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dudest [ Tue Apr 28, 2015 11:14 pm ]

Post subject:

Quizz me this...

Hi HJ,

Been musing over the posts in your thread, feeling I had something to say but without re-gurgitating the usual spiel

Entered the trading world proper in Dec 2011. The person I pity most nowadays is a forex newbie, because he/she has no idea the world of pain & mental warping that awaits them. Because as Mark Douglas intimates, the zone, the grail, is the mind itself.

I believe (as a matter of personal experience) that M.D. is right; that trading successfully is a state of mind. The method, the techniques, the system, are just tools in the hand of one operating a trader's mindset. Thankfully, a significant portion of (former) newbies stick with it long enough through the pain and necessary mental changes and reach competence levels they didn't think were possible ( remember this? this guy was onto something... )

IMHO, learning to trading consistently well ( at the core ) is no different than any skill requiring deftness & co-ordination. I guess we take so many of our 'normal' day-to-day skills for granted, because most were learned when we didn't know we were learning them (e.g riding a bike, learning to dribble a ball without looking at it, driving a manual (stick-shift) car, mastering the violin/guitar,...). Because of interest ( or other over-riding factor, e.g survival ), we didn't notice the internal process that was necessary to cause the skill to become burned into 'muscle memory' ( conscious & unconscious competence ).

Then, when we come to trading, we don't realize that skills and norms we picked up in the schooling systems and social structures are in OPPOSITION to the mindset necessary to trade successfully. We are bewildered at how super intelligent/book smart we are, how super we are at our professional jobs, & super at "winning friends and influencing people", yet TERRIBLE at trading. We have no clue how growing up our minds are accustomed to doing away with RISK and UNCERTAINTY ( the other two names for "fx trading" )

As if that's not enough, without our realizing it, we get ourselves into a domain that's TOTALLY RIGGED against us from the GET GO. Captain Jack's pointed this out better than anybody I know. The very tools we are introduced to from the beginning ( indis, systems, etc ) keep us from the real picture being painted on the screen. The risk and money management principles ( how/when to use SLs, TPs, lotsizes, leverage, etc ) are one-size-fits-all packages that just keep getting spewed day after day after day but that no-one seems to make worthwhile money off of!... ("risk 1% of your a/c...", etc etc)

If I had to illustrate the difference in paths each must take to attain mastery, I'd use martial arts disciples/students. 4 guys can be taught by the same master for years. The core of their skills will be the same, but how they unleash their mad skillz will be totally customized to each. Say they all use swords: one guy will handle with the left, another with the right, another with both hands, but all will be killer bad-ass with the sword. Or take 4 disciples of different martial arts: kungfu, muay thai, karate, capoeira. Each can defend and kick-ass! in their own way with totally different skills, though each have the same fighter's mindset at the core. Taking it as 4 successful traders: they make more money than they lose, consistently.

What then? What needs to be done? (IMHO)

1) Traditional money and risk management principles need to be chucked out the window
--> Replace SL with "cut my losses when it is absolutely clear I'm wrong"
--> Replace TP with "choose to bank my profit and not care if price continues same direction for another month"
--> Replace Low Leverage with "maximize my margin to work for me" ( e.g. via stacking )

==> The idea is not to be safe, the idea is not to have clean numbers; the sole OBJECTIVE is to make money. Period

2) Approach the forex (and other) markets for the rigged eco-systems they are
--> Understand that the retail forex market is just a parallel to the real forex market where governments, banks and multi-nationals convert and transfer money necessary for <whatever they need to achieve>
--> The other guy on the other side of the screen PAINTS THE PICTURE. The objective is to OBSERVE ENOUGH to THINK LIKE HIM.

3) Quit struggling in private and put your work (trading ideas) out there
--> Like porn addiction, or depression, struggles with trading get worse the more they are kept in darkness (yes, I dare say that). Expose them to the light and watch the chaff fall away
--> EVERY great idea/product/service out there was a THOUGHT in someone's mind. The difference is someone put their work/idea out there ( probably got alot of hate for it ) but look at what it became after that ( Paypal, Google, ESPN, stevehopwoodforex.com, Newton's classical physics, ... could go on forever )
--> How many times have you asked someone for their opinion about something that was bothering you and before they even answered, the answer became clear to you?!! Our brains work in weird ways; there is something about putting your thoughts on 'paper' that clarify the same thoughts inside the brain. Put your trade ideas out there; your mind will be forced to take notice of details you would otherwise have skipped.

