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Risk Management

Retail gamblers found the holy grail... To be a rogue trader!I just had a little look into "robots". I've known from reading some of the BIS reports that Forex quants mostly vanished after 2008. But I wanted to go on these FX retail sites that are heavy in the "automated" very short term "trading", which is not actually day trading as they run these programs 24/24 there is no "end of the day so let's stay out of the market for 2/3 of the time to compound profits faster" 😄 Here is how I expect an exchange with an "automated" day gambler would go: My day gambling strategy works muahahaha it does well on backtest for 1 years.   Me: "That's simply because the pair you tested it on has been trending for 1 year you numbskull" Well you just have to apply it in the right conditions!   Me: "With your crystal ball? If you know what they are, why not just manually take 1 trade?" Aha! Because of the power of compounding! Rather than risk 1% to make 5% I will make 2% 25 times.   Me: "Your brain on holiday? Forgot you would also compound spread costs and losses?" Well forget it, if you rly zoom in and can't see anything it looks magical! Doesn't depend on the 1 year trend!   Me: "Then it depends on the 1 month trend?" No! no matter what you say I have an idiotic answer! Usually starts with "You just have to"! I'll throw idiotic answers at you until you get bored and give up on me because I am hopeless!   Me: "Well done I give up" "Thanks for the laugh though" 😂 Take a good friend of mine, UDNCNY: I can tell you for a fact that an "automated strategy" of the kind I am going to describe would work. Don't even need to backtest it. The strategy is as follow: Take about any indicator (RSI, Bollinger Bands, etc). When the price goes down (< 30 RSI or lower band) then goes back up to the middle (RSI 50 or center of Bollingers) you sell. And of course the same on the opposite with buying. Yes that strategy would work, we can quickly eyeball it: In practice this is not even what they do. A risk-to-reward ratio as enormous as puny 1-to-1.8? That's like 1% of retail. Never! What they do is have super distant stops, or no stops. And quickly by looking at USDCNY you understand how they can win. Shorts at a loss are all in a pullback, and the price never goes very far, so by just waiting they will turn into winners at some point. In my example which wasn't the best part of the USDCNY trend, there are 6 short signals, and 3 longs. The longs that are not winners quickly, will "never" recover so they'll take a loss on a far away stop here. But some longs are winners, and most to all shorts are winners, the smaller the reward and bigger distance the stop is, the close to 100% winrate it gets on shorts. To sum up, with their ridiculous high winrate strategies applied in the right conditions: - The vast majority of trades are going to be winners no matter what - Maybe 1/3 of the losers are in the wrong direction and will be big bags - Maybe 2/3 of the "losers" are in the correct direction and eventually will recover These troll retail gamblers are zooming in a flower to the molecule level and wondering why it suddenly went invisible. Must be magic! They have no clue. There is an insect on the flower, that's why you can't see the flower molecule anymore you numbskull. This indicator strategy I mentioned works on a trend, how about a nice thick really gross sideways? Constantly stopped! But have no worries for the retail gamblers have a trick up their sleeve! With a very wide stop such as the risk is 20 times the size of the reward you will keep winning! Hurrah! Martingale! And then it will start trending in the wrong direction and the clowns will get wiped out. And I can assure you, this happens more often than 1 in 20 times 🙂 Now we are getting to my favorite part: The holy grail in the title. I went to myfxbook take a look at system. By default they show you only the ones with positive returns, and many of those are very recent. No no no no no. let me change that filter to at least 1 year of activity, and any returns. What's this? More than half show red returns? Oh my that's a lot of -99% 🙂 Most people quit before getting to -99. How about I pick one of the "winners"? Weird, why are their open trades private? Another one. Private. Another. Private. And another, private again! Oh I found one! TrumpBot. Interesting, that's a lot of red sir. 70 open trades, almost all in the red. USDCAD, EURUSD, USDJPY. All EURUSD are sells, and all the ones ones are buys. He took plenty of short term trades (well long term now as he's been holding the bag for a while) LONG on the USDOLLAR. Oh no! Remember USDCNH? Well these bags go back to early in the USD downtrend. He's been holding for nearly a year 🙂 L - O - S - E - R Just takes 1 L to wipe out these clowns. They can hack some site to make losses vanish, and obviously the dum dums that buy these kinds of systems are too lazy to really do their research so they never notice it, but if it's real money IT'S REALLY GONE. There are some guys that have been struggling to make money for 20 years and have sold robots for 10. Is it cruel if I... roll myself on the floor while I laugh to tears? 🤣 What about all these "private" systems? They're holding bags too? There is a name for this. It starts with an F. And ends with raud. It is the rogue traders specialty. They do a bit more (pros), call them "hedges", manipulate accounting for example, take opposite positions to cut their losses while keeping them secret (unrealized)... Here is a regulator release on famous Karen Bruton, known as "the supertrader". She was made famous by Tom Sosnoff that had her appear on his show. The SEC fined her and a partner to over a million dollar. She lost way more than that. No jail. www.sec.gov Tom Sosnoff is a market maker from the 80s that created a popular trading platform that he sold, and now teaches people to sell option spreads. With no edge or risk it will return little money, like 1%. Karen the Supertrader got superresults by leveraging that strat. Which causes it to LOSE money. Looks like Karen couldn't figure out high school level maths, nowadays this got to be 2nd uni year, the levels has collapsed it's amazing, my sister aiming for med school doesn't even HAVE math classes since 16 year old, science with no maths, genius government. "But kids don't like it", ye so let's make them even dumber than they already are! Yes but Karen convinced investors, and even Tom Sosnoff and his colleagues, that she made money! Ye, just like all the myfxbook trolls. She never closed the losers. Plenty of realized gains, and much larger unrealized losses. Pathetic. And the flip side? Warren Buffett has held unrealized gains on Coca-Cola since 1987. Never held losses very long. Ever. Some uni nerd looked at it. We know because he has to report all positions. Losers (and crooks) hold losers. Winners hold winners. That simple.
Education
by MrRenev
Probability & Trading Trading is a probability game. Every successful trader knows that any trade he executes may bring either profit or loss. In order to assess a statistical advantage of a trading strategy, it is necessary to execute a large number of trades. That is why, it takes a lot of time to understand how efficient your trading is. There will be loss-making trades and you cannot avoid it. However, it is within our power to restrict a negative influence of each loss-making trade on your trading capital. ESSENCE OF PROFITABILITY IN TRADING. Many traders have a general understanding of the probability concept in trading, however, all too often they do not quite understand its essence or do not use it in trading to the full extent. Analysis of probabilities, conducted by such traders, is reduced to analysis of statistics of profitable and loss-making trades for a certain period of time. Quite often this is all they do. Traders do not bother about a thorough study of numbers, which they find in the result of testing trading strategies. However, in order to achieve success in a long-term perspective, it is necessary to understand some basic concepts. Below are two basic ideas, which relate to probabilities in trading: Historical values of the risk-reward ratio cannot be the final measure of future probabilities. These are just forecasted indicators of future probabilities; Even if you have an understanding of what the risk-reward ratio of a specific trading setup would be, you are not one hundred percent sure that the next trade would make profit or loss. The idea of probabilities in trading might confuse you a bit, if you treat it without proper attention. It assumes that your trading strategy was characterized by a certain percentage of profitable and loss-making trades for a selected period of time. However, there are no guarantees that this strategy would be that much efficient in future. You should understand that the market constantly changes and sometimes very rapidly. In any case, the future indicators of efficiency of your trading strategy would differ from the historical values. NOTHING IS KNOWN BEFOREHAND. You should ask yourself, whether historical market data, used earlier for the market forecasting, could be useful for analyzing the current market situation. For example, imagine that you have analyzed efficiency of your trading strategy on the historical data for several years. The market has been in a trend during this period. But what if the market has changed and moved to the consolidation stage? Do you think it makes sense to rely on the past statistics in this case? Can it provide a clear understanding of the future price movement? Probably not. It is also necessary to take into account the fact that you cannot guarantee a hundred percent favourable outcome of the trade. A convincing risk-reward ratio may take-off your guard when executing a new trade, which could result in negative consequences for your trading capital. You do not know for sure what chances for success your next trade has, even if you have a general understanding about what, most probably, would happen in the market. Let’s consider the following situation by way of example. The trading system showed the 1.5 relation of profitable trades to loss-making ones (that is, 60% of the trades were profitable) in a series of 250 trades. However, note that, out of the total number of trades, 100 trades were closed with a loss. It means that, in principle, there could be a situation, when you can have a big series of losses. It is an unpleasant situation, but it really could happen. Namely that is why it is very important to clearly identify risk parameters for each setup, which you trade, and strictly stand by them. This explains why some traders establish a protective rule, which allows execution of a limited number of loss-making trades in a row. The protective rule directly depends on the time of trading and is usually applied to the intraday trades. This rule allows stopping the trading for the whole trading session in case of development of a negative scenario. The reasons of why this rule comes into force could be the following: The best period of time for trading has finished; A certain number of trades have been executed and the trading stops, when a positive result during a trading session has been achieved, independently from their total income; The number of loss-making trades exceeded the acceptable maximum. The ability to manage the trading capital (risk management) is as important in the long-term perspective as the availability of a trading strategy with a trader. The problem is that a human being tends to focus on such things, which are directly in front of his eyes. At some moments, the global vision may become distorted by an immediate urge and belief in a positive outcome of the trade. It takes a pronounced character in those cases when trading decisions are made emotionally and not rationally (in accordance with the risk management rules). Such cases are characterized with a big confidence of a trader in success of an obviously loss-making trade. Namely due to emotional attachment to a trade, a trader often forgets that each trade is just a part of a series of trades. Development of the attachment to a trade looks about as follows: You allow the trade to ‘breathe’ and do not restrict it with a stop loss in accordance with the risk management rules; Then you give it even more space to be more confident that this ‘trade of the century’ will not be closed by a stop loss; At the end of the day you understand that the trade accumulated a significant loss and pushes your profitability curve into the red zone. The most disappointing is when the trade is closed by a stop loss directly before the market reverses towards you and achieves the earlier set goals. This would happen from time to time. Sometimes you yourself would close a profitable trade just before the market reverses and rapidly moves against you. We should note here that the risk-reward ratio and also statistical data in general are not useless, however, everything depends on how we interpret them. People tend to distort or manipulate their perception of reality for supporting their own ideas. Namely this is the reason why it is important to understand the trading psychology. THE MARKET HAS THE UPPER HAND. A trader may forecast any market tendencies, but the market has its own, often different, opinion in this respect. If a trader does not recognize the probability nature of the financial market and is not ready for situations when the market behaves differently from his forecast, he would hardly manage to stay in this business. When a trader starts to think that he knows for sure how one or another market situation would develop, it means that he needs to reconsider his views. Credit: Article by atas net Like and Subscribe. Thank you.
