My rules! Will they or they wont?

Beginner Questions
1

I have been trading for a month or so now, I have met moderate success in trading.But then, as babypips taught me everything about forex, I thought to discuss my rules here. So I am putting my trading rules up here to share for the critics, newbies, experienced, appreciations alike.

My plan:

  1. Never risk more than 2%.

  2. Make 5 % of account balance and stop trade for the day.Dont get greedy(Most important.)

  3. Lastly, lose no more than 5% of your account on a single day.

Then I calculate:

  1. Calculating the risk: 2% risk on a trade on an account of $500(my first small trading account to test the waters) would be $ 10.

  2. Selecting the position: You need to do your own check for this. Make your own system/ take up up some system from “The Holy Grail” threads(not recommended. It happens that every person has his own perspective while looking at the indicators so, if he writes his system, his system gives his system’s heart but not the brain. You still need to figure out what exactly he was looking for while looking at those indicators.)

  3. Choosing a lot: The most important step. [U]For a mini lot, $10 loss would mean stop loss at 10 pip[/U]. If, you follow a particular system, it tends to tell you the SL. So, if your system says put 20 SL, then following the three rules and buy 5 microlots.(1 pip movement in microlot is 0.1 bucks, so 20 points is $2 and for 5 microlots is $10(our risk)). Now according to me, SL properties change according to time:
    a. On dry times(like trading Eur/GBP in Asian session) it would be take sometime before that is hit. But,on some most busy session it would hit in no time(Like our beloved London session). This trading session rule is not cast in stone, but it works most of the times.
    b. Trends are our biggest help, if we have a strong trend in our direction, it could be sometime before our SL is hit. But, if we go in at the start of a trend(not exactly the start but rather a start that the indicators tell us), you need to be very careful. I tend to go in a bit late in a trend, just to be safe.

  4. RRR(Reward to Risk Ratio)/TP: Normally, I use 2:1 RRR and set TP accordingly. As, this is not a rule, it is always needed to be figured out, what TP is required. Most systems tend to give out the TP. Use that,if and only if, your RRR doesnt go below 1:1. If, it does, dont trade.

That’s it, that is my system. Any, comments, criticism ,suggestions, trading system would be appericiated.

2

u were saying RRR is 2:1 means is like profit 20bux loss 10 bux?

3

Looks good to me now the challenge is to stick to it and make it work.

Good luck

4

yep…what it basically means is [B][I]try [/I][/B]and set a double TP as compared to SL. What happens coz of this is, even if you have a rotten luck and lose 50% of trades, you are still in luck.
Remember one thing, there is something called Resistance and the chances are more often than not, the price wont breach that barrier. So, setting and looking for a double profit which pegs your profit above that level is plain foolishness, you may win some trades but lose many cause of TP not being triggered, price reverses and hits the SL.
There is a way to avoid it by using TS.

5

It works well and I am sticking to most part of it, atleast in demo trades.

6

And you’ll doom in live trade.

  1. Depends on your signal system, those percentage mumbo-jumbo can be—and will be—a built-in disaster because of the way you apply it. Think about it, if your signal system gives you only seconds (and I mean those few tick, tick, tick on your clock) prior to Entry, you’ll be rushed to calculate it, and divide your attention between executing trade and calculating. It’ll get worse if you trade more than 1 pair.

  2. What do you think will happen when the first few trades resulting in losses? Your 2% risk-rule will stay 2%, but the actual dollar you risk will averaging down. Thus, either your Stop Loss get tighter or your profit, by the time you get it, gets severely reduced. Since you don’t mention your actual risk-reward ratio (your loss compare to your profit which is seen through your equity’s up and down), you’ll prime yourself for a big surprise when this is happen.

You should calculate those for certain period of trade, say a month, for example, and stick to the first calculation regardless of the profits that already add up your equity. You recalculate at the end of those period for the next one.

