This week I’ve made a few unsuccessful trades and had a significant drawdown. I’ve learnt a few powerful lessons, and my confidence is low.
Today:
GBP/USD short on the dailies.
Nothing in the economic calendar.
The pair fits my system.
“What could go wrong?”
BRITAIN INSTALLED A NEW PRIME MINISTER NOT 12 HOURS AGO. THE POLITICAL RISK IS OFF THE CHARTS. OF COURSE THE MARKETS WERE GOING TO BE UNPREDICTABLE.
I have to be attuned to political risk. Its not going to be in the economic calendar. But its real. And it makes things unpredictable.
Good luck Boris! I guess.
I had no idea I was capable of so much self deception. Sometimes I look back at my trades and think I must have been drunk, because in hindsight they clearly do not fit my trading system, and yet at the time I somehow convinced myself that they did. But this is all good. I will learn.
I am having serious emotional highs and lows, just in my demo account. It must be so much more intense for real.
And don’t mind me getting involved here and making things worse for you BUT:
This clearly demonstrates the point that I make over and over again almost on a daily basis.
Let me ask you this:
What is your background??? How long have you been trading???
Because let me tell you something for nothing:
Unless you’re very well versed in fundamentals and economics and politics: forget trying to factor this into your trades. You will get it wrong 95% of the time. I promise you that.
I don’t know what your actual trading system itself is based on. But if it’s not a pure mechanical trading system you’re wasting your time (unless, of course, as I say, you’re well versed in all of this).
For the record and I am no expert either so I don’t even try to factor this in myself:
Boris may very well not end up getting what he wants as from what I hear he lacks the majority he needs. That is why things are not going according to plan. You always need to look a bit further.
As with stocks:
Many people will start selling stocks when they hear a company is going to lay off workers because they believe that the company must be in ■■■■. Not so. Those that know what they’re doing realize that laying off workers will increase profits for shareholders. See what I’m saying??? And sadly though: this is not ALWAYS the way things work either. Point is: by the time you’ve figured this all out and got it right you’ll be done for.
But let me add this too:
If I were trading that pair (I don’t trade FOREX but just looked at the chart) I would also have been short and been stopped out today with all of my trading systems. So don’t beat yourself up too much on this. And I do this for a living. Should make you feel better anyway.
Whilst I don’t disagree with the thought that technical analysis of price does not necessarily need additional fundamental, economic or political consideration, I think it is worth considering what we mean by “mechanical”.
To call a method purely mechanical suggests it has to be implemented like a totally automated system with strict and blind adherence to all the rules of the system all of the time and with no need for further consideration or input from the trader at all.
In some cases that may well work fine, but I do not believe it is essential. It is just as feasible, maybe even more so, for a purely TA based method to be implemented and monitored on a discretionary basis.
This means taking into account, for example, signals given at the end of week on Friday evenings, on public holidays, before major data releases, prior to major events such as elections, and so on.
It can also mean adjusting target/stop levels to reflect other TA issues as well as price activity such as falling short of a target by a few pips and closing manually, etc.
I believe in TA methods, but I also believe in allowing the trader to apply their own experience and observation and remain in overall control as overseer of the process - rather than just sit and watch as, for example, price goes down the drain. This can also add a little more pleasure and personal involvement in the whole process.
But that’s just my view and means nothing more than that! I just wanted to add that clarification!
Well in all fairness: I guess I am guilty of oversimplifying matters even to the point of fooling myself. Let’s face it: I purport to trade purely mechanical trading systems but my threads are testament to the fact that there’s a fair amount of intervention in the trades!!! LOL!!! Does there NEED to be??? I’m actually not sure. My own jury is still out on that one.
But yours is a very good post. Obviously. I don’t know this chaps background at all i.e. just happened to notice the thread so thought I’d chime in (I know what it’s like to get kicked in the tail emotionally by this business let’s face it). But I’m willing to bet that he doesn’t have your experience and insights when it comes to fundamentals. It’s not easy stuff to grasp or understand let’s face it. Matter of fact I had to have a good giggle to myself just an hour ago i.e. received and email from an Aussie broker that I for some reason or the other had and account with some years ago (still cannot remember why but obviously I didn’t lose money with them otherwise I’d remember). Anyway. They’re having some roadshows right here this month so the email was the invite. And I couldn’t help but notice that one of the things on the agenda if you attended was “A Crash Course In Fundamentals”!!! Yeh right!!!