In short: take the plunge and get messy [ à la Captain Jack ]. Risk it and try a very different approach to your trading. And hang in long enough for your mind's lens to turn that grainy image into a focussed beauty. Once you see, you will not be able to unsee

Long post but hopefully worth the reader's while

Cheers

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Author:	HannesJoubert [ Wed Apr 22, 2015 2:36 pm ]
Post subject:	Quizz me this...
Hi guys...whilst I am making use of some downtime away from physical trading, working through personal losses and some problems, I have a question that I would like to pose to the bright trading minds that we have around this forum, with the distinct hope that I will get some honest answers and hopefully be put on the right track. I realise that this forum is mainly dedicated to trading with EA's and the development of them, I do believe that the answers to my question, will ultimately help others become more successful at trading, even whilst using an EA... We have all heard the mantra that we should trade in a way that allows us to trade another day. ie low lots, low leverage etc. we have also heard that you can give a system to two different people, one will make a success of it and the other will make a mess of it. We have all had patches where we manage to trade for a profit for a while and then we hit a patch where the wheels fall off. We have heard of people advocating the use of SL's whilst there are others that stay away from SL's as they feel that you are then setting yourself up for failure, especially with the use of static / fixed SL's. We have all seen both indicators and EA's that work for a while until they stop working (As Captain Jack put it, the circumstances change). We have also heard of the traders that can place trades from the same price, in opposite directions and both can make a profit... I have seen trades that I have placed and closed in a loss, turn around and go in my direction and I would have been able to close it for a win had I waited. I myself have placed trades, which were losers and I managed to trade my way out of the losing position for a profit, and then trying it again another day I just ended up making my losses bigger... We have seen all the strategies, trend following, counter trend, retrace entries, etc etc. All coupled with the myriad of indicators available. We have heard the argument that entries are the most important, whilst others have argued that exits are the most important. I have come to the conclusion (and it may be an erroneous conclusion, please help me with this) that you do not really need indicators, SL's or even to know in which direction the trend is, or isn't. The most important thing in trading would be open trade management. This would explain the reason why some traders are successful and some aren't, even when using the same indicators etc. What is milling around in my head is this...No one, on this side of the retail market really knows what price is going to do or when it is going to do it. The number of variables in the market and at the disposal of others are just to great to allow you to say with any certainty what is going to happen next (Unless you are a trading Savant like Captain Jack, unfortunately, I cannot get to his level any time soon, I don't have a light bulb to switch on). So to over come these limitations, to my mind, the only way around this is open trade management. This is the only real way to be profitable...It would also free you up to trade without any fear, if you know that your lot size, leverage and open trade management are all in line, then you can trade with confidence, and this will in the end feed itself and you will be even more profitable... Do we have anyone that can help out a fellow trader with open trade management, or is this something that is learnt with trial and error? As I have said, in the past I have managed to dig myself out of a loss / trade that went the wrong way, but at the moment I cannot achieve this consistently enough to say bugger it, now I am going to trade like this all the time...hence my ask for help, and also honest comment as to whether I am blowing smoke up my own butt...

Author:	RedLineFred [ Thu Apr 23, 2015 3:26 am ]
Post subject:	Quizz me this...
I have also come to the conclusion that to succeed at this we should: 1. Assume the market is random - I know there are many who suggest otherwise, but what i mean is that the next tick will produce a price that is random; it can and will go either of three ways - up, down or steady. 2. Keep your trade size small enough as to not matter if you loose. 3. Close any trade that is not heading toward profit. 4. Keep trades open, if in profit, until a turn around is obvious, and then close them out before running into a loss. So my aim, is to automate the trade entry and trade management so that I am taken out of the decision loop, thereby eliminating the human element. Have my EA look for a trend entry that gets me into the prevailing long term trend, as this is probably the only edge we have for longer term trades. Enter with a small lot size (that risks around 0.25% of Account Equity) and set a technical stop loss that if hit, suggests i got in at the wrong price. I don't set a Take Profit, rather trail the SL with the view of hanging in for a ride on the trend. The trade closing when the trend re-traces. Rinse and repeat. Compounding gains should outweigh losses - leading to retirement (maybe).

