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A Trader's Philosophy: Finding Success in Losing Trades

  • #21
  • Jun 8, 2011 2:47am Jun 8, 2011 2:47am
OK Novak, yes you should analyse mistakes, but not all losing trades are mistakes.

I usually trade with very tight stops (8-13 on E/U) and usually only trade around support and resistance (unless an early breakout occurs) in order to find the top or bottom of the day. This often results in several losses which are then covered when the bottom (or top) is found. In business terms my losses are simply costs - not mistakes.

Technically trading is very easy, it can only go up or down - most lose due to psychological weakness - greed or fear. Your methods or system should be refined thru' back testing as this is the easy part.

Those that lose because of poor money management or trading without stops are the gamblers and shouldn't be considered 'traders' and therefore should be discounted from the equation anyway.
I've got my pips - go get yours!
  • #22
  • Jun 8, 2011 7:21am Jun 8, 2011 7:21am
As it was said, "the market does not owe you anything" (something like this). I agree that it is impossible to get knowledge without any falls, but not every loss is our mistake. It can be lack of knowledge of course, but we are all humans, not robots.
  • #23
  • Jun 8, 2011 6:18pm Jun 8, 2011 6:18pm
Quoting BackTestDummy
OK Novak, yes you should analyse mistakes, but not all losing trades are mistakes.

I usually trade with very tight stops (8-13 on E/U) and usually only trade around support and resistance (unless an early breakout occurs) in order to find the top or bottom of the day. This often results in several losses which are then covered when the bottom (or top) is found. In business terms my losses are simply costs - not mistakes.

Technically trading is very easy, it can only go up or down - most lose due to psychological weakness - greed or fear. Your...
Yeah I read your first post, and I agree with you. I replied to you on page one and here's what I said before:

Quoting Novak
You are correct, not always is it a mistake upon the trader's side. But more often than not, I think most trader's agree that a loss amongst trading is due to human error (greed, fear, trade setups, etc. etc.).
I also admire your philosophy and your trading style because mine is very similar . I too make sure I have small stop losses and I usually always trade near my trend lines, support and resistance, etc. Another good thing is to always attempt to earn more pips than you lose (risk to reward ratio). The risk to reward ratio that I usually use is 1:3, but if I'm winning a lot of trades, I may take some 1:2's, and rarely will I do 1:1 (because what's the point of 1:1 if most people lose more than half of their trades lol!). Thanks for posting again btw.
Keep it simple stupid
  • #24
  • Jun 8, 2011 6:21pm Jun 8, 2011 6:21pm
So much of trading is luck, that you should never beat yourself up over a trade that went against you. Honestly, who really knows what will happen over the next few minutes, hours, or days?

Even with a mechanical system (or artistic charting method) where probability is on your side, you are still going to take losses...
  • #25
  • Jun 8, 2011 6:22pm Jun 8, 2011 6:22pm
Quote
As it was said, "the market does not owe you anything" (something like this). I agree that it is impossible to get knowledge without any falls, but not every loss is our mistake. It can be lack of knowledge of course, but we are all humans, not robots.

Yes it is true that it is not always our faults. But perhaps the systems we use are flawed (which can provide mistakes), if they weren't shouldn't they always work? Systems, or indicators are used as a reference or a guide, and the way people interpret them can also lead to mistakes as well, whether we notice it or not (that's why I say it's a good idea to review our losses, and learn from them to get better). Thanks for posting though, not disagreeing with what you said either.
Keep it simple stupid
  • #26
  • Jun 8, 2011 6:23pm Jun 8, 2011 6:23pm
Quoting Novak
I am not the gambler. He who rolls the dice randomly without a sound approach is the gambler. I simply review my previous trades and mistakes because forex trading is all skill, it is not luck, it is a business; whereas, gambling is no skill (considering you are refering to slot machines). One can not build a fortune on luck alone.
In one ear and out the other?

or you really would pass up the opportunity of opening a casnio?

  • #27
  • Jun 8, 2011 6:24pm Jun 8, 2011 6:24pm
Quoting tdion
So much of trading is luck, that you should never beat yourself up over a trade that went against you. Honestly, who really knows what will happen over the next few minutes, hours, or days?

Even with a mechanical system (or artistic charting method) where probability is on your side, you are still going to take losses...
Yes I agree. But most people lose money in forex due to human error, or in my words: mistakes. It is only logical to attempt to fix our human errors, or my mistakes.
Keep it simple stupid
  • #28
  • Jun 8, 2011 6:26pm Jun 8, 2011 6:26pm
Quoting newyear498
In one ear and out the other?

or you really would pass up the opportunity of opening a casnio?


