This means making the same decisions for the same events. If you focus on price action, location, and structure then you will be able to recognize the recurring patterns. Range bars offer us a very limited palette of patterns. This allows us to be able to more adequately recognize them, and then act accordingly. Consistency of trade actions becomes habitual. Whatever is wrong with our trading can be fixed because we behave consistently. If we were not consistent in our actions, it would be hard to pinpoint our mistakes because we would be making arbitrary decisions each time a particular price event showed up.
If the indicators we use get in our way and prevent us from seeing a clear price structure, then we need to get rid of them or learn to see past them. All strategy have false signals. They have to. Nothing knows everything and most mechanical rule based strategies know a lot less than you do about what is currently happening with price, s&r, time of day, consolidation, news, etc etc.
If we rely on strategy based signals, such as the super trend atr type strategy, then we need to learn to be a good filter. One way to do that is to recognize the underlying price structure and all its related considerations.
Note also the momo filter. Momo was not with any of the longs, although it was not totally against the shorts. If I were to define it, I would say there were a lot of traders being caught on the wrong side of things in that trade channel. Of those, how much you want to bet they were taking the long signals as well as the short signals?
Consistent analysis of our decisions and their results is important. Your most important tool is your journal. Be prolific in your recording of all things related to your trading.
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I do...but my experience is that very few traders know what it means to work at learning. Most traders buy into a course or tools with the expectation that their trading problems will by solved by what they bought. The reality is that all they did was buy someone elses tools or someone elses view and conclusions about the market. While these may be good, and they may offer some help, they are not the real answer. The only way to learn is to go through some kind of structured, measured, and qualifying approach to get you from A to Z. Then take some kind of qualifying test to see how well you can duplicate what you have learned, and keep consistent understanding of your actions and the actions required of you in the market.
Then, the real learning begins when you take all this into the live cash market. But before you enter the market, make sure all your technical and money management is solid and consistent. The toughest part is handling loss and gain, and exercising self control. Few traders have the ability to trade within their ability for extended periods of time and build their accounts and confidence slowly... or at a pace in keeping with their ability.
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Wow, fantastic thread here. Just signed up for the forum due to these sorts of great discussions. I'm not at the point of being a full time trader yet but this sort of advice based on experience and learning over time is a great tool for getting there. Cheers!
You do not ever need more ticks than what you can gain and maintain on a consistent and reliable basis. Many traders do things and make trading harder than it needs to be. If your strategy has a high win rate to a first target, at least 70%, then use leverage.
You need to maintain a 1:1 on the extra risk lot, and maintain the usual ratio on the original lot. The 'magic' is maximizing what you are capable of doing without stepping out into increased risk by having to trade more to get more ticks, or extending your strategies ability to deliver more ticks than it was designed to do.
As a scalper always on the lookout for a bigger trade, my performance rate to a 4 tick first target is way up there around 90%. My consecutive win rate average is 10, my consecutive loss rate is 3. Once I knew these statistics and proved to myself that I could maintain them, I used leverage to increase my daily goal. Not more ticks, just more contracts at the right time and within the same RR as my normal trading.
I started with the ES and became the 1 point king. Once that was solid, I increased the number of contracts. All I did was repeat what I normally did. I did AIAO. Over time, I switched to the CL and the 6E because the ES was no longer viable for the strategies I used. This was a tough and costly discovery, but I got through it.
On the CL, I again became the 1 point king (4 ticks) and once I was able to maintain this, I started to add contracts. I discovered my "brick wall" on the CL at about 6 contracts. I did the same with the 6E.
Currently I still trade the same way I did years ago, just better at it. Now, if you look at my trade records, you will note that I get pretty much the same number of ticks per trade, but the gain is much greater due to leverage.
In the plans for next year is to increase my contract lots again. Each time you make an attempt to increase your gains without increasing your efforts, draw down will probably occur. This is not anything that has to do with your strategy or your method. It is most likely your brain trying to make the mental adjustment to deal with the increased profits. Gee.... what a great problem to have, don't you think?!?
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Wow, I have heard bits and pieces of most of this but have never seen anyone reflect it all in one blog style like this. Thanks for reflecting on what your ups, downs, inbetweens and just the experiences in general were.
To put it bluntly, you do not need to buy strategies, indicators, or anything from a trade room or an education vendor except for the most important thing. There are many really good mechanical systems already out there available for free. There are great tools and toys to satisfy any realistic expectation for trading. Unfortunately, the most important thing you need is also the most rare. If you need anything at all, it is experience. Your own experience will be costly, often more costly than you ever imagined. You can reduce some of this cost by 'buying' the experience of someone else. How do you do that!?!
You need to find someone who will let you watch over their shoulder as they trade, day in and day out.
Not just anyone. Find someone who has recorded, documented historical trading in real time. Not market replay results. Find someone who has been around a while. Examine their trading records. Then examine them as they trade in the market.
