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My Forex Experience

  • #1
  • First Post: Apr 28, 2017 10:09pm Apr 28, 2017 10:09pm
Just some note's on how I experience Forex trading:

Trading is made up from 3 components.
For trading success, you need to have all 3 components in tact or you will fail.

3 Components:

  1. Trading Strategy or Trade Plan or Trading system
  2. Risk or Money Management
  3. Trade Psychology

In my humble opinion, I consider Trade Psychology the most important.
Trade Psychology is the mastery of oneself.

If it can happen and it is bad for you, then it will happen...
  • #2
  • Edited 10:50pm Apr 28, 2017 10:11pm | Edited 10:50pm
Quoting CableFx1
Just some note's on how I experience Forex trading: Trading is made up from 3 components. For trading success, you need to have all 3 components in tact or you will fail. 3 Components: Trading Strategy or Trade Plan or Trading system Risk or Money Management Trade Psychology In my humble opinion, I consider Trade Psychology the most important. Trade Psychology is the mastery of oneself.
The most important by far is trading strategy. I don't think there's much more than one way to skin that cat and all the various EAs and random systems out there just don't cut muster. All the rest of that stuff is overemphasized in my opinion. It gives people the wrong impression that if you JUST master your emotions, you could be a profitable trader, when in fact their method of trading is totally worthless and will lead them to financial rune even if you're as cold and emotionless as Data from Star Trek.
  • #3
  • Apr 28, 2017 10:27pm Apr 28, 2017 10:27pm
Absolutely, a profitable trading strategy is very much important concern here, when you have a profitable system or strategy then you are on the way of success! Just need to manage your live trade positions in order to money and risk management policies! By the way, according to my experience, profitable Forex strategies are not available here and there!
  • #4
  • Apr 29, 2017 1:35am Apr 29, 2017 1:35am
In Forex trading , if you want to get maximal result by your trading strategies first of all you have to make sure how to manage money , devoid of having proper money management plan that’s not possible at all to make profit with great consistency despite of powerful trading strategy.
  • #5
  • Apr 29, 2017 3:14am Apr 29, 2017 3:14am
Totally agree with your points. BUT you forgot one critical point:
> find out how the company running the platform (XM, Oanda, Trickmill, etc.) actually control your trades and flatten your account.

Once you have this information, you will become profitable in forex, especially with Metatrader.

It might also help to do some research on the contractual agreement between your broker and their liquidity provider, plus the data supplier (in most cases, this will be Thompson Reuters as the original source). Knowing what is in those legal agreements will help you understand how Metatrader is actually constructed (or your 'binary option' CGI platform of choice) and, specifically, how your broker controls everything to ensure the vast majority of retail traders (actually, we are not traders; we are pretenders. Real traders trade the CME and make actual trades, not CGI transactions 100% controlled by deceptive corporations) cannot possibly consistently make a profit, since the algos and methods used by the MMs must, by default, ensure this never happens (otherwise they would be putting their liquidity providers at risk).

Paul
  • #6
  • Edited 4:29am Apr 29, 2017 3:59am | Edited 4:29am
Quoting CableFx1
Just some note's on how I experience Forex trading: Trading is made up from 3 components. For trading success, you need to have all 3 components in tact or you will fail. 3 Components: Trading Strategy or Trade Plan or Trading system Risk or Money Management Trade Psychology In my humble opinion, I consider Trade Psychology the most important. Trade Psychology is the mastery of oneself.
Sure, mastery of all 3 components is required.

In my opinion, there's too much emphasis on psychology though.
Saying 80% of trading is psychology sounds not right, maybe 50% but not more.
You can master your emotions but if your strategy sucks then you still lose in the end...

The hardest thing is to find a consistent profitable strategy or trading style, not to master discipline and emotions.
A profitable trading strategy leads to confidence which in turn leads to easier emotion handling.
Bullshit strategies lead to emotional issues because losing strings hurt and cause anger and frustration which then leads to account blows...

The fact that many put so much emphasis on psychology is because they think that's their issue and failure point, simply because they haven't mastered discipline so that they never reach the point to truly evaluate if a strategy or style is viable in the long run, since the inability to execute it properly, long enough.

