Average system + great discipline =great results? | Forex Factory

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Average system + great discipline =great results?

  • #1
  • First Post: Feb 6, 2006 10:41pm Feb 6, 2006 10:41pm
I'm I getting the right picture?

I've been experimenting with some systems that I found here with limited success.

Every time, I've been feeling like the Karate Kid, temper gets in the way of the trade and when that happens, I minimize my gains at best.

How do you seasoned traders do it? How do you manage to keep your cool?

Mr. Miyagi?
  • #2
  • Feb 7, 2006 1:06am Feb 7, 2006 1:06am
Quoting Dr. Joker
How do you seasoned traders do it? How do you manage to keep your cool?
First of all, reducing importance of single trade, usually this is accomplished using max 5:1 leverage on every trade.
Mr. Miyagi coming next!
  • #3
  • Feb 7, 2006 1:37am Feb 7, 2006 1:37am
Quoting Croesus
First of all, reducing importance of single trade, usually this is accomplished using max 5:1 leverage on every trade.
Mr. Miyagi coming next!
I totally agree Croesus! Emotional involvement is directly proportional to leverage and to the amount of importance one attaches to the trade at hand.

Dr. Joker, may I suggest if you don't have a micro account or smaller, that you get one? www.fxsol.com and www.oanda.com are both excellent choices. FXSol provides micro lots, and Oanda offers even finer granularity. Once you have such an account, I recommend you start by trading a single micro lot. This will yield a pip value of 10 cents or less. Even if you have a 100 pip drawdown, that will only be a $10 loss. This is easily handled emotionally. Once you are able to show a profit after 20 trades, then increase it to 2 micro lots. Continue to increase your trade size every 20 trades as long as you are remaining profitable until you reach the maximum trade size allowed under your money management system.

Individual trades are essentially meaningless. It is only a series of trades placed by consistently following the rules of your system that has any significant meaning. Trade to trade well, not to make money. By trading well I mean for each trade you place, as long as you follow the rules of your system exactly the same each time, then it is a trade well made. Whether the trade wins or loses is irrelevant. Remember the secret is in series not singles.

Dial
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  • #4
  • Feb 7, 2006 4:13am Feb 7, 2006 4:13am
Quoting diallist
By trading well I mean for each trade you place, as long as you follow the rules of your system exactly the same each time, then it is a trade well made. Whether the trade wins or loses is irrelevant. Remember the secret is in series not singles.

Dial
And remember: every pip you gain is a pip profit. 10 * 1 pip is better than 1*10 pip, because it is a more consistent set of trades. (of course 10*10 beats 10*1 anytime <G>)
  • #5
  • Feb 7, 2006 4:39am Feb 7, 2006 4:39am
Hi


What sort of leverage will be good for newbie to start a live account...! i would prefer to trade on microlots and minis....Can someone help me...

Cheers Fxbee
  • #6
  • Feb 7, 2006 5:26am Feb 7, 2006 5:26am
Quote
Average system + great discipline =great results?

Nop, you do need a solid system too that makes some sense. It doesnt have a to be a complicated system, but it does have to have a possitive win/loss expentancy if properly applied.

Once you have that solid system, it's all about discipline (specially patience) and some basic understanding of money managment.
  • #7
  • Feb 7, 2006 6:26am Feb 7, 2006 6:26am
Quoting Forexbee
What sort of leverage will be good for newbie to start a live account...!
Leverage? As minimun as possible! High leverage is the first cause of newbies decimation!
  • #8
  • Feb 7, 2006 7:24am Feb 7, 2006 7:24am
Quoting Croesus
Leverage? As minimun as possible! High leverage is the first cause of newbies decimation!
Leverange? No I think that leverange has nothing with it. It depends only on balance of your account. You should calculate quantity of the trade that the maximum loss should be less 5%.
Big leverage is good because you have larger margin.
If you will use 1 lot (100 000$) with leverange 400:1 (deposit 250$) and 1 pip = 10$ so if you will play with it, I am 100% sure that you will have no money on this account in few days or in best case few weeks.
In my opinion trading 1 lot should be used when in the account is more than 10K$.
So I think if you have 1000$ you should trade with 0,1 Lot.
If you are beginner you should use micro lots available in oanda or marketiva.
  • #9
  • Feb 7, 2006 7:36am Feb 7, 2006 7:36am
What are some good books that focus on developing a winning system for Forex trading? Is Luca's book on Technical Analysis of the Forex Market any good for this task? Is there any other books that are more focused on developing a trading system for a beginner?
  • #10
  • Feb 7, 2006 8:39am Feb 7, 2006 8:39am
Quoting Forexbee
Hi