Author:	HannesJoubert [ Thu Apr 23, 2015 6:12 am ]
Post subject:	Quizz me this...
RedLineFred » Thu Apr 23, 2015 5:26 am wrote:I have also come to the conclusion that to succeed at this we should: 1. Assume the market is random - I know there are many who suggest otherwise, but what i mean is that the next tick will produce a price that is random; it can and will go either of three ways - up, down or steady. 2. Keep your trade size small enough as to not matter if you loose. 3. Close any trade that is not heading toward profit. 4. Keep trades open, if in profit, until a turn around is obvious, and then close them out before running into a loss. So my aim, is to automate the trade entry and trade management so that I am taken out of the decision loop, thereby eliminating the human element. Have my EA look for a trend entry that gets me into the prevailing long term trend, as this is probably the only edge we have for longer term trades. Enter with a small lot size (that risks around 0.25% of Account Equity) and set a technical stop loss that if hit, suggests i got in at the wrong price. I don't set a Take Profit, rather trail the SL with the view of hanging in for a ride on the trend. The trade closing when the trend re-traces. Rinse and repeat. Compounding gains should outweigh losses - leading to retirement (maybe). Howzit Fred, thanks for the reply. Point 1: I agree Point 2: I agree Point 3: How do you know that the trade will not turn around and turn into profit? Depending on time frame used for your trading (longer time frames = larger moves), can you not keep that "losing" trade open and manage the trade by adding others, in whatever direction to end up in a nett profit? Seeing as point 1 is our starting point? Point 4: Ties into my comments on point 3, if a turn around is obvious (when is anything really obvious or guaranteed in the forex market?) then the loss on your 1st trade will reduce, if you have opened trades in another direction they will already be in profit, so close the profitable trades, trade back into your unprofitable trade by adding trades in the same direction in the turn around move and close for a nett gain... I also agree that perhaps we should not set in cement our TP's and SL's, given our consensus on point 1, but given the other points above, should we even set SL's? I think the point that I am driving at, to date, we all, or at least I have been taught and given the impression that we "must" use TP's & SL's and that entries and exits are equally important, that we need to have this indicator on our side, we must keep that fundamental in mind etc etc in order to be profitable. Now, I have been doing these things and I have just been spinning my wheels, that means that I am doing something wrong, not so? So, my question still remains, what about open trade management? And does all the other fluff that surrounds trading really matter? The fluff feels to me like shackles put on to keep me from reaching my goals of trading profitably... Thoughts anyone?

Author:	HannesJoubert [ Thu Apr 23, 2015 11:06 am ]
Post subject:	Quizz me this...
MrLong » Thu Apr 23, 2015 10:02 am wrote:Hello HannesJoubert, Only thing I can really say, is this, I don't believe it's possible to make a consistent profit trading lower timeframes, getting stopped out here and stopped out there only for the trade to go into your direct once stopped out. The lower timeframes are just noise of the major trends, best to trade the daily timeframes first looking the direction of the monthly followed by the weekly, then enter the daily into that direction. Best Regards Andy Thanks for the reply Andy. I agree with you there too. But I suppose that it depends on what your goals are??? Reading as much as I have, it seems that the patterns and price action shown on the lower time frames repeat themselves on the higher time frames, so, in essence, if you can trade the higher time frames, you should, with some modifications, be able to trade the lower ones also... I am not trying to be difficult with this issue guys, but I really do think that the essence of profiting from trading is in your open trade management, and from what I am hearing it seems that it is very much up to the individual and can only be gained via experience, i.e. not taught...having said that, there must be some basic premise that we can start from other than the old worn out mantras that have been bandied about in Forex for some years now. Keep in mind as well, that these premise as laid out to us do not work so well or we would not have the 95 / 5 or whatever ratio of failing traders to successful ones... Everyone says that the big boys are successful because they have deep pockets (and it seems everyone wants to emulate the big boys)...we could also have deep pockets if we use our leverage correctly and reduce lot sizes accordingly, but then we would have to adjust our expectations of return a bit...Having said that, is 15% pa so bad??? When we say that the big boys have deep pockets, what exactly are we implying? That they can hold their positions for a long period of time and wait for the market to return to their advantage, if they made a mistake in the first place? Or are we implying that they average into their positions by adding to losing positions in order to get out a better price and still make a profit? Or maybe a combination of both? Is this not kind of like what I am leaning towards? I am really starting to take on the opinion that we are keeping ourselves busy with the wrong things and missing the forest for the trees...open trade management, ie what to do when your position is in a loss to ensure that you end up in a profit, and what to do if your position is in a profit to accelerate that profit and to protect it...is THE key I believe. The reason I say that. Give a losing trade to an accomplished trader and tell them to get out at a profit. 9 of 10 times they will manage it, and the 1 that they do not manage will not be a black swan event either... So, any other thoughts on open trade management as defined in the above para? H