Do not expect that person to supply you with an endless supply of winning trades. Do not expect that person to get you into every winning trade and keep you out of the losers. Do not expect to even be able to follow that person in the beginning. Shadow trading is not as easy as most people think. Do not expect that person to accommodate when you want him/her to trade, or the way you want him/her to trade.
Do very much expect that person to trade for themselves and follow their own trading plan, stop when their plan calls for it, trade the times their plan describes. They will need to do their own thing, and if you are lucky, they will let you watch. If you want this for free... well, then you are really lucky.
If you are lucky, you will find someone who really just trades for themselves and gives you the opportunity to hang out with them and watch. After you do this, and if it looks like something you want to learn to do, then make a commitment to become a student.
Good trade educators are hard to find. Trade educators that also trade live for you to see are even more rare. Trade educators that will teach you to trade in a 1:1 setting are the rarest of all. This kind of education is like tutoring. You know how much tutors really cost? (You got any kids?) However, do not pay too much for any kind of trading education. The reason is that, if your trading guide is good, he/she will have you do most all the work. If you are not willing to do the work,then do not waste their time.
You should see either their charts with a chart trader indicating visually what they are doing, or their dom, or some direct visual real-time trade identifying format. Their trades should be posted in real time as they happen right out of their platform. Not some end of day summary, or doctored excel document. If the results say long here, then you should be able to identify precisely when, where, the amount of risk, the time of exit. IN time and study you may even be able to identify the why. However, the why is less important than you think. There are a million strategies for entering the market, each with their own "why".
Think about it. No good trader likes anyone telling them how to trade. No good trader cares what you think. A good trader who is willing to teach you what and how they do what they do will demand it be on their terms. A good trade educator will tell you the real unfiltered truth about this business. There is no such thing as learning this with enough consistency to achieve sustained profits in under 6 months. Honestly, I think it will take 99% of new traders at least 1 or more years before they even understand what they are really looking at and what the consequences of their trading actions is really telling them. With guidance, the learning curve can be shortened a bit, but there is no substitute for your own experience.
There is no such thing as a 89% money making mechanical system, or even a 79% mechanical system out of the box or on a shelf somewhere for you to buy. Most mechanical systems will fire a trigger signal based on selected and predefined defined criteria and get you into a statistically verified probable outcome based on past history. However, any 10 traders using that same system, same charts, same entries will get 10 different results. This is the truth, and it is why you are wasting your time buying stuff without buying what you really need, which is direct guidance and daily direction. If some "stuff" comes with it, then that stuff should not be so important that you cannot learn to trade well without it. As a matter of fact, the stuff you get may help you in the beginning to get started, but along the way you should discover your own stuff, or adjust some of that stuff to match your trading style. A good educator will prompt you continuously to take decisive and defined actions. You need to do this so that you prove to yourself that something works or not for you.
The main reason is because in the end, we all wind up trading our belief. We either believe in our system or not. You get belief from trail and error. You get belief from statistical performance records,from concrete results (good or bad) gathered over time. You do not get belief from faith. This is not religion. This is trading. One wins, one looses with every transaction.
You need someone to help you structure your learning. Someone who can share their trading experience, past and present, to help guide you to discover your own style, and help you stay out of common pitfalls, mis-information, false concepts, wasted searching, and disjointed learning.
Ok, maybe this is really asking too much. Not from the educator, but from yourself. In my years of trading, moderating, and educating, I have learned some things. Most new traders look for the easy way out. So, here it is. There is no easy way out.
You will have to work at this, and there will be days when you will want to kill your guide. There will be days when you just cannot stand to hear your mentor telling you again, perhaps for the 100th time, to keep a journal, or to take smaller losses, or to adjust your expectations, or to just shut up and accept the risk. You may come to hate the education course you are on because you just are not understanding it fast enough, or because you have to do so much home work.
In the end, all you will have to tell you that you should not quit is the track record you saw happen over the last couple of months. This is all you may have to convince you that maybe your mentor knows what he is talking about because you saw him do what has been posted, in real time, as it happened day in and day out for the last year.
And here is the real kicker. Those results you see are not yours. They are your teachers. You may never be able to duplicate them. So, if you cannot verify by visible results the possible outcome of what you are being taught, then do not waste any more time with it. You should just continue to study, practice, and keep building results you can believe in.
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In this business past performance is no guarantee of future results. All traders go through highs and lows, draw downs, bad trades, series of bad trades, good trades, great trades, and make all kinds of mistakes. No matter what level of trader or how much experience, we all go through similar times. The difference between consistently profitable traders is that they go through the negative experiences much less than most other traders. But they still go through them.
When you study with someone who has made themselves available to you to help you with your trading, you have to take the good with the bad. If you are not willing to do this, then you may as well not study with that person. There are many ways to trade with others. You could even use another trader as an indicator of what not to do, and what trades not to take. If they are losings on a consistent basis and take a long trade, then you go short. They may prove to be a really good indicator.
A good mentor is more of a trading buddy because no one is perfect, or the authority on your trading. However, your mentor has one thing that you have not, and that is a consistently profitable trading record. But, that could also change tomorrow and he may lose miserably the next week. A good mentor learns as much from you as you from him, at least that is one main reason why I do what I do.