What sort of leverage will be good for newbie to start a live account...! i would prefer to trade on microlots and minis....Can someone help me...

Cheers Fxbee
If you have less than $30,000 in your account, then you should only trade micro lots or smaller. The reason for this is a thing called asymmetrical leverage. Believe it or not, you'll actually make more money with a small account trading micros than minis because you have finer control over your position sizes.

For leverage, take the highest your broker offers. If they offer 400:1 take that. You won't be using that much leverage; you only want it that high to reduce your margin requirements. The leverage your broker gives you has nothing to do with the leverage you trade at. The leverage you trade at is your position size divided by your account size. As an absolute beginner, keep it at 1:1 or less when you first start out, then gradually increase it over time to no more than 5:1. This is all the leverage you need.

If this raised more questions than it answered, please feel free to ask more questions.

Dial
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  • #11
  • Feb 7, 2006 9:37am Feb 7, 2006 9:37am
Hi dial

Good to see your reply, but i will be starting @ $500/$1000 as startup account and hope the leverage u mentioned should be good enough. So far i have been demo trading and when i opened demo account they offer huge 1:400.......so was bit confused on seeing ur reply as 1:1 and then gradually to 5:1....
thanks for ur quick reply...

Is it possible to by broker to offier 1:1 small leverage?....
Cheers
Fxbee
  • #12
  • Feb 7, 2006 10:54am Feb 7, 2006 10:54am
Do not switch from one trading mathod to another often.

Just choose some methods and trade them.
I have even chosen methods for different currency pairs, For example I never trade tunnel method on EURGBP and not trendign pairs, but Trade it with success for USDJPY.

Recently I broke all my trading laws but it is worse that it brought me huge gains. As experienced traders say it is worse when you break trading rule and you will succeed. No I am checking my new systems on DEMO and won't use it till I am not successful in long-run.
Descipline is so important that I have created special trading method which imply trading against fearful and not desciplened traders.
kiss the trend
  • #13
  • Feb 7, 2006 11:21am Feb 7, 2006 11:21am
Quoting Forexbee
Hi dial

Good to see your reply, but i will be starting @ $500/$1000 as startup account and hope the leverage u mentioned should be good enough. So far i have been demo trading and when i opened demo account they offer huge 1:400.......so was bit confused on seeing ur reply as 1:1 and then gradually to 5:1....
thanks for ur quick reply...

Is it possible to by broker to offier 1:1 small leverage?....
Cheers
Fxbee
Hi Fxbee,

You really need more money in your account. Who is your broker and what lot size do you currently have? If it is a mini, which is 10,000 lot size, then trading that will eat you alive with such a tiny account. Here's the leverage you would be trading at if you only trade the minimum of 1 mini lot:

10000 = lot size
$1000 & $500 = account size

10000/$1000 = 10:1 leverage. Far, far to high for a beginner.

10000/$500 = 20:1 leverage. Insanity!! You will crash and burn, guaranteed!

With a micro account (1000 lot size) it would look like this:

1000 = lot size
$1000 & %500 = account size

1000/$1000 = 1:1 leverage.

1000/$500 = 2:1 leverage.

Both of these are acceptable IF you've been consistently profitable in your demo trading, but I still think you need more money in your account.

If you simply don't have more money, then you should open an account with Oanda, where you can have "lot" sizes less than 1000.

