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Average system + great discipline =great results?

  • #21
  • Feb 8, 2006 11:08pm Feb 8, 2006 11:08pm
Quoting Dr. Joker
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?
Lots of good advice on the technique here, but I always find that the psychological side is not really dealt with. It's a major part of the equation, and probably the biggest saboteur of traders. You need to find a way to identify the subconscious drivers that govern your behaviour patterns. Trading is also a big personal development learning curve. Once you get that part, applying the technique of your choice consistently and successfully becomes much more of a possibility.
The framework is there; we just have to work on our frame of mind.
  • #22
  • Feb 9, 2006 1:13am Feb 9, 2006 1:13am
Quoting james275
It is kinda like a "demo" of your trading psycology
Hey! That's a great way of phrasing it! Thanks Jim.
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  • #23
  • Feb 9, 2006 5:01am Feb 9, 2006 5:01am
Hi

Thanks, Jim , Dial...
Good to hear more things from you experienced guys. I think it would be apt to say when learning to trade its on major Four stages.
1. Strategy/System
2. Test system/strategy on Demo account to make sure it works and how discipline the person .
3. Open live account on micro and start trading "demo of your trading psycology"
4. Slowly increase the account size according to the success.

Am i right ...! if any i missed pls do include....
Cheers
Fxbee
  • #24
  • Feb 9, 2006 8:22am Feb 9, 2006 8:22am
Quoting Forexbee
Hi

Thanks, Jim , Dial...
Good to hear more things from you experienced guys. I think it would be apt to say when learning to trade its on major Four stages.
1. Strategy/System
2. Test system/strategy on Demo account to make sure it works and how discipline the person .
3. Open live account on micro and start trading "demo of your trading psycology"
4. Slowly increase the account size according to the success.

Am i right ...! if any i missed pls do include....
Cheers
Fxbee
Don't forget money management! Veeery important!
sxaxlxvxaxtxixoxnxbxyxgxrxaxcxexdxoxtxoxrxgx
  • #25
  • Feb 9, 2006 9:07am Feb 9, 2006 9:07am
Quoting Forexbee
Hi

Thanks, Jim , Dial...
Good to hear more things from you experienced guys. I think it would be apt to say when learning to trade its on major Four stages.
1. Strategy/System
2. Test system/strategy on Demo account to make sure it works and how discipline the person .
3. Open live account on micro and start trading "demo of your trading psycology"
4. Slowly increase the account size according to the success.

Am i right ...! if any i missed pls do include....
Cheers
Fxbee
Regarding #2 stage, make sure it's long enough, not just a couple of months. Also, make sure the profits are consistant and sustained, meaning you dont gain a 40% one month, then the following you lose a 20%, then you breakeven the third, then back to 80% on the forth, etc. You dont need stellar results every month, but you do need those profits (no matter how small) fairly constant. Remember trading success is like a marathon, not a sprint.
  • #26
  • Feb 9, 2006 9:33am Feb 9, 2006 9:33am
Quoting WTB
Remember trading success is like a marathon, not a sprint.
EHI I like this sentence! This is one of the first things that a newbie should learn!
  • #27
  • Feb 9, 2006 10:26am Feb 9, 2006 10:26am
Quoting WTB
Remember trading success is like a marathon, not a sprint.
Sounds like you did the FX Trainer course.....?
The framework is there; we just have to work on our frame of mind.
  • #28
  • Feb 9, 2006 5:47pm Feb 9, 2006 5:47pm
Remember money and emotions don't mix you have to control your emotions side of trading and don't let money take control by taking small profit before your target is hit. what i did when i start trading was set up my trade and turn my computer for a whole month once i relize that my system had more profit then loss then i follow my system to the t.
If I Go Broke Trying Then I Will die happy.
  • #29
  • Feb 9, 2006 6:38pm Feb 9, 2006 6:38pm
Quoting niceguy777
Sounds like you did the FX Trainer course.....?
I dont know what is that course, I didnt take any, Did I just quoted someone else's quote or something?
  • #30
  • Feb 9, 2006 6:49pm Feb 9, 2006 6:49pm
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!

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.
I disagree with this because it doesn't take into account risk. Your risk per trade is far more important than the amount of leverage that you use. In fact, the amount of leverage you use is irrelevant in my opinion.

