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Developing Real Strategies, My Head is Clouded

  • #1
  • First Post: Jan 26, 2014 3:55pm Jan 26, 2014 3:55pm
So, after what seems like lots of learning and not much experience, the outcome of any trades I make seem to be based on pot luck. I don't believe the hype in that there is some magical indicator, or even a basic indicator that can say at this point buy/sell this and exit here. Even though the majority of people are hush-hush about what they do, over the course of reading various forums, I've come across so many different technical strategies but I was in the mindset that there's more to it than that and fundamentals (not news trading for economic releases) really need to be looked at.

But, my most profitable trades were "couldn't care less on outcome" trades in a demo and my account went from £10k to £47k in about 2 weeks, when I try and do it properly in a £1k demo account with my 'knowledge' and micro lots, I'm down on almost every trade!

Maybe it's because I'm just inexperienced, but right now I feel like my head is clouded and I'm struggling to find which path to take, I've never had a problem self-teaching, I've done it most of my life and I know I'll be a life long learner, but I just need a nudge in the right direction.

I know I don't want to scalp for <10 pips all day long, I would rather not keep my trades open over the weekend, do I swing or day trade I don't know. I would like to use 4H/8H/1D charts and have a nice trade(work)-life balance. Should I continue with focusing on fundamentals, but then do they even matter when dealing day-to-day, or is technical analysis a load of crap and I should just develop a feel by recognising patterns.

I have so many questions, decisions and I'm not looking for any hard answers, just weigh in on what you know with some advice, I'm kidding of stuck spinning my wheels here, a bit lost...
  • #2
  • Jan 26, 2014 5:14pm Jan 26, 2014 5:14pm
Quoting sandy-pip
So, after what seems like lots of learning and not much experience, the outcome of any trades I make seem to be based on pot luck. I don't believe the hype in that there is some magical indicator, or even a basic indicator that can say at this point buy/sell this and exit here. Even though the majority of people are hush-hush about what they do, over the course of reading various forums, I've come across so many different technical strategies but I was in the mindset that there's more to it than that and fundamentals (not news trading for economic...

10k to 40k in 2 week is too much. You might be able to do it in demo, but in live it would be impossible due to stress and greed. You nerves would never allow you to hold you trades. You ought to lower your percentage target to something between 2% up to 20% per month( 20% is very high!!).

As for the fundie and technicals, your are going to need both. Im glad to hear that you have gave up on indicators. Thats a huge step that takes a lot of time for novice traders, but once you abandon them, you can really start to learn.

To finish, what you want in forex is to last, do well in the long run. If you risk too much money on every trade you will get lucky for a short period of time( and that often on demo accounts) and loose the rest after. We often say that every ship has a good captain in calm water. To be successful you have to do well in difficult situation too.

Anyways I hope it helped you. Good luck in your trading venture and keep us inform about you progress
  • #3
  • Jan 26, 2014 6:27pm Jan 26, 2014 6:27pm
Hi Sandy,

Knowing yourself will make it easier for you to focus in developing your strategy.
it is good that you know what TF that you want to trade in. but remember the bigger the TF the bigger the number of pips you need to risk (bigger SL), but also comes with bigger TP.

Different Trader have different approach to the Market. some trade during news time, some would not trade at news time because it would be too violently volatile, esp. when it is a high impact news. this volatility can cause your trade or SL to have a very big slippage, which is very dangerous.
usually I, as a TA trader, would take profit b4 news and wait sometime after the news to see a clear signal b4 I enter again. unless if there is a very clear signal b4 news then I might take the risk accordingly weighing the impact of the news as well

Pattern Recognition is also part of Technical Analysis.

My opinion:
your strategy must have the following:
1. Trend recognition
2. S/R recognition
3. Momentum

When it is Trending Up, and PA bounce off Support with strong momentum this would be a High Probability Buy Trade. reverse it for HP Sell Trade.

How to define Trend, S/R, and Momentum is your homework, it will takes a lot of effort and time, failures after failures, but once you get it, it will worth the while.

One more tips for success:
Be Passionate about Trading, not about Money.
Money is not the Reward of Good Trading.
Money is the Consequence of Good Trading.