1000/$1000 = 1:1 leverage
100/$1000 = 0.1:1 leverage
10/$1000 = 0.01:1 leverage

Here is an important thing you need to keep foremost in your mind. As a beginner, your objective at this time is NOT to make money. Your objective is to learn to trade. To do that you have to stay in the game by preserving your capital. Low leverage trades will allow you to do that.

Hope this helps.

Dial
sxaxlxvxaxtxixoxnxbxyxgxrxaxcxexdxoxtxoxrxgx
  • #14
  • Feb 7, 2006 6:42pm Feb 7, 2006 6:42pm
Quoting diallist
Hi Fxbee,

You really need more money in your account. Who is your broker and what lot size do you currently have? If it is a mini, which is 10,000 lot size, then trading that will eat you alive with such a tiny account. Here's the leverage you would be trading at if you only trade the minimum of 1 mini lot:

10000 = lot size
$1000 & $500 = account size

10000/$1000 = 10:1 leverage. Far, far to high for a beginner.

10000/$500 = 20:1 leverage. Insanity!! You will crash and burn, guaranteed!

With a micro account (1000 lot size) it would look like this:

1000 = lot size
$1000 & %500 = account size

1000/$1000 = 1:1 leverage.

1000/$500 = 2:1 leverage.

Both of these are acceptable IF you've been consistently profitable in your demo trading, but I still think you need more money in your account.

If you simply don't have more money, then you should open an account with Oanda, where you can have "lot" sizes less than 1000.

1000/$1000 = 1:1 leverage
100/$1000 = 0.1:1 leverage
10/$1000 = 0.01:1 leverage

Here is an important thing you need to keep foremost in your mind. As a beginner, your objective at this time is NOT to make money. Your objective is to learn to trade. To do that you have to stay in the game by preserving your capital. Low leverage trades will allow you to do that.

Hope this helps.

Dial
Thanks Diallist
  • #15
  • Feb 8, 2006 7:30am Feb 8, 2006 7:30am
Quoting diallist
Hi Fxbee,

You really need more money in your account. Who is your broker and what lot size do you currently have? If it is a mini, which is 10,000 lot size, then trading that will eat you alive with such a tiny account. Here's the leverage you would be trading at if you only trade the minimum of 1 mini lot:

10000 = lot size
$1000 & $500 = account size

10000/$1000 = 10:1 leverage. Far, far to high for a beginner.

10000/$500 = 20:1 leverage. Insanity!! You will crash and burn, guaranteed!

With a micro account (1000 lot size) it would look like this:

1000 = lot size
$1000 & %500 = account size

1000/$1000 = 1:1 leverage.

1000/$500 = 2:1 leverage.

Both of these are acceptable IF you've been consistently profitable in your demo trading, but I still think you need more money in your account.

If you simply don't have more money, then you should open an account with Oanda, where you can have "lot" sizes less than 1000.

1000/$1000 = 1:1 leverage
100/$1000 = 0.1:1 leverage
10/$1000 = 0.01:1 leverage

Here is an important thing you need to keep foremost in your mind. As a beginner, your objective at this time is NOT to make money. Your objective is to learn to trade. To do that you have to stay in the game by preserving your capital. Low leverage trades will allow you to do that.

Hope this helps.

Dial
Hi Dial,

Thanks and its clear to me now. i would prefer to go for lot size less than 1000, as demo trading alone wont prove a traders psycology, (being demo account its not real money), when coming to live account you can see change in psycology for sure and would make to act on emotions. I think lots size < 1000 should be good enough to earn experience and from there to move on to next stage...
Thanks again for ur explanation dial...
Good trading day, cheers
Fxbee
  • #16
  • Feb 8, 2006 10:50am Feb 8, 2006 10:50am
Quoting diallist

10000/$1000 = 10:1 leverage. Far, far to high for a beginner.

10000/$500 = 20:1 leverage. Insanity!! You will crash and burn, guaranteed!

Dial
Huh! couldn't agree more than this.

