My Trading Epiphany | Forex Factory

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Day Trading vs. Swing Trading vs. Position Trading 86 replies

My Trading Epiphany

  • #1
  • First Post: Mar 16, 2013 7:02pm Mar 16, 2013 7:02pm
I've had a swing trade demo account running paraller to a scalping demo account as well as a live account that incorporated elements of both. My Scalping account was going nowhere and my live account was slowly dwindling. My swing trade account was profitable 70% of the time though using simple traditional TA, 4 hr and daily time frame, MACD and RSI and STOCHS for confirmation. Each trade risks 2% to make 4% and the SL and TP are generous to allow plenty of breathign room. I got tired of looking to make 2% or whatever each day scalping and so reluctantly settled for this swing trading method and so far it is working splendid. Sure, the returns are low compared to what can be made by an experienced scalper but these people make up such a small minority of the trading population. I ahve come to the reality that I am not good enough for this type of trading, that I will not make mega compounding scalps that make me a millionaire ina year or 2 years. By facing this reality my trading accoutn is now in the black and I am making profits most weeks adn I sleep a lot better now.

Guys, unless you are very experienced and have gradually moved towards scalping just avoid it. It is a losers game for most, the spread is what gets you. Go for swing trading, it's easier, gives you plenty of time to think things through and thus results in less stress. I think so clearly about things now on a longer time frame, and the results are proving my revelation so far.

So all in all I make less money than I had dreamt of, but I am making money. With time, realistically several years, maybe a decade even, this type of trading will compound into decent monthly returns. I realise now that you need a pretty large account to consistantly make good money in the markets, a $5K account or whatever ain't gonna make you a good living in the western world.
  • #2
  • Mar 17, 2013 4:42am Mar 17, 2013 4:42am
thank you for sharing. I am glad you made your mind straight. I suggest you stick with your winning plan, and your 1st mil. will come. Good luck.
More than a hobby. Never a game. US Client at 1:50.
  • #3
  • Mar 17, 2013 6:09am Mar 17, 2013 6:09am
Quoting Lib3rty
It is a losers game for most, the spread is what gets you.
Quoting Lib3rty
I realise now that you need a pretty large account to consistantly make good money in the markets, a $5K account or whatever ain't gonna make you a good living in the western world.
Lucky for us, these two concepts are usually not well understood by the usual retail trader (and regarding the second, even by some of the most reputated hedge funds), which lead to market inefficiences, and then to potential profit (captured in some sort of arbitrage between sound and unsound risk management and probability asessment). Congrats, now it is just a matter of time, patience and a few more concepts to reduce drawdowns for the same unit of risk.
  • #4
  • Mar 17, 2013 6:27am Mar 17, 2013 6:27am
I dont think this qualifies as an epiphany, but finding the right time frame for yourself (and your system) is a move in the right direction.
  • #5
  • Mar 17, 2013 6:36am Mar 17, 2013 6:36am
I will illustrate my epiphany in the form of a short poem:

I buy the Euro
The price drops
I sell the euro
The price climbs
oh no..
  • #6
  • Mar 17, 2013 6:57am Mar 17, 2013 6:57am
LOL

Quoting Mingary
I will illustrate my epiphany in the form of a short poem:

I buy the Euro
The price drops
I sell the euro
The price climbs
oh no..
  • #7
  • Mar 17, 2013 7:29am Mar 17, 2013 7:29am
Ah my young jedi, when you can laugh at your losses, you are ready for the next step.

Quoting Mingary
I will illustrate my epiphany in the form of a short poem:

I buy the Euro
The price drops
I sell the euro
The price climbs
oh no..
  • #8
  • Mar 17, 2013 8:10am Mar 17, 2013 8:10am
Quoting Mingary
I will illustrate my epiphany in the form of a short poem:

I buy the Euro
The price drops
I sell the euro
The price climbs
oh no..
Several years ago, I went through a period where I swore that if I got a mate to take opposing positions to mine - exact same entry price but opposing direction and double the lot sizing - that we' both retire happy.
  • #9
  • Mar 17, 2013 9:00am Mar 17, 2013 9:00am
Quoting Mingary
I will illustrate my epiphany in the form of a short poem:

I buy the Euro
The price drops
I sell the euro
The price climbs
oh no..
That made me laugh, cheers
  • #10
  • Mar 17, 2013 9:20am Mar 17, 2013 9:20am
Quoting elizo
Lucky for us, these two concepts are usually not well understood by the usual retail trader (and regarding the second, even by some of the most reputated hedge funds), which lead to market inefficiences, and then to potential profit (captured in some sort of arbitrage between sound and unsound risk management and probability asessment). Congrats, now it is just a matter of time, patience and a few more concepts to reduce drawdowns for the same unit of risk.
Glad to see you know what I mean, it re-affirms my conclusions.

It's so simple really once you break it down, less is definately more in trading. Just a small handful of tried and tested methods combined with a well thought out entry and exit plan. All these hundreds of indicators are no good combined, you only need a few, perhaps just a couple for some techniques.

