Trading for a living

The answers, by the way, came from Google Search AI (Gemini), not GPT. I spent a few more hours researching yesterday and today, and from many different sources (not just AI), I'm getting the overwhelming impression that implied volatility might be less suitable as a volatility filter for an ORB strategy, but that doesn't necessarily have to be true.

In any case, I'm not exactly sure how I would implement such a filter but I also asked AI and it says the following:

"To code an implied volatility (IV) filter for an Opening Range Breakout (ORB) strategy, you need to first acquire historical IV data and then implement conditional logic based on that data, using a library like yfinance to fetch the data for the filtering logic. A common approach is to use the Average True Range (ATR) as a proxy for historical volatility if real-time IV data for options is unavailable or too complex to integrate."

Perhaps it's an overkill and ADR is just as fine as a dynamic volatility filter, hmm.

Asking AI again for what kind of volatility regime filters "Institutional traders" use, I get the following answer:

"Institutional traders primarily use sophisticated, volume-based filters and market context tools, rather than relying solely on typical retail indicators. Key filters and tools include Volume-Weighted Average Price (VWAP), Average True Range (ATR), implied volatility (VIX), and proprietary order flow analysis systems"

So yes, VIX is mentioned here as one possible candidate. The other ones are backward looking like ADR.

Regrading "fix" times, I think I misunderstood, and that's what you mean.

"In Forex, "fix" refers to specific daily times, especially the 4 PM London time (GMT), when major banks and institutions set benchmark currency rates by averaging trades over a short window (like 60 seconds) for large corporate and fund valuations, creating concentrated trading volume and potential volatility. Other significant fixes include the WM/Reuters Fix (12 PM & 4 PM GMT), ECB Fix (2:15 PM CET), and Tokyo Fix. These "fixes" provide crucial reference points for derivatives, reporting, and portfolio management in the 24/7 currency market."

Yes, I've tried the 4:00 PM breakout time as a reference point for GPB/USD in the past, but it didn't really yield better results for me compared to the London Open at 8:00 AM. Also, since I only want to trade intraday and don't want to hold positions overnight, the later in the day I enter on a breakout entry the less likely to still reach an adequate profit target. In my experience/observation, not only for indices, gold, or major forex pairs, the expected average daily range (of which I want to capture as much as possible before the day ends) often seems to be reached by mid-afternoon my time.

Right, well we've learned one thing - ditch Gemini AI bollocks immediately. VWAP isn't a forecasting model, neither is ATR, neither is the IV of VIX unless you're trading VIX or want a general sentiment gauge and neither is order flow. So nil points!

Forecasting vol is the basis of the vast majority of all strategies. In your case, would say a 20% (conservative) increase in accuracy of vol forecast (not filter) improve your profitability? If so, you need to create either a proper model or translate IVs. I can't see how you can avoid this but maybe that's my lack of detail.

Re fix, yes 24hrs, if it's a non-starter because of o/night thats a different story. It improves forecasting substantially because of the recalibrating of MMs, funds etc, but vol <> directional breakouts of course.

I’ve been spending some time studying volume and volume profile, trying to understand what high-volume prices represent at a more fundamental level.
When price trades heavily around a specific level (high volume / POC), how do you personally interpret that information?
In some situations, I see it as acceptance — a price area where a lot of business was done and the market seems comfortable, which often pulls price back toward it after extensions.
In other cases, when price clearly moves through a high-volume area, it feels like there is less opposing pressure afterward, allowing continuation before price eventually revisits the zone.
I’ve attached a chart to illustrate what I mean:
– Blue circle: price returns quickly to the POC
– Red circle: price breaks through the high-volume area, continues, and only revisits later
I’m curious how others here interpret high-volume levels:
do you view them mainly as magnets, areas of acceptance, or as zones that, once resolved, reduce resistance?
Would appreciate hearing different perspectives.

Hey. I don't know anything about PoC, and this isn't a thread for PoC. I'd advise you to start your own thread about it. No offense.

Ditch Gemini and your developer. I'm calling it - he doesn't know his arse from his elbow. IV gives you forward looking info from overnight INTO THE OPEN. It forecasts. ATR does not. Anyway...

