This week, I was feeling more reluctant to do my trading.
I’m not sure if it’s the losses, or burnout.
I think maybe I need a break for a day. I don’t know…
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A reply in support from a friend. Take that break - one day or more. The market will still be there when you return. During the break, try to think of any activity in your life that you have neglected in your pursuit of Forex, and try to rebuild your work plan to include any thing you have neglected that you still care about. It’s called life normalisation, and is good for all of us from time to time. I look forward to seeing you back, refreshed.
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I’m probably still talking rubbish to you here but I can’t help thinking that you are approaching your trading like someone who wants to learn to juggle - but instead of starting off with one ball, getting the movements working, then adding another ball, then another, then another, you are trying to keep 28 balls in the air from day one while you are still learning. i.e. the ultimate in FOMO?
Trading should be a progressive activity, but I am not really seeing the development here. It is certainly not for me to suggest anything to you, but you may like to thin out the field a bit until you have a winning strategy that works in some of the battles before taking on the whole war.
Trading is not actually that difficult at all and it need not be time-consuming either. Afterall, the price can only go either up or down. So you just need a process that a) defines the most probable next direction and b) how far it is likely to go (has it got legs). After that, just stick with the A1 trade set-ups (patience and discipline) and aim for a modest slice of the anticipated move (no greed!).
Something else to ponder:
All this effort is only worthwhile if you eventually reach the stage where you can trade size big enough to earn decent money consistently (what one defines as “decent” money is subjective, of course, but is surely more than just a fistful of dollars per month?). But will you ever be able to increase your position size sufficient to achieve that unless you have developed a strong confidence in your approach that has a track record? One really needs to make that “confidence level” a number one target. Without that, there is no really worthwhile end result, just years of struggling. And achieving that confidence level is not going to happen without cast iron discipline and a systematic, methodical approach to developing one’s trading strategy.
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I’m doing my trading now.
I checked all my W1 charts and took notes of which trades to place.
Just a few days ago I told myself what type of trades I should be focusing on and how to trade them.
I was about to start placing orders, until I realised I completely forgot about my plan and was about to just keep trading as I usually do.
Changing habits is tough. Before I actually start placing some orders and giving myself the green light to open positions once the market opens, I’m taking a few minutes to read over my plan.
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This morning, no new trades.
I checked up on my open positions, and that’s it.
I took time creating lists of pairs to watch. The list is long but I’m only looking for consolidation/reversals.
Most pairs seems to be already trending at the moment. There were just a couple that seems to be worth watching at the moment.
I may have to wait two months for the next setup…
Hopefully not, but so be it.
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I’m watching 60 pairs.
That’s a lot. But, I’m watching for consolidation in the form of convergence of the MAs.
I’m also looking for reversals in the form of a trend losing momentum.
However, my entries are based on candles and MA crossovers.
Based on backtesting, there could be three false signals before actually catching the trend.
I’m gonna try to focus on swing trades because S/R trades often have a shorter life than swing trades.
I’ve often chosen bounces trades that have a R:R of 1:8 or so. But swings that could last two months might yield a 1:30. Of course, not always.
But I’d rather be wrong 3 times and catch a 1:30 r/r than a 1:8.
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OH, I long for the long game. As a matter of interest, what are you using for backtesting your plans at the moment?
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Just my eyes… haha
I just stared at D1 charts. The same chart for like 45 minutes. I also work kinda slow.
But I would look at a swing on EUR/USD on D1 and try to see what was going on.
And I would look at different pairs. I was labeling and taking notes.
And I finally just started taking a tally of different signals that I would see in different swings.
So, it’s all price action, MAs, and trend lines.
No software or anything like that. I’m not that sophisticated. Haha
But that wasn’t the hardest part. The hardest part is changing the habits that you know are bad for you, but don’t eant to give up.
I’ve been focused on S/R bounce trades for a while. And it hasn’t been going well for me. I wanted to slow down, but it’s taken me all month to finally resist the urge to take those kinds of trades.
Some of them are worth it, but I was taking too many of them.
I placed just ONE trade today. GBP/MXN.
It was a signal that perfectly matches my strategy. If I get stopped out, it won’t bother me because I’ll know that I followed my rules.
I can’t believe it. Just one trade.
I wanted to trade long on GBP/USD today, but I resisted the urge.
Today is the first day in maybe a year that I didn’t place not one bounce trade nor even a limit order.
It feels pretty good. I can’t believe it took me a month to resist that urge.