Lets say that you have $1,000 in your account.
You want to risk 2% per trade.
This means you are risking $20 per trade.
Lets assume you have a 20 pip stop loss.
This means you need to have $1/pip which would be a position size of $10,000 or 1 mini contract.

This is using 10:1 leverage and you risk is precisely controlled to only 2%.

This is actually much better than having a 50 pip stop using 5:1 leverage. In that case you would be risking 2.5% of your account and would actually be taking on MORE risk even though you are using LESS leverage.

It is NOT just about leverage. For your money management you need to consider your float, the risk you are willing to take, your stop loss size. I don't take any notice of the amount of leverage I use - I am only interested in the amount of money I have at risk.

Simon
  • #31
  • Feb 9, 2006 6:51pm Feb 9, 2006 6:51pm
Quoting WTB
I dont know what is that course, I didnt take any, Did I just quoted someone else's quote or something?
Yes, it's just one of the favourite quotes of the guy who runs FX Trainer. No matter.
The framework is there; we just have to work on our frame of mind.
  • #32
  • Feb 9, 2006 7:34pm Feb 9, 2006 7:34pm
Quoting DrRock
I disagree with this because it doesn't take into account risk. Your risk per trade is far more important than the amount of leverage that you use. In fact, the amount of leverage you use is irrelevant in my opinion.

Lets say that you have $1,000 in your account.
You want to risk 2% per trade.
This means you are risking $20 per trade.
Lets assume you have a 20 pip stop loss.
This means you need to have $1/pip which would be a position size of $10,000 or 1 mini contract.

This is using 10:1 leverage and you risk is precisely controlled to only 2%.

This is actually much better than having a 50 pip stop using 5:1 leverage. In that case you would be risking 2.5% of your account and would actually be taking on MORE risk even though you are using LESS leverage.

It is NOT just about leverage. For your money management you need to consider your float, the risk you are willing to take, your stop loss size. I don't take any notice of the amount of leverage I use - I am only interested in the amount of money I have at risk.

Simon
Simon, what you say highlights my personal delima. My system actually works on any time frame 10 min and over. For me, i am using the 4 hr bars and getting up at night (wouldn't a trading team be great) and checking my 4 AM PST bar. But for me to use it on this level, i have to plan for an initial maximum 50 Pip stop. Sometimes a bit less, but for MM purposes i use that and translates now into 1 lot.

Now i have also traded on a 10 min timeframe, and i only need a 10 Pip stop. But now i can trade 5 lots using the exact same MM RISK. I can lose 50 pips. For me personally, i find i just am a bit more "tight" with 5 lots on with a smaller stop instead of putting on the forget and leave 50 pip stop using 4 hr bars.

I am finding some stuff about myself that despite the advantages of a shorter time frame , and being able to put more lots (with the same $$ Risk), i don't seem to trade as well as i do on the longer time frames. So i will only occasionally do the short term stuff. Somehow the longer term is helping me with my patience and my discipline. When i get an urge for action I guess i'll get an x box on the side and action my heart out....

Sorry for rambling everyone, but i still have my eye on the shorter time frame, justifing that i do as well, which i don't. I seem to bail earlier or do something dumb. iI think i need to amend my trading plan officially to disallow lower time frames....

Any thoughts out there?

My best,

Jim
  • #33
  • Feb 9, 2006 7:48pm Feb 9, 2006 7:48pm
Quoting james275
I think i need to amend my trading plan officially to disallow lower time frames....

Any thoughts out there?

My best,

Jim
I would recommend it because it worked for me. Making the switch from 5, 15 and 30 min charts up to 4h and daily made a world of difference in my profits and stress levels.

Dial
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  • #34
  • Feb 10, 2006 4:29am Feb 10, 2006 4:29am
Quoting diallist
I would recommend it because it worked for me. Making the switch from 5, 15 and 30 min charts up to 4h and daily made a world of difference in my profits and stress levels.

Dial
When i started a year ago. I thought people were crazy for trading on such high time frames ... 1hr, 4hr, or daily. But I to has moved to the daily and switch down for a better entry. My stress level has greatly reduced. Not to mention how I look at the trades too.

