In my opinion, successful trading is 20% mechanics, 80% in your head. Anyone can find a successful strategy.
Backtest, backtest, backtest for 90 days or 100 trades.
Add to your trading plan these questions; how did I feel before, during and after the trade?
Have you ever committed to a strategy for 90 solid days? Many haven’t. Many cannot.
I also believe any trading plan needs to be tweaked. You’re in charge of that of course. I would never in a million years ever… stop learning. You are always in charge of what you learn.
I’ve been trading for the last few years on a live account and I’d say literally my strategy accounts for 5-10% and it’s purely the psychological side that keeps me winning/losing. The last few years I started taking bigger risk because I usually find myself on the right side of where the trade happens to go. In me doing that I’ve not only brought my account up substantially but I’ve been more confident in myself. Everyday before I sleep or when I wake up I keep telling myself “bet on myself because no one else will”. It’s truly kept me always willing to take the risk on myself.
Actually, I was thinking about this over the weekend, and would add one caveat here.
Whilst these same patterns do repeat in the same manner, one should always be aware that it also depends on the TF one is looking at. For example, a pin bar on a 4H chart will most likely not appear on the daily bar covering that 4H bar - and a daily pinbar will be swallowed up inside a weekly bar.
The same with other patterns as well as the 3-candles set-up for deMark TLs.
BTW, I looked up your blog over the weekend! It is not hard to find! You have written some good sensible stuff there which I am sure others would find useful. I liked, for example, your justification why the best trade duration for Newbies is swing-type trading over, say, 1-4 days rather than (intra)day-trading or long term positioning. There is a lot of good logic there why this is the best compromise for Newbies.
after a while you learn from your mistakes. a losing day/week trading then you go back and relearn what you first studied to strengthen your knowledge.
Forex is not a straightforward story which you can teach someone. It is more like a journey where you discover new things almost every day in the beginning. Most important is to build experience and stay alerted for new lessons from your lose deals
It depends on what you mean by learning. If you are constantly discovering new indicators or strategy hopping this can be a rabbit hole that many get stuck in and is just a waste of time.
I have traded a few strategies over my career and have to say simply learning to read price action is very powerful. If you can plot support and resistance areas and read the price action clues leading up to it such as tight consolidation forming with lower lows at a resistance area (in the case of a long trade) and then trade a breakout with a clear higher time frame close above that resistance level (I would recommend daily time frame) you can find yourself catching some very powerful moves.
I traded two setups similar to this on GBPUSD and GBPJPY breakouts of their recent ranges for some very nice wins.
This is something I have traded year in and year out for darn near 15 years. My bread and butter setups haven’t ever seemed to become any less effective as markets are simply the psychology of the participants represented on a price chart. We read that to determine the only question that matters “Who is in control of price?” And then we trade with the group that is clearly in control.
You could learn the setups I focus on in a few weeks and “master” identifying them in a few months but it would probably take some time demoing to get your psychology right and trust the system even when patches of draw down occur. And they do occur in any trading system.
I don’t do any research on entry methods at all anymore but I do continue to read and study about trading psychology.
I would recommend every trader regardless of experience level read the book “Trading in The Zone” by Mark Douglas. If you read that book and don’t get anything out of it or think that it is just a bunch of “guru” talk as I have seen people comment on youtube and in forums unfortunately for some reason it went over your head. I don’t know why people fail to benefit from it but all that I have come across that do fail have been really struggling in their trading. The successful traders I have met over my career all understand the concepts in that book.
There are also a few outstanding videos of Mark Douglas on youtube like his “How to think like a professional trader” series that will provide any newbie trader literally a decade worth of knowledge and a much deeper understanding of how institutions trade. As an ex institutional trader I can confirm all he says is spot on.
Another great trader/lecturer of trading psychology is David Paul. I would encourage you to watch this basic lecture:
That right there should be plenty to get anyone on their way and it can all be accessed for free. (Trading in the zone as an audiobook is also on youtube.)
Plenty of good pointers in the answers below. The key is actually already in your question, figuring out what kind of trader you are means exactly that, “to know what your are looking for” when looking at a chart. The sooner you decide what to look for, the quicker your learning will be. I am going to give you an outlandish parallel, hoping no one takes any offence. Imagine you are wanting to find a girlfriend with a view of getting married. Any woman you meet will likely be someone’s ideal partner , but not necessarily yours. You certainly don’t want to get stuck with the wrong person and spend years suffering trying to “make things work” or keep going on disappointing dates becoming more and more disillusioned. So, it pays if you start off with a list of characteristics your future wife must have. In order to be able to do that however you must know what your needs are, which requires a certain amount of self-knowledge or self-awareness which to begin with you probably don’t have. The point of going on different dates will then be to teach you about yourself and what makes you tick. Slowly you will gather the knowledge you need to make up that list of characteristics you now know will make you happy. It will become clearer when you meet a woman whether she has enough of those characteristics or not. At this point you are ready to start a serious relationship. It will still require a lot work, getting to know this person. Over time you’ll learn all the nuances of her personality. You will know what to do, when to do it, what to say or not to say but you still get surprised sometimes and you understand that you still need to be on your toes at all times. Overall however your needs are met and you now lead a happy life with your spouse…
What I am trying to say is, you don’t need to know everything about the market, but you do need to know what is right for you. You don’t need to date all personality types to find out which ones will match yours. The sooner you understand what market behaviour best fits with you the sooner you will be able to dig deeper and clearly know what you are looking for in a chart.
Hey, I’m just seeing this. But, I fu**** up in the very beginning lol but I learned from those mistakes and I’m starting to see some consistency. So, things are only going to get better this year I start my account with $1k every week, and just pull the profits on Fridays
GOLD! This is why I’m on the forums. Thanks for sharing. I’m in the middle of re-reading Trading in the Zone and will shortly finish his series on Youtube. Fear of losing money is my biggest problem. Being wrong or FOMO or leaving money on the table not so much. But like Mark says “have an edge, trade your plan and think in probablities and the fear will go away.”
I start my account with $1k every week, and just pull the profits on Fridays