CaptainAmerica
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I have been trading since the age of 16. I started off losing money on leveraged forex; I had no money management skills, I did not develop my trading mentality and I didn't have a consistant strategy or trading plan. Effectively I was throwing the dice every day with the odds hugely stacked against me. Needless to say I blew up a few accounts.
I do however display the one common trait of all novice traders - I enjoy the pain of losing - spurred on by the belief that I would one day make "IT" - whatever "IT" is - I continued to blow up account after account. Eventually, like most traders, I gave it a break, until I met a trader who introduced me to the concept of working on myself, and on risk and money management.
I realised that there are many, and literally I mean thousands of strategies out there that in the long run will make money. The reason that I lost money was because of the squiggy wet organism clicking the buttons that was ruled by fear and greed - me. It dawned on me that if I was ever to become profitable I was going to have to work on managing myself so that I could actually execute my trading plan.
Since developing these skills I have started to gain some traction. I have since turned a $194 account into a $310 account in 7 months - big wow you say. Well I feel that this success - albeit small represents a break-through and puts me ahead of 99% of traders out there who never consistantly make profit.
I want this thread to document my transition from making cents/pennies into becoming financially free. The plan I hear you say! Invest £2000 into a spread betting account and a further £500 a month.
Here is my trading plan and an example trade (Please refer to the attachment)
So my style or my 'edge' is buying or selling in areas which I feel are overbought or oversold. I like to use previous lows and previous highs and identify areas of resistance - to try and work out turning points.
On my example trade I just witness the GBP:USD forex pair test the 1.6600 price and then pull down about ~175 pips. I put my entry to sell the market just shy of the previous high. on the light blue horizontal line. I placed my stop (the red horizontal line) above 1.6650 - the reason for this is that most people, especially fund managers, place their stops on round numbers such as 50's or 00's. Just looking at this chart you can see how often the market runs into areas of resistance at these points. I placed my profit target (limit) at the previous low.
This type of management means that I am either going to lose ~100 pips or win ~100 pips. 50:50 you say - you will never make money! My advantage comes in the fact that this trade wins more than 50% of the time. In fact, I have taken money from about 70% of my trades. As a result - I have a profitable system. Even if this strategy tails off for a few months.
I realised that i am never going to make money if I sit at my computer staring at the chart all day - by placing orders and setting up the trade so that you don't need to be present can be an excellent way of managing your emotions.
One of my key risk management techniques is working out my trade size based on the percentage of my account I am prepared to lose in 1 trade. For me losing more than 5% of the account in one trade is a recipe for disaster. This position was 1000units (I trade with Oanda who do not use lots so you can trade whatever size you like). I therefore took just under 100 pips.
For the last 7 months, I have taken about 4 trades a week, won about 70% of them, and made almost 900 pips. I have traded slightly different sizes. By running this strategy and by having 8 years of experience - I can gain a bit more of an edge. I sometimes reduce my trade size according to my conviction, and sometimes if some adverse news comes out I will exit the trade.
I think being a good trader combines being an antiques dealer with being a casino owner. Being able to identify cheap prices, as well as appreciating that you are not going to win them all and that by winning 51% of the time is going to lead to untold riches.
Please feel free to comment and suggest ideas.
I do however display the one common trait of all novice traders - I enjoy the pain of losing - spurred on by the belief that I would one day make "IT" - whatever "IT" is - I continued to blow up account after account. Eventually, like most traders, I gave it a break, until I met a trader who introduced me to the concept of working on myself, and on risk and money management.
I realised that there are many, and literally I mean thousands of strategies out there that in the long run will make money. The reason that I lost money was because of the squiggy wet organism clicking the buttons that was ruled by fear and greed - me. It dawned on me that if I was ever to become profitable I was going to have to work on managing myself so that I could actually execute my trading plan.
Since developing these skills I have started to gain some traction. I have since turned a $194 account into a $310 account in 7 months - big wow you say. Well I feel that this success - albeit small represents a break-through and puts me ahead of 99% of traders out there who never consistantly make profit.
I want this thread to document my transition from making cents/pennies into becoming financially free. The plan I hear you say! Invest £2000 into a spread betting account and a further £500 a month.
Here is my trading plan and an example trade (Please refer to the attachment)
So my style or my 'edge' is buying or selling in areas which I feel are overbought or oversold. I like to use previous lows and previous highs and identify areas of resistance - to try and work out turning points.
On my example trade I just witness the GBP:USD forex pair test the 1.6600 price and then pull down about ~175 pips. I put my entry to sell the market just shy of the previous high. on the light blue horizontal line. I placed my stop (the red horizontal line) above 1.6650 - the reason for this is that most people, especially fund managers, place their stops on round numbers such as 50's or 00's. Just looking at this chart you can see how often the market runs into areas of resistance at these points. I placed my profit target (limit) at the previous low.
This type of management means that I am either going to lose ~100 pips or win ~100 pips. 50:50 you say - you will never make money! My advantage comes in the fact that this trade wins more than 50% of the time. In fact, I have taken money from about 70% of my trades. As a result - I have a profitable system. Even if this strategy tails off for a few months.
I realised that i am never going to make money if I sit at my computer staring at the chart all day - by placing orders and setting up the trade so that you don't need to be present can be an excellent way of managing your emotions.
One of my key risk management techniques is working out my trade size based on the percentage of my account I am prepared to lose in 1 trade. For me losing more than 5% of the account in one trade is a recipe for disaster. This position was 1000units (I trade with Oanda who do not use lots so you can trade whatever size you like). I therefore took just under 100 pips.
For the last 7 months, I have taken about 4 trades a week, won about 70% of them, and made almost 900 pips. I have traded slightly different sizes. By running this strategy and by having 8 years of experience - I can gain a bit more of an edge. I sometimes reduce my trade size according to my conviction, and sometimes if some adverse news comes out I will exit the trade.
I think being a good trader combines being an antiques dealer with being a casino owner. Being able to identify cheap prices, as well as appreciating that you are not going to win them all and that by winning 51% of the time is going to lead to untold riches.
Please feel free to comment and suggest ideas.
Last edited:
. I watch with interest!