My true story

I opened up Live account - mini account with 400:1 leverage (USD 250) and guess what it only last for 1 1/2 days.
In my case surely crash and burn, but luckly still alive!!!
"A smooth sea never made a skilled mariner"
  • #17
  • Feb 8, 2006 11:10am Feb 8, 2006 11:10am
Quote
You should calculate quantity of the trade that the maximum loss should be less 5%.
Obviosly when I say "leverage" I mean "true leverage" not "the total leverage offered by the broker"...
I mean "leverage applied on the single trade".

We can call it: gearing. Low gearing is good, high gearing is risky, super high hearing is bad.

  • #18
  • Feb 8, 2006 8:18pm Feb 8, 2006 8:18pm
Quoting Croesus
We can call it: gearing. Low gearing is good, high gearing is risky, super high gearing is bad.
I know I've read this in one of Fiji's posts.. But it only sank in when I read your post..
True Leverage is analogous to Gearing.

It just takes me a lot more repetitive reading to truly let this kind of stuff to sink in..

Thanks Croe.
  • #19
  • Feb 8, 2006 9:00pm Feb 8, 2006 9:00pm
Quoting Forexbee
Hi Dial,

Thanks and its clear to me now. i would prefer to go for lot size less than 1000, as demo trading alone wont prove a traders psycology, (being demo account its not real money), when coming to live account you can see change in psycology for sure and would make to act on emotions. I think lots size < 1000 should be good enough to earn experience and from there to move on to next stage...
Thanks again for ur explanation dial...
Good trading day, cheers
Fxbee
Wonder why your "successful" demo isn't mirrored in your real money account? Assuming you traded the demo account with your system with integrity, it is because of ME and not my system. MY trading system has proven itself over and over in demo mode, but do i really trust it? Or do my emotions trust it? Why do i bail earlier than i should in my "real " account? I wouldn't have done that with my demo. Iwould have waited until my system told me to get out, or my targets were hit.

This is why psycology, and money management are CRUCIAL. In my opinion, its vital to work on this with very small but "REAL" money sometime before you go full blown live.

So, start with a demo account and when your system proves itself to you and you feel "ready" to trade for real, i would suggest a trading with very small or micro lots (REAL MONEY !) considerably under your normal money mangement risk. This will expose your weaknesses in trading real money and help you overcome them and still stay in the game. It is kinda like a "demo" of your trading psycology, how you react with your system....and you won't lose your whole stake, and will learn a whole lot. Size increases with demonstrated confidence.

My best,

Jim
  • #20
  • Feb 8, 2006 10:22pm Feb 8, 2006 10:22pm
Quoting james275
Wonder why your "successful" demo isn't mirrored in your real money account? Assuming you traded the demo account with your system with integrity, it is because of ME and not my system. MY trading system has proven itself over and over in demo mode, but do i really trust it? Or do my emotions trust it? Why do i bail earlier than i should in my "real " account? I wouldn't have done that with my demo. Iwould have waited until my system told me to get out, or my targets were hit.

This is why psycology, and money management are CRUCIAL. In my opinion, its vital to work on this with very small but "REAL" money sometime before you go full blown live.

So, start with a demo account and when your system proves itself to you and you feel "ready" to trade for real, i would suggest a trading with very small or micro lots (REAL MONEY !) considerably under your normal money mangement risk. This will expose your weaknesses in trading real money and help you overcome them and still stay in the game. It is kinda like a "demo" of your trading psycology, how you react with your system....and you won't lose your whole stake, and will learn a whole lot. Size increases with demonstrated confidence.

My best,

Jim
Good post Jim.

I couldn't agree more with this post. It is crucial to have confidence in your system because, IMO, that will be your main line of defense when you're having doubts (which should have been eradicated in demo) in your system.

Observe yourself when trading and see if there are resistances inside you that will hinder the flawless execution of your system.

I am currently on this stage of using a system that I believe will be profitable, then test such system to validate that it is indeed profitable (using demo).
Then trade the system with real money and continue to observe myself for possible glitches in me. And giving the same importance to my money management.

Psychology (Confidence and Discipline)
System (Entries, Exits, Money Management, etc.)

These are the steps I'm going to take.

Just wanted to share and hope it helps a little..
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