  1. Read again your Rule 2abc. Stop Loss will this, Stop Loss will that, bla bla bla. In case you forgot, Exit doesn’t mean Stop Loss alone. It can also mean Profit or Reversing Order. And if you’re worrying that much about Stop Loss alone, then that’s what you’ll get in live trade: Stop Loss got hit after hit and crunch down your equity.

  2. All in all, what you called trading rules is nothing but a BoyScout jargons. Simply because they try to cover everything in just a few. Try to get Larry Levin’s book, Emotion Free Trading or something like that. In it he put his own trading rules for example and it is good. You just have to modify it to suit your system.

  3. You have moderate success with just a month of demo trading. I used to have a month after a month of huge success only to be crushed out by the next couple of months…in demo. You think live trading will be different? Oh yes it is. Just wait until you get a string of losses you never got during the month you demoing, see your $500 reduce to $450 or even $400. Then you will know that trading is not only about entry and exit, lot, percentage, and even rules. Largely trading is about mentality, mine in my trades, and yours in your trades. One month of moderate success in demo trades does ABSOLUTELY NOTHING to your mentality as a trader.

  4. And what luck got to do with trading? If you want to use luck, then go to Vegas and play roulette. Trading is a strategy game, and you can ask from Hannibal to MacArthur, luck has no bearing in any strategy game. You need plans: What to do if something or other happens!

  5. And here’s the worst: You can’t stick to the whole part of your current system. And you think it’s good enough. Big mistake! Either you crossed every t and dotted every i of your system, then you can compare your trading result with a one-year old’s writing: strings of lines which mean nothing to anybody.

All of these are harsh words, downright rude if you want. You can take it into consideration, or dismiss it right away. But if you even dream that forex market is softer or more comforting, then I’ll stick to my first opinion:

You’ll doom in live trade.

7

Point taken:).

But,

  1. A work out of your experience or even your system would help rather a blathering out criticism. This thread requires creative criticism.

  2. As, far as moderate success goes, yeah I have burned down many demo accounts to come up with this. And read the word [B][I]moderate.[/I][/B]

  3. Yeah, we all scrounging this particular part of Babypips are Boy Scouts, thats why they call this place newbie’s forum.

  4. I dont understand the flaming which a newbie gets everywhere when he tries something new, this in turn leads to harder way of learning and more flamming of newbies

  5. I dont think you understand my points 2ab. If you have traded or are experienced as much you claim to be, you would know what is the busiest session. And the eur/GBP moves sideways in the Asian session. Dont believe me??? Trade and check it out!!!

  6. I dint say it was picture perfect. I tend to overreach myself and trade on a higher risk and not follow my system.

  7. I believe the whole reason you weren’t successful was you dint follow a system and a trading pattern. You need calculations and everything to be in order to get in your trades(this might not let you be a sclaper on 5 mins chart but can help you on 30-1-4 TF). As the thing goes for the whole mentality thing, you might become ,Yuri Gellar. but that doesnt mean you could trade. And, I know what a drawdown is and how it affects my whole scheme.:o

I might be rude or even down right “A Full headed, egostic Newbie” but if you cant share/suggest your changes, just write [B]“It wont work, you are doomed”[/B] with caps and bold if you like and move on to flamming other threads.

edit: checked your previous posts and it seems you tend to be rude, a lot and that too very active in newbie forum. If this is your way of being helpful to newbies, I get the picture.

8

Vicky, I dont wish to take sides but a bit more research may be a good idea and I highly recommend Kenneth Lee’s thread ‘Dont make trading harder than it is’. Start from the last page and work forward and he will give you a different side to trading.

If IDR has a thread please let us know because I am always looking for new strategies Thanks

9

Sorry, but your header says: “critics welcome.” Nothing remotely close to “creative” part.

I hammered you down on this because this is not as important as you think. The most important thing is to have CONSISTENT SUCCESS, be it moderate or mediocre.

