Some questions.
Do you use a baseline and indicators that you follow when you set up a potential trade?
Do you stick to those baseline and indicator rules?
If you have a target stop loss as a % of your bank, and a target take profit as a % of the stop loss (the amount at risk at any one time) what are those numbers right now?
Do you know how many trades you should complete before the results are 99% likely to be indicative of a real edge instead of random luck?
If you change baseline and indicator definitions, are you logging that in a journal?
Yes, my main indicator is the TDI, my baseline would be the moving average attached to the RSI (yellow line). The first thing I do is I scan the yellow TDI line to see if it’s under (sell zone) or above (buy zone) the 50 value from the start of the asian session. I find this a very effective and simple way to help me identifying the bias of a pair. Apart from the TDI, I use the 200, 50, 21, and 8 ema + the VWAP. I mainly trade off the 21, 50 ema and the VWAP using candle formations on the 15m or divergence setups on the 1m.
Determining the bias of a currency plays a big role in my trading. I use forex heat maps (I really like XTB) and a currency strength meter. The combination of these two indicators help me identify great setups, but have also saved me a lot of money. Sometimes there was a nice setup, but I was playing long on a weak currency, and short on a strong currency, because of the currency strength meter and heat map I can avoid those trades.
I use 1% risk on every setup. A big part of setting a take profit is to identify risk areas, I use basic support and resistance levels like previous day low or high, pivot points, average daily range and higher timeframe EMA’s. These targets vary from 2.5 to 3.5R.
I use Edgewonk 3 to journal and backtest/forwardtest my trades. It is one of the best purchases I have ever made. Edgewonk allows you to go really deep in some basic metrics, but also custom ones.
I focus a lot on backtesting the setups that formed the week before, I prefer that over backtesting one year of data because it helps me get in touch with the market on how it is currently behaving, and to critically analyse everything I did and didn’t do well that last trading week. So I don’t really backtest 100 trades and get over with it. It’s more a continuous process where I try to collect as much metrics and data as possible. When I get a new idea I just put it in my custom statistics and start collecting data every week.
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Cool! That’s interesting. When you look at missed opoortunities, what are some solutions you’ve come up with?
Hey, long time no see!
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Lack of focus. Sometimes I end my week thinking that there were not a lot of opportunities, or any setups that were better compared to the ones I have put some risk on that week. However, when I go over the whole week, I suddenly see that there were many opportunities in the markets I just missed, even though I thought I didn’t miss anything. So focus is a big thing for me now, I used to have a podcast on the background, or some nice music. I realised that trading requires 100% focus and you have to erase all possible distractions. I put my phone away, play some classical music and try to really focus on the market.
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Patience. This is something I have to improve on. I have progressed a lot, I am able to spot great setups and I think I have a pretty good understanding of how the system works, I try to pay attention to the little details and that served me well. However, I tend to be a little impatient, scared that the setup will go without me. When I go over the past week, I realise that patience is so important, a good setup takes time and there is no reason to jump in a little early. When I erase impatience, I will protect much more capital. Last week I took 4 losses, of which two could have been avoided if I waited for a proper break and retest of a structure level.
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Overall performance. By going over the past week, you can compare your actual performance v.s. the perfect possible performance of that past week. So it keeps me in check with reality.
There are many more things, most of them are just small moments of realisation, but these three would be the main ones I think.
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Yeah, I can feel my brain getting clogged when I’m trying to think and music’s playing. I’ll pause it when I need to.
Same for me. FOMO. I’m trying to get better at placing orders for moves that could happen. But, there have been times when I thought price would take 3 days to reach a certain level, so I don’t place the order yet.
Then the next day I see that price touched that S/R zone and reversed, and I missed a perfect entry.
Yup. I look at what I should have done. If I repeat the same mistake several times, that tells me it’s a habit that I should fix.
Great job!!
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this is motivating me to start trading again, might also use $1000
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What a month, one of my best months so far. My drawdown in the third week of this month was around 6.5%, it started to look like a rough month. I did not really mind earning money, but my goal was to minimise my drawdown to my gains from last month (3.37%), or at least come close to it.
I really focussed on taking solid setups, being patient, and keeping my mind cool. Resulting in a net profit of 3.80% in my last week, ending the month July with a small loss of 1,13%.
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Bad month, really slipped in the last week. I got impatient and frustrated, which resulted in a 4% loss.
Last weekend I drank quite some alcohol, and I really felt that messing with my psychology, I was way more impulsive than I usually am.
Smashing your beers and your trading results don’t go hand in hand
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Sorry to hear of your losses. I have not drunk alcohol (unless socially with a meal) in over 20 years but this does not afflict me. But I do remember that many things one does under the influence of alcohol or other recreational drugs has a less than desirable outcome. I guess there is good reason that those labels are on the bottles of medicine that say “do not drive or operate machinery when taking this medicine”.
This is a specific example of a more general “rule” that I have in my list of checks before entering a trade. More generally, it says not to trade (or trade very cautiously) if an opportunity presents itself very shortly after either a large win or a series of unexpected losses.