Good luck on your journey, wish you success.
Failure leads to Success if one learns from mistakes and never give up
  • #4
  • Jan 26, 2014 10:44pm Jan 26, 2014 10:44pm
Quoting jinchu
Hi Sandy, Knowing yourself will make it easier for you to focus in developing your strategy. it is good that you know what TF that you want to trade in. but remember the bigger the TF the bigger the number of pips you need to risk (bigger SL), but also comes with bigger TP. Different Trader have different approach to the Market. some trade during news time, some would not trade at news time because it would be too violently volatile, esp. when it is a high impact news. this volatility can cause your trade or SL to have a very big slippage, which...
Be Passionate about Trading, not about Money. Money is not the Reward of Good Trading. Money is the Consequence of Good Trading. Good luck on your journey, wish you success.
i like it
  • #5
  • Jan 27, 2014 6:13am Jan 27, 2014 6:13am
Quoting jinchu
Hi Sandy, Knowing yourself will make it easier for you to focus in developing your strategy. it is good that you know what TF that you want to trade in. but remember the bigger the TF the bigger the number of pips you need to risk (bigger SL), but also comes with bigger TP. Different Trader have different approach to the Market. some trade during news time, some would not trade at news time because it would be too violently volatile, esp. when it is a high impact news. this volatility can cause your trade or SL to have a very big slippage, which...
Thanks, that's really insightful!
  • #6
  • Jan 27, 2014 7:26am Jan 27, 2014 7:26am
Most traders lose money, most traders try for high probability entries, high win rate, small RR...

Perhaps the few that win are doing the opposite.

I would suggest looking at something with less than 50% win rate and 4/1RR minimum... you've got to let every trade run.
tradewith60
  • #7
  • Jan 27, 2014 8:15am Jan 27, 2014 8:15am
Quoting sandy-pip
"couldn't care less on outcome" trades in a demo and my account went from £10k to £47k in about 2 weeks, when I try and do it properly in a £1k demo account with my 'knowledge' and micro lots, I'm down on almost every trade! Maybe it's because I'm just inexperienced, Should I continue with focusing on fundamentals, but then do they even matter when dealing day-to-day, or is technical analysis a load of crap and I should just develop a feel by recognising patterns. I have so many questions, decisions and I'm not looking for any...



In my opinion why you are not getting anywhere is in bold in the first sentence : "couldn't care less on outcome"

No real trader ever felt like this about any trade.Sure they can accept the loss but its far removed from not caring.

The most important thing in trading is to have a repeatable process to follow with rules that you can test and adapt.This could be anything from only trading double tops on the 1 hr chart when it is at 4 hr resistance only selling rally's (fading rallies) on the 15min chart when the 4hr PA is under the 50 SMA.
There is a million ways to decide to trade.You have to find something that is quantifiable and repeatable.There is a thousand good systems here on FF.
Multiple Time Frame system are the best in my opinion

Secondly you have to think about what time of day you can be at your computer and for how long.That will decide your Time Frame for you.

Thirdly go and spend some time finding out about Supply and Demand areas and the market mechanics about how it really work.So in other words what is making the line or price move and more importantly WHY DOES IT STOP AND REVERSE.

These are just my opinions and I hope you can draw some helpful conclusion from them

Good luck

Rooi
We miss 100% of the shots we don't take
  • #8
  • Jan 27, 2014 5:43pm Jan 27, 2014 5:43pm
Maybe try taking a few steps back, your head is clouded. First take everything off your charts and use bar charts or candles whatever you prefer and just watch price for a week and note what you see. You need to be able to read the market. It all starts in your mind first then you can start taking little baby steps.

Sounds like 4H daily might be a bit too high of tf if you don’t like holding over weekend or before news, you are probably best on M30 or 1H, but this requires more screen time.

If this is too much perhaps just stop looking at charts all together. Sometimes its good to take a mini vacation from trading, really helps if you go to the beach or go camping.