To your point if you're heading down signals path instead, I'll step out as it's not my area.. I guess it's Darwin et al? Not my field, not my circus and not my monkeys but I wish you well.

Thanks. Yes, that's my impression too. It's not my developer. It's the author from whom I bought the ORB system. I'll send you the link right away. No, I don't actually want to trade ready-made black-box systems or signals, but I'm starting to feel really stuck, and you don't know who you can still trust and give your time to guide you to a clearly defined goal.

Hello noisy, it's been a while since I visited this thread. I have been focusing on MMAR (Multifractal Model of Asset Returns) in my new thread. It's really been an eye-opening experience. But, I am not here to promote that, I want to be able to guide you.

Volatility is something I am getting more comfortable with since I learned about Benoit. It's also extremely difficult to model and predict, but if done right can be extremely useful. However, the issue is that a lot of traders or quants don't start with the right assumptions about volatility itself.

Before I do that, I would like to talk about the study you linked that researched on GARCH utilized thresholds for ORB strategy.

I must say, volatility is not a silver bullet. Even if you do know how to forecast volatility accurately, the practical implementation is limited by your creativity. Hence, at the end of the day, it's more of an art than it is science. The study used GARCH to guide the entry thresholds for ORB. However, you can utilize GARCH to guide the ORB exits. (I am not aware of ORB strategy but trying to explain a point here)

The point being, any variable, any forecast or any indicator being used is limited to how it's being utilized. Volatility has many practical takeaways:
1. Adaptive Position Sizing
2. Entry or Exits
3. Signal Enhancement
4. Noise Reduction or Direct Enhancement for specific metric calculation
To name a few..

Now, the assumption your study made is that Momentum is linked with Volatility. This is an assumption, a hypothesis which they proved to be null. But, what makes it worse is that they made it sound extremely general. Momentum being linked with Volatility has nothing to do with the ORB strategy itself. It can be absolutely linked or not. But comparing it in an extremely confined and controlled environment where the only test is being done against a strategy, does not give an empirical answer.

Now that this has been made clear, I would like to give you a suggestion I found to be extremely useful for momentum or trend-following based strategies.

This strategy combines traditional time-series momentum with network momentum, the idea that momentum "spills over" from leading markets to lagging markets. By detecting lead-lag relationships across multiple asset classes, we can improve trend-following signals.

It's an enhancement to your original strategy (ORB), rather than changing the base strategy itself. Which is much more practical and easier for deployment. Just like volatility can be an enhancement, network momentum can also help in this regard. Although, admittedly it's harder to implement accurately.

The reason I don't suggest you another volatility filter is because if your base strategy is already profitable (which seems like it is), you don't really need more nuts and bolts to your strategy. Adding more or better filters isn't going to improve the performance drastically anyways, unless your base strategy's signal is enhanced via a completely different method/layer. Volatility, also being much more subjective in its practical use-case, you would be fighting with lots of ideas instead of coming up with something that works. (Trust me, I have been down this road since I started that new forum which is all about volatility especially the MMAR)

This is much more direct and giving the benefit you want without changing anything. However, you would still need to do a lot of research to implement this properly and I urge you to do so. Instead of trying to enhance your strategy, try to enhance the signal itself. This is different from adding extra filters on top of ORB.

To give you some motivation, I tried this network momentum method on a very basic strategy formed from MACD indicator. I got lead-lag relationships from 48 markets (the more cross-assets present in your lead-lag adjacency matrix, the better the results) however, the only tradeable markets were major and minor forex pairs which included 28 pairs. Lot size was fixed to 0.08 micro lots (assuming 0.01 micro lot = $0.10/pip). And starting balance being $2000. The test was done from 2023-2025.



First image is from the 'plotly' chart generated for the equity curve. The second image is from my powershell terminal which contains the back-test report.
NOTE: Spreads, Commissions and Swaps were taken into account for my specific broker, yours might be different.