Please explain to me why you think I am a gambler?
Keep it simple stupid
  • #29
  • Jun 8, 2011 6:33pm Jun 8, 2011 6:33pm
From Vahid:

"Real traders are those who don’t lose mind and fret over losing trades for too long and take the message in the right frame of mind. They normally resort to studying the mistakes they made..."
Keep it simple stupid
  • #30
  • Jun 8, 2011 6:35pm Jun 8, 2011 6:35pm
I think some people are getting the wrong message that I'm trying to send to you guys. I think some people are sticking me with assumed trading styles or systems that I might be using. This thread of mine simply is telling people to learn from your mistakes; therefore, one can get better, that's my main message lol.
Keep it simple stupid
  • #31
  • Jun 8, 2011 6:41pm Jun 8, 2011 6:41pm
Quoting Novak
Please explain to me why you think I am a gambler?
Would you prefer I went with the "forex is like a box of chocolates" analogy.. thats way you'd think your a box of chocolates right now
  • #32
  • Jun 8, 2011 6:48pm Jun 8, 2011 6:48pm
Quoting newyear498
I'm not disagreeing with you.. what your saying makes sense.. I think we are viewing forex from two different angles...

Forex is like las vegas.. you are either the gambler or the casino..

your coming from the gamblers approach trying to figure out why you can't beat the casino by analyzing every loser and developing some winning system..

but the casino can let loses happen.. because in the end they have an edge..


and this translates nicely into forex because just like Las Vegas.. its 95% gamblers and 5% casinos
Ok, I reread your post. I see what you are saying. And no I wouldn't pass up the opportunity to open a casino because as you said: they have that house edge. Also, considering your analogy, I can see why I'd be considered a gambler. At first I thought you meant that I was a gambler within forex trading, not a gambler within a casino. Sorry, but thanks for the posts.
Keep it simple stupid
  • #33
  • Jun 8, 2011 6:55pm Jun 8, 2011 6:55pm
Quoting Novak
Ok, I reread your post. I see what you are saying. And no I wouldn't pass up the opportunity to open a casino because as you said: they have that house edge. Also, considering your analogy, I can see why I'd be considered a gambler. At first I thought you meant that I was a gambler within forex trading, not a gambler within a casino. Sorry, but thanks for the posts.
Yes!

On a side note.. I'm interested in knowing why analyzing losing trades for mistakes is so important.. that might be the equivalent of improving weaknesses..

but why not improve your strengths.. analyze your winning trades for mistakes...

I had a winning trade today where I made several mistakes and was upset with taking it..

  • #34
  • Jun 8, 2011 6:56pm Jun 8, 2011 6:56pm
Quoting newyear498
Would you prefer I went with the "forex is like a box of chocolates" analogy.. thats way you'd think your a box of chocolates right now
rofl... Haha, laugh at my expense. No but seriously, I thought you were implying that I gamble with my trading lol. And yeah I knew it was an analogy at the time, but I reread it and realized what you actually meant. Can't blame me though, text can be hard to interpret lol.
Keep it simple stupid
  • #35
  • Jun 8, 2011 7:04pm Jun 8, 2011 7:04pm
Quoting newyear498
Yes!

On a side note.. I'm interested in knowing why analyzing losing trades for mistakes is so important.. that might be the equivalent of improving weaknesses..

but why not improve your strengths.. analyze your winning trades for mistakes...

I had a winning trade today where I made several mistakes and was upset with taking it..

I think that if we can learn from our mistakes, and attempt to not repeat these mistakes over and over, then we can become a better trader. For example, if greed is a psychological mistake for a person that is causing him problems, perhaps review it on a trade that went bad. Mistakes can be anything, not only entry points. It's kind of like a commercial airline pilot training to fly an airplane on a 'simulator', the psychological factor isn't there, but he still learns how to do his job, and he must correct his mistakes before he goes live (flies a plane with real people on it).

I also like how you said that you had a winning trade that had things about it that you didn't like. That's happened to me before as well. If that's the case, I usually consider it a loss (not a minus in dollars, but psychologically a loss, because it could have been a loss, sense I made mistakes), and review it, so that I don't dismiss it as luck because I'd rather avoid allowing success to be achieved with luck. And yes, improving on your strengths is a good idea.

