Trading without a trading plan will always lead to overtrading
Iāve been scalping and a 1-15 minutes time frame suits me well. So with that, I spend 4-5 hours a day making 10 trades. All Iāve learnt so far is that itās really important to stick to the strategy.
Perhaps thatās why Iāve heard that the exit strategy is the most important one, like you got to be sure with each trade that no matter what, this is when you need to close your position. Guess with scalping itāll be even more true.
Use this formula- pips at risk pip value lots traded= amount at risk. Clubbed together with the 1% rule, I easily calculate the lot size and the position size of the trades. Try it out. I mean itās worked for me for the past so many years. You can check with your broker. Iāve been using this formula with turnkey forex on ecn and stp account on oanda. And so far have been getting pretty accurate results.
Wanna hear my revenge story? I did make a significant loss, but instead of revamping my existing strategy, I preferred to stay in the market and keep trading, simply thinking that the market would for once move in my direction and I would instantly recover the losses. Leaving aside making profits, I ended up losing more. That was a lesson learned the hard way. Somehow I havenāt been able to live trade after that. Iām back to learning and demo trading though.
Yes, I sympathise. This emotional signal tells you that youāll prove you were right all along. All humans want to believe they are right, and will go to extreme lengths to avoid the pain of being proved wrong.
The correct way to treat it, is to create a mindset where all of your trades are considered losers until the market proves you wrong. Try it and see. And it makes it simple to cut losing trades without any fear of pain, as the savings made can be used to fund a better trade - albeit another loser until proved wrongā¦
1 Like
Hey @Linda, thatās not new, believe me. But instead of shunning away the thought of trading, you should rather check into what better can be done the next time. Heard about trading triggers? Read about these and work on them especially when youāre trading. Other than this, maintaining a trading log could be very helpful to keep a track of what went wrong and how. Reassessing the strategies becomes easier.
Answer these questions the next time youāre trading live:
Ā· Is the trading system working fine for you?
Ā· Have there been any winning trades in the past with this system?
. Had you followed a different strategy post the losing part, would it have made any difference?
I think before you think of determining the position size, itās important that you know the best stop level of a particular trade.
@Jacob! Correct me if Iām wrong! Stops shouldnāt be set at random levels. In fact, I should put it at a level where Iāll know whether or not I was wrong about the trade direction.
Well, I use stop loss to determine the risk. So, with turnkey forex, I put the stop at 50 pips from the entry price for a forex trade, it becomes easier to determine the position size. I have tried staying closer to entry previously when I was trading with octafx and even tried the trailing stop, but that didnāt do the trick for me.
Sounds like a lot of practice but worth it. So I guess till then itāll be a hit or miss and I suppose having one successful trade after anticipating them to fail would be valuable. Thanks for the advice
True because the timing between entering and exiting the trades is just a few seconds or minutes, making right decisions during that time is very important. Thatās when the risk-reward ratio comes to play.
I think the support and resistance levels are good when it comes to marking the exit. Confusion for me is which indicator to use. Help please.
Hey @Katie, MA, Fibonacci retracements and pivot points are the ones I use. You could start with simple moving averages, relatively easier to understand.
I agree with you, it is difficult to control emotions in trading. You can prepare a trading journal. It will help you be to consistent. It makes it easier to assess past trades and learn from the mistakes which reduces stress and makes it better.
According to me, overtrading means either trading too big or too often. But itās is a very natural emotion which traders get stuck into. So, set up a trading plan for yourself and stick to it.
So other than trailing stops that didnāt work out for you, which strategy you suggest can one go for?
Over trading is when your trades are running into losses and you are opening further traders to compensate their loss, eventually leading you to even higher lossesā¦
Donāt know about @emmamoore but I use guaranteed stops. I did try trailing stop with roboforex and it worked out fine. But with fixed stops that I use with turnkey forex, slippage is easily avoided.