Hope this helps!
All posts are my personal opinion
  • #9
  • Jan 27, 2014 6:07pm Jan 27, 2014 6:07pm
Sandy, in my opinion, accepting that luck plays a big role in trading success is huge progress. Once it's clear that the only thing we control in this business is our entries and exits (nothing in between) it becomes easier to focus on adding to positions when luck is on your side and cutting your positions when its obviously not.

Accepting how little control I have even after the most thorough analysis was a significant personal milestone for me.
  • #10
  • Jan 27, 2014 7:41pm Jan 27, 2014 7:41pm
Quoting TranceTrader
Sandy, in my opinion, accepting that luck plays a big role in trading success is huge progress.
So... you're going to change your username to "Luck Trader" or you're simply in a trance??

Quoting TranceTrader
Once it's clear that the only thing we control in this business is our entries and exits (nothing in between) it becomes easier to focus on adding to positions when luck is on your side and cutting your positions when its obviously not. Accepting how little control I have even after the most thorough analysis was a significant personal milestone for me.

So how do determine when "luck" is on your side? Only when you're in profit?

Quoting TranceTrader
Accepting how little control I have even after the most thorough analysis was a significant personal milestone for me.
That part may be true but I'm still not looking to win the "trading lottery".
Perhaps I misunderstand or further explanation is needed. ??
When the Joker is in the deck.. fear not and play it well
  • #11
  • Jan 27, 2014 8:00pm Jan 27, 2014 8:00pm
Quoting sandy-pip
So, after what seems like lots of learning and not much experience, the outcome of any trades I make seem to be based on pot luck. I don't believe the hype in that there is some magical indicator, .
There is nothing magical about it. If you believe it is based on "pot luck" then it might be good for a meal or
two.
Most have some kind of recipe though, in at least, an attempt to insure that it doesn't taste TOO much
different the next time....
When the Joker is in the deck.. fear not and play it well
  • #12
  • Jan 27, 2014 10:59pm Jan 27, 2014 10:59pm
Trading is a business by definition.

All business run on business models. In FX trading the model(at the very base) is simple. Always have bigger profits than losses.

Calculate the SL hit monetary value as a percentage of total capital you will have left after. Is the loss acceptable over 20-30 trades? Again this can be made very complicated. Its all about money and risk management. Forget about your positions entry and exit. Work on the money and risk management. Once you have them perfected you will see your trading become a planned business with position outcome over short-term become inconsequential.

Again this is just a very basic idea, you can make it as complicated as required.
  • #13
  • Jan 28, 2014 3:41am Jan 28, 2014 3:41am
Quoting Slim Buffett
{quote} So... you're going to change your username to "Luck Trader" or you're simply in a trance?? {quote} So how do determine when "luck" is on your side? Only when you're in profit? {quote} That part may be true but I'm still not looking to win the "trading lottery". Perhaps I misunderstand or further explanation is needed. ??
Yes I think you do misunderstand, probably because you're a bit of an idiot.

The definition of luck is an outcome determined by chance rather than individual actions. When you place a trade, you're leaving it to the market decide whether it agrees or not. We hope the markets choice is in-line with our analysis. If your position moves into profit over a reasonable time-frame, then it's safe to say to that point, the market consensus agrees with your analysis so it would be wise to add to that position, hence the adage "cut your losses short and let your winners run".
  • #14
  • Jan 28, 2014 3:53am Jan 28, 2014 3:53am
Quoting sandy-pip
So, after what seems like lots of learning and not much experience, the outcome of any trades I make seem to be based on pot luck. I don't believe the hype in that there is some magical indicator, or even a basic indicator that can say at this point buy/sell this and exit here. Even though the majority of people are hush-hush about what they do, over the course of reading various forums, I've come across so many different technical strategies but I was in the mindset that there's more to it than that and fundamentals (not news trading for economic...
What you really mean, and you could have saved us all a minute is:

"Hey there maybe awesome traders, I've been trading a little while but dam, it's pretty tough to be profitable as I imagined it./ Can you give me some pointers in how to do this right"

Lot's of noise in your post,

Well my answer is this;

Get comfortable cause your in for a long and painful road.. Just start getting your hands dirty, you won't be expected to win until a long while. Save yourself years of BS by lowering your expectations to a 50% win rate. Even if you still lose you will hopefully learn good discipline, and money management whilst gaining valuable chart time and practice in sticking to and testing a system thoroughly.

