An interesting approach to trading- My newbie approach with discipline

Beginner Questions
1

A little background on me- I’m a newbie trader (duh) that traded demo for 2 weeks, then switched to live. I started live 8/5/11. My approach to trading I believe, really focuses on the psychological aspect. I believe no matter how good your system is, it is ONLY AS GOOD AS THE TRADER.

So I want to dedicate this thread to working out my mental muscles as I prepare myself for the long road of forex ahead. Even if I want to become a millionaire forexer, if I were to have $1million right now I would not be mentally ready to trade it, and I would lose it all.

That said, I will post up my forex journal entries on here as I go along (I write in a physical journal, so will have to type it up separately onto this thread). When I get home I will post my (rules I must never break when trading in forex) post. I welcome all comments suggestions and critiques. Sometimes I might even post up my trade set-ups.

Currently my winrate is 55-60%, and due to my horrible lack of discipline my entire second month has been breakeven and short losses, due to me breaking my rules (I know :() repeatedly. Will try my best to iron myself out as the year progresses. I hope to +100% by the end of december again.

UPDATE::

In this thread you will find

  1. trade setups with analysis on how I made the trade (strategy)
  2. market observations and other things I notice
    3)my psychology and how I will try to fix it
  3. my weekly updates

From Page 2:

IRON CLAD rules to never break when trading:

  1. always know economic events that are potentially going to affect your trade.

  2. Be aware of strong/significant Support/Resistance lines, NO HALF-A$$ing it

  3. Pick the direction of the daily trend. DO NOT trade the fence!

  4. Do not trade if feeling emotional

  5. Do not trade if you do not know your entry, stop, AND take profit region

  6. know your risk before entering the trade

  7. WRITE THE SETUP IN THIS BOOK BEFORE ENTERING THE TRADE

  8. Pay attention to volatility for range vs trend trading

  9. DONT CHASE A TRADE. Best Price or NO price.

  10. complete objectivity, complete faith in entering every trade. Believe in the stops you place

  11. NO CALL OF DUTY DURING TRADING SESSIONS!

  12. In regarding take partial profits, there will be two sets of rules. Under low volatility environments if trading inside a box I will take profit at roughly 80% of the range, not at the very end. If trading breakouts, I will take partial profit (half my position) at +20, take full profit at +30-40. When trading high volatility environments, I will take partial profit (1/3) at +40, and set to breakeven + trailing stop at +60. To cliffnotes this rule, I must TAKE something at either +20 or +40, no exceptions!.

[B]WEEKLY UPDATES

Week 1: +263, ==>+8% (risk is 1%)
Week 2: +446.7, ==> +15% (risk is 1%)
Week 3: +244.7, ==> +12% (risk is 1.5%)
Week 4: Still going

Current Winrate: 51/63 ==> 81.0%
NEWS TRADING: 21/22==>95.5%

[/B]

This thread has been moved to Not so nooby Not so pro- My fight with psychology @ Forex Factory, please check there for latest updates. I’ll try to give this thing a weekly update

2

Good start, and that is as brutal of a realization as one can come to early on.

Tru dat;)

Being this is a rather public forum, you’ll get all kinds of advice here. Some not so good, and some stellar. You’ll be able to tell the wheat from the chaff.

You could make GREAT profit consistently winning 55-60%.

Don’t try to win them all, there’s no holy grail. Just learn to profit more on the ones that are positive, than you lose on the ones that are negative.

Cheers!

3

First off, Congrates,

Secondly, Dont bother have this journal… ( Dont take personal)

Im going to tell you why…

They WILL BREAK YOU DOWN, and NO-ONE IS INTERESTED, and it willbe a waist of time, FOR YOU…

Write notes down, or on Text pad, keep a journal

Logging stats and this and that, is well, not benificail…

Just isnt worth the time, and then the mind smacks that you might get from other posters.

Just being Honest with ya, is all… You need to dicapline YOURSELF, no-one here can do that for you, remember that…

Great Profits to you,

4

Master Tang,

Dont try to win them all?

