A list of the most important things you learn through experience

I first began FX trading around 2005 then moved to futures a bit later. I haven’t viewed or posted on this forum in many years, but I have kept trading (mostly FESX futures) this entire time.

I then joined this forum in 2006. I have been trading FX and futures this entire time. I have since earned a bachelors in finance, but other than that, I still just trade for myself.

This stuff has probably been done to death on this forum, and will bore most of you, but here are the most important things I learnt from experience alone (NOTE: most of this stuff relates to normal day-trading strategies, not wacky, experimental methods):


1) Trading is boring in the long run.

2) Never risk more than a couple of % of your account per trade (duh, but i thought i'd say it anyway just in case if there are 2 or 3 people somewhere in the world who still don’t do this)

3) The outcome of individual trades is completely irrelevant. Only in their collective form do they matter.. Win or loss, it is completely irrelevant. Your last win means nothing. Your last loss means nothing. Your last 2 wins mean nothing. Your last 2 losses mean nothing. Only in their collective form do they matter. If you understand this, you will feel zero emotion. If you can’t wrap your head around this when you’re actually trading, then stop trading.

4) Once your order has been filled, there is no turning back (i.e changing the trade plan or your strategy in general). If you have realized you have made a mistake mid way through a trade - too bad. If you changed your plan mid-way through and you were lucky enough to still win the trade, then you should still mark it in your journal as a loss. The only excuse to close a trade outside your predetermined trade plan is when you realize you have made a technical error, e.g - you pressed "buy" instead of "sell" or you made a typo in your limit price. The following is NOT a valid excuse: "I think I should have entered 3 pips lower, so i will change how i manage this trade, just this time". Remember that hindsight is 20/20.

5) Unless you have just changed your strategy, then the merits of your next potential trade is always assessed independently from the outcome of your last trade and other trades before that. Always.

6) Finally and probably most importantly... There is only ONE time that you can re-evaluate your strategy / trading plan:

- When it becomes clear that you are consistently losing.

Therefore, this means that you DONT re-evaluate your strategy:

- Right before a trade
- Right after a trade
- Because you lost your last trade
- Because you won your last trade
- In the middle of a trade
- Near the end of a trade
- When you’re starting to get bored of your strategy
- When you're sitting on the toilet

If you change even a small aspect of your strategy, it is a big deal. Don’t do this lightly.



Hope this post is useful to someone.

wise words ty

I consider myself still mostly a beginner and it's great to read things like this. Point 1 is really true. I've been trading for about 8 months I'd say. When I started, I stupidly lost 86% of my account - in about 5 days - due to hugely over leveraging my trades, but I haven't given up. I'm now profitable, never trade over 2% per trade or 5% per day, and have found some guys to IRC chat with during trading.

It helps to have the community around!

I also utterly agree with point 6! I have a great strategy from a pro (I love breakouts, I've found, haha) and I stick to it "TO A T". No second guessing, no trading highly correlated pairs so if 1 fails 2 or more do, and as little emotion as I can bear.

I have found that I prefer to watch my trades and occasionally get out of them early. While it doesn't always fit with my strategy, I think that the most important part is the entry criteria and the stop being in place. While I always set a target & stop with a minimum of a 1:2 risk/reward I sometimes prefer to just cut them short around, say, 30 pips profit.

After all, with my goal of averaging 30 pips / day I can afford it if I don't make more than that every day. Or...maybe I should just up my daily average target?

I'm also helping a friend get started (she's never done any trading before) and I'll be sharing your post with her!

Brennan,


I wouldn't recommend daily trading targets, just my opinion though. I guess there are others here that would disagree.

I'd also say that you shouldn't get in to the habit of taking profit early, but by the sounds of it you already know that

I agree - daily targets are just a carrot on a string IMO take what you can get when can you get it. If you lose you'll be rushed to get "back on target". Its foolish to go to the market and name your price and expect him to pay you unless you really know what you're doing.