The most important thing for any successful trader is to have absolute 100% confidence in your trading system. The best system in the world will have you bankrupt if you bail or alter your system every time you encounter short term loses. Here is my own story of not having confidence in my system before risking real money.
Back in my dog racing days of the early 80’s , I had a system that I had been back testing and felt pretty good about it’s chances of working, it was a simple progressive system that called for playing a three dog quinella box, that is $6 bet and gave me three ways to win, the progression went something like this $6, 18, 30, 48, 66, and $84 dollars on the sixed race, you would stop after a win or six races, most quinellas paid in the 20 to 40 range . I [B][U]thought[/U][/B] I was ready to try it with real money, so I headed to the track with money in hand $252, that would get me all the way to the sixth race if needed. Well as luck would have it first 4 races I lost, my confidence in this system was beginning to wear thin, and the 5th race required a $66 bet, the three dogs the system said to bet on were the 3 worst in the race, with a heavy favorite running against my dogs, I viewed the race as a sure loser and thought I would skip the race and save my money for the next race that looked much better, just as a hedge I bought one $6 box using my unlikely 3 dogs. So the 5th race starts out pretty much as I expected until the first turn where there was a huge collision that took down 6 of the eight dogs, and as you may have guessed the two dogs that avoided the collision and now running all alone down the back stretch were my dogs, they went on to finish first and second giving me the winning quinella. But because I got cold feet I only had one ticket instead of the 11 had I stuck to the systems rules. It gets worst, remember how I said the quinellas normally pay 20 to 40 bucks, well this one was such a long shot it paid $130 on a $2 ticket, had I stuck to the rules I would had cashed 11 tickets for a total of $1430, and remember this is year 1980 so that some of money would had paid my rent and utilities for the next 6 months.
Lesson here is no matter what the game is, Stocks, Forex, or in this case Dogs. You must be true to your system and have the confidence to stick with it during those short term loses,
Interesting story Dennis, though I didn’t get all the betting terms.
It does underline two truths in trading - if you have an edge, don’t stop using it because it won big or lost unexpectedly - statistical probability stops working when you reduce the sample size.
Secondly, when you’re gauging how well a signal- or trade-generating system works, you have to take account of all the signals the system gives, not just the ones you had the capital or risk tolerance to take.
1st of all, I want to ensue you that, I don’t use any specific indicator based trading strategy or system! On the other hand, I know there is nothing like 100% in Forex business! But honestly, I am confident about my success! I catch good entry points of market according to my technical and news trading knowledge! In addition, my money management knowledge helps me to avoid unexpected result in my trading!
I never quite know whether people would consider my trading “systematic” or “discretionary”, to be honest.
I think of the “systematic” parts of it as more or less everything [I]other[/I] than the entries.
It’s a subject I’m interested in, but often have difficulty discussing with people (and I think that’s at least partly because many people think of “trading systems” as being more or less what I’d call “entry-methods”, and that isn’t a perspective I share, to put it mildly).
But I agree completely with Dennis’s initial observations, above.
And I’d add that - specifically - the situation you need to be able to avoid is the one (quite commonly encountered, I believe, by people who chop and change their methods a lot without having done extensive backtesting) where you have a losing run, don’t really know (because of your lack of statistical confidence) whether or not it was “reasonably foreseeable”, don’t know whether you’re “just having a (very) unlucky run”, “the system has stopped working”, or even maybe “the system wasn’t really a valid one in the first place”, and therefore don’t quite know what to do about it and end up just [I]guessing[/I]. If you have your money on the line, you need to [B][U]know[/U][/B] which one it’s going to be, if that happens, [I][U]before[/U][/I] it happens. At least, I do. And I don’t really understand how people can ever be in that position without some understanding of statistics and probability … which is why I’m always so confused in discussions in which I offer the perspective that some understanding of statistics and probability are an absolutely essential attribute [U]before[/U] getting any trading “experience” (because I don’t see how it can ever really be useful “experience” without [U]starting[/U] from that position). But a lot of forum participants seem not to agree with this. :8:
I will not say 100% confidently that I had learnt all forex. I am making profit but many things are far from my reach that will possible after more skill . I am not perfect and working as an average trader. I think most of the traders are not confdent they are feared and take less risk in trading .
I don’t believe 100% in Forex! Basically my personal trading strategy provides me 75-78% accuracy! That’s way, I don’t need to focus on any specific trade position, when I get a good entry point then I use it with enough number of SL and TP points, if I get any SL trade then I don’t break my concentration; since I know the accuracy percentage of my trading strategy very surely!
No I will not claim I had 100 % good trading plan. I try to manage my plan with market. My plan is for my needs it will be not good for others. Every trader wants to do best for him , He changes his trading system if required otherwise he continue it until it is successful for him.