I cant believe I read that from you Sir…:15:

5

To Master Tang,

I do understand that 55-60% COULD keep me in profit, but going through all my trades I see that for every good trade (meaning good execution good analysis good management), I will have one super bad trade (breaking my own rules) that completely negate my profits. So essentially if I got rid of ALL my bad habits, I would be making a stellar profit right now :stuck_out_tongue:

My first month I netted 125% using 3% risk trades, and being disciplined. Somewhere along that way, I started getting drowned out by trying to find more research, to know more about this and that, and listening to a thousand chattering voices that gave me advice for this and that, and I have lost my way and kind of… de-volved into a worse trader. So I’ve essentially lost my center. This second month has been a constant battle of trying to fix habits that are created and reinforce, instead of me stomping out my problems. I have already started attempting to fix my problems by risking 1% max instead of 3%, and seeing problems as they come, and update this thread as time permits.

Thanks for your post.

6

Not tryin’ to rock the boat here is all;)

7

jwlee, if you do post, i’ll follow it for sure,

8

Thanks, I need more ways of having accountability for my actions MNS

9

That is a very common issue for new traders.

Here’s a little story I have about something else that maybe you can take something from.

I wanted to learn to play golf years ago. I went to the sports store, bought myself a couple of single clubs, some wiffle balls, and decided to give it a try. I had never swung a golf club, but years ago, when I was very young, I rode along in the cart with my uncle. He told me ONE thing, and that was, keep your left arm straight.

I never knew what he meant, but here I am 25 years or so later with a golf club in hand, and that was the first thing that popped into my head. I have always been a bit coordinated, so I took that thought to heart, and took a swing.

BAM straight as an arrow. Did it again, and BAM. Another.

I hacked around like that for a few days, and decided to take my newfound fun to a real driving range to hit real balls, and see what that felt like. I make my way into town, get my tokens for the range balls, proceed to dump balls all over the place because I didn’t realize how important it was to put the bucket on the hook. I find an open mat, and take a few swings without a ball. Then, put a ball down, and BAM. Straight as an arrow, and just ripped. I did it again… And again.

After a while the guy next to me asks, how long have you been playing? I said, that this was my first time hitting real balls.

Well, you would have thought that fellow was Tiger Woods with all the advise he had for me about what I wasn’t quite doing right.

And I listened.

I have struggled to forget that conversation to this day.

In our journey for perfection, we often overlook the logic and common sense that we are born with, instead looking to others that supposedly are wiser, and more experienced.

Trading is especially rife with such sage advise, especially if you put it out that you are looking for suggestions.

Just like the thousand voices you have already heard, those in your head and otherwise, you need to get rid of them.

If you can, go back to what was working for you, and write it down.

Stop the thinking, guessing, predicting, and second guessing yourself, and go with what you see on the charts.

A simple line here and there, and you can see what price is more likely going to react to. Get your risk management in control, and go with it.

If you hit a loser, go back and tear it apart. What made it different? Did you miss something? Did you jump the gun?

MT4 has the great feature of being able to drag closed trades onto the chart they happened on.

Go to “Account History”, left click and hold the trade you want, and drag it onto the corresponding chart the trade happened on. It will put two arrows, two small hash marks at the T/P and S/L points, and a dashed line from the place and time you opened your trade, to the time it closed, win or lose.

Do that with all the losers, AND the winners. If you profited, but felt you got out too early, examine why.

Then, just learn to react. Don’t look, or try to predict, price will more often than not show you the way. Just learn to react.

Simple formula really, if A+B happens, you enter. If A happens, and B is close, but not exactly what you need, don’t assume it will be later, and enter anyway.

ONLY ENTER WHEN ALL YOUR FACTORS LINE UP.

It’s hard, because you’ll more often than not feel like you NEED to be in the market.

Nothing could be further from the truth. You only need to be in the market when your stars line up, otherwise, learn to sit on your hands.

Best of luck with this:)

It’s quite a journey, but a rewarding one, providing you can control the image in the mirror. That cat will test you like nothing else you have ever encountered.

Cheers!

10

Great Post,

Buy the way, “MT4 has the great feature of being able to drag closed trades onto the chart they happened on”.
I had No idea, thanks for that tip

11

Great post Master Tang, this boosted my confidence and also i learned new feature of MT4 which i was not aware :slight_smile:

13

IRON CLAD rules to never break when trading:

  1. always know economic events that are potentially going to affect your trade.