Other traders have good discipline or less issues with trading psychology and are faster to realize that most systems/strategies and styles simply don't work.

There's good news though, there are real consistent profitable traders out there and what they have in common is this:
they are discretionary traders, they don't trade in a mechanical way with fixed rules, instead they look beyond price, what causes it to move?
Price moves because of traders making decisions not because of technical analysis (fibs, trend lines, S/R in isolation).
It's not possible to predict individual trader decisions but there's a point when the crowd is under stress (drawdown, trapped in wrong positions) where their actions become much more predictable, that is when the smart trader acts by reading order flow, S/R, supply/demand and other factors to establish the maximum pain level where the crowd will exit their wrong positions, fueling price moves by their stop orders alongside fresh traders joining the new momentum...

If I could go back in time a few years, I would tell myself and my friends to just stop looking for the holy grail (it doesn't exist, believe me, I thought it too ) and forget all mechanical systems, instead focus on what really causes price movement (price movement is just the shadow of traders making decisions) and realize that feeling and intuition, something no EA in the world can do, is much more valuable. Our subconscious mind can process much more data and situations why not exploit that too, instead of reducing ourselves down to human expert advisors executing an algorithm. I know this sounds strange because I too believed there's a mathematical model capable of describing the markets, maybe there''s, but most of the times it's only temporary and specific to market conditions that are unique in time.
Crazy to come to the conclusion that subjectivity in trading is a good thing and that discretionary trading is the way to go

How else can you explain all the failed systems and EAs and above all the fact that you can follow a proven consistently profitable teacher but still not achieve results that come even close, most of the time?
the 3rd wave is the crowd's wave
  • #7
  • Apr 29, 2017 4:04am Apr 29, 2017 4:04am
Quoting CableFx1
Just some note's on how I experience Forex trading: Trading is made up from 3 components. For trading success, you need to have all 3 components in tact or you will fail. 3 Components: Trading Strategy or Trade Plan or Trading system Risk or Money Management Trade Psychology In my humble opinion, I consider Trade Psychology the most important. Trade Psychology is the mastery of oneself.
Nailed it

you need ALL and ALWAYS no exceptions

Its like a chair 2 legs wont cut it but 3 are needed to stay solid. Its so easy to have 3 but one being rotten or weak.

But the quality of all legs are whats overlooked. If one is failing you will point the finger at the others.

Its easy to have all 3 but to have 3 that are of quality is whats rare.

so it gets kinda deep imo
Time hides Nothing
  • #8
  • Edited 9:51am Apr 29, 2017 9:35am | Edited 9:51am
In my opinion you I agree with cindy and cable... if you are missing 1 it does not really matter how good the rest are...
My buddy is very analytical and develops strategies but he calls me when it comes to clicking... he says he has no balls...lol
he wants to take profit fast and hold on to his losers... while I click (almost) like a robot...
Seriously after all these years you learn the importance of all 3( of course you will pay with money and time of your life
that you will have to spend to learn this....)

4x
  • #9
  • Apr 29, 2017 10:41pm Apr 29, 2017 10:41pm
Quoting CableFx1
3 Components: Trading Strategy or Trade Plan or Trading system Risk or Money Management Trade Psychology
All valid points for a rookie.

Once you have a trading strategy though, you can risk whatever you can afford, and not be scared to do it. Yes?

From my interaction with traders, or wannabe traders, in various markets, they all tend to do the same thing; draw art projects on a chart, make a guess on entry, and then make up a profit target. Until you create a valid exit plan, you are simply guessing over and over, which according to the Law of Large Numbers, will make your wins/losses 50-50 after enough attempts. That is why they think money management is important, because, LOL, they have no trading plan.

As for psychology, when you know how to recognize entry and exit points, then you ride the trade till it ends, whether by profit or loss. An exit strategy sees both, winning trades and losing trades, and you manage your exit, and the next entry, according to your trading plan.

