Concepts to assist new and struggling traders

The purpose of this thread is to share concepts to assist new and struggling traders. This is open for discussion as long as we treat each other with respect. There are no dumb questions to ask. Every trader had to start somewhere including myself 20+ years ago. Good luck and lets see where this goes

The 20/20 Project

Purpose:
Is an ongoing “Vetting” trading development system, meant to produce strategies and methodologies into workable
trade models in the Forex markets. The purpose is to create a factor of 0 in emotion, relying on “hindsight” to
avoid jumping from one system to another when one trade or a string of bad trades goes against you.

Goal:
Produce 1-viable trading system/modal at the end of every quarter with each system producing a 65%-win rate or
higher.

Sample Size:
Consists of 20 trades based on fixed parameters (time frame, target, stop loss, session traded, pairs traded, indicators used, etc.)
Once these parameters are in place DO NOT ALTER ANYTHING during the sample size, let the results at the end
of the 20 trades dictate what needs to be tweaked or in most cases is not a viable strategy.


Consist of 6 Phases:
Phase 1: Initial 20 sample in “Demo” mode
Phase 2: 2nd set of 20 sample still in “Demo” mode (avoid being lucky from phase 1)
Phase 3: 3rd set of 20 sample however in “Live mode” however trades at .01 lot sizes. (Trading this small, there is no room for error and will not blow up your account). Going from demo to a live environment are 2 different animals.
Phase 4: 4th 20 sample at ½ of normal size lot size with additional money management in place (trading multiple lot size with varies targets, etc.)
Phase 5: 5th 20 sample size of normal trading lot sizes. “Maybe I can be a full-time trader now”
Phase 6: Strategy has stop producing positive results (happen as market dynamics change from time to time) in this sample size, move back into phase 2 or 3 for review.

Here is an examples a sample size to give an idea:
System Name: X192-R
Time Frame: Hourly chart
Duration: Intra-day and hold til the end of day.
Pairs trades: USD based only.
Condition: Does not trade on major USD related news days.
Indicators: None, uses candlestick formations (Do not ask about this as this is for example only)

-13

Summary of Phase 1 (see image below):
20 trades: 75%win rate: Overall +207 pips
Wins: 15
Loss: 5
b/e: 0




In reviewing this sample size, low drawdown (nice), however “concerned” with too many winning trades in a row warrants this to conduct another sample size of 20 or moves into phase 2.

I think you get the idea of how this works. The process takes a while, but after time you will have workable strategies along with a pipeline of many others in the works. Once you find a viable strategy that is in phase 5, you will than see hybrids systems evolve.

This system is meant to address the emotional aspect of trading. How often as traders, start incurring a loss or a string of losses, than second guess the setups, overanalyze, and end up missing what could had been a great trade.

Think of it this way, most companies have an R&D program, why can’t a trader have their own
Once you get your first workable strategy, you will be on the start of the road of confidence, making money, and trading for others.

This concept comes from the book "Trading in the Zone" by Mark Douglas

Good Luck

Looking at the week ahead, there should be some great opportunities.

Monday 8/2/21: RBA rate decision;
Thursday: 8/5/21: BoE rate decision
Friday 8/6/21: Non-Farm Payroll (USD related)

Anytime there is a significant news related event (such as these 3), One of the strategies I use is is waiting 60 minutes after the release before taking a small position. I use investing.com (it's free) to measure candlestick formation and volume (like for them to be in sync). In the image below shows the FOMC and the intuitional sentiment (from last week). After taking an initial position (I could be wrong and if prices reverses, I want to be able to cut my losses without too much damage to the account), wait another 60 min and start to build (into a short position (as the trend is now setting in) for the remainder of the US, into the Asian, and European sessions) with each hourly candle. Ended up adding 8 times in this setup.

There is prep work that goes into this trade beforehand, reading up on varies sites, what analyst thoughts are, etc. (will share that in a future post).

Food for thought: "An elephant cannot hide its footsteps" neither can intuitions, just have to know where they are hiding. Happy Hunting

I really love Mark Douglas I have read his book over and over. I wonder do you think 20 trades is enough of a sample size?

That is why I run 2 sets of sampling size along with trading at very small at phase 3. After this phase you will have 60 trades to look back on. If anpther sample size needs to take place or several that is fine too.