This morning, there was a trade I was looking at trade that looked tempting. However, the determing D1 candle was only a few hours old. It reminded me of a lesson I hard to learn a few times: never base a trade on a young open candle.
It’s so tempting to look at an open candle and assume that it’s your trading signal. But anything could happen before it closes. If it’s already given the clue I need, and it’s about to close soon, then I’ll jump in.
I’ve lossed so many times that now I just stay away until it closes or it’s about to close.
1 Like
I’m learning the importance of risk management. It’s soooo important.
Recently, my risk has been ranging around 0.75%, down to 0.38%.
0.38% is not a magic number. The amount I was comfortable trading for a while was 0.38%, that’s all.
I decided to limit my swing trade positions to 0.75% max risk, and my S/R bounce trades to 0.65% max risk.
It doesn’t sound like much, but it prepares me for the event of repetitive losses. This will keep me in the game long enough to keep trading.
My recent losses were bad. I had about 8 losses. But I wasn’t worried because I only lost 4.2% total. That’s not bad.
Imagine if I risked 2% per trade!!! Oh god!
These trades varied between 0.3% to 1.0% risk.
Now, I’m strategizing my position sizes. I can reduce the risk based on what the situation is, but I’m establishing a max risk, and the max risk is quite conservative.
My greed tells me “the higher the risk, the higher the profit”, but I understand that the losses could be higher as well.
1 Like
I have found that I do much better overall risking 1% than I do risking 2%. It is strange. Maybe it’s because I’m comfortable losing 1%. There is something in my brain that switches when I start trying to up my stakes, maybe it’s overconfidence, or greed…but it doesn’t usually end well.
So, despite the temptation, I will be sticking to my 1% risk.
1 Like
I used to think I want a lot of money. Even now, sometimes I fantasize about what I would do with $1M.
But the truth is, if I had that much money, I’d be really scared. When you are working class and never had more than a few hundred dollars for spending money, $1M is a lot of money. It’s like driving a junk car than normally can only go 60km/hr, then suddenly you’re sitting behind the wheel of a sports car than goes from 0-100km in 5 seconds.
If you were wise, you’d realise you suddenly have the power of speed, but not the ability to drive it. And if you try driving that kind of car without the proper training, you could kill yourself.
If you’re accustomed to a $30k/year salary, then suddenly have $1M, you should be scared. Terrified.
You will be happy. Time is money, money is time.
1 Like
Yeah, that’s what I thought! But when I think about it now, it actually frightens me. That’s a lit of power to suddenly have. You have the power to suddenly buy and do everything you’ve dreamed of, and also the power to change your family for generations to come.
When the excitement hits you, by the time you start thinking rationally, the money could be gone.
Right! The stakes are not so high! And I guess you’re more focused on the trade and not the profit/loss.
There were so many times I would place my SL tighter, when placing the trade, to increase the potential profit.
So, of course my SL would get hit. I was thinking about the money, and not the trade.
Do you still get the temptation? Does it ever go away completely?
Today, I didn’t open too many positions. Just a couple, and I set a few orders.
A lot of the set ups weren’t good set ups after taking a second look.
I think a big part of being a better trader is being willing to trade less.
That means you’re willing to walk away from certain trades.
I ordered a few books about taxes.
It’s funny because I bought the cheapest copies available for each book. And most of them were the last copies for that price.
I guess if I’m going to take trading seriously, I should treat it like a business.
I have an accountant, but I shouldn’t rely on one person for all my information. So, I’m gonna try to learn a bit about taxes and maybe there are some tricks to save some money.
I have so much reading to do and not enough time! Well, at least I’m not bored.
This week is a bit weird for me. It’s a learning experience.
So, markets are retracing this week. I had a few trades that I tried to jump in and got stopped out. Super small positions, so I lost less than .04%
I’m grateful for that.
Not much trading today. Just one position opened so far. It’s actually a hedge against one of my open positions. I’ll probably close that Thursday or Friday.
On my swing positions, my SLs are quite far from current price. The least I’ll do is move up to BE once it’s safe. I’m trying to keep my SL where I won’t get stopped out by the retracements.
I was toying with the Fib zones, but it doesn’t really help me because I can’t be sure which zone price it could pull back to.
Next week, trends will resume. I plan to add to my positions, but the SLs are so wide, the profits won’t be much compared to opening a whole new position.
We’ll see.
I know there are tons of traders who like trading breakouts, but I don’t like them. So many fakeouts, and possibilities of what could happen.
I’m currently short here. We’ll see what happens. I have my OCO ready, but it could fakeout both my orders and hit my SL on both sides.