For me risk per trade is most important. I determine my risk first before any trade. Since my stops depend on highs or lows of previous candles, I limit my risk per trade to 3% of my account. That give me at least a 100 pip stop. As the trade moves in my favor, I can add more to the table but locking profit along the way. If I can't handle a certain stop, I don't take the trade ... it's that simple ... I move on and find another pair with less risk for me.

So for me ... risk per trade is the key. BTW ... Vegas rules ....
If it is not broken, fix it until it is!
  • #35
  • Dec 30, 2008 3:27pm Dec 30, 2008 3:27pm
Keep your cool? To be honest if your afraid of letting your profits run your system does not have a high enough risk/reward ratio, you should be entering trades at such a minimal risk the loss is meaningless. Also, trading day after day can get repetitive, you eventually just stop careing so much because you know your going to make a profit eventually.
  • #36
  • Jan 7, 2009 1:01pm Jan 7, 2009 1:01pm
I agree with DrRock that it doesn't matter how much your leverage is, the important thing is how much you are risking per trade and more specifically per pip.

For a newish trader like myself with a limited account size a micro account is fantastic as it allows me to trade with a pip size as low as about 5 cents per tick.

When I first started to trade a little while ago I used to trade that low and only trade on 5 min charts as this gave me the ability to use a very tight stop loss and so therefore my risk per trade remained very low.

As you gain experience and your bank grows I agree that is the time to work on higher time frames (and often with very similar strategies to how I trade on the 5 min charts) and risk more per trade.

On a similar note what do you all think about demo accounts? I think trading a demo account is great to not risk ANY money at all but if you don't have the feeling of putting money at risk do you really learn anything because as soon as you do start to trade for money you'll find it a different thing entirely!

I never traded a demo account but always kept my trades very small while I was learning (still learn something every day) but as I gained confidence i just slowly increased my pip size.

I'd be interested to know the thoughts of you more experienced traders?
  • #37
  • Jan 31, 2010 12:25am Jan 31, 2010 12:25am
I agree with Dr Rock to a certain extent, but there are forces beyond your control as well. For example, market gaps, news etc, which can cause your stop loss to be not honored, and hence you may end up with a huge loss due to leverage.

For example, lets say you have a $100 account, risking just 2% ($2) at 20 pips.

So you set your stop loss at 20 pips and then there is some sudden news, and market price on next trade is 120 pips against you. Now, the broker immediately closes your trade as you have "hit" your stop loss, but not at 20 pips, but at 120 instead, so you just lost $12, or 12% of your capital. Ouch.

So leverage does matter, along with risk.

PS: The above scenario has happened before
  • #38
  • Jan 31, 2010 12:46am Jan 31, 2010 12:46am
Actually, the formulas work as follows:

average system + great discipline = average results

average system + average discipline = blown accounts

great system + great discipline = great results
  • #39
  • Jan 31, 2010 1:55am Jan 31, 2010 1:55am
Quoting Dr. Joker
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?
You're not gambling, you're trading. Its a business.

Go for the experience before you go for the money (in trading and life in general). So get your system paper traded, demo traded and then live.

The basics, all you need, is at FF. Discipline, MM etc etc. You actually do have to listen. Get the stars out of your eyes with the massive amounts of money you could make if only you do x, y, z.

You don't need every trade to be a massive winner, home run to be successful. Many years ago a millionaire (many times over) salesman told me he keeps a log of every sale in a book. On every page there was a biggie but the many, many smaller sales keep him sane, the bank account ticking up, just knowing that a biggie was around the corner. The analogy with trading is obvious so I'd say don't get to 30 pips and get nothing out of a trade.

How do you get past the emotion stuff, read a few things Mark Douglas springs to mind. The attachment is not bad.

You could also blow a few accounts, spend months demo-ing a system but not really sticking to it and wondering why live results don't match up.

Or you could make a serious commitment (yeah write it down, mission statement style) to follow a system, make sure it wins for you the right number of times to make it work (% winners and numbers of pips won/lost).

Its all about discipline to follow your system, forgive mistakes (but for goodness sake don't KEEP repeating the same ones) I could go on.

Its a business treat it like one. Hope this advise helps.
Attached File(s)
File Type: pdf Secrets to Emotion free trading.pdf   484 KB | 618 downloads
  • #40
  • Jan 31, 2010 2:03am Jan 31, 2010 2:03am
Forgot to add (as its in thread name) discipline is the bridge between goals and accomplishments.
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