I have to win 75% of my trades to hit my 10% profit target every month and I am happy with that. I trade breakouts of pull backs in strong trends using a 144 or 233 tick chart. If trading a down trend I set my stop loss at the swing high and my profit target is the distance btn the swing high and breakout point (the swing low), risk reward 1:1.
I only trade in the direction of the long term trend which I define using 45 degree angles from swing high and lows on an 8 hour chart.
This morning I had a successful and quick trade on gbpjpy at about 7.30am gmt. My working day finished at 8am!!!
Congrats. Only thing better than hitting your profit goals, is getting it done early so you can do whatever with whomever for the rest of the day. I think some traders are confused about R:R. They treat it like a done deal like for example in poker, where the pot is x amount and it costs you y amount so you’re getting 4:1 to call. There is no projections it’s simple math formula. You know both sides of the equation. In trading you only see left side of the formula the right side is projected based on the balance of probabilities. Example you risk, 3% of your account balance or x amount of pips, before you trade, however on the reward side of the equation is based on projections based on probabilities such as probability of trend momentum and/or price has hit this level 4 times in the past and you don’t know it til after you’ve entered the trade. There is no math formula to calculate reward. I trade using a fib strategy, I enter a pull back, place a stop based on my account balance, so my entry and stop loss are know before hand, my take profit or profits is projected based on a fib expansion. I project a 4:1 RR, but depending on the exit, that RR is correct or not. Anyway that’s how I see it. Hope you enjoy the rest of your day. Monday will be here before you know it.
Trading for me is now very much an ‘art’ rather than a ‘science’ and I think an analogy can be made with fashion. If you design clothes, how good one is at seeing the trend of the time will determine whether they are successful or not in designing and then selling clothes. The same can be said of trading. How good one is at ‘reading the market’ (and the trends within that market) will determine whether they are successful in trading.
Personally I don’t think it matters how you label trading, art or science, label whatever works for you. Success and/or failure in: fashion, trading, cooking, driving a car etc is based on your definition of success and failure not anyone else s. You ever hear of “some people see the glass have empty; some see the glass half full.” What is true no matter how you approach trading, success or failure will depend on your definition and the decisions you make. To make better decisions, you need to gather relevant facts, list relevant options then pick the least of the evils. For me I think rather than look at risk/ratio, it’s better to approach it with balance of probabilities. What are the chances based on the information and options available, that this pair has a better than average chance to reach my take profit level/s rather than hit my stop loss. But then again some people may say according to their definitions it’s the same thing :>)
I agree with gp00053; there is also another element in this that is often at play: TIME.
What is success in Forex:
being profitable at the end of every trading year?
being profitable at every end of every trading month?
being profitable at the end of every trading week?
In other words: none of us is getting any younger; the question is: how long are we prepared to wait and accept that our ‘time has yet not come’, on the assumption that ‘it is yet too early’?
Unfortunately, where one person’s failure to wait for their five-year test period may constitute a ‘rushed judgement’ in their eyes, this, to another person, would be seen as an inconceivable victory of patience over emotion, as he/she may not even be able to wait that long before judging whether their system/strategy is worth sticking to…
Every trader is different and there is no one-size-fits-all…
I absolutely agree with your post and the points you make address the fallacy that i have recently overcome. In my mind I was defining success as finding a ‘system’ which delivered a risk reward of at least 1:2 based on the so called advice of ‘experts’ and thus, I was defining my idea of ‘success’ by their idea of success. I now have my own clear rules as to what I will define as ‘success’ and am much the happier for it.
The great thing when you realize that once you define success and failure according to you and based on what you want to accomplish, when someone offers you advice and/or opinion or you are looking for something, you don’t have to waste valuable time (one of the major things you can’t get back no matter what) looking at ridiculous things such as: what’s the person who’s offering advice or trying to sell me a service or item bank account balance, or whats the best trading strategy, or how many and what recommendations someone has. You get to say I don’t care, all I’m interested in is how does this fit with my definition of success, my plans and is it worth the time I’ll lose finding out. I have a basic bias against long term trading and I have my reasons why doesn’t make them right or wrong; it makes them mine. So if I was looking to purchase a video or mentor service or coaching. I would not find Jarratt Davis (swing trader) book selling for $ 9.95 as valuable as a book by someone who is a short term fibonacci trader selling for $19.95 because that’s the one of the tools I use in my trading.
Excellent threat! In my point of view the market is a living entity (can be capricious, have different moods, etc…) your trades being part of it are also living entities. So I manage them as such, and don’t apply absolute rules; since the market is a wild beast that cannot be predicted or tamed I have to adapt myself to it.
In other words: Keeping efficiency under variable conditions requires fluidity and flexibility of mind.
You know how to ride a horse because of your own experience, not because you’ve read how to do it or which “golden rules” you should apply.
Exactly! When I learnt how to ride a motorcycle, back in 2008-2009, I thought I knew it all by reading everything about motorbikes and being on the Motorcycle News forums for hours on end; in fact, nothing, and I say NOTHING could prepare me for the first time that I had to be in traffic, without the protective shell of the car around me, going at speed, with the wind beating my chest and whooshing in my ears, my leather-gloved hands going numb in the English cool of a February morning, wheels slipping on icy roads… And, of course, I did also have a fall, but good ‘risk management’ (i.e. spending good money on buying proper protective body armour/gear) meant that the bike took the damage, and I just got up, dusted my elbows, and was right as rain.
Since getting my licence, I have done no riding, as I had to sell my bike, so I could say that my ‘real life’ experience has yet to begin; the same goes for trading: just because you finished the BabyPips school, for example, you would not call yourself an expert until you had your share of slips/falls/crashes (hopefully not too painful ones) and a lot of ‘mileage’, so to speak, in the real trading world…
I agree it is strategy dependant but I think too many ‘experts’ place too much weight on finding a strategy that delivers a RR of 1:2. What these experts fail to point out is if you lower your RR then you also increase your chances of winning a trade. Since I have adjusted my RR to 1:1, my results have improved drastically.
I agree however, you have a choice when it comes to riding horses, motorcycles, or trading; you could learn by your mistakes, or you could learn the basics from other riders or traders, to help you learn the basics. My daughter learned how to ride by taking riding lessons on someone else’s horse, now she teaches riding with her own horse. I started trading by learning as much as I could about basics, When I took the next step, it was easier because I didn’t have to rely on someone else, but had a solid foundation to draw from.
