I'm Nearly in THAT 90% Category

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Old Oct 29, 2009, 4:01am   #1
 
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I'm Nearly in THAT 90% Category

Yes yes, we all know of the "90% of traders fail" comments, the thing is I really don't want to be one of those. I'm going to be brutally honest about myself here, and what I'd like from people who read this is advice. When I say advice, I mean any advice, even if it's give up. I'm not expecting for 'magic' solve all answers, even if no one reads this I think by writing it down and reading it for myself might help, therapy almost!

First off, let me tell you about my background, this is just so people can get a general idea of why I'm trading and what I'm trying to achieve. I'm 28, and a law graduate who incidentally doesn't work in the law field. I currently work nights in a hotel. The reason I took this job is it fits in perfectly with my trading. I'd like to eventually trade full time from home. That's it, no ifs no buts. Trade full time from home.

I'm single, no kids, no mortgage. I've small outgoings, mainly rent and bills.... the usual. In order to make forex my main source of income, I would need to earn between £12,000 and £15,000pa to live quite comfortably.

Now, I've been trading forex for three years. The first year and a half was on a demo account, this easy I thought, I'm making thousands. I invested £400 and promptly blew my account in a little under two weeks. Why? I knew NOTHING. My leverage was stupidly high, the lot size I was using was too high, I had no idea my emotions would suddenly come into play and effect every decison I made.

So, a year and a half on, demo trading up until then. Reading everything I can. Studying, practicing, re-reading the same books and internet forums. I invest £1000,
"this time I'm ready, this is it, this is the time". I use leverage of 1:100 and a lot size of 0.2. Careful money management is my plan. Don't run before you can walk. Start slow this isn't get rich quick. Build on this capital now until I can make consistent profits. I have a tested system and strategy. I have a trading plan. I know what times suit me and what times don't. I know what pairs I'm going to trade.

Everything starts off well, I make a few quid here and a few quid there, at the end of the first week I'm up with consistent profit. I'm using a simple macd crossover on a 5min chart with Heiken Ashi bars for entry and using the H1 for S/R levels. Typically I'll take profit around 5 pips. Why? I don't need to make that much money, this is a business for me, a living, only make what I need. 5 pips, 4 times a day with careful money management was my plan, easy huh! I avoided fundamentals like the plague. The thing I found I was saying was... "why the f**k didn't I leave that trade open? I could've hit my target for the week with that one trade". Never the less, I was making profit... lets not get greedy, take the profit, take the profit, take the profit was my motto. I'm quite an emotional person by nature, I'm not that greedy, in fact I'm quite risk averse. Occasionally the price would go in my favour, I'd take the profit bang on the mark before it turns the other way. "See", I'd say to myself, "imagine if you left that open, then you'd be sorry".

Into the second week and I got greedy, opening a trade against my trading plan, I never should've opened the trade and I got burned, and rightly so. I lose the profit I made the week before. I say to myself, "it's ok it's only the profit from last week" and "we all have to take losses every now and again". I trade without Stop Losses, prefering a mental Stop Loss if you like. I decide when the trade is no longer valid. I go on to make a few consecutive wins that week, enough to keep me in the game!

Third week and it falls apart totally. Monday starts of as usual, a couple of good trades, perhaps could've left the positon open a bit longer but still made some profit. I open a position, the price moves in my favour, I don't take the profit this time too early, before I know it the price is going the other way and I'm down. Closed the trade. I went away from my computer for half an hour or so, come back and low and behold, the price went the way I thought it would. Ok so what do I do next time that happens, hold the trade of course, have confidence in yourself, expect a bit of DD every now and again. The loss was big but not massive, just one of those things I tell myself, emotion, was very negative and I was very pissed off with myself.

A few days later (after two or three small good trades) the same thing happens again, ok this time I'm going to hold it for a bit, grow some balls!! Don't take losses, not everyone has to take losses It's going to turn round and come my way, BANG emotions come flooding in, screaming CLOSE CLOSE CLOSE. I close and make another loss the same size as last week. My account from an intial £1000 from having a high of £1080 inside two weeks, now reads £850.

Ok so what do I do? I know, I've been playing around with Systematic (automated trading using robots) through the broker Alpari. I've had numerous demo accounts and It's been fairly successful. I'll put that £850 into Systematic, sort my automated portfolio out and let some robots trade for me, the demo has been good.