Some example trades:






The drawdown, winrate etc all depends on the base strategy (I choose a very basic one for testing purposes). If your strategy has low drawdown, it would be even lower after this enhancement same goes for other metrics like winrate, profit factor etc. I am assuming your strategy is trend-following or atleast momentum based.

I am not sure as to how much profitable it would be if I added gold in the mix of tradeable pairs or even indices, but it would sure as hell be even more, as indices and gold trend more often than forex pairs (I personally only trade forex pairs).

Anyways, I would suggest this approach as I have personally tried the method and seen it improving results for basic strategies. Otherwise you may do as you please. Good Luck!

For me, the biggest challenge in going full‑time hasn’t been the strategy itself — it’s been the psychology and the consistency behind the scenes.
Inconsistent income:
This was a shock at first. When trading is your main income, every losing week feels heavier. What helped was treating trading like a business: paying myself a fixed “salary,” keeping separate accounts for taxes, savings, and risk capital. It removes a lot of emotional pressure.
Risk management:
Good risk management is almost boring. It’s basically saying no to most of the market. Once I accepted that my job is to survive first and profit second, things became more stable.
Drawdowns:
This is where most people break. Having a drawdown plan saved me: reduce size, stick only to A+ setups, and take time off if I hit a certain threshold. It stops the spiral before it starts.
Routine and mindset:
This is the real edge. A consistent pre‑market routine, journaling, reviewing trades, and having rules for when not to trade. Full‑time trading is way more about discipline than excitement.
Strategies that hold up:
Simple, repeatable strategies rooted in market structure tend to last. The more complicated something is, the faster it breaks when conditions shift.
If I had to pick the biggest challenge overall:
Staying emotionally neutral when your income depends on your decisions. That’s the part nobody prepares you for.
Curious to hear what others struggle with — everyone’s journey looks a little different.

I don't quite understand that statement. With a filter, I'm not trying to change the strategy itself, but as you say, simply to increase the chances of success for the entry trigger and to get fewer "false breakouts." I hate that word because it's so subjective. A price that breaks out of a range by just one tick can, from a technical perspective, also be considered a successful breakout. It probably depends more on the profit target, which classifies the breakout as successful or unsuccessful. A breakout with a profit target of 1 tick is successful if it reaches 1 tick in the right direction. A breakout with a profit target of 30 ticks, where the price only breaks through the range by 5 ticks and then reverses to trigger the stop loss, is not successful.

As I said, I've already tried all sorts of filters here, be it trend filters, weekday filters, volatility filters, etc., without having achieved any significant improvement in the precision of my entry signal which makes me doubt whether this is even possible (or even necessary).

This description of AI lists the advantages and disadvantages of my strategy quite well, I think.

--

The Opening Range Breakout (ORB) strategy offers clear, objective trade signals and the potential to capture strong momentum. However, it is highly susceptible to false breakouts (fakeouts) and requires significant trading discipline and quick decision-making.

Advantages of the ORB Strategy

1. Clear and Simple Rules: The strategy provides well-defined entry and exit points (the high and low of the opening range), which reduces subjective decision-making.
2. Captures Early Momentum: By focusing on the market open, traders can capitalize on the initial volatility and strong directional moves that often occur at the beginning of a session.
3. Time-Efficient: It is well-suited for part-time traders or those with limited availability, as the core activity happens within the first 30 to 60 minutes of the trading day.
4. High Risk-to-Reward Potential: Successful breakouts can lead to substantial gains as a new trend emerges, offering favorable risk-to-reward ratios when managed correctly.
5. Adaptability: The strategy can be applied across various asset classes (stocks, futures, forex) and different timeframes (5-minute, 15-minute, 30-minute ranges).
6. Easy to Automate: The objective rules make the ORB strategy straightforward to backtest and automate with trading algorithms.