  2. Be aware of strong/significant Support/Resistance lines, NO HALF-A$$ing it

  3. Pick the direction of the daily trend. DO NOT trade the fence!

  4. Do not trade if feeling emotional

  5. Do not trade if you do not know your entry, stop, AND take profit region

  6. know your risk before entering the trade

  7. WRITE THE SETUP IN THIS BOOK BEFORE ENTERING THE TRADE

  8. Pay attention to volatility for range vs trend trading

  9. DONT CHASE A TRADE. Best Price or NO price.

  10. complete objectivity, complete faith in entering every trade. Believe in the stops you place

  11. NO CALL OF DUTY DURING TRADING SESSIONS!

14

Today has been one long day. I figure I should not bother with posting my earlier journal entries, but I will start with what happened today. Since I have not entered any trades, I do feel more disciplined than normal. I watched AUD/USD, EUR/USD, and USD/CAD the ENTIRE DAY. It stayed within range during the asian session (expected, did not capitalize on it). When the price was at either end of the ranges (check your 1H and 4H charts), what I most likely would have done before is place an order for a breakout of the range, which would have lost. The question was why??

It is because I believed that the dollar would continue rallying after this brief period of consolidation. But the FACTS (rule 10) are that 1) its the asian session. Breakouts are pretty damn uncommon. 2) theres very low volatility to support a break, and 3) I did not look at the daily trend yet (rule 3).

Now that I have sat out I feel better that I did not bomb myself into a dumb trade today. However, since currently it is in the middle of the ranges for all 3 pairs, and theres not much price action going on, you can’t tell if its going to go up or down, and so I won’t expect to make an entry before LONNY crossover. I would prefer to bet on the dollar, because a supported breakout would gave a larger pip return than the other, but I will remain completely objective and pay attention to where price is heading toward, not what I think it would do. Either way I have to make two separate plans for if either action plays out: USD is getting significantly stronger/weaker towards the ends of the range.

As of right now: pips saved is roughly about 60 pips

15

I see where you are coming from with this, but my take on forum advice has always been along these lines: hearing the opinions of others, even if they are complete nonsense, can always be a learning point. Gaining an insight into someone else’s thought process can improve one’s own understanding (even if it results in nothing more than a decision not to follow that person’s advice!).

As Forex traders, we are each of us in a minority anyway, compared with most people in society. The conventional approach to life is to get a job, a mortgage, and try to line up the timings of all of that in order that we might stop working a few years ahead of death, in order that we get a few years at the end doing all the things we never got round to. If we get the timing really spot on, we will work it so that we pay off our mortgage, credit cards etc. at around the same time, and maybe siphon off enough surplus that we can buy a holiday home/boat/caravan/fishing rod/sportscar/football season ticket/insert as applicable. That is broadly how conventional society is structured, that is how most people intend for life to play out, and they are quite happy with that.

I am rambling, but where I am going is this: we have already chosen to take a punt on Forex trading as our principal income stream. At various points when I started out, and occasionally it still happens, I had friends and family telling me that I was crazy, that I was risking the kids’ future, that I had to get a ‘proper’ job, all of that. I get that less now that it is working, but the initial leap into this was accompanied by a symphony of people I trusted telling me that it was a mistake.

I ignored them, politely, and it turns out - it was not a mistake. But I learned a lesson - I could listen to all of the advice and opinion in the world, from people I trusted and knew well, I could reject all of it, I could plough on with what I had decided to do, and I could turn out to be right. Now many of those same people ask me to trade money for them. There were two people who told me consistently to stick with it, to have faith in myself, and everyone else I knew thought I was crazy. So I am comfortable that I can open up my thinking on this site, can get feedback on it, can be told that I am plain wrong, and ultimately it can only go one of two ways: either someone says something that had not occurred to me, I thank them and incorporate that thinking into my own, or secondly I say ‘thanks for the input’ and go ahead with what I thought in the first place. Both are good outcomes.

So I would urge you to post your journal on here, to seek advice on here, all of that - but if you think that you are right and everyone else is wrong, do what you think anyway, ignore all of us. Losing your money because you followed your own instincts and turned out to be wrong, that is a serious learning point and is very valuable to your development as a trader. Losing money because people on a largely anonymous forum, people whom you had never met tell you you are wrong - that is a mistake, and something you won’t learn half as much from.

