Some of the key things that have helped me become a profitable trader when I started out (decades ago)...
1. Learn to "shut off" your emotions. When you sit down to trade, be "Spock" ... devoid of any emotion... trading is a mechanical process not an emotional one... don't trade with money that you can't afford to lose..(rent or food money).. doing that will make you emotional and stressed out...
2.** Keep a daily diary of all trades (sim). For each trade, write done WHY you took the trade- what were you seeing or thinking, that made you think it would be a good trade and track if it was a winner or a loser... Pay attention to the LOSERS, you will usually find a pattern in the losses... (you keep buying against the obvious down trend, stop too close etc)...
3. If you get frustrated or find that you bail out too early, for fear of losing: place the order , profit target and stop, then Go for a walk around the block. I find it's a great way to relieve stress or frustration...and clear your mind..
4. Trade the smallest size in a reasonable market (NOT CL) ... ES is probably OK.. The idea is to limit risk, NOT make a fortune .... My rule for risk is NOT MORE than 1/2-1% of account size at risk, on any trade..(I'm very conservative)..
5. Don't clutter your screen with 20 indicators, most are just variations of the others and add no information. Keep the chart simple and only add an indicator, if it will tell you something that you can't see without it... Floor pivots, Previous days highs and Lows etc are OK...
6. if prices are moving too fast for you to react (1 min ES bars for example), increase your time frame to 5, 15 or 60 min bars, it will give you more time to react, patterns are often easier to see as well, since the shorter the time frame the Noisier the price bars... Just compare a 1 min chart with a 15 or 60 minute and you can see just how noisy 1 min bars are... many traders say anything under 60 min is mostly noise.
7. Focus on discretionary trading, NOT mechanical at this point... unless you're a mathematician and a physicist..
I've yet to see a 100% mechanical trading system, that makes money over time, with a draw-down that the average trader could withstand..
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Hi, thanks for sharing those details of your story. It was very interesting to hear that the "stock broker/financial advisor" , "broker/dealer"s and the bond dealer/"portfolio managers" thought there was "no way" to be profitable by trading!
CNBC's "American Greed" show many cases of financial "managers" turned criminals even though they had spent years in "boiler rooms" but still couldn't trade profitably and resorted to running a ponzi scheme to hide the losses often in millions to clients. Then you have extreme cases like Corzine who just added insane leverage to a massive losing position with means from the ends of the earth only available to corrupt institutions which bankrupted the company that hired him.
I'll just add my observed thoughts on your trading predicament. It could be your trading plan is incomplete. As Big Mike mentioned, you may need to shore up the other half of the trading plan,i.e. risk and trade management. Also if you feel "lost", the best learning material on overall price action is Al Brooks is also my recommendation. Too many folks "gloss" or "skim" over the material. It needs to be treated like a real course and studied like one to get the most benefit from the material. Good luck.
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It took me 4 years to reach anything that resembled "consistently profitable", and another 18 months putting some psychological issues to rest. And I still am working to correct some things that would make me more efficient, every single day journaling waht I am thinking at that moment, going back and reading later to see what worked for me and what didn't.
There are several to trading that all require equal work, training, understanding.
1) Trade Location - This is knowing how to read charts of the past to determine how traders may react in the future. Vhart patterns, wave structure, market profile, prior opens, closes, highs, lows, etc.
2) Trade Methodology - Are you a scalper, a day trader, a swing trader, a position trader? Do you prefer to be right 30& of the time but have wins 5x or better losses, or can your psychology not accept being wrong the majority of the time and still maintaining faith in your method? Do you like targeting higher timeframes, lower timeframes, a mix of them (I recommend), do you want to make a trade once a day, twice a week, 5x a day? Are you comfortable buying in overbought conditions (yes, I meant that). Would you prefer bottom fishing?
3) Trade Psychology - No matter which direction you choose, there are no guaranteed outcomes. They way to survive comes down to learning yourself and how you are reacting incorrectly. Do you try to catch tops and bottoms so much that you have tire tracks on your back? Then make it a goal to stop doing that. Are your winners bigger than your losers? If not, practice holding the winners longer. Practice allowing your stop to get hit. Or, if you allow it to get hit now, practice not allowing it to get hit. Do you get upset with the market? Do you double down when you are negative for the day? Are you nervous every time you enter a trade? Do you blow up from fear, or greed? The one thing that is constant, the only thing, is that you bring yourself to the trade desk every day. YOU enter, YOU exit, YOU decide how much to risk, or how much to make. If 95% fail, but you can take either side of the trade (long or short), doesn't that tell you something?