Education
by Deeppoketz
Statistical approach to risk management - Python scriptThis script can be used to approximate a strategy, and find optimal leverage. The output will consist of two columns, one for the median account size at end of trading, and one for the share of accounts liquidated. The script assumes a 100% position size for the account. This does not take into account size deviations for earnings and losses, so use with a grain of salt if your positions vary greatly in that aspect. Code preview cdn.discordapp.com/attachments/592684708551327764/848701541766529034/carbon.png TradingView does not allow posting external links until you've reached a specific reputation, so i can't use the url feature Input explanation WINRATE : chance of winning trade AVGWIN : average earning per winning trade AVGLOSS : average loss per losing trade MAX_LEVERAGE : maximum leverage available to you TRADES : how many trades per account you want to simulate ACCOUNTS : how many accounts you want to simulate the inputs used in the source code are from one of my older strategies, change them to suit your algorithm Source code pastebin.com/69EKdVFC Good luck, Have fun -Vin
VEducation
by Vindruee
The Secrets to Forex & the Boydian Theory of CompetitionI'm assuming if you got this far, you might be smarter than the average Yahoo commentator. No need to rejoice, dear Gulliver, we're still in the tutorial. I have specifically designed this article to be long and heavy, hopefully to demoralize you out of intra-day trading. However, I know that for those who live outside the expected plot, demoralization doesn't work. It's expected that dumb people will make dumb decisions. But oftentimes, smart people make the dumbest decisions. So here it is, a guide on how to make that dumbest decision a bit more survivable. Fortunately, we have the lessons of millions of losers to draw from. Corpses that tell a story. ------------------------------------------- Intra-day is a horror many glimpse but few manage to survive. The chaotic, turbulent, uncertain darkness of the lowest levels of the market are, to be honest, not for everyone. The vast majority of you reading this should not be intra-day trading. Why? Because I don't want to see your net worth (and lifeworth), sucked dry by the vampires in the hellscape. It is the hardest difficulty a retail trader can play the forex game on. You need to sink 1000s of hours into the craft, often as a fruitless exercise in geometry and color. There is no decisive path through this battlefield, this eternal competition. All edges decay. But there is a silver bullet. Just one. And if you know how to polish it, no amount of sulfur will get in your way. Part 1: It's Strictly Business The US military is a big organization, arguably the wealthiest and most powerful out there, as far as we know. A lot of people are paid to think about strange problems or prevent unfavorable events that probably wouldn't happen anyway. They are also paid to figure out how to make things cheaper, more efficient, more interoperable, more redundant, more lethal, more accurate, etc. It's not so different from your typical US30 business. You just trade the profit motive for organized violence (not-in-minecraft kind) and the shareholders for citizens. Powerful men who are responsible for other people are rarely different, despite what the movies and media might tell you. The front of the shop might look different, but don't be naive Kay, the survival motive is the same. So what risk management or market lessons can we learn from this controversial type of big business? What about those guys that think about strange problems? Every once in a while, someone comes up with an interesting idea. And no, I'm not talking about what you or your fellow estronauts think about on discord. Part 2: Patterns of Conflict Col. John Boyd developed the OODA loop theory from a basic white paper called: 'Destruction and Creation' and various presentation decks like: 'Patterns of Conflict.' And while I have an autistic tendency to make military-to-market analogies, it's not important to dive too far into these. Basically: risk and strategy development are cutting edge in the military domain, where the stakes and budgets are highest. And then, oftentimes, it trickles down into lower stakes arenas, like markets or sports. I could write a book on it, but alas, I have better ways to make money. Now, his works were publically obscure but privately influential, eventually their reach extended from military strategy to business and market strategy and even to cybersecurity and legal strategy. Boyd's cycle time management, his observe-orient-decide-act or OODA loop, in particular. It is a simple concept at first. It's so simple it doesn't really seem like an 'invented' idea. It's like processing power in a computer, or latency with an internet connection. If we can do things faster... our process of development, that is making mistakes and correcting them to 'get better,' also speeds up . An AI running a neural net is similar, it makes a lot of mistakes, maybe more than a human would, but because it plays so many games at once or a single game extremely fast, it eventually evolves to defeat humans in the form of competition. If it gets fast enough and far enough ahead or interferes with the processing speed of the opponent, something magical happens. It makes moves we see as 'chaotic' or 'confusing,' which usually end up as traps or baits to draw in the opponent, in retrospect. OpenAI and AlphaGO did this all the time. Eventually the faster equation of mistakes and successes will overcome the equivalent slower equation utilized by our competitor. Three options. /1/ You can make your process faster through technology or intellect, /2/ you can slow the opponent's process down through confusion or force, or /3/ you can do both according to Boyd's theory. The first option is our limit as traders. As far as retail FX trading is concerned, that is as much of the theory that can be applied due to the lack of boutique data feeds from prime brokers and the nature of the market (and law) itself. As an institution, you can go further. You can load up on computational resources, get closer to the source of the exchanges/interbank transactions to reduce latency, scalp top talent away from competitors, produce FUD in the media (the purpose of CNBC), etc. In fact, in other markets with other tools, by applying the OODA loop you could abuse the order book and confuse and bait the HF algo strategies. Do this well enough and you just might start a flash crash. Front-running, spoofing, layering, and others were second-order techniques of applied OODA loop strategy (those 'overpowered' methods are now banned). It was a trillion-dollar lessons-learned exercise. Part 3: A Strategy for the Weak But the idea is too widespread and too evasive to be killed off by a few unethical and abusive strategies. It's like the scientific method reformatted into a competitive/survival environment. You could argue its two or more scientific methods in contest with each other, with a game theory like logic balancing outcomes. A competitive decision cycle. Virtually every successful business uses a derivative or parallel version of cycle time management. A parallel version of it was developed as the Shewhart cycle, and inspired production theory in Japan that would eventually revolutionize manufacturing for a globalized, value-added world. And of course, it wasn't just tested in the field of profit, but in the field of battle, where competition and risk management is a matter of life and death; which are very expensive affairs. It would underpin the design logic of all future combat aircraft. It led to the swift and decisive victory in Gulf War I (the only swift and decisive victory any conventional military had after WWII). It was built and inspired by the central lessons of thousands of years of warfare 'upsets.' It's success, its value, is self-evident by it's wide adoption in competitive fields and by competitive entities. It's now synonymous with the idea of a "lean victory." When we talk about the resource called Time and the resource called Information, the OODA loop is about managing these to competitive excellence while disrupting your opponent's management of those resources. So why wouldn't we also apply it to trading? Part 4: Fast Transients Personally, what I like the most about this theory applied to markets is its crossover with technology. Competition normally happens at the speed of thought, and technology is a type of thought machine (it translates thoughts). Technology is inherently synergistic precisely because it improves calculation time, observation time, and the overall speed of the cycle itself. Technology is always improving these things, so the theory gets stronger over time. This is also why, for your intra-day future, you need to have time and/or money set aside for R&D, so you will be on top of new indicators or trading technologies. It's also why, in the long run, using algos to assist in your trading efforts will likely be very important, primarily for intra-day. I use a comprehensive algo-run dashboard to manage my intra-day positions. I spend a lot of time on counterparty analysis*, it's the 'unit of analysis' in a market competition from a scientific perspective. It's what shapes my broader market theories that manage my portfolio beyond forex. Reducing it down to something simple, how the human mind works in a competitive environment, the psychology of profit-seeking. Is what I have been mentioning throughout the entire series. Who is buying this shit, why is someone selling me this shit, what are these boomers thinking, how are they making money, what is influencing their decision-making... Etc. But technology changes that. It's another brain, another filter. The market war is far less human than it once was, but the biases from humans are still plugged in, the humans in the loop. Or, are they? *(and if you followed GME, you would see the idea of punishing siloed short counterparties independent of absolute stock valuation has become popular in the retail world) Today, just like your social media, the market is filled with less-than-human entities, monsters... vampires. Not just because of technology doing the thinking and trading, but because of how it influences the human mind to favor commodifying everything and thereby justifying dehumanization. It is a very dangerous process at the forefront of our increasingly unsatisfactory and disenfranchising materialism-driven world. I'll talk a little about that in the last article where I explain the Pigovian-like risk you inherit as a trader. Part 5: Entity List Now, unfortunately, because trading is a many many player game, and most of the biggest players have fiduciary responsibilities (on paper, which isn't worth much these days), it is hard to take full advantage of Boyd's method unless you have access to higher market-level data and access to massive resources like a corporate entity. For the rest of you, you will have to translate the competitive environment into units of analysis or battlefields to survive. Sessions become battlefields, newsflows become battlefields, pairs become battlefields, etc. You will compete against entities in these battlefields. The moment you enter into the market, this plane of materialism, you are in competition with these entities, both real monsters (other real players), and synthetic monsters (algos, AI, MM). Risk management is impossible without accepting this truth, that you will always be in competition in the market, no matter how large or small or where you positon may lie. You can't hide from the fight, you can't wish it away, you can't pray its fangs are small. You can only prepare for limited certainty and adapt to unlimited risk in the long run. That way, when you do get scared, it'll be over the size of your new house instead of a strange French accent over the phone. Intra-day is the application of everything laid out so far, with the addition of the Boydian time cycle method and important psychological revelations about sessions and open interest. This method pushes your trading timeframe into as short of a unit of time as reasonable, or fast enough to be competitive against your