I feel your pain - or I did for a long time last year. Whilst I was stuck on my current trading plan since mid year, I am going to do some backtesting in ForexTester5 - a post under Trading Systems. Early days but I have committed to do this in sections over 12 weeks. I now know how I wish to approach this so look forward to saving my eyes, and yours too if it works out so.
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Hahaha I forgot there were even programs for that.
To be honest, I wanted to find some help. I tried watching a tutorial video “25 price action strategies” or something like that.
I watched it for less than a minute. I saw the first strategy was candle formation. I’ve already read books and Pipsology about that stuff.
I decided I didn’t want any help. I just wanted to do it myself. I didn’t want anyone else’s interpretation of the charts.
Everything I needed was in the charts. All my answers.
I watched the entry, the bounces, and the exits.
Even some false signals. And your only hope is SL management, in that scenario. Still, there are losses you can’t prevent. And there are times when you only profit from 75% of the swing. That moment when you could exit, but the trend could just retrace and keep going. There’s no way to be sure.
Retracing or ending? That’s where you’re gonna lose some profit. Forget about “nailing tops and bottoms”.
I find myself really tempted to take certain trades.
When I take a break for a few minutes and walk away, I realise it’s best to walk away from those trades.
I try to keep in mind that if I’m not sure if I should take it or not, just stay in the sidelines.
It’s funny. TLs are subjective. Often, price will respect them if you draw them correctly.
Sometimes, price will slightly push S/R lines.
But where the trap really is, is when price dances around a S/R.
You can’t keep jumping in and getting stopped out over and over. I’ve done that before, and it’s a waste of money.
The JPY is dancing around some S/R right now, and I was struggling to understand what’s going on. Is it going up or down?
But, under those circumstances, I think it’s best to stay out until you get a proper entry signal.
I saw a video and a guy was saying “don’t be desperate.” And that’s what I was doing in the past—acting desperate.
I think it’s helpful to be so arrogant in trading, that you only take the trades that fit your criteria.
I’m gonna take THESE trades only. If it ain’t the conditions I want, don’t bother me.
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We retail traders, chartists, speculators tend to think that we are the only participants in these markets. We are not. It is worth pondering what might really make an area a support/resistance level. If it were just us traders then these levels would very much be a thin line that almost never gets broken!!!
But the currency world is also full of a vast range of various international, multi-currency, business transactions. And many of these “trigger” when currencies reach a certain area or zone. For example, an import/export business buying in USD and selling in GBP will only buy their stock at certain exchange rate levels where their sale prices will be competitive. Commodity buying, like oil or coffee, will also increase/decrease whenever exchange rates are either favourable or unfavourable. But, to a certain extent, they need to buy even when rates are not totally optimal simply to keep their business turnover going and meet demand.
This all means, as many writers suggest, that S/R are zones/areas and not lines. It is therefore clear that there will be times when prices just hover around these points because business life continues even when there are no specific fundamentals to move price to new area.
Sometimes watching these type situations on a higher timeframe can help to at least avoid 50% of any potential whipsawing.
I don’t think this is arrogant at all. It is sound business sense and should be the norm in any trader’s activity. It is no different in other forms of business. Any firm could buy and sell any products that they fancy might make a profit but they do not. They specialise in their own field that they know and understand. You would not expect to see a car dealer selling furniture or an electrician offering to milk cows.
This does not mean one can only trade one instrument. It just means knowing your own specialty (strategy), what you apply it to, and under what conditions. If you were applying to a banker for business finance then this is what he would want to see. Why should we be any different?
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I agree. Except in trading the only structure/rules come from us. There’s nothing stopping me from taking a trade. If my greed is too strong, I’ll rationalize why I should take it.
Bankers have supervisors. We just have ourselves.
For me, I need to call it arrogance. “I’m too good for this set up. Bring me something else!”
Haha
I need to develop this attitude more. I’m slowly turning away more trades.
True. But right now I’m seeing trades that I’m seriously not sure if it’s going up or down.
If a base currency is breaking out in one pair, yet APPEARS to be bouncing in another, what do you do?
For me, I’m gonna trade it how I think it will go. If it goes the opposite way, and the opposite way makes no sense to me, I prefer to stay out. Well, I’m learning to stay out.
I wanna be right for the right reason. Not right because of a random guess.
Then it is not a skill anymore.
Or is that wrong?
