Fail Better

Interesting idea, are you entering as the price initially breaks through the swing point, or as it returns back to it?

Jim

Iam using a Limit/Stop order to enter the trade when the price initially breaks through the swing point.

Thanks, it will be interesting to hear your results.

What do you guys think about going short for a retest in USDJPY at 98.851?

I have that level marked on as well.

Nice confluence about it is that if price would go straight up there, it would have reached its daily ATR already.

Link to Tom ATR video: http://www.screencast.com/users/Trader_Dante/
folders/Default/media/e90bc952-079f-48d3-a98d-d932135ef0fe

It doesnt work

Out for 0.14 R. Should have gotten out at FTA around 98.46. Later on I didnt have the guts to manually close the trade when it came back 20 pips into profit. Eventually I got out with about 10 pips profit.

AudUsd Hourly SFP . . .Thanks Tom . . .


I caught it a little early . .

Jim

Awesome trade.

Took the Aussie "blind". Worked out great .

Guess what happend to my usdjpy trade i got out last night. Went straight into my former take profit. Trading is a bitch.

Your target should have been at 97.77. D1 pin bars do the same thing the vast majority of the time. We discussed this exact trade with the suggestion to sell 98.92 and take profit at 97.77 in Sunday's webinar.

Just wanted to post a quick update on the setups discussed in the free strategy webinar on Sunday.

First up was the Aussie.

We were looking for an H1 SFP of the 0.9386 level which is a weekly swing low that you can see in the chart above.

On the H1 you can see we opened with a large gap down. This would have been an ideal setup on the open but it didn't happen. If that had setup on the open it would have been one of the highest probability trades you can take.

At any rate, price went in a slow grind higher throughout Monday and then came back and SFP'd that low overnight. By this time most of the gap had filled which reduces the probability a little for me.

You will note that right after that SFP the market went bid but it just couldn't hold and after a relatively short bounce, it went onto make fresh lows. Unless you had super tight management this was going to be a loser and I think most people did take a full 1R loss on it.


Next up was the USD/JPY

We were looking to sell blind into the 98.92 level to look for a reaction back to the trigger point of the D1 pin. Remember, this pattern repeats constantly.

- D1 traders get long off the pin
- Price rallies into the FTA
- D1 traders (especially retail that are obsessed with trying to run everything) move to break even and the price comes back to take them out.

At the point that it comes back and they are puking longs, you can usually buy into them because price often continues back in the direction they were originally placed. (e.g. they puke the pullback low). However, I only do this if there is a clear level - in this case there wasn't one to get long as far as I am concerned.

However, I've attached an example of one - again we spoke about this in the webinar.

This is the Nasdaq and you will see a D1 pin that gives us a bullish bias. It is the one that occurred TWO day before the red arrow on the chart.

If we now go to the H1 chart you can see what happened.

Price comes back to the "break even" point for D1 traders. This coincides with former resistance and is EXACTLY where the downside ATR comes in on the day. This is a beautiful area to go long and an immediate rally ensues.

Musings on becoming a better trader and why hardly anyone can keep to a plan.

As long time readers of this thread will know, the essential tenet within it is this:

We all, as traders, should be seeking constant improvement.

It doesn't matter whether you've been trading 17 years or you placed your first ever trade just three minutes ago, you never stop learning in this game.

In this vein, there are three questions you should have in the front of your mind.

1) How can I make MORE money from my winners?
2) How can I lose LESS money from my losers?
3) How can I generate more winning ideas?

Or to put it in a simpler format, what am I going to do this month, this week, TODAY, better than I did last month, last week, YESTERDAY?

The above questions never leave my mind.

To get the answer to them requires a record (or journal) and the time to both diligently study it and learn from it.

Now some of you may be about to emphatically exclaim: "Well your words are lost on me - I record ALL my trades!"

Unfortunately, you're not off the hook yet.

Some people spend all their time writing down their trades; in a book, in a blog, in an excel shee or wherever and then, believe it or not, fail to review them.

If you have a record and don't look at it constantly, you might as well not have one. It's not a list of your trades to put on a blog and elicit sympathy or deliver an ego boost via a few random readers. Neither is it something to stick in a folder on your computer to read back on like a diary.

It's there for one reason and one reason only: to make you a better trader.

If you don't know where to begin with a journal, start thinking about it. Now.

I can assure you that the answer to becoming a) profitable or b) more profitable is in your journal and not on YouTube or in someone's thread or trading course. As a commercial member I have absolutely nothing to gain (and to be fair, something to lose) by keep pushing this point day in day out, so you need to pay attention to it fully as it's the most important thing I will ever contribute.

We all need to start somewhere and reading about techniques and set ups can be useful to generate ideas but remember that by learning a set up you are only on the same level as every single person that has learnt that same set up before you and will learn it after you.