Disadvantages of the ORB Strategy

1. Susceptible to False Breakouts (Fakeouts): This is a major risk, where the price temporarily breaks the range only to quickly reverse, leading to potential losses.
2. Requires Quick Decision-Making: Trading during the volatile opening period demands swift execution and emotional discipline, which can be challenging under pressure.
3. Less Effective in Choppy Markets: The strategy does not perform well in low-volatility or sideways markets where clear trends fail to emerge after the open.
4. Emotional Pressure: The fast-moving nature of the market open can create significant psychological pressure, especially during losing streaks, which may deter traders from sticking to their plan.
5. Potential for Late Entries: Waiting for confirmation (e.g., a candle close outside the range) to reduce false signals can result in entering the trade after a significant portion of the move has already occurred.

--

What conclusion can we draw from this? The same points already mentioned. On days when the market and price action are very sideways/choppy without clear momentum movements in one direction, you will increasingly get stopped out.

Is it possible to avoid or mitigate this through the use of any filters beforehand? That's the question. Based on my own experience and all my tests, the answer is no.

I already use an ADR filter (yes, only calculates historical volatility, that's correct) to limit the effects of volatility that is too low or too high. I can hardly imagine that all these more sophisticated things like GARCH etc. will give me any real advantage here. Besides, I'm not a mathematical genius/quant whiz enough to even understand half of this stuff properly. I do have a technical background, but frankly, a lot of this is way beyond my intelligence. And I'm not aiming to become a quantitative super-ace. If this is the only way to find a reasonably robust and profitable strategy that leads to my goals, then I guess I've lost.

"MMAR" - That sounds really exciting, but as you said, it might be too difficult for me to implement into my strategy. I wouldn't even know where to begin

"Already Profitable" - Overall yes, but December has not been profitable yet. Perhaps it's normal that you can't be profitable every month with a strategy like this. Currently, volatility seems to be lower on indices and gold, and that's clearly reflected in my results. Many choppy sideways days with few clear breakouts and therefore many losing trades. I've also tried a filter like "max. 1-2 breakout trades per day," but that seems to make it even less profitable than defining a session end or simply using a maximum daily drawdown filter.

Results:

Sept 21, 2025 - Sep 30, 2025

Gain: +5.77%
Max Balance Drawdown: -1.29%
Win rate: 55.9%
Avg Win / Avg Loss: $53.39 / $29.19
Avg Trade Duration: 2h 45m
Profit factor: 2.32
Total trades: 34

Oct 1, 2025 - Oct 31, 2025

Gain: +3.91%
Max Balance Drawdown: -5.30%
Win Rate: 45.5%
Avg Win / Avg Loss: $52.45 / $36.29
Avg Trade Duration: 2h 5m
Profit factor: 1.21
Total trades: 101

Nov 1, 2025 - Nov 30, 2025

Gain: +6.87%
Max Balance Drawdown: -2.48%
Win Rate: 44.0%
Avg Win / Avg Loss: $63.82 / $32.14
Avg Trade Duration: 3h 21m
Profit factor: 1.56
Total trades: 75

Dec 1, 2025 - Dec 21, 2025

Gain: -1.63%
Max Balance Drawdown: -3.68%
Win Rate: 32.9%
Avg Win / Avg Loss: $62.23 / $34.18
Avg Trade Duration: 1h 34m
Profit factor: 0.89
Total trades: 76

All time (Sept 21, 2025 - Today)

Gain: +15.54%
Max Balance Drawdown: -5.30%
Win Rate: 43.0%
Avg Win / Avg Loss: $57.63 / $33.90
Avg Trade Duration: 2h 22m
Profit factor: 1.28
Total trades: 286

Results by instruments traded:

Gold: +7.4%
DAX: +6.1%
NAS: +1.6%

Basically, what I meant is that you need an orthogonal layer. That captures market dynamics from a different perspective than what your strategy currently relies on.

However, I can see that you have already undervalued yourself so it wouldn't make sense for me to motivate you further unless you hire a developer. I am a college dropout, have no interest in mathematics and I don't consider myself a proper quant. But my curiosity is what makes me earn money from trading, not a PhD. I am sure if I can implement it, anyone can with enough persistence and dedication. But, suit yourself ig.

To sum it up, I would say that overall your strategy is regime-dependent like anyone else's strategy. Hence, the reason you see poor performance during sideways market condition. If you can afford it, get another account that is specifically made for mean-reversion. This way you'll be covered from the 2 major regimes. If one strategy does bad, the other one should automatically succeed. And rarely should you get bad months. However, losses are inevitable and I know that you already understand this.