When it comes to risk, money management is a must. When I first read about this topic I thought "but that means I will only make XXX amount each month with my small account, I want to make more!" which is the line of thinking that gets your account killed. Trading is just a game of probability, and in games of probability you lose a percentage of the time and this needs to be taken into account. With my techniqe I can find 1 opportunity each week in a pair or CFD, sometimes 2 depending on volatility. To be conservative though let's say I can only find 1 per week and my system is (so far) 70% correct. That makes 36 out of 52 trades profitable. At 2% risk for 4% profit that nets me a total profit of 113.6% per year, which on a small account like mine is not that much money really, it's a decent side income, like what I would get if I took up a part time job alongside my day job. As that account grows though through profit and me paying a fixed sum in each month that amount will grow. This industry definately favours those who already have a good amount of capital as they don't have to be as active or aggressive as others in order to make good returns. Think long term guys, and contribute to your account to help it grow faster. It's all about getting that equity up so that those percentages return more capital each time. This is a game of attrition, it ain't the lottery.
  • #11
  • Apr 20, 2013 11:07am Apr 20, 2013 11:07am
Things are going well so far using my new found knowledge. I've outperformed my target in fact since Silver and Gold have been so volatile. Up 17.5% this month which is great for me. I hope things can remain this good for me.
  • #12
  • Apr 20, 2013 1:12pm Apr 20, 2013 1:12pm
In smaller time frames a 1-3 pip spread can make a trade that could've been 2-1 or a little more only back to 1-1 and sometiimes even less. I started using futures and its made all the difference, now i can use the 5 min and 1 min charts without worrying about spread.
  • #13
  • Apr 20, 2013 1:29pm Apr 20, 2013 1:29pm
Quoting Lib3rty
Things are going well so far using my new found knowledge. I've outperformed my target in fact since Silver and Gold have been so volatile. Up 17.5% this month which is great for me. I hope things can remain this good for me.
I agree with you. Yes, your account will grow slower than if you're scalping, but that's assuming you're successful at scalping. Most aren't, yet so many try.

Don't worry about the account growth, just focus on consistency of steady growth with draw down swings that aren't too big. If you can do this for a year, then start looking for money to manage. 17.5% in a month is fantastic and you don't need that sort of return to get money. What you do need is to manage the draw downs while pulling out single digit returns on average per month. Draw downs are expected and shouldn't be too large. Of course, each investor has a different risk appetite, so with a track record of at least a year you can show them what your average draw down has been. If it's too much for them, so be it.

Take what you can get and manage it. Even if you start with only a few thousand dollars, it's a start. If you can do it successfully, word will spread and you'll have a track record. Then you'll be able to get more money.

Now, there are tons of folks on these forums who'll say all kinds of shit about managing OPM, but bear this in mind; 99% don't know what they're talking about. The only money management experience they have is when their mother gave them $5 and sent them to the store for a gallon of milk and told them to bring the change home. They all have opinions, but that's it. You'll never know if you'll like it or be good at it until you try it. If you want to get enough money to trade for a living for yourself, this is the best way. In my opinion, I prefer trading OPM than my money. I don't like losing my money a whole lot more than losing someone else's money.
  • #14
  • Apr 20, 2013 1:30pm Apr 20, 2013 1:30pm
Quoting Lib3rty
Glad to see you know what I mean, it re-affirms my conclusions. It's so simple really once you break it down, less is definately more in trading. Just a small handful of tried and tested methods combined with a well thought out entry and exit plan. All these hundreds of indicators are no good combined, you only need a few, perhaps just a couple for some techniques. When it comes to risk, money management is a must. When I first read about this topic I thought "but that means I will only make XXX amount each month with my small account, I want to...


You are way ahead compared to many other retailers. If you stick to the fundamentals of trading you will in the long run be profitable. Being profitable is the only thing that matters. A gain of rice a day adds up in the long run.
Trade what you see, not what you think!
  • #15
  • May 5, 2013 5:29pm May 5, 2013 5:29pm
Quoting Dopey
{quote} I agree with you. Yes, your account will grow slower than if you're scalping, but that's assuming you're successful at scalping. Most aren't, yet so many try. Don't worry about the account growth, just focus on consistency of steady growth with draw down swings that aren't too big. If you can do this for a year, then start looking for money to manage. 17.5% in a month is fantastic and you don't need that sort of return to get money. What you do need is to manage the draw downs while pulling out single digit returns on average per month....
Very interesting stuff here. I ahve thought about becoming a money manager someday, is it fairly easy to do adn do I require a broker license to do it or can a legal contract be enough between me and the invested parties? I'll do my own DD on this but if you can offer any straight up info that would be greatly appreciated.

I'll stick to trading my own capital for a while. Just suffered my first drawdown since implementing my new plan. Lost almost a quarter of my gains shorting Gold and the Euro last week (direction was correct, but bad entry points resulted SL being hit before each instrument crashed in price). Oh well, live and learn. Currently gonna go back and review my entry points and see how they can be tweaked a little. The entry points seem to be only a little premature so shouldn't require much in the way of tweaking.
  • #16
  • Last Post: May 24, 2013 6:22am May 24, 2013 6:22am
Quoting Lib3rty
{quote} Very interesting stuff here. I ahve thought about becoming a money manager someday, is it fairly easy to do adn do I require a broker license to do it or can a legal contract be enough between me and the invested parties?
Technically you need a licence from the FCA.
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