4) Trading Experience - To my knowledge, no one has developed a robotic tiger that could hunt to survive. No one has made a computer guided skiier that could compete in the olympics. While indicators and systems are great in terms of having a filter through which to view the market, you need to have watched it so much that you develop a second sense, that you understand why price is doing what it is doing, and that you can visualize what it might look like in the next hour, or at the end of the day. You need to have indicators that speak to you, that not only move and change color, but that you have chosen because they help you condense all of your experience faster.
5) Find the right market - I can't trade ES worth anything. It is too big for me to see whatever it is that seems to work for me. But, many many traders see it as their market of choice. I wish I did, but I have tried, and I just do not like it. It is also too slow for me, and the more time I have, particulary time that I cannot quite read what is happening, the more doubt can creep into my mind. TRy several markets, they all move differently to some degree, they respond better or worse to certain support and resistance, they have various speeds and daily ranges. And when you do decide on one, for whatever reason works for you, stay with it and get to know that market's every little nuance. Think of it as a passionate relationship, that you are drawn to it, infatuated with it, you want to know every little thing.
6) Discipline - Once you have all your other stuff worked out, you have to stick to your plan without fail. You cannot see some big burst one day and decide your risk limit can increase this one time. You cannot see some news about a market you know littel about and decide to chase it this one time because it is the hot topic. Trading in sim, or highspeed playback, or if that does not hold your interest, try the Topstep Trader combine that will give you parameters you must stay within and has a reward at the end, without risking your own account.
7) Patience - Some guys get it their first year, or so I have heard. The average is probably 3-6 years, some guys take longer. Some will never ever make it, due to not balancing their study to all of the things required, or just not having the emotional makeup to do something that never has any guarantee of anything, meanwhile risking money every day at work. That does not happen in a "real" job, and may not for you. And if not, it's ok. But, if you really want to make it, you have to ignore the amount of time it takes. Just keep getting better, keep learning something, buy a new book, watch a new webinar, get to know yourself better and better.
8) Capital - If you are trying to become a full time trader with a $10k account, it is not going to happen (unless you learned to trade profitably first, of course). If you are hoping to trade to pay the bills every week, it is not going to happen. Anything that causes you to have unnecessary fear of being wrong in the trade you are taking will hurt your performance. You need to be calm, feel nothing when you lose. That is tough, and we are all human and not emotionless, so you get to know when it is time to walk, and trust that you will do it. But you need a decent amount put away to where you are not worried about this YEAR's expenses, next year's even, to truly trade without fear.
I am sure there is more, and other guys here that can express it better than I can, and other personalities may have different requirements. I just read the question board a lot lately to see if I can be any help, there are several traders here who have done a lot for me, and I saw your post and it was something I wanted to jump into.
Skype me if you want to go over your charts. Check out my nutty journal to see what I deal with on a daily basis. And make sure you really want to be a trader, not just make money. There are far easier ways.
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This post has been selected as an answer to the original posters question
The only thing I can add to the multitude of good advice you have already received is to take a look your past trades to see if the reason you blew up your accounts was your trading plan or the fact that you didnít follow your trading plan.
Once you establish what the problem is you can either adjust your plan or find a way to follow it.
I focus on preserving my capital rather than on how much I can make. Keep losses small and let your winners run.
I'm sure this is similar to great advice that others are providing. I want to emphasis that changing systems, indicators, entries is really an early review process that only helps you find a system that fits your personality and interests.
Once a system is picked, the learning really starts. You will still take loosing trades initially. Now instead of changing the system as the fix, you need to look within to see what needs to change. It often is psychology (fear of loss, fear of missing out, etc) as emotions get in our way and get us to not following the system rules or risk management.
Everyday review all trades and ensure that they meet you trading rules. It is best if your rules are written. If it fits the rules, it is a good trade, win or loose. In hindsight you would have wanted to skip that trade, then look deeper to determine a way to refine and tighten the criteria so you know why that trade should be skipped next time.
Trade Wise, Trade Well
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