I only say that improving on weaknesses is better because if you can be void of weakness and mistakes, the only thing left is greatness. And improving on your strengths is definately a plus as well, to become even better, but if your winning trades, you must be doing something right!
Keep it simple stupid
  • #36
  • Jun 8, 2011 7:11pm Jun 8, 2011 7:11pm
Quoting Novak
I think that if we can learn from our mistakes, and attempt to not repeat these mistakes over and over, then we can become a better trader. For example, if greed is a psychological mistake for a person that is causing him problems, perhaps review it on a trade that went bad. Mistakes can be anything, not only entry points. It's kind of like a commercial airline pilot training to fly an airplane on a 'simulator', the psychological factor isn't there, but he still learns how to do his job, and he must correct his mistakes before he goes live (flies...
I like it,

In the end I rest my case that forex all comes down to having low risk high probability trades.. its a bitch to achieve since it involves everything from entry, SL, TP, psychology etc..

once you balance those out you got the edge..



don't make the mistake of trying to get the holy grail never lose a trade system..

and IMHO.. the individual trades don't hold the mistakes.. you have to view the entire system.. the only mistake you can have is not having an edge...

  • #37
  • Jun 8, 2011 8:03pm Jun 8, 2011 8:03pm
Quoting newyear498
I like it,

In the end I rest my case that forex all comes down to having low risk high probability trades.. its a bitch to achieve since it involves everything from entry, SL, TP, psychology etc..

once you balance those out you got the edge..



don't make the mistake of trying to get the holy grail never lose a trade system..

and IMHO.. the individual trades don't hold the mistakes.. you have to view the entire system.. the only mistake you can have is not having an edge...


Yeah, mistakes will happen everyonce in a while, we all make them. And like you said: it's that edge that defines a good trader. I simply attempt have more success than mistakes, that's my edge.
Keep it simple stupid
  • #38
  • Jun 9, 2011 2:45am Jun 9, 2011 2:45am
Quoting Novak
I too make sure I have small stop losses and I usually always trade near my trend lines, support and resistance, etc. Another good thing is to always attempt to earn more pips than you lose (risk to reward ratio). The risk to reward ratio that I usually use is 1:3, but if I'm winning a lot of trades, I may take some 1:2's, and rarely will I do 1:1 (because what's the point of 1:1 if most people lose more than half of their trades lol!). Thanks for posting again btw.
Cool - if you stick to that simple, logical strategy you really can't go wrong.
I've got my pips - go get yours!
  • #39
  • Jun 9, 2011 6:50am Jun 9, 2011 6:50am
Quoting BackTestDummy
Cool - if you stick to that simple, logical strategy you really can't go wrong.
heres the thing with risk to reward..

when I did 1:3 R:R I would take consistent small loses and then the occasional huge win..

when I switched to 1:1 I started making consistent wins and occasional loses..

My method produces greater that 50% probability of winning so it works.. trying to slap the 1:3 on it just meant it shifted how often I won..

for example if you have a 40% chance price will go down 100 pips.. and a 60% chance it will go up 100 pips.. shifting the risk to reward from 1:1 or 1:3 etc.. its not like your accomplishing anything really..


but hey thats the case with my method.. everyone is different.. for me I just stopped trying to capture the entire trend and started taking a small piece of it..

so like I said some systems should use 1:3 R:R.. but I'm also saying a lot of people have no f**king idea what R:R is.. they think just using 1:3 is going to make them win more then they lose.. and a lot of times its just prolonging them to realize they have no edge

IMHO if you cannot calculate an opportunity that price has a clear imbalance weather it will go up or down X amount of pips you have no edge.. using 1:1 or 1:3 risk to reward when price has 50% chance of going up or down x amount is the.. SAME THING it just feels different
  • #40
  • Jun 9, 2011 9:35am Jun 9, 2011 9:35am
Quoting newyear498
heres the thing with risk to reward..

when I did 1:3 R:R I would take consistent small loses and then the occasional huge win..

when I switched to 1:1 I started making consistent wins and occasional loses..

My method produces greater that 50% probability of winning so it works.. trying to slap the 1:3 on it just meant it shifted how often I won..

for example if you have a 40% chance price will go down 100 pips.. and a 60% chance it will go up 100 pips.. shifting the risk to reward from 1:1 or 1:3 etc.. its not like your accomplishing...
You're right - it all depends on your method / strategy or system. I have a poor win /lose ratio which I accept as I like to form a base (or top) but often achieve 1:12 RR when I get an established entry. As you say it is understanding what gives the individual the edge and adapting to current market conditions which allows the trader to profit consistently. If the market is in the 'middle' and flat I will often scalp for 3 or 4 points, no point hoping for something I aint gonna get!
I've got my pips - go get yours!
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