If you keep losing money, based on either bad entries/exits, or fear, then your trading plan is not valid. It is that simple in my opinion. As a rookie trader though, you will observe how money interacts with the market, and feel the fear of price moving up and down, until you validate your trading plan works. Good Luck

PS. A valid trading plan does not only include technical and fundamental data. Ideally, you want to place trades when the market that is aligned to one of the currencies of your pair is open. If it is not open, you are not trading with volume and will be subject to whipsaw caused by low ranges. The ONE fact of trading is you need the market to be moving vertically, up or down, if you want to make any money. Don't trade the dead zones.
You cannot be extraordinary by being normal
  • #10
  • Apr 29, 2017 10:57pm Apr 29, 2017 10:57pm
Quoting dkrock
{quote} All valid points for a rookie. Once you have a trading strategy though, you can risk whatever you can afford, and not be scared to do it. Yes? From my interaction with traders, or wannabe traders, in various markets, they all tend to do the same thing; draw art projects on a chart, make a guess on entry, and then make up a profit target. Until you create a valid exit plan, you are simply guessing over and over, which according to the Law of Large Numbers, will make your wins/losses 50-50 after enough attempts. That is why they think money...
Hi dkrock. I'm not sure what you mean by "risk whatever you can afford". In another thread you said that you "bet the farm" on every trade. Does that mean you do not limit your potential losses from a catastrophic or black swan event? Clarification would be appreciated.
  • #11
  • Edited Apr 30, 2017 12:16am Apr 29, 2017 11:58pm | Edited Apr 30, 2017 12:16am
Quoting Kanzler
{quote} Hi dkrock. I'm not sure what you mean by "risk whatever you can afford". In another thread you said that you "bet the farm" on every trade. Does that mean you do not limit your potential losses from a catastrophic or black swan event? Clarification would be appreciated.
First, that is pretty paranoid as those are extremely rare. For me, I was on the correct side of the one I have seen. Most of the time they spike, which means they don't do any damage. The ones that gap are the ones that kill you. I have only seen one "black swan" gap in 13 years, so I am not going to let it bother me, lol. However my exposure is less due to my business plan. I trade intraday and am out of the market at the end of my trading day. I don't normally trade high impact news because I have no idea of its data, nor the market reaction, nor do I use a straddle strategy. I withdraw profits that exceed the required balance for the next day's trades.

At my broker, the required margin to open a trade, along with my stop loss, equals a dollar amount per lot. I divide the cost per trade by the account balance and the number of pairs. Each pair has its own cost. I use excel to do the calculations and the DDE server to keep it updated to the market.

If I lose a trade, I certainly do not lose my account. The loss recalculates my account, it all divides again, and I have my new lot size.

This allowed me to compound after each win, if it was sufficient enough to increase the lot size. At some point you will reach your max lot size according to your business plan.

For instance, if you start with a $500 account trading EURCAD, then the margin per micro lot is $29.73. If you use a stop loss of 30 pips, then you need $32.73 for each micro lot. Always round down to a whole number to stay within the parameters of your risk. That means I could open 15 micro lots with $500. As the wins surpass $32.73, it allows you to open more micro lots on the next trade. If you only make 50 pips a day, then on trading day 31 you would start trading 10 lot size trades. Depending on your trading plan, and market movement, it might take more or less time. I can make more than 50 pips a day on several currency pairs, so it compounds fairly quickly. Since each pip is only worth 10 cents, then personally, I think $32.73 is extremely too much margin. That allows for a "catastrophic" loss of 327.3 pips, which is beyond my trading plan's math, but I suppose "could" happen inside the market. It would never happen inside my graph under normal trading conditions...which are 99.99999% of the time. Apparently the US control freaks look at position trading for determining Forex retail margins, which is ridiculous for traders like me.

