How long did it take you to become consistently profitable ?

This is a discussion on How long did it take you to become consistently profitable ? within the General Trading Chat forums, part of the Reception category; [QUOTE=tenbobtrader;831654][QUOTE=GladiatorX;831626] Originally Posted by megamuel "I read a lot of the posts on these threads and we both know that ...

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Old Jul 14, 2009, 2:56pm   #43
 
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[QUOTE=tenbobtrader;831654][QUOTE=GladiatorX;831626]
Quote:
Originally Posted by megamuel View Post


"I read a lot of the posts on these threads and we both know that the disappointments are many. If you say that it is lack of experience I would reply that it is more likely that the experienced traders only save themselves on their ability to leave the trade as soon as it goes wrong for them but, make no mistake, a lot of the trades go wrong."

by Split

http://www.trade2win.com/boards/fore...tml#post830002

......

http://www.trade2win.com/boards/us-s...tml#post778448


" A common occurrence for me is that I will go into a trader’s room and observe him/her trade. Although the trader may be struggling and losing money every day, generally they make money while I am watching them. This is not because I am offering such grand market insights; usually I do not impose my market views on a trader. Rather, I require the trader to verbalize the reasons behind his or her trade. This has the natural effect of slowing down their trading and making them distinguish between genuine trade ideas and mere trading impulses.

From my vantage point, all trading ideas boil down to variations on two themes:

1. The market is trending, and we want to buy pullbacks in an upward trend; sell bounces in a downward trend;
2. The market is range bound, and we want to sell moves toward the top of the range once buying dies out; buy moves to the lower end of the range once selling dries up.

If I am employing solid reasoning in my trading, I want to assess the status of those themes in both the time frame that I am trading and in the larger time frame. A trend in a shorter-time frame may be part of a range in a longer frame; a range in the short time frame may be a consolidation within a larger trend. Not infrequently, your ideas regarding targets for a trade will come from the assessment of the larger time frame.

A sure-fire way to identify impulsive trades is by their absence of a well-conceived exit. Ninety percent of the effort is going into getting into the trade—the entry—because the purpose of the trade is to be in the market, not to make a profit. The impulsive trader seeks action, not results. Because exits are associated with the cessation of action, they get short shrift.

Conversely, the reasoned trade contains several components:

1. An assessment of current price behavior: Is buying pressure expanding or contracting; is selling pressure expanding or contracting; is price volatility expanding or contracting?
2. An assessment of market conditions at shorter and longer time frames: trending or bracketing?
3. A target for the trade: A move to new highs/lows for a trend trade; a move toward a price mean for a bracketing trade.
4. Criteria for stopping the trade: Conditions that will convince you that your trade idea is no longer valid
5. A decision of resource allocation to the trade: How much of your capital you are willing to put at risk on the trade idea.

If talking these five components out loud before each trade would lead you to trade less often and would lead you to trade far differently from how you’re currently trading, there is a likelihood that you are overtrading. There is definitely something to be said for having a feel for trading. That doesn’t mean, however, that feelings substitute for market knowledge and awareness"

by Brett
If people used indicators discretionary rather than systematic, i think they'd be surprised how easy it is... If you take away the MUST take ALL signals and just do the signals you feel are revelant to current price action and market context... Results can be very good, take it as a 'trigger' into a position you WANT to be in from analysis...
Your targets based on price analysis - Is the hourly ranging and therefore the upcoming resistance is 20 points away so lets exit then, or is the current signal to go long in an uptrend made from an earlier breakout and therefore we are going to try hold the trade for the duration of the uptrend ... Not Target: 50 Stop loss: 25 ...

As for stop loss, what is sensible, have we hit the bottom of a trading range and therefore can adopt a close stop loss, is the current pullback in an uptrend sharp and therefore we want to enter on a confirmation of a continuation with a close stop loss because we have momentum... Do we want a 30 pip stop loss on the GBP/USD because through studying 200 examples of this setup, this seems to be a generally good place...
Or shall we have a larger stop loss because we expect a large upwards movement and don't want to exit just because its a large pullback.

