Transition from Losing to Winning

March was bad.

Unlike most threads where trend is brought up, there would be unanimous agreement on the trend of my equity curve.

About halfway through the month I realized I was blowing out another micro account, and came up with a good, simple money management calculator. Toward the end of the month, I actually started using it!

This was a very, very easy, yet major step toward trading like a pro.

In order to do that, I had to get the mindset that any trade could go against me, and that I won't know which one it will be. Size all positions properly.

Into April, my trading was still all over the place, and getting worse. I had to face the fact that my discipline was poor, and decided that for the next week I would pick a system, ANY system, and trade that ONE system. It didn't matter to me whether I won or lost, I needed to practice, and achieve discipline. Trade the signals; no signal, no trade.

My trading took a giant leap forward and has gotten better for 3 weeks. This may turn out to be my first profitable month.

The last problem was exits. I realized that I watched too many great trades turn into losers. Once you have 50, it's hard to accept 20. Even harder to accept 10, or 0. I need practice taking profits.

Consistency is top priority. But to become consistent, I will have to banish the innate desire to catch the whole move. I will have to take what the market gives me and be happy.

Usually when a person gets something, they know they've got it. I have that feeling now.

I did have help. Talking to a professional who was willing to spend the time with me helped me on that last step. Of all that he said, certain things turned the light bulb on, and his guidance made a few tweaks in my trading. (You know who you are, and thanks again, bro.)

My main point here is, if someone TELLS you what is wrong, or what to do, and it just doesn't seem to hit home, then they're wrong. It's not the right advice for you.

When it's true for you, you'll know it. Keep looking, don't give up, and use money management to stay alive to trade another day.

it really depends on how you look at it. I don't think when you don't get something or it doesn't make sense to you, that it is inherently wrong. It just means that you don't get it yet, or it's someting that doesn't suit you style.

You have to be open minded in trading and making sure at the same time you don't let yourself be vulnerable by following blindly of others' advice.

The key words are "hit home". There's a subtle difference between not understanding something, and understanding but knowing deep down that it does not apply to you. It almost feels the same, but it's not the same.

When advice is good for you, you'll know it. If you're wondering how it applies to you, it probably doesn't.

Advice runs the gamut, especially on forums. Everyone is trying to help, even when the advice is polar opposites. "Never trade without a stop" "Never use stops" "Use a wide stop" "Use a narrow stop" etc..

Then there's all the psychological advice, a lot of which is horsecrap.

Elder's books like to herd you to AA if you lose consistently. It apparently helped him, and that's great. I was willing to go, but I just didn't see how it would teach me to trade. It didn't feel right to be called a "chronic loser" just because I was trying to find my style, what worked for me.

Often someone is just making a few mistakes over and over, and not spotting that exact point that is wrong. Often someone has been taught wrong. That doesn't mean they have this subconcious desire to lose forever.

The forex is geared so that most people lose. Everyone will lose until they learn to trade correctly, period. Elder would have them all believe it's a mental defect, after all, he's a psychiatrist. In my opinion, he's mistaken in most cases.

[quote=blueruby;281317]March was bad.
About halfway through the month I realized I was blowing out another micro account, and came up with a good, simple money management calculator. Toward the end of the month, I actually started using it!

This was a very, very easy, yet major step toward trading like a pro.

I can identify with what you have written. I have learned the entry and exits. The biggest issue still is placing STOP LOSS and money management. I have come to realise that money management is the key to becoming a successful forex trader and that takes discipline for sure.

Do you mind sharing your "simple money management calculator"?

Hi Blueruby,

I can identify with you. My journey has been very similar to yours. I found myself jumping from one system to another, or adding an indicator that I found somewhere to a system that i read about somewhere else, or double-guessing my entries, doubting about my stops, etc, etc.

Finally I arrived to the same place where you arrived to. To the realization that I had to focus on a single system and use it as it is. No tweaking, no fooling around. Learn about your money management, make the system your own, gain confidence.....and be profitable.

My journey is not over yet. I am testing two systems that have to have the following cahracteristics: Daily time frame, the less indicartors the better, little supervision (type of set-and forget) - I do not want to become a slave of my trading- I want my trading to provide me with the income I need/want to pursue other interests in my life.

My goal is to gain the confidence I need to open a trade and not worry about it because I am pretty sure it is going my way. If it does it is because I had done my analysis and the outcome was the expected one (so far I consider most of my wins a result of luck), and if it goes against me...well...bad luck (but the bad ones should be a fluke of the system)!

Hopefully my journey to fibnacial freedom will start soon....hopefully.

I'd be glad to. It's a work in progress. See the README tab. If you don't have excel, I'll post the formulas.

Hopefully someone will be reading this and say, "AHA!"


Making it your own might involve tweaking, that's OK. A system will have to adapt to market conditions.


