Quote:
Originally Posted by ChuckNorris
There are only 3 things to consider to be a succesful trader.
1. You need proper money management. Never risk more than 3%-5% of your account on any given trade ... Money management includes tight stop losses and profit taking when it is on offer.
2. Don't take any trade with a risk/reward ratio of less than 1:3. That is trades where you risk 100 pips to make 300 pips for example. If you take risk/reward trades of less than 1:3 then you will struggle to beat the market ... But if you use 1:3 risk/reward you only need 3 winners out of 10 to break even.
3. Get a trading system that gives you 4 winning trades out of 10 attempts. But that system should also give you a 1:3 risk/reward ratio. The best system to use to accomplish this is to use trendlines and chart patterns. Forget about Moving Averages, MACD, RSI, PSAR, Bollinger Bands, Envelopes, etc. They DO NOT work.
And that is all you need to beat the market. I know 95% of forex traders would disagree with me, but that is why they all lose money.
Best of luck
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Wow Chucknorris
Trading 101 in 3 easy lessons!
1. "Money management includes tight stop losses and profit taking when it is on offer."
Money management is MUCH more than that.
What it does NOT include is TIGHT stop losses.
The 95% of traders who lose that you refer to would be scalpers, day traders and the 1-Minute-to-15-minute traders. After that it gets progressively less dangerous.
You can not issue a blanket statement espousing the virtues of tight stops without giving an example. If I am trading weekly bars, what is the point of my using tight stops? Yet trading weekly bars has not only rid me finally of membership of the 95% group, it has negated the need to use stop losses at all - other than for 9/11 events, where I do employ an arbitrary 250-pip SL purely as a left-field-contingency measure.
I would say that good money management involves using WIDE stops ... but then that is from MY perspective, and I obviously trade differently from the masses.
2. "Don't take any trade with a risk/reward ratio of less than 1:3"
This sort of stuff is only put out by the systems sellers to further hoodwink desperate traders. 10 traders will look at a trade and come up with 10 different "Risk: Reward" scenarios.
In fact, traders who wrack their brains trying to get all this stuff aligned just become more confused and begin to feel they are missing out somewhere - they feel inadequate and work even harder to overcome perceived deficits in their knowledge and understanding.
Unfortunately your statement has added to this tangled mess of "prerequisites" for entering a trade. Again, you give no examples - just half-baked repetition of something that someone told you, that they heard form someone who ...yada yada!
There is a whole industry out there pedalling this rubbish. And the sad part is most of them BELIEVE their own hype! Nothing more ironic than a system seller who is a believer of his own myths!
3. "Get a trading system that gives you 4 winning trades out of 10 attempts. But that system should also give you a 1:3 risk/reward ratio. The best system to use to accomplish this is to use trendlines and chart patterns. Forget about Moving Averages, MACD, RSI, PSAR, Bollinger Bands, Envelopes, etc. They DO NOT work."
There are actually 4 points in that statement, so we have to unwind the myth a bit at a time with this one ...
3a. "Get a trading system that gives you 4 wins in 10 attempts"
Why not 5-from-10 ... 7-from-10? That is a statement that is as shallow as I have heard. How do you measure this "system" and how do you know the PSAR is NOT such a system already? So far your posting record on this thread is: ONE post ... ONE king hit on the thread!
How about asking a question or two and offering some guidance and support to all of the people who have been working their insides out to bring something of value to the forum?
That would be in keeping with the spirit and intent of the thread.
3b. "But that system should also give you a 1:3 risk/reward ratio"
Already debunked this one - a mythical red-herring introduced and designed to make traders feel disillusioned with their efforts. Very discouraging to a trader who is already struggling.
3c. "The best system to use to accomplish this is to use trendlines and chart patterns."
Probably the only statement you have uttered that contains a modicum of substance.
However, again I have to take issue ... there is NO BEST SYSTEM.
Traders have to trade within their own Risk Profile - even if they have not defined that for themselves. It may be that they love scalping ... then that is the system BEST for them. Or like myself - they may like position trading ... fits comfortably with the risk profile.
If there is a "BEST" system, it is one that the traders has developed for himself/herself ... one that they "OWN" through putting their own stamp on it. I am sure this is what I did, and other successful traders have done.
Trendline and chart patterns actually ARE important parameters but in my view, no system can be rated against another unless time frames are compared, and even then all you have is a set of probabilities that an entry in one system or the other is LIKELY to give you a winning edge in the trade.
Of course there are NO guarantees - systems stop working ... and defunct systems can "come back to life" and begin to fire again. It just happens that way.
3d."Forget about Moving Averages, MACD, RSI, PSAR, Bollinger Bands, Envelopes, etc. They DO NOT work."
WHAT?
Could you please offer some evidence of the failure of all of the named indicators. You probably should throw in Stochastics and CCI while you are making blanket statement s ... but I am only being facetious!
Some very good traders are using EXACTLY these indicators.
They may/may not trade by them (some do) but they sure as eggs do use them to extract their edge ... and they certainly ARE used by successful traders to effect their entry. Many traders actually manage their trades using these indicators.
The thing is ... they need to be used in the time frames and context under which they were developed. PSAR DOES work ... that has already been shown in this thread. It is an excellent entry/exit indicator, but my personal refinement of it (if I used it) would be to use a couple of different timeframes to fine-tune entry/exit.
As an exit indicator PSAR is outstanding.
Much the same could be said in support of the other indicators.
Chucknorris - like your alter-ego you have burst through the door, found yourself on the wrong movie-set, stomped and romped all over the hard work of others who have put in countless hours on this project, and left the building ... nothing positive - just a smoking ruin!
You should try another approach Chucknorris -
Try entering the room quietly, ask a couple of questions, understand why the work is ongoing and who the main contributors are. Then politely, you might have the right to make a tentative suggestion or two, and could expect to be taken seriously.
Keep your brashness for your movies!
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