From Fear to Confidence, A Trader's Journey

[kayvon77]

So this is it… my first proclamation of my intent to embark on a journey to becoming someone I have only dreamed about being since 2001. My name is Kayvon, and I am just your average aspiring market enthusiast who holds a day job (real estate agent by trade), but wanting to be a profitable trader on the side.

I started trading way back in 2001 trading stocks, but was quickly overcome by fear of pulling the trigger. I had no plan or system in place, so my account balance yo-yo’ed around alot. I also wasn’t committed to the activity as I only hoped to make alot of money very quickly while doing minimal work. Not the right [B]mindset[/B] . I decided to take a sabbatical from trading and vowed to revisit the activity at a later point in my life when I was ready for it.

I have been on and off again in the last few years, and I have noticed that my profitability potential has definitely improved as I have become more self aware and dedicated to learning about this promising activity. It was not till recent that I realized my demons of fear and lack of confidence have hindered me so much in becoming a profitable trader, that I’m giving myself another shot at this endeavour to overcome these obstacles.

This is my documented journey to becoming a more confident and profitable trader, as ones ability to control their mindset and be disciplined is the hallmark of a successful trader. I firmly believe that by establishing a trading journal and evaluating my thought processes, emotions, and results on a daily basis will lead me to becoming a trader that I am reading so much about in these forums. I am sharing my journey here because I think a path travelled with others is more fruitful than a journey ventured solo.

By stating my purpose here I keep myself accountable and committed to this activity. I also know some if not all of you can relate to my predicaments as we’re all humans having the same human experience. So our struggles tend to be the same in essence, except our skills levels and ability to overcoming the emotional obstacles differs from one another.

So I look forward to going on this journey with you. Let’s start with my plan…

[B]Trading Plan[/B]

[B]Here’s My Methodology[/B]

I am a discretionary trader, primarily using technical analysis for my trading set-ups. I use chart patterns confirmed by candle stick patterns, and indicators to confirm trading set-ups. While using fundamental analysis to support my technical analysis and not the other way around, I can tilt the probability of me winning to my favor. I also give weight to the economic news calendar as I know the prospects of economic events dictate the volatility potential on each currency pair. I focus on 1st tier and 2nd tier economic events only.

We pick trade setups with a 2:1 reward to risk ratios. Prefer chart patterns that are trending and not consolidating.

Using 4 hour, 1 Day, and Weekly Charts. Looking mainly for swing and position trading opportunities.

[B]Account Size[/B]
I am starting out with a $666.00 (Not deliberate, that’s just where it stands at this moment!). Hopefully the devil will stay out of my trading :). I will be trading micro lots. This is so I can gain the confidence in my trading so I can increase my account size.

[B]Risk[/B]
I will risk 5% of my equity on any one position.

[B]Trade Management[/B]
Initial stop is set tight. Expands as price moves in the direction of the trade. If trade moves over 20 pips, we move initial stop loss to break even. Then trailing stop would be dynamically in effect.

[B]What I trade[/B]
I will keep it to one or two currency pairs. First learning the trading behaviour of one or two currencies before expanding to other pairs.

[B]Pre-Trade Preparation[/B]
2 Hour preparation time.
Scan currencies for chart setup.
Scan news lines for latest fundamental news that may be affecting crowd behaviour.
Look at the days ahead in economic calender to see which events may have an impact on price activity.
Journal your trade idea, trigger price.
Post pre-chart to journal

[B]Post Trade Analysis[/B]
Review trade outcome.
Post after trade chart to journal.
Document trade outcome and emotions at time of the trade

[B]Goal[/B]
30% Each Month (based on my trade performance, will need to adjust)

[B]Trading Rules[/B]

1. Wait for confirmation of reversal before entry
2. Cross confirm setup with indicators with other indicators
3. Don’t speculate. Trade what you see!
4. Confirm setup with at least two indicators.
5. Does the entry offer the best reward to risk ratio
6. Trade with the long term trend
7. Master one or two pairs before going with others.
8. Use the same indicator used to enter to exit (if indicator was used to enter).
9. Look for excellence instead of perfection.

I welcome everyone’s comments and feedback on this framework and I look forward to engaging with you in this journey.