I came across this line when dipping my toe in forex years ago: “This is the hardest easy money you’ll ever lay your hand onto.” And I thought either he’s joking or he’s the world sinister ever walk on this earth. Today, I got those bruises and scars for undermining that statement.

If you really read my previous posts, then you’ll found ones in a newbie thread whom would like to plung $25,000 for his first live trade and believe he would beat Michael Bloomberg before the year’s end. There’s a couple of his post which are already deleted, in which he called me by all kind of things. The thing is, you never heard from him again, nor from his precious $25,000.

I relented in those thread. If only I persisted, I maybe able to help him save his $25,000 and he may still around this forum today.

As far as for flaming goes, it is the most important session all newbie needed to survive. Too many newbie out there who just want a pat in the back and nice words of others, which is dead wrong. You don’t train your muscle by caressing your lover’s body, you train them by exposing them to pressure, each time more demanding that before.

It is you who didn’t understand. I don’t give the slightest damn whether EURGBP, or any other pair, moves sideways or even backwards during Asian session.

It is you, focussing on Stop Loss, which is wrong. Stop Loss is important, but it is part of a package. You cannot focus solely on it since you trade for profit, not for loss.

Please tell me you just kidding! Read again your no. 6 and the first sentence of your no. 7. You just said that you TEND TO NOT FOLLOWING YOUR SYSTEM and then claim that I wasn’t succesful because I DIDN’T FOLLOW A SYSTEM AND A TRADING PATTERN.

So if it is me not following system I will completely unsuccessful while if it is you, you are successfull because you do just the opposite. Are you a bombastic idiot or what?

No, you just newbie.

Get past those emotion of yours and read again my first post in this thread, especially every paragraph ending.

And Vicky, sadly, you just fail your first barrier in forex trading. You tend to follow your emotion instead calculate everything coldly. That will make you fall during live trade. Doesn’t matter if you have found the “holy grail” of forex trading, as long as your emotion keeps talking during your trade, and you keep listening, the “holy grail” will turn to “holy ****” and you say bye-bye to forex trading.

10

What for? I’ve got nothing new to offer which big enough to start a thread of its own.

As far as new ideas goes, here’s two thing you might like to consider:

  1. Time factor.
    My strategy is not something exclusive stem out of my brilliant mind because I don’t have any brilliant, let alone mind. I just copy what I found in other forum. Factoring in time since my broker resides on different continent and our time zones have 13 hours space in between. But, voila, what do you know…I got a whole different things instead.

  2. Enhancing Profit.
    This belong to Mr. Van Tharp, if I’m not mistaken, in his Trade Your Way to Financial Freedom. For some years I thought avoiding losses and enhancing profits are the same thing. I was at the end of my rope, busting my butt to erase those losses out of my backtest result, when I turned to his advice and lo-and-behold…Those two are the two sides of a coin, but far even from similarity from one to another. Focusing on avoiding losses helps me erase some only to grew it worse at another time. Focusing on enhancing profit… You’ll try that and see for yourself.

11

Now, as this thread has been reduced to a rather battleground and IDR being the more experienced trader, I would like to do the correct thing here and [U]extend my apologies to IDR.[/U]

Adding,to it I take a solmen oath, to IDR and all the experienced traders, no more advice asking threads and questions.

I should rather become a leecher and suck everything out of others threads but not try something on your own, as it is biggest advice I am getting here.

12

You got it all wrong, girl. If there’s anybody to whom you owe an apology to, it is to yourself.

You think I’m being mean to you? What do you think will happen once you enter the market for real?

Let stretch our imagination a bit too much. Say you already enter the market for real, and by chance, you happens to countertrade one of those guys who had given you nice words here. Let say you both know about this, about who’s on the other side of your trade respectively. Do you think he will hesitate cashing in his profit, knowing full well that it is taken from your personal wallet?

Like many other newbies, you think just because you’re new others should give you some breaks. More lenient to you. That’s fine by me. Problem is: once you enter the market for real, the market won’t be that nice to you. Compare to the market, my words are only child’s play.