peers. The better application of your time resources. It also demands the observation/gathering of information resources as widely and as quickly as possible (Boyd's rapidity and variety). And ultimately the processing of these two resources synergistically. This is the rapid transient mindset. It's increasing your initiative as a capability. You wouldn't spec a character in a turn-based game that gets fewer turns. You want more turns per encounter. In this sense, the familiar forex conclusion is something like a fractal. Where you are looking for a similar occurrence but on a smaller timeframe, allowing you to act earlier and more often on information. But that isn't entirely accurate. I used the classical mechanics vs quantum mechanics example in the 3rd article. Classical is more structured and stable, while quantum lives and dies many times before producing something significant (or maybe its really a matter of frame of reference). The point of intra-day is similar, you want to take advantage of the uncertainty, the volatility, as possible preparation for a long-term outcome. You want to think of these timeframes (15m, 5m, 1m, seconds) as FASTER, not smaller or lower. Think faster. Everything is faster, and that includes you. If it sounds hard, it's because it is. You're only human after all. Part 6: Entropy Investments You are looking for the possible start of a CPG/EX/FLOW/SEA event, AS EARLY AS POSSIBLE. That is, on the higher timeframe the process will play out, but the purpose of moving to faster timeframes is to jump in on these 'potential beginnings' because if you jump in the potentials as early as possible your risk/reward is highly dysgenic. In other words, you will have a lot of losers, which is a good thing. Remember, openAI plays more games and has many more stupid lost games than a normal player would. Let me explain this in a way where risk management meets my energy ecosystem concept from the prior articles. With an equilibrium system, you will have a higher loser frequency of trades (the number of trades) with small individual account loses, while earning a lower winner frequency of trades, but the ones that win will win big. In equilibrium, it will all balance out to a net account zero before fees and commissions between traders with edge and those without. However, markets allow competitive systems within the master ecosystem. With competitive edge, you will have a high loser frequency of trades, with even smaller losses, while maintaining a few very big winners, similar to the 90/10 rule in boomer investing. In other words, your trading system must facilitate an environment where you can lose many of your trades while still capturing significant moves on the few upside wins you entertain. That is the endstate I have found to be most valuable for intra-day trading. It's the silver bullet of return patterns. You can have a small account size, your downside risk is smaller (compared to long-term trading), and your upside potential tracks daily volatility more effectively than long-term trading ( we will talk about specific RR ratios and RoR based on Monte-Carlo simulations in the next article). The closer your trading system tracks volatility, generally the more profit you will make IF your strategy is competitive. Inversely, what is more predictable = is less competitive, and the potential for edge generation is harder to fulfill. Remember, the Ecosystem Tycoon stands still and dips his hand into the flow of cash transactions. You will profit most where the flow is strongest (the most volatile and liquid). For instance, if USDJPY starts the week at 110.00 and ends the week at 108.00, it moved 200 pips on your competitive long-term tradng strategy. But with intra-day, it may have moved from 110 to 111 on Tuesday and then down to 108 by Friday. That volatility (400 pips worth) can be turned into more profit, AND, with proper risk management, involves lower account risk per trade. Despite the pair pip movement outcome being the same as the weekly long-term strategy (IE, where it started on Mon and ended on Fri). Note that the long-term account risk differential with intra-day can be reduced with currency options and futures, which we will visit in the next article, but it is hard to replicate the gross available pip totals from intra-day trading because European options were designed for multi-day strategies, along with other issues. Capitalizing on volatility sounds nice, and operating on faster timeframes to capture that volatility sounds nice, but how do you analyze any of this? How do you find the optimal (competitive) periods of volatility, how do you track the swings for more pips, etc? You could try some thinking on your own, or you could keep outsourcing your thinking to me. It's okay, most people do it, just look at Reddit. Part 7: Openly Interested I have found through my own research that session psychology is just another way of classifying structured open interest and volume behaviors. I mentioned prior that counterparty analysis was important to understanding the market from a scientific and competitive standpoint. Open interest behavior is a component of counterparty analysis. It is the magic to intra-day that carry interest is to multi-day. Problem. Technically open interest isn't measured by most brokers in the FX market, but it does exist somewhere because forex is a derivatives market with a futures and commodity market. To understand open interest: it is a measurement for the occurrence of multiple investors or entities converting cash into new market contracts or settling those contracts back into cash. In other words, it's how many contracts have been created via cash. It's like going to the casino and converting your money into house chips for gambling. When those chips are 'created' open interest is created. So if players created 100 house chips for the day, then the open interest is 100 for that day. They will all have to be settled by close of business (brought down to 0, because chips cannot usually leave the casino). When those chips exchange hands between players, volume occurs (the occurance of transactions between players). So all the instances of one player losing chips to another player during poker count towards the volume total (which will usually be greater than open interest). Keep this explanation in mind (and refer back to the Ecosystem Tycoon article) when I explain sessions from a human psychology standpoint. Part 8: Session Psychology Each session has a psychology, this is one of the 'secrets' to forex I find to be significant and relatively underexploited despite being self-evident in the trading universe. Entities within the NA session, entities within the EU session, entities with the ASIA session; they all possess patterns of behavior that result in price action outcomes that are consistently predictable. In my review of the topics, these patterns come from psychological biases tied to civilizations and institutions. With civilizations, the majority of consumption/import nations exist in NA and EU (current account deficit bias), and the majority of saving/foreign investment/export nations exist in Asia (current account surplus bias). (Keep in mind that this is changing a bit with AUD as a vassal currency for CNH/CNY, but not just yet.) This impacts the flow of money and risk-taking behavior at the market macro level. It creates a market-driven partially by psychology at the highest level. Momentum patterns are more common during the EU/NA overlap, while ASIA is correctional (mean reversion) but often overcorrects (or anticipates) and withdraws to wait for EU to start. EU (mainly through London) fills large positions and take substantial bets on the overall market outcomes for the day (which occurs when NA comes online, or if they receive enough information about global macro to preempt NA coming online). It's like buying at par value and hoping to sell at premium. If the bet is correct, the forex pair will have a significant (usually 70-110 pip move for the day), if the EU bet is incorrect, there will be sharp reversals until NA produces enough information clarity. It's important to think in terms of cash flow as open interest and vice versa. When the NA markets open, the stock market and other major asset markets open as well, these need cash to facilitate transactions. Credit, risk, leverage, and other major financial currents move during the business day. The financial economy operates under somewhat traditional office hours and this includes the release of performance reports or audits which will influence valuation, legal events, and dealmaking. Most importantly, Jerome Powell and the rest of the Federal Reserve are awake and plotting the death of the US dollar. As a result, the movement of these markets more accurately tracks the overall economy, the underlying, and the biggest demand economy in the world. As a result, currency directional bias will usually become clearer and more stable as it now has a reliable reference point from these flows. This is partly why you see stable and smooth trends during this period. The NA session isn't just another session with its own quirks, it's the demand session of the global market 24 hour cycle. Most price action up to that session is just prediction or anticipation of how the demand session will interpret global macro events. Of course, there is still plenty of money to made during that price action\ prior to the NA session. It is important to understand that it's not as simple as LONDON BREAKOUT, though this the right line of thinking. Trading strategies need to match each session's behavior. And from a higher standpoint, that the opportunities to enter long term trend-based trades are found in the NA/EU overlap, while reversals and compressions are found in the ASIA and LON session periods. Both at the intra-day level and for your multi-day strategies. In addition, during ASIA/LON, the center of price gravity and its extremes will be more valuable; but FLOW and SEA will be more valuable for NA/EU overlap. So your momentum/breakout trading will work better during EU and especially with the NA/EU overlapped session, while your reversal or DCA etc strategy will perform better during ASIA and into LON. Now, you want to think of the transition between sessions as decision points, where the behavior of the upcoming session will have to summon the collective decision-making of market participants to decide on the course of action. So if you run a reversal strategy from ASIA/LON you can expect to hold (usually 8-12) until a decision is made on whether the price will return to the center of price gravity or if a NA/EU trend will begin (these are the 150-300% ADR events usually driven by huge macro stories like CBs/stimulus/brexit/tariffs that ride a lot of newsflow). Thus you need to be abreast of outside influence on the minds of market actors to evaluate if you close your position in that 8-12 window or if you hold for a huge reversal opportunity during NA/EU (a reversal due to the start of a new major trend). Normally, the ASIA/LON period will contain a correction related to the prior day's NA/EU session or will have a mini-move and subsequent correction before 8. In this decade, there will be new economic challenges for the eurozone and the ECB, so the EU standalone market session may develop new behaviors and we might see more volatility. It's important to understand the shifting behaviors of these sessions as macro and geopolitics shapes hearts and minds. All this surface area can be hard to follow, so here is a summary below. Part 9: Execsum The endstate is finding and translating forex order flow into patterns, and then generating edge by reading and reacting to those order flows faster than the tail end of losers. It is pit sentiment or floor dynamics as best represented on a chart, a type of 2D battlefield. The endstate goal is an operationalized effort drawn from the Ecosystem Tycoon analogy. Here are the major themes and connected key concepts within that endstate: Open interest demand mechanics = vol & compression regime mechanics Open interest is created by outside 'viral' vectors grabbing the attention of investors (people with cash interested in the market) and when sentiment is shifted within that cohort (who are now interested in opening long contracts or short contracts) Open interest can break a compression regime by spoiling a careful equilibrium between traders currently in the market. They were formally in a balanced position until new cash tipped the scale. Open interest can create strange PA behavior resulting in new trading performance risks from high ATR and vol. OI is understandable only through the lens of newsflow and macro research related to the viral vector influencing investors; thereby making it a significant threat to technical systems dependent on historical PA information. However, at the start or end of the business day (regardless of rollover), open interest is commonly settled and the contracts are closed and converted into cash. That money or energy leaves the price discovery system and the instrument usually returns to lower volume after finding an equilibrium. These cycles are predictable and occur within the session unit of analysis. They also have different behaviors by session. These mental frameworks are necessary for effective vol capture, especially at intra-day resolutions. Tailoring or selecting technical systems to match session behavior and the open interest driver maximizes potential vol capture. Now, there are few more important tools and methods you need to have to stay true to a Boydian trading strategy at the intra-day level. Part 10: The Crafts There are other important points, particularly regarding technology and how to improve your trading speed. Follow these crafts and at the very least, you will have a chart checkered with good and bad outcomes. Instead of just all bad, like your default life setting. VPS, and a backup instance of your broker on your phone (with a data subscription). This is insurance that pays off in the long run. Now, it won't matter too much unless your intra-day strategy is fully automated (which I don't recommend anyway). Either way, phone backup is useful. Position management and style is also key from a Boyd perspective. Particularly, the importance of splitting a position up into multiple entries. AT LEAST 2; a conservative TP and an aggressive TP. Personally, I like to use a statistically derived TP (like a common ATR/momentum hit dependent on the pair, IE 9 pips on the EN versus 4 pips on the EU), I like to use a covariant-like technical target (S/R level, psychological level, the center of price gravity, etc; in other words, a combination of technical targets with similar natures) and I like to use a TIME based target (closing towards the end of a session or after a scheduled event occurs). I recommend a combination of all or at least 2 of the three. In addition, utilizing order implementation algos can go a long way in this effort. Not as important for the multi-day traders, algos increase your entry and exit optimization with technology (Boydian considerations) for intra-day trading. In fact, this was the original inspiration and justification for algos, to assit in the efficient use of bid/ask (pit dynamics) for the heavy bags of wall street. Your SL should be consistent with the session, strategy, and pair. Ideally based on ATR, but I would recommend an SL at least twice as large as your conservative TP. I will explain the risk logic of this in the next article and how it can be more profitable than the inverse. Finally, you need to be willing to use MARKET orders. There is no reason to not use market orders in the most liquid market on Earth. Unless you are trading 30 lots or more in a single order entry, you will not influence price unfavorably. In addition, if price slides or moves.. this is good, this behavior is good for your strategy, which should be based on volatility tracking and capture. Speed is paramount, you can't wait around for hours to have an order fill at your dream price level. As such, LIMIT has less value depending on your strategy, but it can serve a purpose with forward planning a large position. STOP orders make sense for SL exits but not for initial entry. If you don't want to manually close your orders or you have way to many orders to manage manually, you will need an algo dashboard or a trailing algo SL. Remember, that a third party algo is effectively a system that creates virtual orders, they are not a broker order like a market or limit until the final step of the process. You are solely liable for the operation of the algo. Other order types are irrelevant without prime broker access and are really only useful in the share market or markets with low volume and hidden LPs. Leverage should be used as a exponential for conviction. Meaning, the better your system or prediction, the more money you should be willing to risk. This will be discussed in greater detail in the next chapter, but forget everything you have heard from the webinar retail salesmen and their 2% margin religion. Leverage is favorable in forex because retail traders (and common people in general) cannot get leverage of a similar degree for other assets , or to be honest, anything else. This is very important from an investment standpoint. Your principle goal as an investor is to increase your purchasing power, and leverage is one of the best tools to achieve this. However, you must never forget the other ancient boomer wisdom. "Only 3 things can ruin an honest man: ladies, liquor and leverage." I would also note that they all start with an 'L' Part 11: Newsflow Again As mentioned in a previous article, news trading might be best achieved with binary options, but otherwise, you want to open prior and close after. At least TWO minutes of distance both ways. If the news is a surpise, price can move forcefully for the next 4 hours or until the end of the session. I would also recommend opening a LONG and SHORT position of equal sizes instead of utilizing a stop loss (if your account supports this capability). The idea being you would close them each in profit during the volatility spikes in price action or simply close at a later point at a net zero result if volatility does not occur. That would be the Boydian approach. IF this isn't an option due to some FIFO issue with your broker (you can always bypass this with multiple brokers), just use a smaller position size than you normally would, and increase your SL to something substantial (80 for low ATR pairs, and 120+ for high ATR pairs). I don't recommend this final option unless you are accomplished in reading and understanding the global macro eventspace. As mentioned in the Happening Default Swaps article, news trading really only makes sense for taking profit and/or exiting an older position. It is rarely wise to use it to open new positions, despite the volatility potential. You don't want to be all flow and no balance. Data feeds matter. Information processing speed, etc. You need the fastest sources of info, you need it processed (ideally by specialized experts). Processing it yourself is fine if you are very familiar with the content. You may have to pay money for this, but it will generally be worth it (especially in time-sensitive intra-day) from a risk management perspective. It's like hiring an expert. You aren't a corp, but you can get the 'consulting' value from these experts (at a much cheaper price). Dont go chasing sources that are repeating other sources, it can present added value of knowledge but it's really just disguised as redundent information. Just go directly to the source. And not the one at the center of the galaxy. Part 12: Outsourcing research A psychological edge you need to have is the willpower to conduct your own 'capex' or development on a consistent schedule. The more you do, and the higher quality it is, the greater edge you will generate in market capture knowledge. Your ability to dip your hand into the flow of cash. While this isn't limited to intra-day, intra-day is where the market evolves FIRST, and often at the fastest rate. Thus you need to mindful. Always looking for better versions of indicators you possess. Or ways to set SL more efficiently and accurately. Or selecting better data feeds or newsflow sources. Most of what we've covered so far is more abstract than the average fluoride brain would hope for. That there must be a signal service, or an indicator, or some universal function that can be realized into a specific technical system. The reality is more of a mindset and an assumption that you need to spend more resources on upgrading your 'technology' and your 'time-management.' And that the sessions themselves are excellent units of analysis to apply the time-management and decision-making initiative because of open interest dynamics. How do you study or gather information about the current or upcoming session more efficiently? How do you execute orders more efficiently? How do you become faster? The more information you have and the faster you react to it, the more money you can withdraw from the trillion-dollar liquid market bank account. To explain it in factor investing terms, the Boydian mindset is the key to vol tracking and vol capture, which is what intra-day offers. You want to ride high volatility profitably or at least react favorably to high volatility better than your competitors. To summarize the rest: sessions have vol behaviors, predictable, but not predictable enough that they aren't also competitive. Driven by vast macro psychological and market influences, these patterns will occur again and again. You can build a strategy to match each session if you trade intra-day, but you must be faster in action and faster in information processing. Your positions will live and die many times before a long term position may exist in the market, so adjust your risk management accordingly. You can use your intra-day strategy to leverage into a long term position. It's really that simple. I offered the behavior/psychological solution (the assumptions about session behavior), and a few other specific solutions to make your time and decision intersect more efficient. But there is always something better on the horizon. And you need to chase it if you want to stay competitive, and therefore maintain edge; which is your career margin of safety. You shouldn't get too greedy, because hogs get slaughtered. Unless of course, we're talking Orwell's farm. Part 13: Silver is for monsters Listen, little Helsing, intra-day trading is all about surviving the flood of spectral horrors in the night. It is the true nightmare difficulty of this market game. These vampiric entities in the market are monsters both in scale and in appetite. They operate on attrition and superior firepower; a strategy you can never replicate or use against them as a retailet. They are immortal in that regard. Some are soulless institutions, others are lifeless algorithms. And, even if your spirit is strong, your flesh is still weak. They will take everything from you, without even recognizing your face, your effort, or your dreams. Though some, I presume, are good people. I want you to remember on your intra-day journey, if you eat, eventually you get eaten. That's the rule. Ultimately, this kind of flat and shrouded market takes what would normally make someone regret or question his behavior, and removes it from the equation, masking it as invisible and out of the way. It's a distortion. It's a spiral of dehumanization. It makes it easier to ruin people, who could be as relatable as your brother or your neighbor. That is the tragedy of this efficient flat competition. You will be on the recieving end of this story more often than not. That is why I arming you as best as possible, so that, at minimum, you can defend yourself against these vampires. Your silver bullet is the applied OODA loop, the market-realized outcome of maneuver warfare, the competitive management of time, information, and decision making. In essence, it is a strategy for the weak to win against the strong. In the first place I would never recommend/promote a battle like that. I have a nonzero responsibility for your success or failure. But off the record, if you choose to play on this difficulty, I strongly recommend you wait for my final article where I discuss benchmarks and 'grand strategy' before you go all in. No need to be impatient, trust me. The monsters on the other side of the screen will wait for you.