One thing I repeat is, "there are repeatable patterns, and there are random events". No system can account for all random events, so there will always be losing trades, even when you do everything right. Often, though, a person will find something they did wrong - manufactured a trade where there was none.


Sounds to me like the journey is well under way.

bravo!

Thanx blueruby for sharing your WIP. I will check it out. I dont quite get the GBP/JPY calculations. Whats the Exchange Rate for?

Because a pip for the yen pairs is = contract size x .8431 /1000.

Put whatever number in there makes it come out right.

I just got this in an email. I'm an intelligent person, I'm not going to tell you how many I missed. I didn't cheat, I answered them instantly. If you do otherwise, it defeats the purpose of the exercise.

What does it have to do with trading? It might give you insight as to how good your snap decisions are. You can then decide whether you want to be totally discretionary, or follow a plan to the letter, or do something in between.

Here it is:
***********************************************************


Below are four (4) questions and a bonus question.

You have to answer them instantly. You can't take your time, answer all of them immediately. OK?



Let's find out just how clever you really are....



Ready? GO!!!

(scroll down)



First Question:

Y ou are participating in a race. You overtake the second person. What position are you in?



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Answer: If you answered that you are first, then you are absolutely wrong! If you overtake the second person and you take his place, you are second!



Try not to screw up next time.

Now answer the second question, but don't take as much time as you took for the first question, OK?



Second Question:

I f you overtake the last person, then you are...?

(scroll down)



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Answer: If you answered that you are second to last, then you are wrong again. Tell me, how can you overtake the LAST person?



You're not very good at this, are you?



Third Question:

Very tricky arithmetic!

Note: This must be done in your head only.

Do NOT use paper and pencil or a calculator. Try it.



Take 1000 and add 40 to it. Now add another 1000 . Now add 30 . Add another 1000 . Now add 20 . Now add another 1000 . Now add 10 . What is the total?



Scroll down for answer.....

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Did you get 5000?



The correct answer is actually 4100.



If you don't believe it, check it with a calculator!

Today is definitely not your day, is it?

Maybe you'll get the last question right... Maybe.



Fourth Question:



Mary's father has five daughters: 1. Nana, 2. Nene, 3. Nini, 4. Nono.

What is the name of the fifth daughter?



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Did you Answer Nunu? NO! Of course it isn't.

Her name is Mary. Read the question again!



Okay, now the bonus round:

A mute person goes into a shop and wants to buy a toothbrush. By imitating the action of brushing his teeth he successfully expresses himself to the shopkeeper and the purchase is done.

Next, a blind man comes into the shop who wants to buy a pair of sunglasses; how does HE indicate what he wants?



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~



He just has to open his mouth and ask...

It's really very simple.






PASS THIS ON TO FRUSTRATE THE SMART PEOPLE IN YOUR LIFE!



Have a nice day!

I always knew I was crap at snap decisions, this just proves it

I'm not sure what it means, but it humbled me much the way the market does.

It seems to work just like the reflex that makes a person chase a trade, then get in right at the reversal, then take the loss right at the next reversal, over and over until mental collapse.

Maybe someone can come up with a good word for that phenomenon.

Go through it again, and the mental process will work perfectly. Yes, you know the answers, that's not what I'm saying. You visualize them differently after being tricked once. Hopefully lessons learned in the market will work out the same way - next time you see it, you immediately know the correct response.

My mentor calls it "muscle memory". Your trigger finger gets better as time goes on.

If I can make 8 pips today, April will be my first profitable month.

If not, it will still be my best month so far, close to even, and also the first month I haven't lost a good portion of my account.

So either way, the improvement is there, and is significant!

First you need to decide how much of your account you can risk on any one trade. This depends on the success rate of your system, but a good rule of thumb is 2 - 5%.

So you see a trade setup.

Determine where you would set a logical stop on that trade, depending on your system, the charts, or whatever you use. How many pips is this?

Then the formula is:

Position size (in home currency) = (10000*account size * % risk) / (pips stop)

so if you had a $1000 account, willing to risk 5% on any one trade, and a 40 pip stoploss looked right to you, then position size P

P = 10,000 * 1000 * 5% / 40
P = 12,500

so you could trade 1.25 mini lots on this trade.

This calculation assumes a pair where a pip is some even multiple of 10. It needs a fudge factor thrown in for other pairs.

Or, calculate what the 40 pips represents in dollars (or home currency) per lot.

If you're trading 1 mini lot ($10,000) on the USD/JPY, 40 pips is $33.60, that's your dollars risked per lot traded. Your account is $500 and you're willing to risk 3%, or $15. So you get the ratios

10,000 / trade size = $33.60 / $15

cross multiply then divide to get

10,000 * 15 / 33.60 = $4464

You can trade 0.446 mini lots, or $4460 dollars.

I want to give my mentor credit, yet retain his privacy. I want to relate what he's taught me recently that I feel will help others, but don't want to sound like I did it all alone. I guess it's moot if I don't say who he is, but have to make this clear anyway.

