How I became a consistently profitable trader

Beginner Questions
1

Hi,

I was here at babypips about 4 years ago as a newbie. Learned my first lessons about forex at the school. Learned many other things from members through this forum. Done my home work, learned all my lessons, unlearned what was unnecessary, and here I am, as a successful consistently profitable trader, trying to return the favor.

My first advice is;

[B][U]Find a statistical edge.[/U][/B]

There are many free trading strategies out-there. Newbies try them all the time, without much success. Most of the time, problem is not the system, but the way you practice it.
Study your trading strategy well and find out itā€™s winning rate and loosing rate over a year. Like 65% winners and 35% looses. You may manually do this on historical charts. Do this for few years. ( I did for more than 10 years). Do it on random years. Find out statistics for each year, they may differ. If you do not find any significant (at-least over 60%) winning rate, that strategy is useless. Find another and try again. You may think that you could just demo trade it and find out whether it works or not. But that way you canā€™t find the statistical edge. Without knowing itā€™s winning & loosing ratio, you will trade in the dark with doubt, fear and as a result conflict may occur.

Edit

As ā€œTyrannosaurusForexā€ pointed out on a commented bellow, I need to make some corrections to above paragraph.

When you find the winning rate you need to take into account your Take Profit (TP) and Stop Loss (SL) ratio. If your TP is 3 times the SL, for example TP is 90 pips and SL is 30 pips, then a winning rate of 30% will make you a winner. I had considered same TP & SL on above example. If your TP & the SL are the same, for example TP 100 pips and SL 100 pips, then you should look for a winning rate above 50%, better be over 60%. Likewise calculate the winning rate you need based on your TP & SL ratio.

Edit ends

Find the statistical edge, then you know what you are dealing with. You will learn that you need to take every trading signal. You will learn that some will end up as losses while most of them as winners.

Now you will not have doubt or fear as you know your statistical advantage. You will know that there could be better years and worst years. There will be no conflict as your trading plan is simple, you just take your signals, set Take Profit & Stop Loss and wait for the market to fill one or the other. Donā€™t try to think what will happen next, as nobody knows it, except those who has enough money to move the market. Yes, some people can really move the market.

Iā€™m not going to share my trading strategy but I will share my experience and practical knowledge.

I only trade GBP/USD as I found that it has the best statistical edge with my strategy. I donā€™t use any indicators. No fundamental or technical analysis. I donā€™t care about news. No trend lines or support and resistance on my charts. Thereā€™s nothing on my charts except two lines to mark market high & low. It changes daily. I get my signals based on market high & low. Now you will see that some people can trade like this also, not like popular trading strategies. Iā€™m fearless as I know my winning ratio.

Now donā€™t ask about my strategy anymore :27: Iā€™m going to save it as a treasure for my son who is just 2 years old. When more people start to use the same strategy, it looses itā€™s edge. I need others to be in opposite trades to be profitable, donā€™t I :wink:

Now donā€™t rush it. This is not a get-rich-quick scheme, this is a business. If you rush it, if you try to become rich quick, only opposite will happen.

It will take like 2-3 years for you to master the market as most of them say.
But you will think that you are better than others and you had captured it before 2-3 years, as we all do.
Then you will start loosing your accounts, few times. Learning a lesson each time. As it happened to most of us.
Eventually you will mature, will be more disciplined. Understand itā€™s nothing but trading psychology that matters.

My advise is, find a statistical edge (most difficult part of trading), demo practice it for 6 months until you learn everything about trading and the platform. Then open a real Micro account and further practice it for another 3 years. Real trading is very different. Canā€™t even compare with Demo trading. You will develop your trading psychology by real trading, it must happen by experience.

I know you will not listen to me, neither did I when I was told the same, 4 years ago here at babypips.

Learn it the hard-way, by making all the mistakes that most of us did. It will make you mentally tougher.
[B]Eventually you will mature, will be more disciplined. Understand itā€™s nothing but trading psychology that matters. [/B]

Just my 2 pipsā€¦

2

You forgot to mention one critical aspect - timing :wink:

3

Yeah, it is a critical aspect.

But I didnā€™t forget it. That was how I trade and it worked for me. Timing doesnā€™t apply to my trading strategy.
But of cause in generally speaking, timing could be a game changer :33:

Just my 2 pipsā€¦

4

You use a variation of a breakout strategy donā€™t you :stuck_out_tongue: I know you said not to ask but it sounds similar to my strategy.

5

No, I only trade reversals. No breakouts. Earlier I tried to trade breakouts but it require me to watch the market all the time. Too much work, even if I keep entry orders. And I usually target for less, like 30-60 pips. Rarely over 100. I leave more on the table.