INDEX:BDIEducation
by CountofCoins
2
Risk per unit (R) & ExpectancyIn this article, we will expand the notions presented in the first part of the series. If you haven’t read the first part, you can check it out below in our related ideas section. We define risk as to how much you’ll lose per unit of your investment if you are wrong about the position. We called this in the first part initial risk (1R) . All your profits and losses should be related to your initial risk. Example 1: You buy a stock at $100 and decide to sell it if it drops to $80. What’s your initial risk? The initial risk is $20 per share. So, in this case, 1R is equal to $20. If you buy 10 shares then your total risk is $200. R represents your initial risk per unit. Example 2: You want to do a foreign exchange trade with a $10k account, selling the EURUSD. Let’s say that $100 USD is equal to 77 Euros. The minimum unit you must invest is $10,000. You are going to sell if your investment drops by $1k. What is your risk? What’s 1R for you? It may sound complex, but it is very simple. If you’d close your position if it drops $1k from $10k to $9k, then your initial risk is $1000 and that is equal to 1R. R represents your initial risk per unit. Let’s say that you have noted on your trading journal the following trades: 1. 400 CSCO at $23 - R $1000 - P&L $2,317 2. 80 IBM at $80 - R $1000 - P&L ($813) 3. 300 VLO at $50 - R $1000 - P&L $3,413 4. 400 HRB at $51 - R $1000 - P&L ($1,531) The R multiples for these trades are: 1. 2.32 R 2. -0.81R 3. 3.41R 4. -1.53R The average R for your system is: 0.84R Expectancy really refers to the mean (average) R-multiple of your system. As a trader, if you want to be successful you need to start quantifying your trading performance. You should always calculate your R-multiple and it’s average (expectancy). The expectancy of your system is the average of the R-multiples (both positive and negative) of your system . It tells you what you can expect in terms of R, on average over many trades. This information is pretty straightforward and easy to grasp. In our example above if we have a system with an expectancy of 0.84R and we risk 1% per trade we should expect a profit of 0,84% per trade. After 100 trades you should be up 84%! The average however is not the total picture! To understand how much your system can deviate from the expectancy, you must not only know the average R-value, you must also know the variability of R or standard deviation. The variability will tell us how far away from the mean most samples are likely to be. It would be great if all samples were at mean, but this is never the case because it would mean that there is no variability to the sample. Now you truly understand why the 3rd and 4th golden rules that we mentioned in the first article are very important! Trade with care. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.
TVC:GOLDEducation
by financialflagship
20
Is there hope for Forex retail traders wanting to make money?The numbers are disastrous. Virtually all Forex retail traders lose money. Most of those that persist lose big. There is no improvement over time, no matter how many years they keep trying, and no matter how much help they get. There is no hope. How bad are really the stats? And why are they so bad? Let's look at the evidence. Citi 2014 presentation of the Retail FX market They say there are 4 million traders (implying FX), 1.6 million in Asia, 1.4 million in Europe, and 150,000 in the USA. Mainly male (shocker) and of an average age of 35. It does not add up. An AMF doc from the same period looks at 15,000 traders from intermediaries representing 50% of the market. So 30k for France and 1.4 million in Europe? Americans are into stocks so their number is much smaller as expected. An unsurprising quote from the doc: "FXCM accounts larger than $10,000 have profitability that are double the average. Part of it is likely due to the natural selection of profitable averaged-sized accounts surviving and becoming large accounts." And the CEO said in an interview the smallest accounts pushed the winrate down. This doc says "Strictly Private and Confidential" so I won't share it even though it is accessible on the ECB website. Conflicting evidence: The elusive profitable FX individual investors According to the paper linked below, a studied sample of 1,231 accounts were found to be profitable on average (0.2%). www.researchgate.net Most people feel bad, demoralized, sick to the stomach, when they hear everyone loses money trading. Me, I feel bad, disgusted, demoralized, when I hear that noobs have the ability to make money. Almost makes me want to cry. There is something really rotten about clueless casuals finding success. Yuck I can just picture them being joyful and euphoric. I don't know, I don't understand, where this data comes from. I need to wash my eyes with some IG, FXCM, and myfxbook client positions data :) I need to warm my heart by seing dumb monkeys constantly go against the trend and hold losers for weeks 😊 In this paper we do not know who the guinea pigs studied are, how long have they been in the business? What we know is how long they subscribed to a service. And the average was 0.27 years, or 3 months. Those are not your usual daygamblers as: - The average opening equity is $90,854.03 - Average Holding Time for Trades (in h) 1,508.48 (63 days or 2 months) - The average total net gain was $190.30 (0.2% of 91k), it might only be from interests So this paper does not look at average Forex retail traders at all. Stats change completely when you remove the degenerates. You look at FXCM and IG client stats, you might find 80% short on a big uptrend, then you look at myfxbook - which attracts all the "robot trading" clowns, and 95% are short! The more daygamblers and "automated expert advisor 🤡" and 800 leveragers you have, the worse the stats. Remove all these 🤡, and sure then you get a totally different result. Conflicting evidence: 99% of noobs lose money, now that's what I like to hear A Forex website with 120,000 subscribers at the time (mostly FX traders) surveyed in 2020 3,127 Forex traders from 32 countries. 97% of respondents trade Forex, 43% Gold, 24% stock indices, and 9% cryptocurrencies. Half of users surveyed are 25 to 34 years old, mostly men, and 1 in 4 is 35 to 44. Roughly consistent with other stats, a bit younger. 72% of the Forex traders surveyed are fresh noobs, they had no previous experience before FX. The retail "traders" surveyed are a tad bit delusional, as 50% of Americans, 59% of Asians, 44% of Europeans, 42% of Oceanians and aye aye aye 100% of Africans think they can achieve more than 5% monthly returns. Between 1 in 2 and 1 in 3, and even 88% of Africans, think they can make more than 10% monthly. Typical stats: 53% have been trading for less than a year, I assume those are the "5% to over 10% monthly" types? 39% have been trading for 1-3 years, 7% for 4-10 years, and 1% for more than 10. The success rates (I believe this is self-reported): Conflicting evidence: Run for your lives! Forex is an evil scam! This may sound like an exaggeration, but I have the video. A lady from the french regulator, on television, was screaming "YOU HAVE TO FLEEEE FOREX DON'T YOU GET IT. R.U.N. A.W.A.Y!!!" In the AMF report "Étude des résultats des investisseurs particuliers sur le trading de CFD et de Forex en France" they come up with scary stats. Close to 90% of traders lost money in the 2009-2012 period, and even the more experienced ones that traded for the entire period (48 months) lost money at 87.56%. They have a graph "losses by leverage" but nowhere on that graph is indicated leverage... And of course there is no distinction between day gamblers and the rest, as their goal is to scare people away. You cannot say I am biased towards defending Forex, you know how much I LOVE watching noobs break their teeth. Honestly, this doc is pretty bad, and just pointless fearmongering with nothing to learn that we don't already know (90% lose money). In a BOJ doc I saw that around 90% of individual "investors" were day gamblers. Explains why 90% lose money. Ok so retail loses money when day trading I get it, but then how do institutional traders make money intraday? What is their secret? Simple. They don't. That's the big secret. There are other sets of data, like what FXCM did for us a few years ago, showing that traders with a risk to reward of 1:1 or more were greatly more profitable than bagholders with high winrate (3.12 times as much): "Of the traders who traded 1:1 or higher risk-reward, 53% turned a profit; of those who didn't, 17% turned a profit." Also they show 40% of their traders with 5:1 or less leverage make money, compared to 17% of the ones with > 25:1, and the ones that do make profit with this leverage probably only made a small deposit compared to their net worth. For obvious reason you'll never hear from a broker the correlation between day gambling or not and profitability. I heard from someone that worked at FXCM that they tried looking for an edge from their biggest losers, all that they found is they overtraded, this is again something you'll rarely hear from brokers for obvious reasons. In the end all we can take out from all of this, is some win, most lose. There is at least some little improvement with experience. "Intraday" Gamblers and leverage gamblers are gigantic losers that destroy the stats, as most of us I am sure already knew. And as Locke and Mann (2000) show in a study "there is evidence that trading success is negatively related to the degree of loss realization aversion." Might also want to add: Be a one trick! Warren Buffett is one big fat OTP that only value invest in blue chip US stocks in sectors he understands. 1 market. 1 strategy. And he is doing rather well unlike all the loud mouths with zero life medals that say he "misses out".
Education
by MrRenev
4
Day Trading With Fibonacci Extension (Sell)Example of using Fibonacci Extension to day trade with: EurNzd 15 minute time frame today: 1) Right Pair? Yes, EurNzd during both London and London/New York overlapping sessions. (Both Gbp and Eur pairs are great r/t being in session). Have high liquidity and volume. 2) Right Price? Yes, Enter sell at 1.69500 with stop at 1.16950 (15 pip stop). 3) Right Session? Yes, During London session and London/New York overlapping session. 4) Right Time? Yes, after break out of price action and return back into golden zone (38%-62% area) of Fib. retracement area. NOTE: Waiting for the initial break of range or sideways price action and return back into the golden zone of Fib. retracement area gives you one of the safest and best risk and reward set ups in day trading Forex. This one was 1: 2 Risk/Reward setup (15 pip risk/stop/30 pip reward/profit).
