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How to Break Through in Trading
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How to Break Through in Trading

  #11 (permalink)
Market Wizard
Cleveland Ohio/United States
 
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Jeremy1984 View Post
I guess I do not have a positive expectancy with my trading since I am a net loser. I have jumped around different platforms, tried various techniques (Elliott wave, Fibonacci, tick charts, etc.) and have never had a positive expectancy. I have never traded more than 1 contract either. To be honest, I feel like I was a better trader when I first started.

So to be specific, did you ever test Ichi or 5% gaps to see if they worked historically? Or, did you just accept they worked, based on something you saw or read somewhere?

Don't feel bad, whatever your answer. I bet 10% of traders answer yes to questions 1, but 90% answer yes to question 2.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread

Last edited by kevinkdog; December 8th, 2017 at 07:40 PM.
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  #12 (permalink)
Yorktown, VA
 
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I understand your struggle! I often heard and read that you have to find your own method. You have done so many trading styles. I always feel like there was a time that something worked the most or felt right the most in your journey. Maybe go back to that and look at price history over and over on how you would of traded that setup. Start forward testing it again and journal your trades and ideas on here brother.

I for one started not long ago. I had a system and have since tweeked since journaling it here! I mostly talk to myself in my thread, but it helps.

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  #13 (permalink)
North Carolina
 
Trading Experience: Beginner
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Right, you may well could have been a better trader when you started. Do you know why though? Because, you were most likely keying in on "real factors" that drive real traders. Most new traders key in on value. They want to buy when the market is falling. That works sometimes, of course.

It sounds like you honestly need to take a much more involved approach before considering a mentor. The answer to your question:

1. Do an assessment of what worked for you when you first started. Losing is often encountered when traders move from swing to day time frames or from lower to higher leveraged trading but don't make the required adjustments.
2. Stop referring to your track record or past like it means anything at all. Right now, negative psychology is likely to hamper you, as you see yourself as a losing trader. No one can say whether tomorrow you will be winning or losing.
3. Back to identifying your strengths. It might be that you're not optimizing that with your method and/or you're trading is too restrictive. I do not like "quasi-mechanical" methods. I mean by this where you take trades like "rote" based on untested signal. If you're adding value then try to focus in on where you should be adding the value.
4. Take screenshots of your trades when you enter them, during trade, and after the exit. Something I always like to do is watch the trade after I exit. Was my exit good or bad? This is not possible to discover if you just leave after a losing trade.
5. It is often possible to find success in markets when you approach them slightly different then the herd. For example, you day trade like a serious day trader but you only look for trades that might setup for several days. You tape read the markets, tick by tick, but you look for big trades to setup.
6. Break even trading is not necessarily bad trading. It depends on the why and whether or not you are developing. Trading is difficult and uncertain.

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  #14 (permalink)
San Antonio Texas
 
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I was recently right were you are. I can tell you a few of the things that helped me. As many have mentioned you need to know your expectancy. You also need to know your risk to reward. But in my opinion you must first clearly define your trade. I mean crystal clear and laser dialed. So much so that I could pick up your trading plan and understand how you trade.

Then create rules for money management. If you know thorough expectancy and knowing your risk to reward that your system has a normal draw down of X and you go outside of that then something is off.

Lastly and this was for me the most important part. Journaling. Not in a book. I have sheets in a binder that I got from one of the MANY courses I jumped around to. They are easy to read at a glance and two boxes are most important. Notes, where I write down how I felt. Was I nervous, was I calm. And the other is mistakes. What is a mistake? A mistake is ANYTHING outside of those laser defined rules. Once a week I started comparing my actual P/L and what my P/L would have zero mistakes. I found without mistakes I was a profitable trader. I then looked to see which was the mistake I made the most and worked on correcting that one thing. Just that one. I still go rouge. I did it this week. I either gave back most of the profit I had on a day after making clean trades then going back in till I gave it back or I traded outside my rules and pulled myself in and got back to breakeven with clean trades. I had to sit down and ask myself do I have the discipline to do this. Because knowing your expectancy and risk to reward doesn't matter if you and your psychology get in the way. Consider reading Trading In The Zone.

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  #15 (permalink)
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kevinkdog View Post
Hi Jeremy -

What you describe is a pretty common issue with newer traders, myself included back in the day.

Many failed traders spend years and years, always jumping from one method to another method, usually searching in vain, almost always ending up in failure.

So you need to turn this around. The way to do it is to find a method that works. I'm not saying to rely on the advice of some "guru" who says "gaps will make you money" or "Ellliott wave is a proven method."

I'm saying you need to historically test a method yourself - prove it has had historical positive expectancy. That does not mean it will work in the future, but ask yourself if it is better to trade something that has a history of working, or one that has a history of not working.

Most people actually take the easy way out - they decide on a method where they have no clue on if it has worked before or not. That is easier than testing, for sure. But then they wonder why they haven;t made money after X years.

TL;DR - HISTORICALLY TEST UNTIL YOU FIND A METHOD THAT WORKS (POSITIVE EXPECTANCY).

Does this mean I have to learn how to backtest? Or do you recommend me manually going back and checking myself? I pride myself on having an amazing work ethic so whatever it takes I am up to it.