Just my 2 pipsā€¦

6

Well, I donā€™t share my strategy neither, I might say tha i trde Cable too and I do use lines but instead seeing a line I see a bunch of sucker watching the same line.

7

ā€¦If you do not find any significant (at-least over 60%) winning rate, that strategy is useless. Find another and try again.
ā€¦

Great post!

I agree with you that finding and having confidence in a statistical edge is very important. However, strike rate is just one component of a statistical edge. It is not necessary to win 60+% of the time to have a statistical edge. You can win 33% of the time and if your wins, on average, are more than twice your average losses, you have a statistical edge.

1 Like
8

Yes, ofcause, you are dead right.

It totally depend on your TP and SL ratio. I should had considered that at the time of writing. Thanks for bringing it up.

11

Welcome back. Interesting thread and good to hear from an old babypips member. Few questions:

  1. What prompted you to recently join babypips after 4 years out?
  2. I disagree with your statement above unless you give your crown jewels to the big boys. Us retail traders or small fish wonā€™t ever have enough strength to move the market
  3. What time frames do you use, I assume it isnā€™t on the daily from what you say
  4. How long have you been live with your trading strategy
12
  1. As I mentioned in my first post, Iā€™m trying to return the favor to babypips as this was the place I started. I avoided all forums & chat rooms related to forex for about 2 years while I was mastering my trading strategy.
  2. Thatā€™s true, we small traders wonā€™t have enough strength to move the market. But after about 25 years if few million traders use the same strategy, it could have an impact. I know itā€™s a impossibility, but why take chances. :wink:
    3):27:
  3. Over 3 years live trading this same strategy. Still very young. But I had back tested it over 10 years. Then further tested it on random years. It worked the same in oldest charts I could find :slight_smile:
13

but emotions controlling - very, very important

14

hello justmy2pips,

thanks for the thread. do you have any advice on how to evaluate the stastistical edge of a system? eyeballing is nice, but i prefer ā€œrealā€ backtesting, especially if it is a system, that is easily quantifiable and thus easy to put in some form of code and let then let the computer do the computations. i know how to code (matlab), but there are two problems attached:

  1. where do i get reliable data? (h1 would serve my purpose)
  2. getting the data, data cleaning and manipulation and coding the system would probably take a couple of days. i donā€™t really have that time atm. do you know of any software or something that could be used for backtesting a strategy?

how did you do it?

kind regards

15

Hi, TopFroxx,

I just go into my OandaMT4, in history center, you can double click EURUSD for example, and download historical data for 1min, 5min, 15min,30min,1hā€¦ afterwards you can easily export it and use it however you want :slight_smile:

16

Iā€™m long GU @ 6150
Lets see how it goes.

17

Hi,

Iā€™m a programmer my self. I coded an EA for MT4 and back-tested using it. I got historical data from various sources.
As ā€˜Richard87ā€™ suggested, I got data from ā€˜history centerā€™ in MT4 also. Tried data from different brokers, downloaded from different places etc.

But all those data I found had gaps. When there are gaps in data your EA doesnā€™t produce accurate results.

So I was forced to use eyeballing. Thatā€™s the only method worked fro me. And I was 100% sure about the results :slight_smile:

If you find any reliable data source in your search, please donā€™t forget to inform me also.

Just My 2 Pipsā€¦

18

Iā€™d buy GU again @ 6050.

My trading strategy has a strong long signal.

But anything can happen in this market, thatā€™s why I use hedging.

At the moment both my long positions are making a loss.
Lets see how it goes.

19

what pair is this ā€œGUā€?

20

GU is GBP/USD shorten.

Like wise we use EU, AU, UJ, EJ, GJ etc. Can you guess what pairs those could be :slight_smile:
EUR/USD, AUD/USD, USD/JPY, EUR/JPY, GBP/JPY

Just My 2 Pipsā€¦

21

i actually thought it was gbp/usd for a sec but ur numbers confused me, anyway im bullish on this pair as well

22

When you have a system with a statistical edge,
when you learn to execute your trading plan flawlessly,
when you learn to take many small losses emotionlessly,
when you donā€™t get mad if your SL hit,
when you donā€™t get thrilled by TP,
when you donā€™t doubt your trading decisions,
when you donā€™t hesitate to execute your trading plan anymore,
when trading becomes just executing your trading plan,
when trading becomes boring,
you had achieved consistency of profitability.

If you think otherwise, then my friend, it just means;
you havenā€™t made all your trading mistakes yet,
you havenā€™t traded that many trades yet,
you havenā€™t had enough experience yet !!!

Well, of-cause itā€™s just my personal experience and opinion.

Just My 2 Pipsā€¦