You have made a very interesting start to this thread, and I for one will be following with interest. I might lob in the odd bit of advice as it occurs to me, but if you think I’m talking nonsense - ignore me and do what you think.

However many missteps you might take along the way, Forex is the best way I have found of avoiding the rather gloomy mortgage/retirement pattern I outlined early on in my (excessively long, for which apologies) post.

ST

16

You won’t hear much advice on here (or, for that matter, anywhere else) that is better than this.

ST

17

Also as a complete newbie I will be following with great interest!

18

Heres an update on my morning ( will post a chart possibly later):

I placed a short on eur/usd, aud/usd, and gpb/usd this morning at my reduced risk of 1%. I waited for confirmation… waited… waited… then fell asleep. Then when I entered the trade roughly half the movement was finished.

This was still within my SL requirements in terms of risk, so I entered the trade, and currently am +28 pips in aud/usd, -10 pips in gpb/usd, and +28 pips in eur/usd.

One possibly IMPORTANT THING I have realized:

If you are going to keep your stop loss at the same location, whether you enter 50 pips earlier or 50 pips later is all the same if you are using the same lot size. Essentially, I could have entered at the beginning of the movement (following overbought conditions and a hammer forming on the top of the range), versus waiting for the next following confirmation candle (most of the movement).

Do you guys feel this is justifiable entering during the confirmation candle, but essentially entering alot closer to your SL (less risk, but less leighway for a stop getting hit) ?

EDIT:: its currently 6pm PST for me and I have accumulated about 100 pips in my three trades. One thing I noticed is that aud/usd and eur/usd have very similar charts, and usually all my three pairs move in tandem. By noticing that they are both hitting key areas at the same time gives my analysis strength to pull the trigger. Eur/USD just touched the top of the week long range (the one that was tested 9 times), while aud/usd is testing the top of its range (only tested once), so I expected a small blip of long orders going against me. The great news im seeing so far is that it was an extremely shortlived movement, and I am hoping that my pairs will push back into its range by the end of asian session.

19

Hi Jwlee

Here are a couple nice videos on trading Psychology…

[B]Discipline to Reach the Next Level in Your Trading [/B]

Trading Psychology Trading Session: Discipline to Reach the Next Level in Your Trading - Trader Kingdom

&

[B]Intro to Psychological Capital – Your Most Important Resource [/B]

Intro to Psychological Capital – Your Most Important Resource - Trader Kingdom

Enjoy your trading journey! :wink:

G

20

Master, I agree with ya…

Great posts man,

I for one, am in no place to say , NOT to post, I was off base.

I think I started a few here, cant remember, but what happened to me, was it became stressful.

I wanted it to be like a book, with pics of balances, and trades, and this and that, I just found it more time efficiant to use that time to learn more, instead of posting a journal, that I got very little feed back from the start.

Maybe because I came off as , " I know everything", I dont know…

But I can say, a few posts I got, stung me. BUT opened my eyes wider to the big picture… And, now, Im greatful for it.

JwLee, Keep rocking it, looks like your going in the right direction.

[B]Do you guys feel this is justifiable entering during the confirmation candle, but essentially entering alot closer to your SL (less risk, but less leighway for a stop getting hit) ?[/B]

I cant answer this for ya, as Im a scalper, and I dont use a SL ( I know pretty fast if Im right or wrong as I tend to stay in trades for mere seconds most of the time.

PS>>>>> THIS AUTOSAVE FEATURE IS ANNOYING, is there a way to turn it off? Takes 15 minutes to write a post,lol

21

Heres an update on my Recent Trades.

GPB/USD : -23 pips
EUR/USD: +28 pips
AUD/USD: + 51 pips

At one point it was a combined +125 pips. So it looks like I held it for too long, and failed to see severate opportunities to exit at +100 and +80 pips.

I also took the time off the rest of the night to re-energize, versus hunting for more trades to kill myself in. I did trade the USA high impact durable goods report.

EUR/USD : +41 pips

Total summary as of right now is

WINS: 3
LOSSES: 1

NEWS REPORTS 1/1

WINRATE: 75%