Etc etc etc ... Make a system and add discretion - Have precise reasons for entries and discretionary elements for targets, but you don't have to take every trade.... As long as you are displinced and ONLY enter when given a stochs long or short - The increased value of your analysis should only INCREASE your winning percentage and the way of calculating your targets should allow you to keep for some large moves and therefore you will make more out of the strategy....

Compare your results with what would have happened if you have used the stochastics system and taken EVERY trade with a 1:3 risk reward and i'm sure your results will be significantly better

In other words, discretionary trading with a strict entry trigger... A discplined way of trading that will reduce losses through not allowing impulse buys and shorts.

If the market is choppy, you don't have to enter. Thats it, simple... Rather than after saying 'That system didn't work, it lost during choppy periods'

I talk way too much. Hope this helps someone.
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Old Jul 14, 2009, 3:44pm   #44
 
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that makes a lot of sense Mr. G. X.
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Old Jul 14, 2009, 7:46pm   #45
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Quote:
Originally Posted by Paulie_5 View Post
There are endless threads from people asking :

"how many pips does a professional make each month?"
"Is it possible to make 1000 pips a month?"
"How much can I expect to make from trading?"

These (quite rightly) end up in a heated discussion about the relevance (or rather irrelevance) of such a question.

I believe a much more useful question would be :

How long did it take you to become consistently profitable ?

I know the answer to this personally : a long time ... and I'm still not quite there yet.

I've been trading now for 16 months. Full time. Hours and hours of screentime. (about 10 per day)

This was my path -

Learning / sim for first 6 months.
Blew 2.5k account within the next 4 months.
Took a 1 month break.
Back to demo account for 3 months.
Live again for last 2 months.
Doing ok , but yet to have a true consistent track record. I'm working on it !

I wanted to start this thread because I get the impression that so many people think that all you need to do is pick up a couple of trading books and "voila!". And quite frankly I find it frustrating that people think trading is that simple. My family/ friends can't understand why I'm not driving round in a Ferrari yet after 16 months ...

This isn't to put newbies off (in fact I still very much include myself in the newbie category), but rather show the dedication involved ....

Would anybody like to contribute to this thread by showing the stage there are at and how long / how much dedication it took to get there ?

Please no discussion of profitablilty itself. I don't want any discussion along the lines of "I made x number of pips/ percent within x amount of time". This is totally irrelevant to everybody.

I'm just interested in how long it took to attain profitablilty ....

To avoid any discussion about "what is consistently profitable?" - let's say 3-6 months of consistent profitablilty where you were confident you could pay youself a monthly income... (or if part-time, to pay yourself a consistent supplement to your income).

I'd be interested to hear from institutional traders as well ... how long did it take for you to become profitable for the bank/ institution you were employed with ? (I have no idea about the training / structure of this)

I hope this will be an eye-opener for anybody who thinks trading profitabilty is straight forward.

All the best,

Paulie
Hi Paulie,
Great to hear such an honest explanation as to how you're feeling, because I too have had all the same emotions in the last 6 months of live trading!
I now believe that I'm turning the corner, and have shown consistent profits for a couple of weeks now...early days, but confidence to take the trade is a big part of the battle.
How many times have you seen the perfect set-up, only to sit on your hands and watch it go exactly where you thought it would.........and then take a crap trade out of frustration?
How many times have you closed out a winning trade too early, only to see it carry on into mega profit - just so you could show a small profit to cheer you up? Actually, this can be more disappointing than a trade which goes the wrong way and takes out your stop loss in my experience.
How many times have you seen the perfect set-up, taken the trade, only for it to come back, take out your stop loss, and then retrace back into a mega profit?

Here are a few really simple things which have helped me in FX day trading - incredibly simple, but also text book:

1. I set myself an easily achievable daily target to avoid disappointment. In my case that's just 20 pips Profit. If I exceed that target, say 40 pips - I switch off for the day. I used to make 30 pips with my first trade, and then lose 25 on the second. Having a strict daily minimum target gives me a daily sense of achievement. And my account grows daily. And I get a life - after all - that's the whole point isn't it? I'm accustomed to working up to 80 hours a week in my past career, why would I want to do that as a trader? No, exceed your target - switch off. ( And don't be tempted to trade Fridays either - such a bummer when all your hard work is un-done by an irrational market!)