Two days later my account now reads £350.

HELP! I really am stuck for ideas now. Don't get me wrong, I realise £1000 in the grand scheme is nothing. I was not expecting to go full time on £1000 I was using this to get the emotional side of trading with real money.

Are some people just not cut out for trading? If there are any newbies reading this please take this advice. Forex is not easy, emotions are everything in this environment, I underestimated that when I first started. I used to be of the belief that anybody can do anything if they try hard enough. I've been doing this for three years and am still no closer now as to where I was when I blew my first account! Maybe I need to change my strategy, maybe I need to start all over again. Maybe I need to read more books. Maybe I need to control my emotions more. MAYBE MAYBE MAYBE.....
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Old Oct 29, 2009, 4:04am   #2
 
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0.2 lots = ~£1/pip?

Don't use automated robots - you don't know what they're doing. Not all people are cut out for it, but you can do a few things to reduce your emotions. The secret is to just not give a f*ck.
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Old Oct 29, 2009, 4:19am   #3
 
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Sang Froid started this thread
Quote:
Originally Posted by Masquerade View Post
0.2 lots = ~£1/pip?

Don't use automated robots - you don't know what they're doing. Not all people are cut out for it, but you can do a few things to reduce your emotions. The secret is to just not give a f*ck.
I will NEVER use automated accounts again. I didn't like the idea in the first place, it was just that the demo I had was good, making fantastic returns, and I thought it might reduce some of my emotions because I can 'trust' a robot more that myself!

I know I know, but I was stuck, made losses and thought f**k it why not, they have as much chance as I do at making money.

0.2 lots, yeah near enough £1 a pip
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Old Oct 29, 2009, 4:29am   #4
 
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All robots will do (if they're doing something wrong) is lose your money quicker than you can.

£1/pip is still using a fair amount of leverage on a 1k account. It depends on your style but it's still a decent size. I'll give you a clue that your edge if you have any is tiny on the small time frames.
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Old Oct 29, 2009, 5:12am   #5
 
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Red face Re: I'm Nearly in THAT 90% Category

Sang Froid started this thread
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Originally Posted by Masquerade View Post
All robots will do (if they're doing something wrong) is lose your money quicker than you can.

£1/pip is still using a fair amount of leverage on a 1k account. It depends on your style but it's still a decent size. I'll give you a clue that your edge if you have any is tiny on the small time frames.
I sort of understand what you are saying. Here's the thing with me though. Trading with smaller lot sizes meant I tended to overtrade. I felt as though I needed the slightly larger lots to gain a reasonable profit margin. I don't scalp per se. I don't make lots of trades all day......

you've given me an idea. If I'm using an M5 chart for entry and an H1 for S/R with £1 a pip lots, why not up my timeframe to H1 for entry... let my profits run more and use a stop loss? Why was I using M5 for entry and H1 for S/R, if I'm looking at H1 for S/R I should just be trading off that timeframe right?????????

God, are they the words of a desperate man
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Old Oct 29, 2009, 5:37am   #6
 
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I'll let you know tomorrow - these are the words of a tired, pissed off person with a splitting headache, I need to think about it and this isn't the best time for me.

For now while i'm here, don't think about the money as such. Money makes money, focus on the returns on your account. You can chuck a few more k in once you figure it all out and be on your way to achieving your goals.

Also, all s/r shows up on any time frame be it M5/M15/M30/H1/H4 - just you need to distinguish the major points which you may not see on M5. Also if you're planning to hold trades for any decent time you're best off picking a time frame which reflects it.
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Old Oct 29, 2009, 5:53am   #7
 
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Sang Froid started this thread I realise S/R shows up on all timeframes but I use a macd cross on the m5 (with heiken ashi bars) then refer to H1 with candles to cross reference if it is a good time to open a position based on longer term S/R which is easier to see on this timeframe. What I am suggesting is forget the m5 and use the same method but only on H1.

I say same method, I'd have to alter it slightly... on M5 I wait for the cross, then open a position 2 bars later, on H1 I guess I'd have to enter on the cross.

Perhaps I should forget the macd cross altogether and go for pure nakedness. Price action after all, is where it's at. Just S/R, and go for longer trades, not swing trading but intra-day.

Still... thanks for the thoughts and for your time masquerade,

Chris
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