Anyway, this is based on my business plan. Another trader will have a different plan. Once you can make money though, go make it. DUH. It will depend on how your margin is calculated, your leverage, your account size, and your currency pair(s). In my case, perhaps I am lucky it is so easy to calculate.
You cannot be extraordinary by being normal
  • #12
  • Apr 30, 2017 12:09am Apr 30, 2017 12:09am
Quoting dkrock
{quote} First, that is pretty paranoid as those are extremely rare. For me, I was on the correct side of the one I have seen. Most of the time they spike, which means they don't do any damage. The ones that gap are the ones that kill you. I have only seen one "black swan" gap in 13 years, so I am not going to let it bother me, lol. However my exposure is less due to my business plan. I trade intraday and am out of the market at the end of my trading day. I withdraw profits and only leave a balance required for the next day's trades. At my broker,...
Great Insights Dkrock...

Aggressive on increasing the position size albeit with justification.
  • #13
  • Apr 30, 2017 12:12am Apr 30, 2017 12:12am
Quoting dkrock
{quote} First, that is pretty paranoid as those are extremely rare. For me, I was on the correct side of the one I have seen. Most of the time they spike, which means they don't do any damage. The ones that gap are the ones that kill you. I have only seen one "black swan" gap in 13 years, so I am not going to let it bother me, lol. However my exposure is less due to my business plan. I trade intraday and am out of the market at the end of my trading day. I withdraw profits and only leave a balance required for the next day's trades. At my broker,...
Totally reasonable reply. Unfortunately I require as much leverage as I can get because my stops are very tight and to get even the 1% risk I put up per trade eats up significant margin. 50:1 doesn't make it easy to withdraw much lol. As far as adjusting my position size I have an on screen indicator that calculates all of that based on where I put my entry and stop loss lines, adjusted for spread. Makes it pretty easy and fast to do since charts move fast on highest resolutions and requires quick calculations or you miss the entry.
  • #14
  • Apr 30, 2017 12:20am Apr 30, 2017 12:20am
Quoting dkrock
{quote} All valid points for a rookie. Once you have a trading strategy though, you can risk whatever you can afford, and not be scared to do it. Yes? From my interaction with traders, or wannabe traders, in various markets, they all tend to do the same thing; draw art projects on a chart, make a guess on entry, and then make up a profit target. Until you create a valid exit plan, you are simply guessing over and over, which according to the Law of Large Numbers, will make your wins/losses 50-50 after enough attempts. That is why they think money...
Dkrock,

1. Could you please elaborate more on this:

"That is why they think money management is important, because, LOL, they have no trading plan."

2. What is an ideal strategy according to you? Riding the market till it reverses?

Thanks
  • #15
  • Apr 30, 2017 12:22am Apr 30, 2017 12:22am
Quoting Kanzler
{quote} Totally reasonable reply. Unfortunately I require as much leverage as I can get because my stops are very tight and to get even the 1% risk I put up per trade eats up significant margin. 50:1 doesn't make it easy to withdraw much lol. As far as adjusting my position size I have an on screen indicator that calculates all of that based on where I put my entry and stop loss lines, adjusted for spread. Makes it pretty easy and fast to do since charts move fast on highest resolutions and requires quick calculations or you miss the entry.
Of course, it depends on your business plan. I had specific goals and designed my trading system to match. I wanted to be able to compound so I could diversify. I also required my entry and exit to be the same value. That significantly lowers my loss per trade and nearly nullifies my stop loss. For me, 30 pips is a catastrophic stop, but I know it is only for general trading conditions. If I get gapped beyond it, YIKES. So far, so good
You cannot be extraordinary by being normal
  • #16
  • Apr 30, 2017 12:42am Apr 30, 2017 12:42am
The axiom "Plan your trade and Trade your plan" cannot be far from those 3 components of successful trading ...
Yet, a good trading strategy/system/methodology should always incorporate risk-management into it ...
Money-management is more likely related to the lot-size we could/should be playing on any trading plan ...

So, in my opinion, a trading plan consists of a trading strategy + the money-management factor ... thus narrowing the components of successful trading into just 2:
1. A suitable-profitable trading plan (the technical side), and
2. Trading psychology (the mental side) ... i.e., the "Trade your plan" side ...