I do hope that you achieve your goals.

Yes, I think this is the logical consequence of thousands of failures and setbacks over the last 15 years. My self-confidence is pretty low.


That's my impression too. No single strategy works in all conditions. Discretionary traders likely have an advantage here, as they can react more quickly and flexibly to different market conditions. I've never managed to do that myself, though. In principle, that also requires correctly assessing market conditions beforehand. I also think a diversified portfolio of uncorrelated strategies for smoother equity curves is a good idea. Exactly, perhaps in addition to the breakout strategy, one or two more strategies that excel in range-bound conditions.

Great post. 100% agree!

Trading for a living ended up being a lot different in reality than what I thought it would be.

Dealing with inconsistent income
This was difficult in the beginning. It took about 1½ years before I started making real money, luckily I had enough savings in a separate account to pay the bills and could let the trading capital compound. In the 3rd year I had no choice but to withdraw money to cover living expenses. This brought another challenge as the market determined when I made profits and it didn't care when I needed to pay the bills, this meant cutting living expenses down to the bone in order to preserve trading capital and maximize compounding.

Managing risk when trading is your main job
I have a hard rule to avoid using leverage and rely on my analysis skills to identify the best low risk, high reward setups. I trade long term and only see 1-2 A+ setups per year, the trick is to wait patiently for these setups to mature. These opportunities tend to be so profitable that leverage becomes completely unnecessary.

Handling drawdowns
I hold positions for years and only experienced negative drawdowns in the beginning when building positions but once the long term trends get going and pick up momentum, the positions end up well into profit. The open profits fluctuate when the trend pulls back but these moments are only temporary. When living expenses are only a small fraction of the total capital, drawdowns aren't as big of an issue any more.

Building a routine and mindset that supports long-term success
This is the real secret, I had no idea how important this was until well into my first year of full time trading. For me, building and following a consistent process is what eliminated uncertainty, instilled discipline, built confidence and cultivated patience.

Strategies that actually hold up
For me, strategy is the least important part of trading. IMO, the more important skills to have are:

1. identify the assets with the lowest downside risk / greatest upside potential
2. being able to assess the evolving market conditions
3. having the patience to wait for the opportunity to come to me (instead of me chasing the market)
4. once in position, having the patience to let the trend unfold and the discipline to ride it to the very end

As far as the biggest challenge, I would say that it was about discovering my strengths, recognizing weaknesses and developing my trading personality within the constraints of what trading for a living really is (skills, patience, process, discipline and execution) and what it isn't (strategy, indicators, win-rate, R:R ratio).

Just finished watching the video, and honestly it hits on something most traders overlook. The message is simple but powerful: your results won’t change until you change. Not your broker, not your indicators, not the system you’re chasing this week.

As someone who’s been trading FX for a while, I can say this is one of the hardest lessons to accept. Most people think the next strategy or the next YouTube setup is going to magically fix everything. But like the video points out, the real shift happens when you stop system-hopping and start mastering one approach with discipline.

A few things that stood out to me:

Consistency is the real edge: Anyone can win a few trades. Very few can execute the same rules day after day without letting emotions take over.
Your mindset shows up in your results: Fear, impatience, revenge trading- they all leak into your chart whether you notice it or not.
A system only works when you stop interfering with it: Most traders sabotage their own strategy long before the market does.

It’s a good reminder that trading isn’t about finding the 'holy grail.' It’s about becoming the kind of trader who can actually follow a plan without blowing it up the moment things get uncomfortable.

`your results won’t change until you change.'

nice quote

-sjmr

People put different spinns on the same idea. I like Jim Rohn.

"If you don't change what you are doing today, all of your tomorrows will look like yesterday."

"For things to change, YOU have to change. For things to get better, YOU have to get better. For things to improve, YOU have to improve. When YOU grow, EVERYTHING in your life grows with you."

"Your life does not get better by chance, it gets better by change."

I need a good setup setegey please tell me