When you have a trading buddy it is important that you understand your own trading self, and trade your own plan. If your trading buddy has a similar trade signal in your direction, then maybe this could help you have more confidence in your signal (if you need more confidence) and the end result could be either you both get stopped out, or you both win.
However, there is another outcome that is very often the most common between mentor and student. You take a 5 tick win, and your mentor makes 40 ticks. Also, another common outcome is you take a -5 tick loss, and your mentor sits through the pullback and risk, and winds up making +30 ticks on the very same trade. Why do these scenarios happen?
Firstly, it is your mentors fault for not holding your hand throughout the trade. It is your mentors fault for not guaranteeing that the trade was going to succeed. It was your mentors fault for getting you in the trade in the first place, and for not getting you your winning ticks. You trading results are all your mentors fault. It is all your mentors fault. So, go ahead and hate your mentor.
There, now that you are feeling better, let's concentrate on the other reasons why you lose or make little and your mentor trading buddy gets large winners, and small losers. Did your mentor ever tell you about a trade plan? Did he ever tell you that you need one, and that it was absolutely crucial? Did he ever tell you it needed to be written down and that you needed to use it to trade by? Did he ever tell you about keeping a trade journal and detailed trading statistical records? Did he ever tell you to detail your trading and analyze your performance in as detailed a manner as possible? Did he ever tell you to trade with realistic expectations for the strategy you are using? Did he tell you to take small losses over sustained risk once price has reached the trade failure point, and to not exit your trade until price fails or target is reached or some price event tells you that the risk of giving back the gains in your trade is greater than continued advance in your trade? Did he ever ask you what your statistical consecutive win rate was, and to how much target? Did he ever mention the importance of preserving your gains by using proper money management designed to protect your gains once you are close or at target? Did he ever mention things like scratch is better than loss, and positive 4 ticks is better than negative 10 ticks? Did he ever mention things like trade in the trend direction, or to keep you eye on dynamic developing s/r, or to concentrate on price first everything else second?
Go back and examine all those things your mentor has been telling you and see how many of those things you are doing? Yes, it is a lot of work you have to do. but didn't he ever mention that trading successfully was going to take a lot of work? If your mentor never mentioned these and similar things, then you really should hate him, and maybe get as far away from him as possible.
However, if all these things were mentioned, and were continuously mentioned to you to the point were you can't stand to hear them anymore and his voice in you head is just making your eyeballs bleed, then you have only 3 options left. Either start listening and doing, or continue to not listen or doing and blame the losses on your mentor (the winners you can take all the credit for), or hate your mentor and go trade with someone else who is just like you.
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Many traders hear about the importance of gathering and analyzing statistical performance records of their trading. Before you can gather statistics you need to make some decisions about how you are going to accumulate a reliable period of statistics.
In order to do this you need to trade consistently for the period you are going to record your stats. This means same charts, same strategies, defined and well executed trade management. Trade management is synonymous with money management. So, to get reliable statistics you need to not change anything about your trading once you start this process. In order to be able to not change anything you must have spent enough time developing your trading plan, your strategy, and your approach to your trading and have picked a point where you go forward with the plan for the purpose of statistical anlaysis. The entire purpose of statistical analysis is to find the answers you need to fix, improve or just verify your trading.
Some of the key stats you need need are:
1 - What is your average consecutive completion rate to 1st T, 2nd T, and each target.
2 - What is the average consecutive loss rate to the stops.
3 _ what is the average forward point value of your entries before a pullback.
4 - What is the largest pullback amount for each strategy entry, and what is the average pullback.
5 - What is the largest forward point value for each strategy, and the largest adverse point value for each strategy.
6 - What is your best time of day or the most successful trade times.
7 - What day is your most reliable trading day, Mon, Tues, Wed? etc?
8 - What is the average size of your positive trade. The average loss?
There are many others, but these will at least give you an idea of the kind of losses and gains you need to work for on a consistent basis, and can supply some crucial clues as to whether or not you have a chance of making consistent gains going forward.
When you take all this information and analyze it, you may be surprised at what you discover. You may also be able to fix the parts that do not work well, and discover ways to do more of the positive to improve or acquire greater gains from your trading.
If you do not take a cold hard look at your trading, devoid of what your memory and you feelings say, then you may as well give up trading all together; because you have almost no chance of getting enough accurate information to sustain good trading, or fix poor trading. In the end, we all trade our belief that is built upon our results which is the black and white of our statistics. Our emotions cloud our judgement, and our memory is selective and lies. We look in the mirror and see a handsome devil no matter how butt ugly we look to everyone else. The numbers don't lie. So, if you are not keeping an indepth statistical journal of your trading, then you are already setting yourself up for failure. If you are not paying attention to what the stats are telling you, then you are trading from the heart, and this is not going to make your wish and dreams come true in trading. This is a probability game, and your stats have the answers you need.
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