#1 baby steps, please don't go quitting your job,m your life, or betting your life savings on some pie in the sky system you tested for only 3 months..
Or better still, ignore everything I said. I don't give a shit ether way
Howlin' at the Moon on the Roof
  • #15
  • Jan 28, 2014 9:42am Jan 28, 2014 9:42am
Quoting 60minuteman
Most traders lose money, most traders try for high probability entries, high win rate, small RR... Perhaps the few that win are doing the opposite. I would suggest looking at something with less than 50% win rate and 4/1RR minimum... you've got to let every trade run.
Sandy, think about this....have been a turning point for my trading , and it change everything since then..5/1 to 10/1 RR in my case..but you have to accept you are going to have many more losses than winners
just my 2 cents
  • #16
  • Jan 28, 2014 10:24am Jan 28, 2014 10:24am
Quoting sandy-pip
I know I don't want to scalp for <10 pips all day long, I would rather not keep my trades open over the weekend, do I swing or day trade I don't know. I would like to use 4H/8H/1D charts and have a nice trade(work)-life balance. Should I continue with focusing on fundamentals, but then do they even matter when dealing day-to-day, or is technical analysis a load of crap and I should just develop a feel by recognising patterns. I have so many questions, decisions and I'm not looking for any hard answers, just weigh in on what you know with some advice,...
Given what you've said, my advice would be to trade somewhere between a swing trader and day trader. Hold positions for a few hours at a time (sometimes for as little as an hour, sometimes upwards of a full session), always be flat at EOD. This will give you the ability to use smaller time-frame charts for trade entry (5m, 15m), while using 1H, 4H, D for analysis. For people who want to be "active" in the market but don't want to scalp or hold very short term positions, this is a nice balanced approach.

I think it's a good idea to know the fundamentals, but fundamentals don't drive price on a day to day basis. Full stop. Human behavior drives price, and a good technical analyst attempts to paint a picture of what the market has done and what it may be doing now with the knowledge that markets have feedback mechanisms and past history does affect price today. But even the best technical analyst can only make short-term predictions (on the timeframe in question) on where price is going, which is where experience and screen time comes in, and I don't think there's any short cuts there. Some people will pick up the flow of the markets quicker than others just like some athletes pick up sports quicker than others, but without live screen time you'll never achieve your potential of minimizing losses while maximizing winners. Doesn't mean you can't be profitable, just not as profitable.
  • #17
  • Jan 29, 2014 6:02am Jan 29, 2014 6:02am
My advice - try a simple strategy and stick to the rules *exactly* - don't waver even once.

60minuteman has a few excellent easy to understand and follow strategies - e.g. H4 Power.

http://www.forexfactory.com/showthread.php?t=421431

Try following his method for an extended period of time... and you will see results.
The reason why paper trading is more successful is because your emotions are *totally* different when you know there is no money involved.
As soon as real money is on the line - you get butterflies, and stomach churns and hot sweats, you check your account every 5 seconds.
One big mistake is on real trading beginner traders tend to close out *good* trades too early.

As I said - check out what 60minuteman does. He seems like a friendly chap too, so will probably be happy to answer a question or two.
  • #18
  • Jan 30, 2014 1:31pm Jan 30, 2014 1:31pm
Woahhh, there's more questions now!

There's definitely things to think about though from you guys, I needed a little motivation boost too! Guess you'll learn that over time, no doubt everyone will have had bad days/weeks.

That 4H Power looks so simple in relation to what I've seen elsewhere, I think I'll have deeper dig.

So, game plan:

  1. Reduce expectations, reduce negativity.
  2. Try some simple strategies.
  3. Get some more screen time, not trading.

I work full time at the minute, any neat ideas on how to watch them throughout the day or at least keep up on developments, I could look at my phone every 15/30 mins and watch the charts?

  • #19
  • Last Post: Jan 30, 2014 1:53pm Jan 30, 2014 1:53pm
If you work fulltime, it makes more sense to trade the daily bars.

Remember, it's not a race.
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