My personal experience extends back to 2.5 years with FOREX and has still not led me to consistent profits yet. Right now, i am back to demo trading and testing.
I was essentially attracted to FOREX through a local seminar that made trading seem so easy. It was really pushing a certain methodology and nothing else. No money management, no psychology, nothing. After that seminar i was convinced i was going to get into this thing. They tried to push their course naturally for 3000.00, but some voice in my head told me to not do that and just start learning on my own.
I got lazy with the learning and figured there must be gurus out there who would sell signals or advice. I did some research on that and guess what?!?! I discovered signal providers. I thought i was set. I wouldn't have to think, just follow the signals and i was set for success. Yeah right!
Besides a knowledge of how to execute orders on my trading platform, i knew nothing of what it took to succeed. So, i started with my first signal provider and was completely enthralled with all their backtesting results. Were they legitimate? I found every excuse in the book to convince myself theye were. Were their posted results simply fabricated? I refused to believe that.
So, i started to trade and hit a losing streak. I couldn't beleive it. They posted 60% winners so how could i be experiencing 6 losses in a row? Not to mention that fact that i was risking almost 7% per trade, not realizing i was doing so. My risk was increasing on each successive trade because i was not modifying my position sizes. I really had no clue of money management. I went through this process for about 3 months jumping back and forth between 2 providers every time i hit a drawdown. I even began to cherry pick signals. Eventually i lost half my account before i realized I had to be doing something wrong.
So, the adventure started to really learn this on my own. I signed up for a 1-on-1 program that really did not end up being 1-on-1 at all. It still taught me alot of crucial information though, but it did not help me to become profitable really because i did not have the discipline to follow rules. The program didn't teach that, LOL.
Then i moved on to mechanical systems. I was on the right track because i was trying to conciously control my emotions by using clear cut signals. I tested this system till i was blue in the face and after 100 back tested trades, i was pleased with the final result. Or was I? During my testing of this trend following method, the system experienced what i believed to be a tolerable max drawdown given the type of methodology. 25% max drawdown using 1% risk per trade. It also had 35% winners and avg win 3x higher than losers. Great! I decided to trade it. When trading live, the story changed. I experienced those several losses along with the drawdown but i suddenly discovered what true stress was. I could not stomach that many losses. I abandoned the system! I was so frustrated that i almost quit all together.
I took a short break to clear my mind and decided to start reading stuff on trading psychology. I learned about a proper mind-set and how the distribution wins to losses in completely random but over a proper sample size an edge can manifest itself. I also learned that your ability to follow a given system is highly dependent on your personality. It dawned on me that maybe long-term trend following was not for me. I was not THAT patient.
Maybe a system with 50-60% winners with slightly higher avg wins than loss values. So i tried day trading off of 15-minute charts. This, again, was a very specific methodology with set rules and money management. I tested it thouroughly for almost 200 trades and was pleased with the results. One problem though...i was working and could not really follow it. I loved the results so much though that i had to find a way. I could not automate it because there was a slight amount of discretion involved depending on the news out. So, i started to teach my wife how to trade it. She was home and willing and just as excited. So, we started.
I found that the stress of day trading was compleetly overwhelming for both me and my wife. Despite the rules, my wife would pull the trigger too quickly and then want to quickly re-enter after losing. She resisted because of my instruction, but it still created insane stress levels between us. Mistakes were made with timing and the market gapping through tight stops, etc etc...
The testing showed that statistically i should have never expected more than 6 or 7 losses in a row at worst. After experiencing 10 losses in a row, i started to question it. These 10 losses in a row were free of mistakes. Everything was executed perfectly accorindg to the rules, so what was up?!?!
I decided to go back and backtest another year's worth of trades to try and prove to myself that it still worked (or didn;t). Well, that year proved dismal. It was profitable but only marginally and threw off all the statistics such that 10 losses in a row was to be expected from time to time. I abandoned it
This system could proabably be tweaked a little to make it better but the stress of day trading was just too much. I recall banging on the desk !
So what's left? Sometime's it'svery hard to figure out what method fits your personality until you trade it live. I'm at a point now where swing trading seems best for me. I plan trades in the evening and they are held for a few days to a week. I've since discovered babypips.com and they really drove home the point of not letting a winner turn into a loser with their scaling out methods and use of b/e stops, 2 things which i never considered.
I am demo trading again, despite all the discouragement i have experienced and i still do not consider myself as a failing trader. I have not quit yet!
My demo trading is going better than it ever has, and i think the money managament regime i follow now has a lot to do with it. My method is discretionary using support/resistance on longer time frames (i have found them to be more reliable), while looking for divergence and OB/OS conditions on lower time frames (4HR & 1HR) to time entries and exits. Nothing has ever treated me better thus far. It takes patience to wait for those set-ups, but when they come i am seeing that they are some of the most highly profitable set-ups. My avg win to loss has been about 1.3:1 (i find i can really do better on this when signals line up simultaneously across all time frames), but my accuracy has been great. I went as high as 73% in September. I trade only 5-8 times a month and i am fine with that. I've changed my expectations of trading. Before i was rushing it because i wanted to do it full-time. Now, i have stopped focusing on that and instead focus on the right process of waiting for the best set-ups on a time frame that does not stress me out.
I trade much less now, but i am also less stressed and i think i will have effectively filtered out many many losing trades by trading too much.
I am really sorry to have rambled but this whole thing has taken 2.5 years to discover. I'm sure it will happen to many more people much worse than i, but the point is not ot quit. I consider my persistence a success in its own right and i most definitely have not failed until i quit...which i will not do
Thanks for listening to my story
pipbull
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