Education
by Anbat
Simplify Your Range Setups - How To Trade It?Hi Traders, today's topic regarding " How to simplify range setups? " If you are someone who's constantly giving back profits during range bound condition, this post is dedicated for you. Majority of traders are able to make money during trending condition, but only to watch huge chunk of their profits peeled off during a choppy/ range bound condition. These are few of the simple steps to improve your ability to trade the range safely. 1. Be patient Majority find range bound condition difficult to trade due to the lack of patience. There's no way you'll be able to identify a range without giving it time to develop. When the market is experiencing some volatility contraction especially after a strong trend, it is a precursor telling you probably you need to take a step back. Give the market enough time to develop a clear structure, it will improve your decision making process. Avoid having the sense of urgency to get involved. 2. Widened SL To trade the range safely, you must widen up your Stop Loss to prevent probes & spikes. Unlike any textbook range condition, a range bound condition in the live market contains plenty of fakeout. By widening your SL, it provides some cushion for your range setups to breathe and allow you to have a calm state of mind. Because once you get stopped out with a widened SL, it signals you probably the range condition is coming to an end. 3. Realistic expectation (RR) Majority tend to ' predict ' the break rather than respect the market. Avoid having some unrealistic expectation if the market itself is presenting a tighter range. If it is a 50 pips range, by having a 100 pips target you are enforcing your personal will & expectation into the market. By doing so, you would always see some of the great range setups turning against you. 4. Identifying key Area of Value (S&R zone) During a range bound condition, it's vital to spot key S&R zones and ignore the minor ones. The only Area of Value for range setups area is S&R zones, if you're trading a continuation pattern (Eg. flag) within a range, most likely it might fail. 5. Market direction By identifying the market direction, you are improving the probability of success . Think about this logically, If the market had a prior bullish impulse, the probability of success to go long is higher, because buyers' are in control, the probability of market breaking above the range is greater too, vice versa. Comment down below what's your worst experience trading the range! "Trade what you see not what you think." - Warren Buffet Trade safe as usual. Do follow my profile for daily fx forecast & educational content.
KRAKEN:BTCUSDEducation
by TraderNeoh
5
Our Favorite Way To Set Take Profit Orders/Levels Typically, most traders have no idea how or where to set their take profit orders on any given trade. Most inexperienced traders will choose a risk/reward ratio and set their take profit based on a specific ratio. For example. The trader defines where their stop loss order will be, then drags their take profit up until it says "Risk/Reward = 3". Determining your take profit order/level based on this provides the trader with no increase in profitability/edge, and we call this gambling. ‌ Generally, the first thing the trader should be doing is setting their stop loss prior to determining the take profit. The stop loss is one of the most important factors to consider that can have a dramatic affect on how profitable your strategy will be. After the stop loss has been determined, assuming we want to go long, the first thing to identify that will aid in determining the take profit price/order is, identifying where key levels of resistance are as well as pivots. ‌ We have found that in the markets, one should never assume the market will break past a specific resistance/pivot. Although it may happen, your take profit should never be at the mercy of the pivot blocking price. With that being said, the trader should ensure their take profit is not beyond the nearest pivot/resistance to increase profitability. For example, if price just broke resistance and is retracing back down for a retest as support, to get the highest profitability/success rate, we recommend to ensure your take profit is slightly below the pivot just above the support, which the price is retracing from. A trader could attempt to take the trade further beyond the first initial pivot/resistance, to increase net profit for the given trade, however, the trader needs to understand that doing this requires close monitoring of the trade to identify rejections at the pivot. Based on our research/back-testing, it is a viable option for traders to try to extend the take profit beyond the first pivot/resistance as long as the trader is monitoring the trade closely. Some of the things that the trader should be looking out for is, a bearish rejection off the first pivot, signifying that price may return to the support/entry price. Based on our research, roughly 39+% of the time, the trader can expect the first pivot/resistance to breakout with high volume and a large candle, which can then be used to extend the take profit if managed properly. ‌ Ensuring that both your take profit and stop loss are placed/managed methodically will greatly increase profitability based on statistics.
Education
by VitalAlgo
8
Trading psychology and a story of history repeating itself.Take a look at the chart above. Now take a look at this one. And now take a look at this one. There’s something that all three of these charts have in common and it might not be what you think it is. I'll add before going further that this is probably going to be my most crapped-on post here but it is what it is. I want to talk about the problem of winning early. During the COVID crash, millionaires were made. Millionaires were also destroyed. In more cases than you may imagine, millionaires were made and then destroyed. During the crash, there were a bunch of savvy investors who profited greatly off of the collapse of the stock market over the course of a month. A huge part of this was due to options and the magnified returns that can be possible with them. During the crash, this became even more possible. See, while AMEX:SPY was shitting itself over the course of a month, implied volatility exploded across essentially every options chain that existed in the market. Normally, to be successful with options trading you have to have at least some kind of comprehension of how the underlying math works behind building a position. You have to have at least *some* comprehension of the Greeks. During this period, you needed none of that. You could buy a $150 strike put expiring tomorrow at the beginning of March and by market close you’d 10x your initial investment. It was definitionally free money if you were able to capture it and get in early enough. This led to a huge influx of people jumping into the market because they were hearing their friends just buying puts like crazy. r/wallstreetbets started becoming more and more popular during this time as options use on Robinhood exploded and more and more people started piling in for the free money. After all, if the friend you have who flips burgers just made $1,000 in options why couldn’t you? Tons of inexperienced traders jumped in and made a lot of money. Then the bottom happened. Volume started to die out, the bleeding stopped, the Fed ramped up their unlimited QE operations, and the market stabilized. What’s more, implied volatility slowly started to creep down. New entrants into the “easy money” market who were very successful were convinced it was a fake-out. They were POSITIVE that there was no way this was a real bottom. COVID was still rampant, countries were still shutting down, and in this case they were correct. COVID was nowhere near finished. Now more than a year later, we’re still dealing with it in many ways and the world is far from being “back to normal”. What they were wrong on, however, was that the market would continue to care. The truth of the matter was that none of these new entrants had any clue what they were talking about. None of them had any concept of even what the market’s current valuation of specific assets even meant in the context of COVID. There was no talk of gauging the actual value of stocks against projected success in sustaining COVID. There was no concept of the market being “forward thinking” in terms of how it allocates capital. It was just all “this is bullshit, there’s no way this it the bottom” and reams and reams of conspiratorial tweets and posts about “the coming leg down”. It was all bullshit, the market bottomed, big money was now hunting for bargains because it assumed that COVID would pass and the market would recover. In addition to this, implied volatility also started to drop. Just buying random options in the general direction you thought the market might go became less and less of a winning strategy. Soon, people were losing their shirts on big bets using money they made during the drop. People were bearish to the point of insolvency. They fought the trend instead of going with it and they kept with a losing options strategy because they used to make money doing it. The amount of money won and lost by retail during the months of March, April, May and June was astronomical. There’s something that happens to a person when they discover something new, try it out, and become immediately successful at it. There’s a trigger in our brains that leads us to assume that we’re successful because we’ve just discovered some nascent talent that we never knew we had. Instead of looking at ourselves as lucky, we look at ourselves as imbued with innate knowledge that is guiding us toward success. After all, look at your account balance. That doesn’t just happen on its own. This becomes so much worse in something like the stock market (or, perhaps crypto). The stock market and finance generally are things that people are often led to believe are zones of institutional expertise. They’re things that regular people shouldn’t be involved in. Look at the math used by some quant fund. Listen to the financialized, confusing language. It looks like this monolith of expertise from the outside. Then you become successful in it and you feel like you’re one of the club or, even worse, beating the club. When we start to win after learning lessons and applying them, we train ourselves to evaluate information and apply it to something in the real world. When we start to win immediately, we train ourselves to believe that we just “know” what’s going to happen. The biggest difference between these two mentalities in my eyes is what one does when what they “know” starts to be tested and broken. With experience and time, when the play you make starts to falter because what you “know” starts to look like it’s not working out, you take losses and learn. When you win immediately and a play you make based off of what you “know” starts to falter, it’s because of some outside force “manipulating” things or because of a million other reasons. You don’t take losses and learn because there’s nothing to learn. You’re right and everyone else is wrong. Now we see this playing out again in the crypto world. Every other post seems to be about manipulation in the crypto market. Duh. Crypto is the most manipulated market on Earth. When 1,000 wallet addresses control 40% of the entire market cap of something, you don’t get to call it decentralized. It’s centralized, just in the hands of anonymous strangers or groups instead of alphabet soup agencies you can put a face to. We see new entrants to the market flooding $DOGE and $BTC, enraptured by the story behind the crypto revolution and captured by early initial success. Look at my account. It’s up 1,000% I must know what I’m doing. I can’t imagine I just now found out about this. Look at the innate knowledge I have and how I can read these markets. If the market goes down, it’s not because of anything other than people not knowing what I know. It’s going to make me sound like an asshole but it has to be said: if you are up 1,000% on an investment and you haven’t sold anything, you aren’t an investor. You’re not “beating the market”. You’re not on the vanguard of a new wave of investor shaking the establishment. You’re not “doing battle with the hedgies”. You’re a rube. Everyone starts somewhere. Unfortunately (or maybe not) for some people, that somewhere is in the middle of a period of mania leading to euphoria in a specific market sector. It’s a period where you just can’t lose money. The good ones get crushed and learn from their mistakes. They lick their wounds and decide to stick with it. I mean, the population of r/ThetaGang must have EXPLODED of the past year with people destroying themselves with options buys. The bad ones get crushed and disappear, further angered at a system that “manipulated” them out of their money. The moral of the story here is that we should all be suspicious of everything in the markets. Above everything else, we should be most suspicious of ourselves. Are we trading for the right reasons? Are we missing something? Are we really as smart as we think we are? The second you start to believe you know something the rest of the market doesn’t, well you’re screwed. Just remember that the second you look at a chart like the BTC or DOGE charts above and blindly think they look good you have turned a corner into trading on emotion or hope. What goes down isn't required to come up.
COINBASE:BTCUSDEducation
by SwingTradeAssassin
11
This is why you shouldn't make large MARKET ordersStablecoins are quite stable, right? With minimal volatility, correct? Well, not necessarily on a shallow market, as can be seen on this extreme example of slippage. If the market order is too large, not even arbitrage bots can save the day for the one who set the market order. This was definitely easy money for counterpart with limit order at 6 EUR/BUSD. (Possibly this was also during the time when the exchange was unavailable...)