Exactly! (and companies too). Now we start to realise that when we talk about discipline in trading we are not just talking about trade entries and exits. It is the whole picture. And discipline in a one-man-band is very hard in any type of business.
We need to have a business plan that incorporates the why, when and where of every aspect of our trading. This includes all the boring stuff like journalling, analysis of trade history, performance measurement, etc as well as the choice of instruments, timeframes, exit policies, indicator mix, PA tools and so on. There is no advantage in fighting with oneself every time one faces a potential trade. It should be clear as anything when the set- up occurs.
This is the paradox in trading currencies because every pair is two different items each with their own driving factors. Personally, I would just go with the one that is matching my entry criteria regardless of what the other pair is doing since it is clear that the relevant factors are not base currency issues.
I quite agree. Random is never trading. The reasons for entering any position must be very clear so that there is no (or very little) room for dithering over whether it’s a yes/no/maybe. The criteria should be concrete and unambiguous. Of course, it will sometimes be wrong but it is the money/risk management department that takes care of that issue. 
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Right. That’s what I did. It looks like it bounced resistance, and I wanted to add to the position.
But I decided to wait for price to start trending past at least the MA20.
I had to walk away from the other JPY pairs. That part was hard!
I didn’t want to get involved with the enter/stopped-out-quick cycle again.
I figured I should just wait for a true signal. I had to arrogant and say to the market, “that set up isn’t good enough. Bring me another!” Haha
@SovoS do you have difficulties walking away from so-so set ups?
Not really because I have a very simple entry set-up. The more years that I have been trading the simpler my strategy has become!!! I don’t look to trade whole trends, rather I just look for the initial impulse when a new trend starts or a continuation after a consolidation. In its simplest form it just requires a close through a certain EMA and a corresponding cross through the 50% line on an RSI - and that’s it!
I prefer to trade commodities and indices to currencies mainly because the follow-through after an entry set-up is usually much bigger in pips than with currencies.
Obviously, it does not always work out but with a 1:1 P/L ratio and a success rate of around 80% of my signals I am usually in profit on the basic structure. However, that is not the whole story. I don’t like to advertise this on a site like BP but I strongly follow a practice whereby whenever a trade set-up fails I take a double position on the next set-up. This is based simply on the principle that “what doesn’t go up(down) must go down (up)”. In other words, I rarely get two successive failures so an opposite trade following a loss is much more likely to succeed.
But the strategy relies on very clear and very simple set-up rules and my only discretion in taking a trade or not is based on other factors like upcoming data releases, EOW, trading holidays, etc.
But I think I have been trading so long that the over-enthusiasm for just being in the market has long ago given way to a more rational and objective decision process. 
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This past week has been interesting.
I’m slowly walking away from trades that I shouldn’t take. And taking the wrong trades will ruin you because you take so many of them, and it was a losing trade before you even opened the position.
I’m learning that the difference between the trades you should and shouldn’t take is the probability.
The trades that fit your strategy have a strong possibility of being profitable, even though you can still lose.
However, the trades you shouldn’t take have a stronger possibility of being wrong. My brain will say, “Well,
It’s an ok setup…We could be wrong but maybe we could be right!”
With those trades, I might be right, but there’s a lower likelihood. Yet, my brain wants to only focus on the smaller possibility of being right rather than just walk away and wait for a proper set up.
I realized that this week. It’s really difficult to walk away from so-so set ups. I’m getting better, though.
I’m doing a good job keeping track of all my trades and following up on them.
Earlier this year I was overwhelmed by all the information.
So, I had to scale back to just one or two pairs and teach myself how to check on a trade, take a note, and follow yesterday’s notes.
My spreadsheet helps a lot. I’ve continuously modified it. I’m on mark VII right now haha
I’ve taken several losses and many of them are just random market moves while others are my own fault. I see it, and it helps me to refrain from taking bad trades.
My SL management is better. I don’t ratchet it up constantly. Gotta leave room for the trend to breathe. But it sure feels good to move a SL to BE.
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I’m looking over my W1 charts. It often helps me understand the D1 better.
It just so happens that I missed a perfect entry with my beloved USD/DKK.
The crazy part is that I already drew the entry and SL lines. But I never placed the order. If I had, it would have been beautiful!
I had a short position that didn’t work out as I planned. Basically, my initial idea was right, but I was doubting myself and my strategy. I was scared to take the loss.
I saw other trades that I should have taken. I was dwelling on them, but I realised that help anything. Learn what you can and move on, right?
There are always more trades.