I don't want a small probability of ruin, I want zero.
Because if you have a small probability of ruin, any given day, over time, you will be ruined. It is just matter of time.
Source: Nassim Taleb on the Importance of Probability - Bloomberg (http://www.bloomberg.com/news/videos/2016-05-12/nassim-taleb-on-the-importance-of-probability)
Changing my (trading) religion (https://www.breaststroke.org/religion/)
Going public with your trading has myriad of drawbacks. One of them, perhaps the biggest of them is that changing your opinion becomes much harder, even when it is for the better. I would say that going public with my stats has pushed my growth about 2 months behind.
Truth is my understanding of markets since I went public has evolved. And, I dont want to be stubborn about it.
So here are the new things in my trading:
More fundamentals and even more news: I have always looked at fundamentals but mostly for the purposes of risk management and profit taking. But I will be using fundamentals and news to understand the current sentiment. My current understanding is that sentiment is single most important thing that effects market in short term. Think risk on vs risk off kind of things, such things cause enough money to move and that creates tradable opportunities.
Less price action: the more I learn about market mechanics, the more I understand how a particular candle and hence pattern is formed. In past, I have made a mistake to take it too literally. If I dive in to this right now this post will become a very long essay, so lets keep this discussion for the future (hopefully not too distant). But in summary, price action has become much less complex for me. It offers me just one piece of information and sometimes one last push to pull the trigger but it is not sole why I will enter in a trade.
Also, pure price action for all its benefits had been mined merciless by larger, more resourceful participants and solely relying on it in my humble opinion is tireless hunt to find another trick because the last one stopped working. Thats why quants call it market anomaly. If you have indeed found something then market will find a way to plug the hole sooner to later.
Trimming my focus to less number of pairs: Now that understand the sentiment and market happenings have taken a centre stage, I will need to trim down on the pairs I focus on or a better way to say it is to trim the currencies I focus on at any given time and find a suitable instrument (trading pair) to trade the opportunity later. This is not to say that I will only trade handful of pairs, in fact now I plan to trade exotics as well, but if and only if I understand what is happening.
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There is no better guarantee to make a consistent profit in the market then to learn to understand what the heck is actually going on.
Persistence over stubbornness (https://www.breaststroke.org/stubbornness/):
I have been away.
Life is been happening.
Couldnt trade.
But didnt stopped learning.
I think being away from sharing thoughts immediately helped me; it gives thoughts a chance to morph and mature.
I have changed my views on trading a lot. I think it would be fair to say that I am not a pure chartist any more.
Rather I have become much more conventional and my approach is much more old school.
Become aware of what is happening and take a position when odds are ridiculously in my favour.
Worse drawback of this approach is that it is not possible to go on vacation and come back at leisure, take a look at the charts and enter a position. I need to be aware of what is going on around me pretty much all the time. It is not necessary for me to be in a position rather I need to wait for when in my opinion odds are ridiculously in my favour.
I now have pretty much binary view of market.
X is either going up or going down.
I however will enter when I think that odds are ridiculously stacked in one direction. Such conviction is not merely result of a chart, but rather, news, technical, fundamentals and sentiment as well.
Stop loss exits are based on odds decreased, hitting 1-2% loss on a single trade or 5% on a single idea. Profit taking exists are based on loss of conviction of original idea, medium term EMAs and historical data like how % X moves in a day, week or when similar event happened.
I will never do grids. I really have a huge disliking to grids. Grids feels like cheating to one's own self. And I will never add to a loser. Fuck losers. Single most important thing in trading is to have an overall edge and then be able to trade forever so that that edge can play out. Grids are a sure way that odds will destroy you and whatever you have earned during the good times.
I have been rather busy. Couldn't trade or write too much. But I have been learning and learning and learning. I have modified my strategy a lot. I am definitely not a pure chartist anymore.
"When the facts change, I change my mind"- Some wise man.
I have written a post about newer strategy, just need to clean it up a bit. Hopefully, will post soon.
But here's my latest post for now: Moved from Pepperstone to FXCM (https://www.breaststroke.org/fxcm/) I have moved from Pepperstone (https://pepperstone.com/en/) to FXCM AU (https://www.forextrading.com.au/). No particular complains about Pepperstone. They have been good. But FXCM has many distinct advantages on Pepperstone such as:
Regulated to the hilt across multiple continents.
Reformed broker. They have had their own blunders, but lets just say that they have learned their lessons (the hard way).
Access to multiple platform using a single account login i.e. MT4, Tradestation2, PTMC, Trading View, Ninja Trader and many others. No other broker has access to so many different platform using same user/password. Although I dont find any particular platform a must have necessity for me any more, but it is always good to have more toys.
0.5 ms connection to their trading server from (free) VPS. Good to have end of the world stop loss.
Exclusive in house volume and transactions indicators.
Good support. To be honest, Pepperstone wasnt bad either.
One of the largest retail forex broker in the world. Their average daily volume exceeds other popular brokers monthly volumes.
And finally, arguably one of the best liquidity and price feed on retail end. During recent GBP flash crash, GBPUSD gaped down hundred of pips less on FXCM than all other brokers I checked.
