Hi everyone,
Babypips was the first place I learnt anything about the world of trading 8 years ago and now I’m back to hopefully complete my long learning journey!
I’ve traded on and off for those 8 years and the past year have been focused on the futures market. I absolutely love the potential prop firms have given us as traders to trade big size relatively quickly and have been really inspired seeing some guys on YouTube get pretty big payouts compared to what guys in stocks are able to achieve. I’m not so much chasing the money, more see the potential being so much large in the prop space that it makes so much sense to move there.
The biggest lessons I have learnt in my journey are as follows:
- You need a way bigger edge than we think to succeed.
It sounds easy: Have a win % of around 50% and a R:R of 1:2, but the EV per trade with that is only 0.5 and that is the smallest theoretical edge you want as a trader. Given the actual edge is always a little lower than our estimates, you are already starting out likely closer to an EV 0.4/trade and to be profitable with that kind of edge you need to execute your edge at about a 90% accuracy to make an actual of 0.25R/trade. the issue with this is that the variance at this tiny return will be pretty huge and this is when we are most likely to make mistakes.
- Psychology is important, but it is wrapped up in performance.
Performance is what makes a trader. Performance is split into strategy knowledge and psychology and
both are critical to success. You need to know your edge inside out, every little detail of it, how it changes
in different markets, when you should “bend some rules” to catch a move in high edge circumstances and when to add a layer of rules to make sure you are avoiding taking average setups in low edge scenarios. On the psychology side, you need to do everything you can to be at your peak performance to stay on top of your “chimp mind”. FOMO, discipline, fear of losing etc, are almost all causes of uncertainty of edge and come out when you mentally slip up a little or when you are not certain on your edge.
- One Good Trade is probably the best book you can get
There are so many lessons in here from the firm SMB Capital and every single one can help. Regardless of if you trade stocks, futures, forex etc. The principles and golden nuggets of info are really powerful!
- Journaling is pointless unless you use it
Journal trades to find patterns of performance and USE IT! It’s a free resource you can create that will show you where your edge is performing well, where you are executing well and badly.
My current situation is this: I have an edge I have a huge amount of faith in after months of backtesting, forward testing, trading on paper, trading on evals, trading in a live account. I have made adjustments to the edge to perform better in different markets and feel I am now about 75% of the way there to being successful with it. Now the hardest part.
Actually executing at a high level consistently!
So this journal will be that. I’m not sure how often I will post but I will try to do so relatively often! I already record trades in excel and in Evernote, but want to share in a forum to see if any like minded traders want to connect, work together on things and help each other push forward with out goals!
I’ll post my strategy outline in a later post to get any feedback people have!