Author:	RedLineFred [ Fri Apr 24, 2015 2:39 am ]
Post subject:	Quizz me this...
If you exit your loosing trades early enough, and assuming you trade small lot sizes, you don't need to manage them. Spend more time looking for the next winner instead. On the other hand, how to get the most out of the winners - now that's a good question...

Author:	HannesJoubert [ Fri Apr 24, 2015 4:19 am ]
Post subject:	Quizz me this...
RedLineFred » Fri Apr 24, 2015 4:39 am wrote:If you exit your loosing trades early enough, and assuming you trade small lot sizes, you don't need to manage them. Spend more time looking for the next winner instead. On the other hand, how to get the most out of the winners - now that's a good question... Hi Fred,thanks for the reply, I hear what you are saying, but that sword cuts both ways not so? When is early enough to cut a losing trade, and how long do you hold onto a winning trade? It can always turn around and stop out for BE...so no losing trade then but it sends your R:R for a loop... There is another element that we are missing...I think that NB is closer to the answer than we in that he doesn't close losing trades just for the sake of losing trades, at the end of a period of time, be it session, day, week or month he looks at his trades and then he closes them out on a basket basis usually for a nett gain...the more I think about it, this is not something that can be taught because the variables are so fluid...only experience will teach one this. That and the balls to not close a trade if it is in loss, just for the sake of closing a trade because it is in loss...eg. I have had trades on more than one occasion, where my 100+ pip SL was hit (daily time frame) because I had the entry "wrong" Hey ho, come back a week later and the price on that losing trade managed to turn around and would have hit my TP anyway and that was not an anomaly, it has happened quite often...so my question remains, what are the principles of managing open trades to our advantage?

Author:	Pipologist [ Sat Apr 25, 2015 5:35 am ]
Post subject:	Quizz me this...
Hello HannesJoubert, I have been following your thread and reading the above posts at least a few times, and I would like to make the following points: - MrLong is very right about trading TFs. - This forum is not "dedicated to trading with EA's", and we have many threads here dedicated to manual trading systems including Bob's, Captain Jack's, Bald Trader's threads, to name a few, and are dedicated to teaching manual trading at their best without any B.S. that you find in some other forums. - Two of the threads which I mentioned above are about trading with indicators, and one is about trading naked charts. All the three are excellent working systems. Therefore it is your personal choice whether to choose indicators or not, and really no one can help you come to that conclusion. - Of what I can see from your posts, you have all the basic knowledge that you need to become a good trader, and you know all the advanced stuff too , but it seems to me you haven't yet compiled all that knowledge together, and have not yet found a coherent way to trade. - About being a consistently profitable trader, I would like to say that I do not believe there is any trader who makes profit in every trade he enters, unless he has a magic ball, We all make losses, but the more experienced a trader becomes his losses decrease and his profits increase. One should look at the increase or decrease of the amount of cash in his account at the end of the week if he is trading shorter time frames and monthly if trading daily charts. Personally, I look at my main account monthly but make a conclusion quarterly. - Of course in life everything comes at a price, and the price for becoming a profitable trader (by profitable trader I don't just mean a Forex trader, as I have been a commodity trader for some years, and have been trading Forex for just less than 2 years) is getting into a cycle of continuously learning, practising, self improving, self discipline, learning from one's mistakes, and walking step by step towards perfection (even though we all know in reality perfection does not exist). Of course all this needs hard work and time. - The stage you are in at the moment, which you are reflecting and bringing all your knowledge and experience together, is an excellent opportunity for you to become stronger for when you are ready to move on. However, if you want to continue trading in the future, please do not give up and open a demo account with 1K max. virtual money, and trade it with 0.01 lots and a maximum of 3 x 0.01 lots on any pair. Never let the margin go over 40%. If because of your margin level you are not able to open another trade, but you really want to do so, then close another trade before opening a new one. Now that I mentioned margins I should also mention leverage. The maximum leverage I would ever use in Forex is 50. - Treat the demo account as a real account, and have a tabulated sheet of A4 paper with rows and columns, and before entering a trade write down the date, buy or sell, entry price, other relevant data, and all the reasons (including you gut feelings) why you are entering that trade. Do the same before exiting a trade too, unless you have hit a SL. Analyse your trades regularly, and write down next to each round trade why you were right or wrong for entering or exiting that particular trade. I promise if you do this, your trading will improve in a very short time, and continue improving if you make a long term habit of it. - Many of the questions which you have, as I can see in your above posts, will be answered for you by reading and understanding the first 30, 40 pages of Captain Jacks Naked Trading thread. There you will see how to get excellent R:R entries, when to TP, and when to cut your losses short. You can mix and match his methods with any other trading system you would like to use. In fact reading and understanding those pages will make anyone with any trading system a much better trader. My post became much longer than I intended. I apologise. Farhad