If you think I’m wrong, then ask yourself these: Why does the Army, all over the world, setup boot-camp in the first place? Shouldn’t they thanks those newbies for willingly comes up and defend their countries? Instead they beat the bejesus out of those newbies. Are the Armies of the world consist of means, ungrateful bastards?

This is your boot-camp, girl. As well as other newbies. I can’t shake you up enough to prepare you for the real market out there. Just as the U.S. Army couldn’t shake up their newbies enough to prepare them for Vietnam. And you should know what happened in Nam.

If it’s that what you want for your future, fine by me. But I won’t be the one who deliver you to it. My courtesy to you ends up here. Once you enter the market for real, I won’t hesitate to rob you blind. Not in a million years.

13

IDR youre being rather harsh as all that was stated were some general rules presented by a newb who was looking for feedback, not a nuclear war !

Miss Vicky, you have EVERY RIGHT to post your questions and expect a reasonable dialogue (as opposed to diatribe) and you dont owe IDR one moment of apology !

i cant comment on your rules, because “rules” left my trading years and years ago, BUT ---- rules apply to you AT THIS POINT IN TIME.

I teach advanced methods that go far beyond pip school, and unless learned and applied well, they can be extremely rough on a trader, but with LEARNING and EXPERIENCE they become wonderous guides to the paths over the mountains of forex.

But i started somewhere, and that somewhere was not where i am now and like all others, what you know now will be replaced, day by day, by new and different and perhaps better information — its a learning process, and there is no way to shorten the process by very much without a teacher, and its hard to find one of those hanging about these days, so you go, one step at a time, and you learn, and this is an EXCELLENT site on which to learn.

and you get better and better until you begin to understand what looks like a random mess in front of you, and pretty soon that random mess makes perfect sense and you start picking off trades like fish in a barrel Q

you will go thru MANY systems and methods until you find the one that suits JUST YOU, and once found you will improve and alter and fiddle and make it better and exclusively yours !

a lot of people wash out of forex because they wont take the time to understand and learn it, but the ones who are left continue on, adding to profit and their own freedoms.

take your time, DONT listen to the likes of your “combatant” and understand that forex is not nuclear physics — its just patterns and ups and downs and cycles and even distinct times of the day to enter trades or exit them ---- there are a number of traders at the top of the heap, and some down in the bottom, but in the middle lay all the rest, and they do just fine, thank you !

enjoy and trade well

mp

[I][B]Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages !

As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence – BUT I KNOW WHERE THEY HID THE KEY !![/B][/I]

14

Great post mp. Although I’m still a rookie, I totally agree with you. :wink:

So Vicky, don’t listen to people who try to discourage you. The PRO’s are not born PRO’s, they were once, where we are today… They had to learn the business from scratch. So I really don’t understand these experienced guys who act harsh with the newbies. There is no reason to do so. They all were newbies once too. Maybe they had harsh professors? Who knows. Also, some guys were lucky enough to have a tutor, I mean, a father or granpa that teached them and showed them the “secrets” of the business, and that was a big shortcut.

However, I’m completely sure that we can learn the business from scratch without having a tutor side by side. It will cost a lot more effort, time and headaches, of course, and you we will have a lot of “stones” in our way. But the whole learning process it’s all about our “will” and our mental strenght.

What one man or woman can do, another can do.

15

Mind if I ask, do you mean me? If you do, then you got the whole picture completely wrong. Read all my posts in this forum if you would, then tell me: Have I never give anyone uncomplete picture? That I only criticize without a way out, even if one as I see fit?

If I choose to be harsh in words, that’s because forex trading is a harsh-world. If anyone ever tell you differently, either they’re con-artist or a fool.

EXACTLY! And what do you think how we were when we’re just started? Do you think mp, whom you’re so readily to agree about, just woke up one day, decide to trade forex with his successful system already in his head and zoom up to wealth in a flash?