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  #16 (permalink)
baltimore md
 
 
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I have read Trading in the Zone and that is one of my favorite trading books. It has been a few years so I am going to re-read it. Is it advisable to create a trading plan with a goal of making X dollars per year? I have a number in mind that I would like to earn but not sure if that is the route to go. I know that I first need to find a strategy that works but want to know if you advanced traders make a plan of making a certain dollar figure.

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  #17 (permalink)
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Jeremy1984 View Post
I have read Trading in the Zone and that is one of my favorite trading books. It has been a few years so I am going to re-read it. Is it advisable to create a trading plan with a goal of making X dollars per year? I have a number in mind that I would like to earn but not sure if that is the route to go. I know that I first need to find a strategy that works but want to know if you advanced traders make a plan of making a certain dollar figure.

I would worry more about the process than the profits. Learn to trade your trade as mistake free as possible. These are just the things that help me. I by no means am a trading god.

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  #18 (permalink)
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Futuresnoob View Post
Consider reading Trading In The Zone.

Just finished reading this book yesterday and it's got me thinking about everything you mentioned. Excited and can't wait to start implementing what I've learned on Monday! Highly recommended.

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  #19 (permalink)
Schin Op Geul, Netherlands
 
 
Posts: 19 since Dec 2017
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I'll share what helped me progress and hopefully by doing this it de-jams some of you guys...or not

When I think back to when I first took up trading, I am uncomfortably embarrassed at my stupidity then.
I was ignorant and took what the industry fed me as given.
That was my first mistake. You should put into question everything! Break it down.
The painful thing is that by the time you realise all this, you are 5 years on! Less or more depending on personality, intelligence and environment.

Ichimoku is an 'indicator'.
What does it indicate?
It indicates trend direction, momentum and support/resistance...CONSIDERING PRICE ONLY.
Price only? That was my second mistake!
Does it make sense to look out the back window of a car when you're driving it? How many people have you seen doing that? None!
When you trade price only, it is akin to driving a car staring out the back window.
To become profitable you need to look out the front window!
If you couldn't see the problem before with back testing price alone, then you should see it now.

You do however need price to trade.
The error I was making back then was using price incorrectly. Mistake number three.
You can now see why many (including myself) get caught in a really nasty loop.
The most useful attribute of price is that it indicates how the market feels about certain information.
I'll give an simple example:
I remember a few years ago I was trading USTs (I'm a rate and currency trader only - I'll elaborate on this in a further post), and a piece of flow hit the wires. It was news on the Ebola virus.
It was interesting to see how the market reacted to that flow. The market obviously worried about an outbreak or it spreading cross-borders, because they began to bid treasuries. This bid continued on through London and well into the US session.

As I went along I began to realise that I couldn't make money trading price or derivatives of price alone, but I needed to focus on what drives prices.
Here is how it works:
INFORMATION>>TRADER ACTION (CLICK CLICK)>>ORDER FLOW>>PRICE MOVEMENT
How can one expect to make consistent money by focusing only on price movement, or output?
Start focusing on input and your trading will improve.
We need to trade FORWARD, not BACKWARD!

I'll post further later in the day and cover some other things that helped me progress.
Enjoy the weekend!

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  #20 (permalink)
Schin Op Geul, Netherlands
 
 
Posts: 19 since Dec 2017
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Quoting 
My one trader friend suggest I find a mentor and spend money on education.

Do not spend money on education! I'll help you here for free!

If you need a mentor then look at HOW he/she trades.
But the issue you're going to have is that from your perspective (struggling) you may not be able to assess a mentor properly. Your experience will not allow this.
It amazes me how many traders throw that suggestion out there without providing information that would help in assessing whether a mentor is worthy or not.
Mentor profitability is very important, but equally important is mentor knowledge, experience and MO.
An example:
There are 2 mentors...
One mentor teaches entries on CL and executes using various MA's and Fibonacci (he's been doing this for 2 years).
The other mentor tracks the Federal Reserve and US economy and trades spreads across the US curve (he's been doing this for 14 years).
From my perspective, I would not touch mentor 1 with a 10 ft bargepole, even IF he was profitable over the last few months and the spreader was not.
My experience tells me that mentor 1 lacks real market knowledge and is less experienced.

Find someone with real market knowledge. They may likely be a specialist.
The more years under their belt the better.
They will cut years from your learning curve and will give you edge which you can apply almost immediately.

A very good gauge is to ask some questions:
Are you a specialist? What do you specialise in?
(If they specialise for example in spreading the US curve, then get them to explain to you where the Fed is currently and what they are focused on. They should be able to answer quickly and with resolve).
How long have you been doing it?
Over the last X years, how many profitable years have you had?
How good is a profitable year? How bad is a losing year?
How do you determine trade direction?
How do you execute?
Who do you broker with?
What tools do you use to trade? (serious traders use serious tools)
What has your maximum DD from equity high been?
What is your maximum effective leverage?

This should all be done over the phone/Skype! (no emails or messaging). You want to HEAR in their voice experience, resolve and composure.
They should know their trade and it should be evident in their delivery!


Hope this helps.

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