How am I supposed to trade that?! You gotta be in it to win it. I get that. Sometimes, it could breakout bullish, then go bearish, or vice versa.
I’m just venting. haha
There are times that it breaks out and just keeps going. There have been several times I shouldn’t have traded the breakout because it was in the middle of a channel. And anything can happen in the middle of a channel.
Anyway, we’ll see how this turns out. Maybe early next week it’ll start trending.
I’m thinking back to when I first started.
“Disciplined Trader” mentions having a weird relationship with the market when you can’t understand your strategy or the market you’re trading.
I used to trade on my phone only. I noticed that whenever I opened a position at night, I would have profits in the morning, then lose them again during the day.
So, I started a routine where I would open a position, go to sleep, and close it when I wake up. I must have called that technique “the sleeper” or something. Haha
I realise how little I understood in the beginning.
I’m a bit disappointed in myself. I realized that I could have traded so many of the pullbacks.
Numerous traders have warned against trading pullbacks. Several of them were pretty clean. Had I put more faith in myself, I could have traded them. Lost some, but mostly win.
Lesson learned for next time.
I also just realized that there were pullbacks that I SHOULD have placed orders for. There were positions that I didn’t want to hit my stop, so I kept it far back. By doing that I missed my opportunity for a very nice entry.
However, I have to appreciate that I respected the market enough to not get greedy and maintain a conservative SL. An aggressive SL could get you stopped out. In the end, I got to keep my position open.
Now, I’m setting some orders, but I’ll continue to be a bit conservative. I have to fight the desire to get greedy and start throwing money at set-ups. I have to always maintain the idea “what if I’m wrong?”
This idea has also made me reluctant to add positions on certain trades. I want to have more faith in myself, but the market doesn’t care about my faith.
But, I must have some faith in my ability to execute my strategy and place some orders to catch some profits. That’s the only way to win. I at least have to participate. Even if I participate conservatively, just place a small order and take a chance. I could lose, but I also could win.
This is where risk management is king. It is your oxygen underwater.
As I review charts this morning I see so many opportunities I missed. Of course, hindsight is 20/20. However, many of the things I thought would happen, happened. I could have placed orders.
2 things:
1- I realise how much more practice I need in order to catch more opportunities.
2- I MUST respect that I NEVER know what will happen. I can guess by placing orders, though.
Here’s another trade I missed. I could have gone short on this. Here’s USD/CNH D1.
Small risk would have been worth it.
We’ll see how this week goes. My first time moving my SL to the recent bounce, and adding to the position.
I’m starting to catch the rhythm of how the market moves on a weekly basis.
However, not all pairs move at the same time, but some move very close together. Or, I should say have good entries for my strategy around the same time.
1 Like
So, I had a few very nice positions that got taken out by fakeouts.
I’m not thrilled about the loss. But I don’t feel much regret about it. A fakeout is unexpected.
However, there is something I could have done about it—I could have placed some orders or kept my SL away from those areas when adjusting my SL.
Lesson learned. I jumped back in to those trades, but a smaller position because now my SL has to be wider to include that recent fakeout candle shadow.
Once, the market is in motion, I’m trying not to place any more trades.
To be honest, my brain is quite busy, and this morning, I rested it a bit. I was watching a movie for about an hour before starting my trading.
I guess we need to relax our brains sometimes.
My job is quite simple, so my brain is free to contemplate my life, past decisions, my future, etc.
I’m really trying to turn things around, and I have to remember it’s a marathon; not a sprint.
A positive approach. Well done. I have a couple of questions.
Did your total daily trades position exceed your maximum bank at risk percentage?
When you jumped back in to those trades, did the trades still meet the entry criteria that made you enter the trades before the fakeout?
Did you adjust the SL wider because the ATR increased dramatically for a short period, or did you not calculate your SL as a function of (for example) ATR(14)?
It’s great to see some real examples of trades. It’s also important to try continuous improvement, I have been doing that myself for about 3 years now. Still don’t have that continuous positive edge though 
1 Like
To be honest, On some I did make the SL wider. But on a couple, I just took a gamble and left the SL where it was because I doubted that price would breake that level AGAIN.
I could be wrong, but if I were to place my SL that far, the profit would be so low, I wouldn’t want that deal.
Perhaps I’m being arrogant, because some profit is better than no profit.
I was willing to take that gamble, though.
And my risk was staying the same. Around 0.38%
I’m trading several pairs. So, I risked 1% per trade, and I was wrong, then I lose a lot of money.
But a loss of 0.05% or less per trade isn’t so bad.