In the greater order of things, because you have money management built into your trading strategy, you only lost 4%. Imagine if the boredom that alcohol was promising to eradicate had steered you towards lifting your 1% stake to, say, 10%? You could be down 40%. Thank strategy for small mercies. 
Yeah 4% is not that bad at all. It was just the realization that bad trading behavior lies around the corner, and that I still fell for it. Anyway, 4% is not that bad and I learned from the mistakes. It’s a slow process, and anytime you want to short cut it, you will shoot yourself in the leg.
September Results:
Last month I took a total of 16 trades, 5 winners, 7 losers, and 4 break-even.
I start to notice that the in first 2/3 weeks of a new trading month I perform relatively bad, and in the last week I often perform very well. This month was exactly the same. From Sep-01 to Sep-20 (14 trading days) I took 12 trades, 3 winners, 5 losers, and 4 break-even.
From Sep-20 to Sep-31 (9 trading days) I took a total of 4 trades, 2 winners, and 2 losers.
This pattern is pretty consistent throughout all my trading months. The first 20 days of July: 11 trades, 1 win, 7 losses, 3 break-evens. The last 10 days of July: 5 trades, 3 winners, 1 loss, 1 break even.
In the beginning I am more aggressive, feeling eager to make trades. This behaviour negatively impacts my trading results. In the last week I realise I need to recover. I become more conservative and, I only trade clean/high quality setups. As a result, I always make a nice comeback at the end of the month.
I realise that I am perfectly capable of distinguishing a good setup versus a bad setup. I know exactly what I am looking for. However, because I have time on my side at the beginning of a month, I trade more low probability setups. This makes absolutely no sense.
I start to realise I am limiting myself from making some consistent returns. I know I have the technical skills. But I have to get my psychology in check, luckily, this realization will steer me in the right direction.
My goal for this month is to treat every week like it is my last. I will only trade high probability setups, and I have to keep myself in check when I have the feeling I want to overtrade.
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By the way, last month I launched my own website. Nothing fancy, but I use it for journaling purposes. I will review every trade I make, post weekly reviews, monthly reviews, and some other stuff. If anyone is interested you can click on the following link: https://gravelandcapital.blog/
Thanks!
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Yes!! 4% is totally manageable. I’m glad to hear it wasn’t in the double digits.
Sounds like you had some fun, though!!
To me, this sounds very good. Breaking even is better than a loss, any day of the week.
Great quote!!
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100% agree. Most of my break-evens would result in a loss if I had not managed the trade. So I’m always happy to get BE results.
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Do you mean just paying attention? Or do you mean stop loss management?
Yeah stop loss management. When there is some resistance or support area ahead, I most often cover my risk so in case it rejects I have nothing left on the table. If I didn’t cover the risk most often I would get stopped out for -1R.
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October Results:
Great month! the first two weeks of October I experienced some minor drawdown, the last two weeks, as usual, I managed to make great trades. I’m very satisfied with the past 2 profitable months. The overall volatility of my trading performance is way more steady, my tilts have been pretty much non existent and my drawdown is very limited.
You can also see this is my overall equity graph. I make small patches of great returns, and then it just crashes. For the past 20-30 trades my equity curve is much more stable. The main difference is that I switched from backtesting and going over data to working on my psychology. I have a lot of different tools I use to keep my mind as sane as possible, working out my thoughts after the trading day and trying to find out where some of my negative behavior patterns come from. This has been a big gamechanger for me, I pretty much have most of the technicals down, now my psychology needs some finetuning. It took a long time to realize, better late than never.
My first goal is to get funded by a prop firm. Since the start I made a rule that I have to be able to bank consistent profits three months in a row and/or recover from my total drawdown before attempting a challenge.
In November I continue to focus on taking things slow, only trade high quality setups and enjoy the ride.
For all the specific trades I took you can take a look at my blog: Blog – GravelandCapital
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Pretty rough month. Let go of some journaling elements in my trading, realized that is definitely an important cornerstone for my trading. Made a couple of pretty bad trades and the good ones unfortunately did not make up for that. I really learned a lot last month, picked up all my journal practices again. Excited for this month!
Getting closer everyday
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Alright, I am wrapping up the year trading-wise. Considering Christmas is around the corner and volume usually drops, I decided to not enter any more trades and focus on preparing for next year. I have a lot of ideas and trading related stuff I need to finetune.
Last month was another great learning month for me, I quickly had a drawdown of 2,62% after a couple of trades. Since Monday last week, I was able to recover from my 2,62% drawdown and end up with a 2,36% profit. Last week was my best week ever, banking almost 5%.
As for the year, I am currently down 8,93%. Although still in drawdown, if I compare myself to exactly one year ago, I can’t believe the improvement I have made. I am a far more stable trader from an emotional perspective. It’s been a long journey since May 2020, but I still really enjoy it. Considering the growth I have made this year, I can not even fathom what 2022 will bring and I can’t wait to share it on this blog.
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