One of the first great things he gave me was the idea of "decision points". I had given up on pivot points, trendlines, support / resistance because of the many losing trades I took, following what I was taught.

We're shown charts of big moves, all of which start with a breakout, by definition. A big move HAD to first cross a trendline, or break across support or resistance. So each time we see a breakout, we think "Oh boy, here's a big move!" just as we were conditioned to do. Well, we were taught wrong. There is such a thing as small moves, false breakouts, reversals, etc.

Support / Resistance, trendlines, pivots, fibs, etc., are "DECISION POINTS". You MUST wait for the candlesticks to tell you what to do. You will lose some pips while you wait for confirmation, or possibly lose the whole trade. Wait for the candle to close and then see what the chart is saying.

You'll miss some good trades, but will be kept out of most of the bad ones, this way.

Mark Douglas stated in "Trading in the Zone" that he spent 18 years discovering the difference between successful traders and the losing majority. This, he said, was strictly in their attitude, the winners had a confidence, a way of thinking that kept them "in the zone".

So I thought that I just had to get my head right, and I'd start applying what I knew correctly, and then I'd be profitable. Wrong. I still didn't know how to trade, so confidence only made me more dangerous.

Now that I'm learning, I am gaining true confidence. I don't get angry when I see a move that I'm not in. I don't get angry when I get stopped out and the trade goes my way. I don't get angry when a trade goes against me, as long as I followed the system properly. I don't like it one bit, and sometimes I'm cursing the tube, but once I'm out, it's over. I don't go crashing down that spiral of hopelessness anymore. I will make it.

At the point in time where I have 2 or 3 (or more) systems that I use regularly, and am making money regularly, and know those systems so well that I can execute them without thinking or figuring, and have improved my exits over time, and have a long track record of profitability, then I will have that confidence, too. I'll be in the zone, by definition.

Which comes first? A trader who hasn't been properly trained, will consistently lose, and will never gain confidence and self-assurance, no matter how many books he reads.

Maybe I should have named it "Transition from Losing to Breaking Even". However, even that is quite a milestone.

Closed out April down 1%. Break even, for all practical purposes, and my best month so far.

To recap:

I've practiced discipline, but have been straying from my ONE system. I've been taking fewer losing trades.

I've practiced taking profits and have gotten pretty good at getting out when price stalls and I've got a nice gain.

I'm getting out of losing trades a bit faster, learning to recognize price action and click out, rather than "hoping" for a move my way.

I'm practicing proper money management absolutely to the letter.

I've made a lot of progress, now on to the next thing....

I'm still giving back my gains. I make a great trade, I make a bad trade. I can't seem to get a string of good ones.

Yesterday I made 40 pips in the morning. Gave back 35 in the asian.

Thursday I made 81 pips, Friday I gave back 80.

This morning I netted 37, now I'm down 12 in two trades and could give it all back in a heartbeat.

I just figured it out. I'm shifting timeframes. I make a great daytrade, then I want to get into a swing trade and hold it for awhile; the stop has to be larger on the swing trade; I watch my profits for the day disappear and either let it hit the stop or click out near breakeven because I don't want a loss for the day.

Hmmmm... the only cure is to have a few good swing trades. That will alleviate some of the fear of giving back my gains, as well as bank a couple more good gains.

Right now I'm long the G/J and E/U, both are in a long term uptrend and I've wanted to find a good spot to go long. BTW, the 35 I gave back yesterday were from a long E/U.

Blueruby, I've been following your posts.

This is a great observation. It sounds simple but sometimes when you are in the thick of things you can't see the wood for the trees.

I was doing something very similar, taking 10 pips in a daytrade and then losing 200 in a swing. I think it really helps if you can trade two seperate accounts for the different time frames OR keep a detailed record so that you can see exactly how each strategy is performing. It is debilitating if you see your account has taken a loss for the week/month but if you can say well it's because my swing trade went wrong but I had 4 winning day trades its encouraging. Swing trades do require larger stops and in cases like this, you have to delve much deeper than looking simply at account equity.

It sounds like you are really progressing. Looking at your trades, working out what went wrong, learning from others and constantly trying to improve and find a way to trade that suits YOU is the key that differentiates winners from losers, in my opinion.

I wish you luck and all the best,

Tom

Hi Blueruby,

I have been using the same money management technique that you are using, and it has protected me from blowing my account. But, just as you, I find that my account is always around the same number. One gain here...one loss there....big gain there....several small losses here.....hmmmm...just walking in circles.

I am still waiting to break what I call the "Gravity Force" that pulls my account back to where it has started. I want to take it to the outer space...but for that I need the speed to escape gravity pull. I guess that speed is provided by confidence, faith in a working system, good MM,....I have all that and still no speed. Hopefully with experience I will be able to run faster and achieve that speed.