So, the real question is: Are you going to take your place in line with the rest or step out in front?

A journal will help you to:

- Constantly improve on what you do to get better results than your peers
- Discover new patterns that you have NOT been taught

At this point people often think: "Well, let me just ask Bob what he does as he has probably done all this boring shit before and it will save me some time".

Sadly Bob has most likely not done this - he is shooting in the dark like you. And if by some small chance he has done it, he has tailored his information to him.

I know one professional trader who ACTIVELY lowered his strike rate to increase his reward/risk return by minimising his stop drastically. By simply learning where he puts his stop and not what makes him do that, you are not going to understand why he is doing it.

And then people think: "Yeah, I get your point but he says it works for him and if he can make money doing it, so can I".

Wrong.

It is one of the greatest fallacies in trading.

"If it works for him it works for me" is quite frankly, bullshit.

The cliche: "You need to trade a style that fits" is a truism. Unfortunately the average person thinks its rubbish and simply retorts: "Just show me what you do. If you make money with it, so will I."

I hate to tell you but as a prop trader I once spent months sitting next to a person returning hundreds of thousands of Dollars per week. So why was I not making that? I could have just followed him in on everything.

For a start, he often traded without stops and averaged heavily. Clearly this worked for him but understandably I didn't have the funds to do so and of course it is an incredibly scary proposition to trade that way. He clearly had a way of doing it and had certain rules on when to start and stop (as he did take losers frequently despite the above points) and had proved to himself that it worked. But for me sitting next to him and knowing nothing about his long term record and why it worked I'm totally at the mercy of his reasoning.

And what makes it worse was that like any discretionary trader (and I include myself here) he can tell you basically what he does and why he does it but the minute you take a trade and get killed on it, you find out he either didn't take that one or got out of it early.

That's called experience. And it's picked up over thousands of trades and you can never, ever, ever teach that. There are just too many small nuances that a trader picks up in a long career that float around in their head and can never be translated into a set of rules.

Sometimes thinks just LOOK right or LOOK wrong and you can't put a finger on it. Trust me on this one.

Now, let us look at each of the above points in turn.

I've made a few suggestions of things you can take a look at. However, to try and go through them all would most likely take me all night, if I managed it at all; as a result I've deliberately kept it to a few key ones.

But think about them, play around with ideas, generate new ones, refute them, think outside the box, on top of the box, inside the bloody box; work at it.

This shit should keep you awake at night.

1) Firstly, how can I make more money from my winners?

- Are you getting out of your winners "too early"? Start by looking at the following: If you trade with a target where was it? Where did you eventually come out of the trade? If you see lots of trades where you came out early, immediately go over your entire history and see what would have been the net result if you did not touch the trade at all and simply left to stop or target. The answer to this question is of utmost importance. If your record clearly shows that over the long run you are screwing things up by managing trades, you just found your own personal grail.

This is one of those potential problems where people seek the easy way out; to blame their psychology. "Oh I'm just so psychologically screwed up. I just keep coming out of my trades so early because I get scared/impatient!"

No, the reason you probably come out early is because you do not categorically know over a large sample size that holding is the right thing to do.

If you DO know that and you get out too early, let me save you a bill from your local psychologist with a simple diagnosis: you are an idiot.

- In the event you trade without targets or you find that no intervention makes little difference, take a look at how far your trades go after you come out of your winners. Coming out early is a frequently cited issue. But there's no good moaning about it. What are you doing to actively change this? Go and look back over the trades and try a variety of theoretical management techniques on those trades. Would you have been better trailing your stop behind a swing low? Behind each bar? Behind a bar that closes through the level? Get CREATIVE. This takes hard work. But it is well worth it.

- Of utmost importance is the maximum adverse excursion. How far do your winners go offside? I was talking with a great trader the other day that told me his winning trades never went more than 10 ticks offside. For his entry criteria, it had become evident that if he suffered more than a 10 tick draw down something was wrong and the trade should be cut.

Let's now assume you use a fixed 50 tick stop and make money on 70% of your trades. You have a record of 100 trades (so 70/100 got to target). If you find that 55 of these 70 didn't go more than 10 ticks offside than it makes sense to slash the size of your stop. Making it 11 ticks smells a little like over optimisation but you get my drift. If you cut your stop down to 11 ticks that means that your strike rate now dips to 55% from 70% but your R goes up by a multiple of almost 5. Guess what? Your expectancy just went through the roof. And higher expectancy = more money.

And now let's assume the opposite. You use a 50 tick stop and EVERY single one of those trades went against you by at least 30 ticks but they all eventually reversed and 100% of your trades win. That's right: YOU DIDN'T TAKE A SINGLE LOSER.

Congratulations on your 100% strike rate but your entry is obviously shit.

Improve it.