For newbies/rookies, yes, they have to spend a lot of time finding and testing trading strategies that can suit they characters, which should become their primary focus of efforts (which is better done on the demo account) and could take years to develop ...
But for advanced traders, who already developed at least one suitable-profitable trading strategy/plan, the challenge lies in "Trading the plan" ... a shift from "100% technical" to "80% mental, 20% technical" ...
(I'm using the 80/20 proportion because it's the most common one. But it will eventually come up to nearly "100% mental" as there will be nothing else to add/subtract on how we make trading plans because the results have been proven "satisfactory" ... no more "greed" on optimizing the existing strategies)

This post is just to clarify that the "importance" factor will shift as one progresses in the world of harsh-rude-fierce forex-trading endeavor ...
Market is not random but unpredictable
  • #17
  • Apr 30, 2017 12:47am Apr 30, 2017 12:47am
Quoting aaven
{quote} Dkrock, 1. Could you please elaborate more on this: "That is why they think money management is important, because, LOL, they have no trading plan." 2. What is an ideal strategy according to you? Riding the market till it reverses? Thanks
In my perusing of various trading systems, the majority seem to be the same. They make support/resistance lines based on dead trades, occasionally make diagonal trend lines, then wait for price to touch a line or punch through it. The more advanced traders place pending orders past the lines, presumably for more probability. In my head though, it is still ONE candle, so the sample size is 1. I believe trading on line touches is 50-50. It is a guess. So, if you are guessing, then you need to CYA in case you are wrong. For that reason, you need to have a money management plan. I also think since most traders lose, and most traders draw these art projects, then this is probably not profitable. Logically, all trades are guesses, but I prefer to trade on a larger sample size to increase the probability. Higher probability means more profit. It does not mean I win every trade. It simply means that eventually a trade will have enough future traders driving it vertical enough to make profit.

The minority group of traders are using moving averages and their various associated indicators. I have done extensive testing of moving averages and found there is no magic moving average crossover for consistent profit. These traders want to use them though, but I am not sure they know why, or how. They are better than using lines from dead trades as they are more closely connected to the current day's movement, but they have limitations. Unless you know how to capitalize on their strengths, then you need a money management plan because there is a greater than normal chance your entries will be late, forcing you to sit through drawdown, or that you will experience a lot of head fakes if your values are too tight to the market.

These are just my opinions. It doesn't make them true. Supposedly there are traders making money despite my evaluations. Good Luck
You cannot be extraordinary by being normal
  • #18
  • Apr 30, 2017 12:52am Apr 30, 2017 12:52am
Quoting dkrock
{quote} In my perusing of various trading systems, the majority seem to be the same. They make support/resistance lines based on dead trades, occasionally make diagonal trend lines, then wait for price to touch a line or punch through it. The more advanced traders place pending orders past the lines, presumably for more probability. In my head though, it is still ONE candle, so the sample size is 1. I believe trading on line touches is 50-50. It is a guess. So, if you are guessing, then you need to CYA in case you are wrong. For that reason, you...
I would just PM you but apparently I am on your ignore despite us having this conversation. In any case...there is a reason S/R lines work, sometimes. If you know what to look for it is much higher than 50/50. Something to chew on.
  • #19
  • Edited 1:44am Apr 30, 2017 1:18am | Edited 1:44am
Quoting Kanzler
{quote} I would just PM you but apparently I am on your ignore despite us having this conversation. In any case...there is a reason S/R lines work, sometimes. If you know what to look for it is much higher than 50/50. Something to chew on.
I didn't like that style because I was more familiar with a different approach to measure movement, and I wanted it to be as hands-free as possible. I stick to the middle, and trade as price moves up and down from it. Without mathematical analysis, I am uncomfortable entering/exiting trades.
You cannot be extraordinary by being normal
  • #20
  • Apr 30, 2017 1:50am Apr 30, 2017 1:50am
Many, if not all, will disagree with me, but i have come to the conclusion that Trading Psychology is just a complete rubbish. Sorry, if I sound rude. Not my intention... Maybe one needs the Trading Psychology when one is in ignorance? Don't know...

One German pro trader, writes here at FF, once wrote me: statistics = boss. As you can see - there is no Trading Psychology in there...
Maadik Hugiis. IQ 69.
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