I don’t even know him. But I know he gets to where he is now not without bruises. I believe he even got battered and bleeding before he finally got his system right and succeeded. (Am I right, mp?)

Because you’re just newbie and don’t know **** about forex reality. You think the ratio of 80:20/90:10/95:5 of those who made or break in forex just numbers without meaning. You think I’ve been harsh simply to avenge my past? Know this: Forex trading when I was started some years ago are still the same world as it is today. It’s cold and harsh and damned demanding. Because even mp, if put in the imaginary situation as I had explained to Vicky, do you he will hesitate to cash in his profit?

To repeat: with the rules Vicky presented in this thread, she’ll doom in live trading. Why? BECAUSE HER RULES ARE ONLY MONEY MANAGEMENT RULES! And she put “TRADING RULES” in her header. So where is it? Where’s the TRADING rules? If she thinks with MONEY MANAGEMENT RULES alone she can succeed in live trading, she’s wrong! Dead wrong.

And nobody else tells her that even up till now (that including you, newbie).

And she replied to my first post with ANGER, so much so that she asked that if I “can’t share/suggest changes”. Which I already done in my first post, had she read it with cool head. Do you think she will reply to losses in much different way?

Worse, while she admits she tends to not to follow her own rules (and claiming a “moderate success” prior to that) she also accusing me of failling for NOT FOLLOWING RULES right after that. You see, newbie, it is so easy to think we do something while in reality we do a completely different thing. And, in case you don’t understand that, it is easy to think we have following our own trading rules while in reality we did exactly the opposite.

Again… when I called her a bombastic idiot for it, she focuses her attention to it, tunnel-vision her mind to it, and not for once considered my prior sentences that pointed out how she just contradict herself so easily. If you have $5,000 at stake, what will you chose—me calling you a bombastic idiot so you can save those $5,000, or the market takes those $5,000 out of your hand before you realize how a bombastic idiot you are?

And I’m not one of the “stones” in your way? How strong does your mental if you can’t handle just me? You think it is strong enough to deal with live trading. Who’s you try to kid, kid?

16

IDR — while you may think youre offering up nice sound advice, there are many ways to do so and your method is, as has been commented on, rather negative and curt.

no one says its easy, but no one tries to discourage either — each person faces the multiple situations along the way and either comes out better for it, or falls by the wayside as a washout !

its no crueler than making the team in football or any other sport – its work, experience and time, BUT simply because of incomplete rules on her part, which will be altered day after day, YOU have no excuse to sally forth with your slaps in the face !

You can choose to advise, which would be the proper thing on THIS SITE, or you can choose to denegrate a newbs concepts ----- decent people know the correct attitude !

mp

17

“If she thinks with MONEY MANAGEMENT RULES alone she can succeed in live trading, she’s wrong!”

Why do you assume she thinks the money management rules are all that matters? I get the impression she didn’t post trading rules because those vary wildly from person to person, or even for one person in different trading climates. She is just posting her money management rules, which look pretty sound to me.

18

This is a good set of principles. You will need MM more than any other thing right now. but as you will grow as a trader, some of these rules will appear to be just impediments in success.

I dont see any need to say that this will keep you safe and make you successful in the long run but here is only one advice: 2:1 reward:risk issue is not mandatory.

I rarely have a reward to risk greater than 1:1 for mos parts I use a 1:2 reward to risk.

Tex

19

Agree. MM is by far the most important ingredient in trading.

See you will all learn this sooner or later- some of you wiill lose accounts and then learn while others will simply listen to the ones who have been there.

No system will work unless backed by a strong MM.

She can also add to her arsenal optimized Leverage.

20

we understand your reluctance to post again, but youre now among friends and newbs alike and we would like to comment and/or assist !

IDR is as you state, a VERY rude individual, and while I’m known to get a tad “crusty” at times, I try to remain within the bounds of human conversation, not whatever he (and it HAS to be a HE !) has so far produced.

so come on back and lets settle this all down and become humans again !

mp