2. I always respect my stop loss - always. If my money management allows me to trade 1.75% of my account, then I take the trade, and always respect my stop loss. When I started trading, I couldn't believe it when trades went against me, and used to move my stop away from the price. Although I won more trades than I lost, my losses exceeded my gains.

3. I accept losses as part of the every day function of trading. They are inevitable. The only way to avoid losses is to not trade ("get a proper job then" - the wife!).

4. I now close a losing trade quickly - as soon as my (very simple) indicators tell me it's not going the right way! I used to be stuck like a rabbit in the headlights - not believing what I saw, watching the price take out my stop. If I can save 10 pips of loss, that's 10 pips less profit to make back to my daily target. My stop loss is a) a means to protect my account from serious harm, and b) a way to protect profits from retracement once in profit.

5. I now let my profits run as long as my (very simple) indicators tell me. I sit on my hands to stop the temptation to take profits too early, and wait for either a) the retracement to take out my stop, or b) my projected profit target to be hit.

These simple steps have helped me enormously. On average my win/loss ratio is 50/50, but my profit/loss ratio is 65/35. I am incredibly satisfied with that - it's the exact opposite of where I was 3 months ago.

I too am definitely in the Newbie category of traders, but am now happy and confident. The better I do, the easier it feels!
I also spent hundreds and hundreds of hours in front of the screen, testing, back-testing, demo trading etc. etc, ad infinitum, leading to the well known state of "paralysis by analysis" - for every reason I could see to take a trade - I could see an equal and opposite reason not to take it! Now I (seem to) have a very simple strategy that works. After all, when you strip away all the guff, this is a very simple proposition - will the price go up, or will the price go down - nothing more complicated than that.

This may be a bit simplistic for you Paulie, I'm sure, like me(!), you've read every word there is on trading success, but maybe there's someone else out there going through the same pain I went through, who can take a little encouragement.

As I was taught 30 years ago in salesman school - "KISS - keep it simple stupid"

Cheers,
Alec
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Thanks! The following members like this post: tenbobtrader , Paulie_5 , robster970
Old Jul 14, 2009, 9:09pm   #46
Joined Jun 2009
Traiding about 3 and a half years, 6 months full time now and only starting to show signs of consistency. The last 6 i lost the most but learned the most. Them ftse futures wiped out my day trading account but i will be back next month to test it with my new and improved trading plan. Watch out for my journal when that happens.
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Old Jul 14, 2009, 10:19pm   #47
Joined Dec 2007
Paulie_5 started this thread Alec - great post and very encouraging - many thanks !
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Old Jan 24, 2012, 8:19pm   #48
 
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Re: How long did it take you to become consistently profitable ?

Quote:
Originally Posted by GladiatorX View Post

In other words, discretionary trading with a strict entry trigger... A discplined way of trading that will reduce losses through not allowing impulse buys and shorts...

Hope this helps someone.
Hi GladiatorX. Over the last year I've gone from complete beginner, through many approaches to demo trading/markets/analysis etc to baby steps of live trading. I've ended up with a system that sounds similar to your description: EMA crossover to clarify trend direction, stochRSI to add edge to entry on pullback - tested, demo traded now trading with small amounts of capital. Risk per trade is less than 2% of equity - average risk 0.6%, most risked is 0.89% - so equity growth is small but steady. I started trading the system with an EMA exit but didn't like leaving so much profit on the table (didn't consider this when using fake money) so have moved over to a discretionary exit system, primarily around swing highs and lows. There were still some impulse trades and the odd missed entry but overall it - too early to say how well it will fair, but it seems to tick all my boxes.

It's interesting to come across someone who has the same approach to the markets, without using an identical strategy

Last edited by iwshares; Jan 24, 2012 at 10:04pm.
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Old Jan 24, 2012, 8:48pm   #49
 
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Re: How long did it take you to become consistently profitable ?

no such thing as becoming consistently profitable. just because you have a period of a year where you consistently make money, doesn't mean it will continue. a blow up could be right around the corner.
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