-K

[kayvon77]

EUR/USD Trade Setup

Setup:
Wedge Chart Pattern on the Daily

Long Term Wedge on the Weekly, with a smaller wedge forming within its belly. Can go either buy or short. If breakout on the daily the upside potential would be to the 1.40 area. If broken to the downside of the wedge we’re looking at 1.21251 area. But this is a long-term perspective.

Daily Wedge - A break above the descending trendline will alert us to a breakout which will be confirmed if there’s a pull lback to the trendline, which we will look to enter at that point. A move below the 1.31683 will alert us to a downside move towards the 1.28646 price target which coincides to the wedge’s ascending trendline.

We have setup trigger price to alert us where activity is going. We’re looking for a good candle stick formation to short, as stochastic is coming down through the 80 level zone.

Fundamentals
We are looking to tomorrows service numbers out of Europe to determine where the volatility will push. The less than stellar USD numbers as well as strength in EURO numbers may provide the push it needs for a breakout.

To Sum Up
Buy: 1.33292, SL: 1.32795, PT: 1.40 Risk/Reward: 1:13 Micro Lots: 6
Short: 1.31683 SL: 1.33408 PT: 1.28558 Risk/Reward: 2:1 Micro Lots: 1

[broketrader]

Hi Kayvon,

I just saw two things that not match in your plan:

First, you said that your initial stop will be tight and at the same time that you will trade the 4h, day and weekly charts and from what I know the larger the time frame you trade, the larger your stop loss must be unless your trade is perfectly timed which is very difficult…

Second, you made a 30% goal each month which is a lot, I don’t know if a pro trader reaches such kind of goal. For me, making something between 0 to 5% per month is already a great performance. Don’t forget that this business is not a sprint but rather a marathon and you should focus first on preserving your capital before attaining such results.

Good luck in your journey

[kayvon77]

Hi Broketrader,

Thank you for your feedback and I appreciate the well wishes. In regards to your point about larger stop losses for larger time frame, I think you have a definite point and based on volatility of a specific pair I probably should fine tune where I set my stop losses. the thinking behind how I set my initial stop losses is based on where I would think negates my trading setup. I want to get out of the position as soon as possible if I’m wrong on the direction, and I need to be right from the get go. I will employ the same strategy regardless of the time frames. I am going to try it this way for alittle bit and see what it yields me for this specific pair.

I know my 30% goal is lofty, which I am kind of shooting for the stars at this moment. I will adjust down or up my goal as I gauge my performance. You’re right, I have to keep in mind that I have to pace myself and not to get too ahead of myself. Well noted.

Thanks again for the feedback. Good luck to you as well. See you around.

-K

[rcreddyvanga]

Hello Kayv.
Thats great to hear. If you are getting 30% profits from a long time. How long have you been trading ?

[kayvon77]

So it’s been some time since I recorded my trades and despite my declaration of keeping an active trade journal, I have to admit that I’ve not kept up with that promise. However, the learning hasn’t stopped and I’m going to continue on this journey recording any milestones along the way.

Going back to business of our previous trade set-up on the EUR/USD; the set-up happened and our long trigger did come to fruition. However, as you can see back in August the break-out was dismal and soon price retracted below the descending trend line of the wedge. So safe to say, that I got stopped out. Oh well… However, important to point out that since then it looks like the price action is trying to make it to our long term target on the weekly as demonstrated by the most recent chart:

. However, time for a little pull back at this juncture with the stochastic turning over in overbought territory. Time to re-strategize.

Ok so back to drawing board. I’m eyeing another opportunity on the pair amidst of the government shutdown debacle, we may be able to go with the sentiment here with the dollar’s weakness and the gradual climbing of the EUR, which I think is pretty suspect, since risk aversion I believe is starting to dominate the broader market themes. So essentially we may be readying ourselves for a breakdown.

A breakdown at this juncture, we’re looking towards the 1.3400 price target, which roughly coincides with the 50% fib retracement.

Entry order has been set right below the 1.3550 psychological price point which is also right below the descending top channel line on the H1. Stop loss will be set a bit close with almost 20 pips out. First price target is 1.3500. So to sum it up

Entry: 1.35494, Stop: 1.35659, PT1: 1.3500