2) How can I lose LESS money from my losers?

- Is there something that links your losers? If you buy a level, what happens if it closes down through the level? Do these instances lead to the trade usually hitting your stop?

Are the vast majority of your losers trades that are taken overnight (maybe linked to the fact that they cannot be managed properly).

Or is it really something as simple as the fact that you have a clear set of rules and yet you seem to have handfuls of losing trades that just don't fit any of those rules?

Also worth checking is whether there are certain days of the week, for example, that consistently cause you problems. I heard so many traders say Friday's were difficult but I found this to be a red herring. I have personally never found that any day is better or worse than any other. Although I have noted that July is consistently poor for me over the years and I've seen this echoed among many other professionals. Too many to make it a coincidence.

It is important to note that when you analyse losers you have to also look at winners to make sure that this is done accurately because something that is present in your losers may also be present in your winners and vice versa.

At any rate: ISOLATE THE ISSUE and FIX IT.

3) How can I generate more winning ideas?

- How many trades do you miss? I know we can all do the hypothetical: "I would have done this, I would have done that" but seriously, how many trades have you missed? You have to be fair here and count those that would have been losers alongside those that would have been winners.

Once you know the answer, it's time for another question: WHY DID YOU MISS THEM? If you missed them because you were not aware that they set up, then can you set up some kind of alert system? If you missed them because you had just come off a three trade losing streak and second guessed the fourth set up, what are you going to do about that?

I started thinking the other day; how is it that I very rarely break the rules and take trades that are not in my plan and yet most amateurs do this all the time?

Is it just because I'm experienced? Or is there something else going on here?

I started wondering if it isn't more to do with the fact that I didn't LEARN this technique, that I pass on, from anyone.

Sure, I learnt basic price action and S/R from J16 but everything else from gaps, to the accumulation/distribution pattern, the spider pattern, the way I personally trade levels, to where I place my stops and how I manage trades, I have learnt on my own.

People sometimes tell me that they have seen similarities in my stuff elsewhere. That is because there really is nothing new under the sun but I can honestly say that despite the fact it may already have been out there before I began doing it, the fact remains that everything I do comes from observation and experience and constantly assessing my record.

The SFP I can't take credit for from my own record. I learnt that from studying another traders journal. If he hadn't been so lazy and done the work himself it wouldn't have found it's way on here. But that is categorical proof for me of what a journal can do.

And so what I think is this: Many people get into trading to make money. But there is also a strong desire among many to be their own boss. We crave independence and the freedom of choice to do what we want, when we want.

And I think that following another traders "rules" or "setups" manifests itself, on some scale, as that dreaded boss. Because really you have someone saying: "This is what you have to do to make money" which is really, at the end of the day, exactly what a boss does.

Closely linked in with that is ego. Most of us don't want to say; "I owe everything to another person that showed me how to trade." I'm not saying that EVERYONE is like this but I've seen first hand evidence of this in people that trade my strategy profitably but don't give me any credit for it. I don't berate people for that. Deep down many of us want to say: "I worked out how to beat the market myself - I did this and no one else can take credit for it". And why shouldn't you? It is, after all, an extremely powerful feeling and provides you with a huge sense of achievement.

Buy maybe, just maybe, that is why people find it hard to follow rules. Because they are someone else's rules and not your own. And really, in a strange way, that makes that person your boss.

It's food for thought but here's the bottom line.

YouTube, Forex Factory, Google, Twitter, your friendly neighbourhood commercial member - they are all good for generating ideas.

But the real key is in your history.

Go find it.

Well let me say this.I started trading forex a few months ago as a way to make some money and be my own boss just like you said.It hasn't been easy but I already knew that.Lately, and after reading this thread I began becoming a break-even trader and I am slowly starting to win some.And for this all the credit goes to the Wizard.Not because I read his set of rules and suddenly everything clicked, but because I understood what having a "method" is and I learned about the importance of reasearching for your flaws.

I have a nice run of good calls in the last few days, but I haven't been able to capitalise all of them.I missed an entry here by a couple of pips, I closed that trade a bit too soon, I didn't close that other trade when I should and it went to my stop.Nevertheless I am starting to make money and more importantly, I found out how important having confidence in your call is, and you obtain such a confidence only by studying your history and you stick to-improve your own rules.No "extra" trades, no experiments.See what you did wrong before and never do it again, see what you failed to do before and try to do it right the next time.

I think that this is the best lesson you can get from this thread when it comes to being a succesful trader.Maybe the Wizard's system suits you maybe not.In any case you won't find success if you don't actually become your own boss and tell yourself what you did wrong.Demand from yourself to improve every day just like you would demand it from your employees.

Noone can guarantee that you will become winning from the first day but you can give a guarantee to yourself that you will keep improving...that you will Fail Better until you no longer fail!