A few words about the trading activity on this first week of 2014
It was a good week, ended with a 50% gain, in 2 trades.
A good result indeed, but is such return rate sustainable in the longterm?
Guesses are, not (personal past experience).
On my side, i tend to be strictly focused on the present moment, so this question does not bother me.
Looking to this nice start, we many notice the high leverage (50x-70x) used on the two trades, a dangerous one.
Not really dangerous as long as the trades taken are high probability (still riskious but overall the risk is worth the reward) ones, however i must confess that especially on the second trade (gbpusd), the risk level there was pretty high, considered that it was not an "AAA"* trade (i did classed it as a "C"* trade), it was against the trend, it did worked out, but it may did as well turned out to be a loss, so.. perhaps a 70x leverage on that trade was just too much, surely it was not a good example of how to make good trading.
In conclusion, i consider this first week as a failure, not regarding the profits of course, but regarding the risk aversion.
Untill now the only way to lower down the risk aversion and get back on track is to face a loss, so perhaps this "failure" recognition is a good sign.
Good weekend to everybody!
* A little explaination about the trade "classes":
Class AAA trades: Perfect low risk high reward trades, that goes in the overall trend direction, with the presence of a good momentum on the markets, overall a stress-free safe trade, they tend to reach the target in a very short period of time, and have a success ratio way above 90-95%. This is the trades that comes rarely, and when they come we want to get in with a strong leverage, with courage, and without hesitation.
Class A(+), AA(+) trades: more or less same as the AAA, but with low momentum or no current momentum at all. Not as good as the AAA ones, but still a good deal.
Class B trades: Range market, in this trades we don't have a strong trend on our side, but also not a strong trend against us. Not really a risk-free trades, but also not really a riskious trades.
Class C trades: Trades that simply go against the current trend, usually against a weak trend that lack of momentum, with divergences signaling the possible imminent change of direction, yet they remain counter-trend trades. Those are the trades that bring the highest level of risk, sometime they end up in profit, sometime the trend re-awaken and bring us a loss. This is the kind of trades that the majority of retail traders use to take most of the times, and have the lowest level of success. Absolutely better avoid taking this kind of trades, yet sometimes they are really attractive.
It was a good week, ended with a 50% gain, in 2 trades.
A good result indeed, but is such return rate sustainable in the longterm?
Guesses are, not (personal past experience).
On my side, i tend to be strictly focused on the present moment, so this question does not bother me.
Looking to this nice start, we many notice the high leverage (50x-70x) used on the two trades, a dangerous one.
Not really dangerous as long as the trades taken are high probability (still riskious but overall the risk is worth the reward) ones, however i must confess that especially on the second trade (gbpusd), the risk level there was pretty high, considered that it was not an "AAA"* trade (i did classed it as a "C"* trade), it was against the trend, it did worked out, but it may did as well turned out to be a loss, so.. perhaps a 70x leverage on that trade was just too much, surely it was not a good example of how to make good trading.
In conclusion, i consider this first week as a failure, not regarding the profits of course, but regarding the risk aversion.
Untill now the only way to lower down the risk aversion and get back on track is to face a loss, so perhaps this "failure" recognition is a good sign.
Good weekend to everybody!
* A little explaination about the trade "classes":
Class AAA trades: Perfect low risk high reward trades, that goes in the overall trend direction, with the presence of a good momentum on the markets, overall a stress-free safe trade, they tend to reach the target in a very short period of time, and have a success ratio way above 90-95%. This is the trades that comes rarely, and when they come we want to get in with a strong leverage, with courage, and without hesitation.
Class A(+), AA(+) trades: more or less same as the AAA, but with low momentum or no current momentum at all. Not as good as the AAA ones, but still a good deal.
Class B trades: Range market, in this trades we don't have a strong trend on our side, but also not a strong trend against us. Not really a risk-free trades, but also not really a riskious trades.
Class C trades: Trades that simply go against the current trend, usually against a weak trend that lack of momentum, with divergences signaling the possible imminent change of direction, yet they remain counter-trend trades. Those are the trades that bring the highest level of risk, sometime they end up in profit, sometime the trend re-awaken and bring us a loss. This is the kind of trades that the majority of retail traders use to take most of the times, and have the lowest level of success. Absolutely better avoid taking this kind of trades, yet sometimes they are really attractive.