But I fully agree with you about trying to trade fundamental issues. But sometimes there are are issues that some might call fundamentals and are really just sentiment.
I was actually long GBPUSD today based on a TA signal but also due to a feeling that since the GBP has been so driven down for so long with so much uncertainty that just the completion of the leadership campaign would be enough to boost it, as just one less thing to “worry” about - whoever won it!
But I also feel that BoJo’s enthusiasm, charisma and strength will instill a fresh sense of faith in the UK and its economy and we will see the pound regain some ground - until and unless things start to go wrong!!! - but, again, this is not really fundamentals, just a view on market sentiment as Boris starts to flex his muscles. Personally, I think he is a good choice at this time and I don’t think leaving the EU without a deal will cause anything more catastrophic than a period of chaos and mishaps that will soon get sorted. - but, again, that’s all just personal reflection.
I really like him. Even from his Mayoral days. So I hope he does well. I really do. Just hope he doesn’t sidle up TOO much to Big Red over the pond is all.
There are a lot of similarities (apart from being blondies!) but also some broad differences. I think he is his own man, even if his personal aggressiveness is very similar.
PS I was long SP500 based on the TBP - we just missed the R1 target and I just closed out (Although I am pretty sure we will get there today) . It just seemed sensible to close now as I got in at a better position that last night’s close anyway. I think I have now managed to integrate this into my own method so I am happy about that.
Sorry @Haptic, I am digressing from your OP. I’ll shut up now!
Don’t worry. I think good 'ol @Haptic there still licking his wounds. If nothing else: our posts will help him realize that life goes on and time to dust yourself off and get on with the job at hand. Losses are losses and are just something that happens. As long as we’re not talking about a total wipeout: it’s all good.
I agree with pretty much all you and @anon46773462 have saidin the last few posts and I also think it is good for @Haptic to be able to look at the sort of “stuff” the “masters” consider in their trading !
[edit - as an aside I’m not sure “fundamentals” mean quite the same thing in Forex as they do in Equities ]
Our business is based on probabilities, that is its core function. We can only make profits if we are in the market - and being in a market where the product is probabilities means there will inevitably be losses.
I think all traders would do well to think of losses as overheads. In any other business there are expenses to be paid in order to make profits, but that does not stop the owners from running their business - they are only concerned that the profits are greater than the costs, i.e. a net profit over time. Why, oh why, don’t traders think about their accounts in the same way???
It is the risk versus reward and exposure management that control the profitability not just “what went wrong today”.
In many tourist resorts there are mazes for the amusement of visitors. Everyone entering a maze knows that they will take both wrong and right turnings -that is the only way to eventually get to the centre. No one thinks I won’t go in because I might take a wrong turning. Our trading is the same, if we make trades according to our rules then they are ALL correct trades whether they win or lose. The business acumen comes with managing that situation such that the losses are smaller than the gains overall - such that we reach our objectives.
The biggest fallacy I have seen is the idea that “it is never wrong to take a profit” or “no one went broke taking a profit”. If anything is going to destroy one’s overall profitability, it is taking profits too early and running the losses.
When it comes to using our equity carefully, there is one idea that for me describes trading as it really is:
" A ship in harbour is safe - but that is not what ships are for".
You, @Haptic, are the captain of your ship, and you need to care for it in whatever weather conditions you may find yourself in. It might sometimes take a beating, but you have to ensure it doesn’t actually end up shipwrecked - and sometimes it actually is better to remain in harbour - at least until the storms blow themselves out and clear weather once again prevails!
Right, sounds like you’re on the wrong track mate. Let’s clear a few things up. Firstly, what do you mean significant drawdown… you should be risking 1% per trade. If its significant, does your strategy actually work. And when you tested it or analysed you trades what was the maximum drawdown to expect.
Second, if you are trading a technical strategy then it doesnt matter what political news is happening until your analysis tells you that it affects your strategy. If your analysis says fundamentals affect it so much that it is an unprofitable strategy then you need to be aware of fundamentals otherwise not.
Thirdly and most importantly. You have no conviction in your strategy if you are not taking trades as per to your rules. No more discretion, no more making random moves. If your strategy is profitable then why are you not following the rules.
You have a long way to go. Good job you are on demo. Follow your rules and analyse the trades every week.
consider in their trading !