EEducation
by texnokrates
1
What Is A Valid Pin-bar Candlestick?The pin bar candlestick pattern is one of the best candle patterns available and one of the most reliable candlestick reversal formations you can see on the Forex or stock market. The pin-bar candlestick can be seen frequently on Forex charts and the best tradeable pin-bars are usually located at the end of impulse waves, and extend outside of the preceding price action. These are the three conditions or rules to use in verifying a valid trading price action Pin Bar: 1) The price opens and closes within the previous candle 2) The wick is 3 times the length of body 3) The wick must stick out from all other candles ( no candles left of right of this candle) Please see chart example of a valid daily time frame bearish pin bar. thank you. Always use price action #1, risk management when trading. 1:2 risk reward should be minimum set up on any trades or higher..
Education
by Anbat
How To Set Up A 2% Trade (Example)You should do this on every trade you make, because right risk management will keep you trading - and not blowing your account. If you remember 4 thing before entering any new trades: 1) Right Pair 2) Right Price 3) Right Session 4) Right Time Yes, 4 out 4 is best above- but I will go with 3 out of 4 of above, if other things are supporting a trade. *Then this will help you int lining up any news trades with high liquidity and volume, especially if you are day trading or scalping. Use Forex Pip Calculator and NO you do not have to use standard size lots when trading (100,000 units)- this example is 70,000 units related to risk management and to adjust to 18 pip loss and target of 52 pips. *You can use standard lots, mini lots or micro lots- trading Forex is long game not short game. Good luck and Good Trading!!!
Education
by Anbat
How Markets Really Work- Supply & Demand!!1) Where do market prices turn? Demand (Not Support): Price turns higher at a price level where willing demand exceeds willing supply. Supply (not Resistance): Price turns lower at a price level where willing supply exceeds willing demand. 2) Who is on the other side of you, a PROFESSIONAL TRADER or a NOVICE? * 2 most important components to consistent profits are: - Supply and Demand & - Human Emotion Human Emotion: The emotions of fear and greed are clearly seen on a price chart, if you know what you are looking for. FYI: The Concept: - The origin of any move in price is where supply and demand are "out of balance". This is where we find low risk, high reward, high probability entry points into markets.
Education
by Anbat
The Golden Rule of TradingOne of the fundamentals that every trader must know is how to evaluate the effectiveness of his trading methodology. In this article, we will explore core trading fundamentals that you must follow in order to survive and thrive in this business. 1. Never open a position without knowing the initial risk that you are willing to take. The initial risk is the point at which you will get out of the position to preserve your capital. Very few people have the psychological makeup to keep a mental stop loss and respect it 100%, that’s why for the rest of us, there is the stop-loss that will automatically close our trade for us at a certain level. 2. Define your profit and loss in your trades as multiples of your initial risk. These are the R multiples. If your risk is $1000 and you make $3000, you have a 3R win. If your risk is $1000 and you lose $1200, then you have a 1.2R loss. You must start to think in terms of risk/reward. 3. Limit your losses to 1R or less. If you don’t respect the stop loss that you have set and let a losing trade run then you are in real trouble. This mechanism produces 4R losses or larger and can turn your great system into a losing system very easily. 4. Make sure that your profits, on average, are larger than 1R. Let’s say you have one 5R profit and four 1R losses. If you add those up you have 5R in profit and 4R in losses, a net gain of 1R. Even though you lost money 80% of your trades, you still made money overall because your average gain was big. This is the power of having an average gain larger than 1R. What is typically known as the golden rule of trading is a summary of these 4 rules: “Cut your losses short and let your profits run.” Here we are talking about doing your best to make sure your losses are 1R or less and that your profits are much bigger than 1R. In 2002, the Nobel prize for Economics was awarded to Daniel Kahneman, a psychologist and economist Amos Tversky for their development of “prospect theory”. This theory when applied to trading/investing showed that people have a natural bias to cut profit short and let their losses run, exactly opposite to the golden rule. 5. Understand your trading system in terms of mean (the average R) and the standard deviation (variability in the results) of your R multiples. Your system, when you trade it, will generate a number of trades. The result of those trades can be expressed as a multiple of your initial risk or a set of R-multiples. You should know the properties of that distribution for any system that you plan to trade. And the majority of the people who trade the markets never know this. If you spend some time and calculate the mean and the standard deviation of your R multiples, you’ll know a lot about your system and what can you expect from it in the long run. Trade with care. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.
TVC:DXYEducation
by financialflagship
100
Trading Conviction: Missing Ingredient“How did you hold that winner for so long?” “How did you hold through that big move against your position?” “Why did you take so much size?” Conviction is what allows you to have big, home-run trades that make your whole trading year. It keeps in winning trades even when things look uncertain. This is what separates amateur traders from pro traders. Learn how to build this in your trading: What is Trading Conviction? Conviction is defined as “a firmly held belief or opinion”. In the trading world, you will often hear traders say “that was a conviction trade”. Conviction trades are ones taken with large size, and are often responsible for the bulk of your PNL at the end of the year. One of the most important characteristics of great traders is sizing big when the odds are in their favor. Not sizing big on your high probability setups is like betting small when you have pocket Aces in Texas Hold’em. You won’t be able to win in the long run if you don’t maximize profits on your high-probability setups. Capitalizing on winning trades is just as important as keeping losing trades small. Knowing the Probabilities To have a conviction on a trade, you need to have an accurate estimate of the probability of the trade becoming a winner. So where does conviction come from? Having a defined trading strategy. This means you have defined what type of Forex you trade, when you trade them, what constitutes buy and sell signals, and you have rules to protect yourself from your weaknesses. You cannot have conviction if you don’t have a proven system you know has an edge. A lot of traders assume the effectiveness of a strategy by just what happened on the last few trades. You need to have a large sample of trades to determine a system’s effectiveness. If you don’t know how the trade SHOULD pan out, you won’t be able to ride the bumps on the road to your target (s) with big size. “Competence breeds confidence”. Conviction is derived from confidence, and confidence comes from having a DEFINED strategy with an edge. Psychology does play a role as well of course, but the base of all successful trading comes from knowing what you should be doing during the trading day, and more importantly, what you shouldn’t be doing. And the only way to know this is to have a system and rules. Differentiating Between Conviction and Stubbornness This is where many traders go astray. They let their convictions prevent them from cutting a losing trade before it gets out of hand. Even on high probability trades, there is always a chance of them turning into a loser. “A conviction trade” results from trader completely accepting possibility trade could be a loser, thus eliminating fear. Trading losses are just business expenses: Change the perspective of your trading." Trading is a business. Just like any business owner or entrepreneur, traders have expenses, frequently these expenses come in the form of losses." View losing trades as price you pay to find out if trade would be a winner. Study Your Best Trades EVERY Day Your brain needs to see the same setup play out over and over again to build conviction. Just like an athlete trains every day, you as a trader need to train your brain every day. Study best trades over and over again, and remind yourself how they usually play out so you can take big size on them. What you can do is after you run morning scans and build watch list, go back and study past names with similar setups, and remind yourself how they typically play out. Summary There are many factors that cause a trader to have or not have a conviction. Experience is a big one that I didn’t mention. But I think it all comes back to having a system with an edge, and taking the time to study past charts and scenarios on a daily basis. Starting sound like a broken record: Study 1000 charts a day. Seeing the same patterns play out over and over again is how you build conviction in your trades. Can you hold Forex trades for several months for your profit pip reward, like example weekly chart of USDCAD from 1.30000 to 1.20000 (1000 pips)? Still going lower at this time... maybe for rest of the month of May? With right risk management and plan you can- and increase lot size as trade profits.
Education
by Anbat
2
Direction Easy✔️ Timing Hard ❌Hi Traders, I think the analysis part of trading is the easy bit. By that I mean most traders usually have the correct direction in mind but timing is difficult. AUDJPY is a classic example. The analysis was simple. Price broke about daily resistance, retested it and I was looking for continuation. I entered the trade but price came back and took me out for a breakeven. Then, it continued it same direction I expected it to. Personally, I prefer to preserve my capital by going breakeven once in good profit and I do not even confident re-entering a trade if price retraces so sharp and took me out the trade. 1. How soon do you place your trade at breakeven once it is in profit? 2. Do you re-enter a trade is it took you out at breakeven and show signs of following your original trade idea? Comment below.
