Up. Short EUR/NZD 1.7318, Stop 1.7401, Initial Target - 1.7180, Extended - 1.7075.

On 15 Minute - double bottom with 161.8 Extension set up. Strong move down yesterday, with double bottom and return back to 161.8% extension. Looking for a retest of the double bottom. Trade management - once price reaches 1.7250 area, which is the v point of the double bottom, move to BE. If price action looks good down to the initial target, may trail on structure to see if the extended target can be reached which is the D completion point of the ABCD.

Demo Trade #5 Set Up. Short USD/CAD 1.3250, Stop 1.3321, Initial Target - 1.3136, Extended - 1.3025

Entry Criteria - Lower highs, New Structure Lows (NSL) being made. C entry point on larger ABCD, in confluence with smaller ABCD completing at D towards area of interest. On smaller ABCD price reach 138 Extension and now stalling for entry. 15 minute price struggled twice with 1.3270. Good risk reward with extended target.

Trade Management - I will manage per the smaller ABCD (D point), however if that smaller ABCD (A point) breaks, then we can look for the extended target and manage as a C entry.

Weekly Trade Review

Sounds interesting.

Demo Trade #6 Set Up. Short CAD/JPY 82.21, Stop 82.55, Initial Target - 81.70, Extended - 81.08

Entry Criteria - Lower highs, New Structure Lows (NSL) being made on H4. C entry point of H4 ABCD made at 61.8. C entry in line with H4 on 15 min ABCD.

Trade Management - Manage per the M15 ABCD with stop above M15 A point. Extend target if price action accelerates to the short side down to 81.08, which would be a great place to consider a long position.

Weekly Trade Review - Demo Week #2