Author:	forexdj [ Wed Apr 29, 2015 1:00 am ]
Post subject:	Quizz me this...
dudest wrote: ................... What then? What needs to be done? (IMHO) 1) Traditional money and risk management principles need to be chucked out the window --> Replace SL with "cut my losses when it is absolutely clear I'm wrong" --> Replace TP with "choose to bank my profit and not care if price continues same direction for another month" --> Replace Low Leverage with "maximize my margin to work for me" ( e.g. via stacking ) ==> The idea is not to be safe, the idea is not to have clean numbers; the sole OBJECTIVE is to make money. Period 2) Approach the forex (and other) markets for the rigged eco-systems they are --> Understand that the retail forex market is just a parallel to the real forex market where governments, banks and multi-nationals convert and transfer money necessary for <whatever they need to achieve> --> The other guy on the other side of the screen PAINTS THE PICTURE. The objective is to OBSERVE ENOUGH to THINK LIKE HIM. 3) Quit struggling in private and put your work (trading ideas) out there --> Like porn addiction, or depression, struggles with trading get worse the more they are kept in darkness (yes, I dare say that). Expose them to the light and watch the chaff fall away --> EVERY great idea/product/service out there was a THOUGHT in someone's mind. The difference is someone put their work/idea out there ( probably got alot of hate for it ) but look at what it became after that ( Paypal, Google, ESPN, stevehopwoodforex.com, Newton's classical physics, ... could go on forever ) --> How many times have you asked someone for their opinion about something that was bothering you and before they even answered, the answer became clear to you?!! Our brains work in weird ways; there is something about putting your thoughts on 'paper' that clarify the same thoughts inside the brain. Put your trade ideas out there; your mind will be forced to take notice of details you would otherwise have skipped. In short: take the plunge and get messy [ à la Captain Jack ]. Risk it and try a very different approach to your trading. And hang in long enough for your mind's lens to turn that grainy image into a focussed beauty. Once you see, you will not be able to unsee Long post but hopefully worth the reader's while Cheers What a post! This has cleared all the uncertainties I have been having in my trading recently. I guess it's now time to open my thread and share my trading style... (just kidding)

Author:	Pipologist [ Wed Apr 29, 2015 9:22 pm ]
Post subject:	Quizz me this...
dudest » Wed Apr 29, 2015 12:14 am wrote: --> How many times have you asked someone for their opinion about something that was bothering you and before they even answered, the answer became clear to you?!! Our brains work in weird ways; there is something about putting your thoughts on 'paper' that clarify the same thoughts inside the brain. Put your trade ideas out there; your mind will be forced to take notice of details you would otherwise have skipped. In short: take the plunge and get messy [ à la Captain Jack ]. Risk it and try a very different approach to your trading. And hang in long enough for your mind's lens to turn that grainy image into a focussed beauty. Once you see, you will not be able to unsee Long post but hopefully worth the reader's while Cheers Thank you Dudest. Wonderfully said. I totally agree. Cheers

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