Education
by UnknownUnicorn8360477
2% Max LossMoney Man has not seen the need to adjust his levels as he still stands with his original idea that ETH needs to break a pattern, clear as day on the chart, to get buyers over the fatigue. The short term trendlines are telling us this and has proven themselves as guiding pattern formation. Logic thus would change the top of Decision 1 and bottom of Decision 2 to keep these lines inside it as we go. So, he is taking this time to expand more on his ideas around risk. We all have heard about the Kelly Criterion, but also about the 2% rule (cap your losses at 2% of total allocation – the total you have allocated to trade in a particular instrument like ETH). He would classify the Kelly Criterion as an advanced risk management tool, hard to pin down within so much variance that a market has. Advanced, you say? Then that must be what a new trader should use! Not so fast. New and even older hands typically calculate their acceptable risk before admitting defeat on a trade, via back testing. Here lies the rub as more important than; the “past results do not guarantee future results” understanding – there is the lack of experience in relation to their own emotional tolerance to red. You know: the old “close winners fast and let loser run” outcome. Money Man has written about the well-known break-even parabolic horizon a long time ago and link that below. He mused then that that parabola is what sinks even brick and mortar businesses. Now he wants to give his thoughts on the 2% (used in this explanation – but could be more or less) risk to total allocation. There is another parabola hidden here (in red) and finding your sweet spot is the goal. So, your sweet spot would depend on your tolerance to loss (percentage) and its relationship to the chart / price action (distance on chart in percentage). Many traders simply trade with their whole allocation and thus sit at the far left grey bar (100% of allocation in) and far left of the parabola, forced into a 2% below entry price stop loss placement. The other extreme is a trader who only uses 2% of their allocation on any trade to trade with and have no need for a stop loss if they believe in the 2% rule. There is the option to adhere to the 2% rule and adjust your position size according to where you would like to put your stop loss. The graph above tries to give a quick reference rule of thumb and illustrates how the distance of your stop loss parabolically grows the smaller your position size. Back of an envelope math but soothing to the adrenal glands if you can find your own sweet spot. Where does the whole 2% rule come from? Money Man does not know for sure but knows that it has been around for a long time and has thus been discussed and “peer reviewed” extensively. Also, and more importantly, it speaks to another reality in the antifragility of staking your options in your favour while keeping your risks in check – an advantage you can still reap even if the percentage is too low for your liking. The reason for including it is that it could be a bridge between “betting 100% on every trade” and having a very well-developed dynamic trade size to stop loss placement distance dependent on market conditions. Please double check the math that went into the above graph before use. Remember there are no guarantees, only probabilities. Very Important to me: Please like if you appreciate the effort, Please comment and develop this further and Please follow if you see this analysis thread going somewhere you would like to know about.
BITSTAMP:ETHUSDEducation
by Rule72
3
11 Rules for the Ordinary Trader Through your trading carrier, you will learn to develop your own paths and ways to become successful in your own way, but there are many things that will give you a boost of knowledge in your trading carrier. Down bellow lists 11 different rules I have gathered from many sources. Rule 1: Price has memory. What happened the last time a stock hit a certain level? Chances are it will happen again. Watch trades closely when price returns to a battleground. The prior action can predict the future. Rule 2: Profit and discomfort stand side by side. Find the setup that scares you the most. That’s the one you need to trade. Don’t expect it to feel good until you take your profit. If it did, everyone else would be trading it. Wisdom from the East: What at first brings pleasure in the end gives only pain, but what at first causes pain ends up in great pleasure. Rule 3: Stand apart from the crowd at all times. Trade ahead, behind or contrary to the crowd. Be the first in and out of the profit door. Your job is to take their money before they take yours. Be ready to pounce on ill-advised decisions, poor judgment and bad timing. Your success depends on the misfortune of others. Rule 4: Buy at support. Sell at resistance. Trend has only two choices upon reaching a barrier: Continue forward or reverse. Get it right and start counting your money. Rule 5: Manage time as efficiently as price. Time is money in the markets. Profit relates to the amount of time set aside for analysis. Know your holding period for every trade. And watch the clock to become a market survivor. Rule 6: Don’t confuse execution with opportunity. Save Donkey Kong for the weekend. Pretty colors and fast fingers don’t make successful careers. Understanding price behavior and market mechanics does. Learn what a good trade looks like before falling in love with the software. Rule 7: Control risk before seeking reward. Wear your market chastity belt at all times. Attention to profit is a sign of immaturity, while attention to loss is a sign of experience. The markets have no intention of offering money to those who do not earn it. Rule 8: Big losses rarely come without warning. You have no one to blame but yourself. The chart told you to leave, the news told you to leave and your mother told you to leave. Learn to visualize trouble and head for safety with only a few bars of information. Rule 9 : Enter in mild times, exit in wild times. The big move hides beyond the extremes of price congestion. Don’t count on the agitated crowd for your trading signals. It’s usually way too late by the time they act. Rule 10: Perfect patterns carry the greatest risk for failure. Demand bruises on your trade setups. Market mechanics work to defeat the majority when everyone sees the same thing at the same time. When perfection appears, look for the failure signal. Rule 11: See the exit door before the trade. Assume the market will reverse the minute you get filled. You’re in very big trouble when it’s a long way to the door. Never toss a coin in the fountain and hope your dreams will come true. Yours truly, Jacob Schildcrout **Note, I dont take credit for these rules, these have been gathered from sources for your convenience***
COINBASE:ETCUSDEducation
by JacobSchildcrout
3
How To Trail Stop Loss Effectively | Capture All day's ActionMaximise your Day Trading Profits 5X | Apply this trade management system to hold trades all day without much effort In this video I'm going to share with you a trade management idea which would allow you to trade and hold the trade from the start to the end of the day trading session. The Chart I'm using is US30 / DOW30. The Time frame for day trading would be the five minute chart. The idea is to make entries on the 5 minute chart and then use a few swings to add on. This can become part of your Trade Plan and you can apply to any time frame or symbol of your choice. It's a great way to maximise your profits using nothing but the data provided by the market itself. Price Action is surely The King!!! I bow....
OANDA:US30USDEducation
by iTradeAIMS
8
PATTERNS & PITFALLS #1 The market is designed to make you fall into traps, and make you doing things. By nature, we tend to overcomplicate things and trading is one of them. As in coding, the best way to code is to Keep It Simple Stupid (kiss). One of this thing is what i call “The Home Runs Chaser”. A large majority of retail traders, slowly tendto look everyday for a stock heading up to the moon. Why does this happen? How we slowly enter into that thinking process when we start trading? So you start trading for few days or few weeks, you see a stock on an uptrend and you go long, take money and then you see the stock going up fast after you exited, what do you tell yourself? “Damn it, i should have held it a little longer, if only...” And then it happens a few more times, and BINGO you’re in it, you’re in the trap designed by the stock market: - You start looking everyday for home runs. - Now you have the “win or loss” mentality So you allow yourself to lose it. You see gains but you’re focusing on the holy grail, the holy target! LOOKING FOR HOME RUNS WILL LEAD YOU TO NOT GETTING PAID !!! Plus it will frustrates you a lot because most of the time, you won’t have the home run. => We must enter the right way of course, as usual, BUT BUT BUT, we must take quick wins when it’s on our side. => Sometimes we have low wins when the stocks have low momentums and sometimes big wins if they are big. But at every trade: you should take partial profits along the way. Exemple: you enter long in stock XYZ at 20$ with 100 shares. Your target is 22$. Instead of waiting the price to reach 22$ to sell your 100 shares, what you should do is to take partial profits. So at $20.49 you sell 25 shares, then at $20.99 you sell again 25 shares. If it goes over 21$ then you wait for the price to reach 21.30 to sell again 25 shares BUT if the price goes back to 20.50, just sell 25 shares to secure a bigger win. The remaining of the 25 shares are sold at ~ $21.97 in the case it goes up, or sold at ~ $20.20 if the price drops. That’s how you secure a win and not let the trade goes against you..... And if you have to leave your computer, just use the trailing stop with an ok spread between the price and the stop just not to be stopped too quick if the price moves down a bit before going up.
NASDAQ:UPSTEducation
by youssHark
Ways to solve our overtrading issuesHello, I have an overtrading problem. There are solutions, they are just not on the internet on trading websites. They come up with the same useless nonsense you'd expect "take some time off the screen", "don't try to get rich quick", "defeat your overtrading", "get motivated get a plan and force yourself to stick to it", "be patient" 🤦‍♂️. What is next? "Brush your teeth be a good boy and do your homework"? Or even better "do not overtrade". My brain doesn't care that "less is more" my brain is thirsty. Really there is no such thing as "placing the threshold here". There is not such thing as "not (under/)overtrading". You always either overtrade or undertrade. If we want to compare this to drawing a line, or in other words placing a barrier, it would be like placing a barrier but not 2 or 3D, there would be 20 dimensions, and all opaque, and ever changing, and you do not know which one is more important which one is less. Good luck learning by heart how to do it in a book. Of the past 5 months 4 of those had nearly no good setups for me, it was very hard. I can't just do nothing. So I took really terrible setups. Way too many. Ok let's skip the excuses. Even if I am not trying to go only for the ideal stuff at all, I've been taking way too much, I went through my logbook and I would say I took 2-3 times too many. We want to compete, we want to play the game. Most people, and most people this idea is targeted to, are at an intermediate level to advanced. Beginners that do not even have an edge well overtrading is not really hurting them is it. They do not give back profits, there are no actual profits to give back! A word for beginners. Since we're going to end up investing anyway aren't we? Well perhaps they might as well start with managing a simple low risk portfolio. Build a solid base. Might as well start with the easiest part. Least difficult. And might help avoid overtrading from the start. If I could start over I would not hesitate. Once an intermediate has his niche, a few currencies, his favorite websites & tools, and an edge, well that just won't do will it. There is no resting on laurels until we really have plenty of knowledge, strategies, instruments we can handle. Constantly look for more edges. And progressively widen the business with more currencies. Can also add commodities. With time the base grows, like a strategy game. Might want to test the new strats on a separate low stakes accounts while running the core one on the real account. A player with several edges, and a wide array of instruments, as well as a couple years experience, is what I'd call advanced. At some point if we try adding even more instruments or strategies we'll just mess it up, it takes enough time to manage our vast business already. And after several years the strategies sort of come without looking for them anyway. Plus the markets do not have infinity opportunities to offer. Just keep doing research, improve your understanding of the market, keeping updated on everything... A serious advanced trader will be busy, no worries here. The issue is there are not enough opportunities. We want to compete, we are eager to fight. If nothing happens in the market, price is just random as far as we know (only retail day gamblers will say it's not and we know how well they perform), what to do? Well there are some tricks: - First use and abuse adding to winners. If you're going to overtrade anyway, might as well do it with a winner than some choppy garbage. Not ideal, use this in last resort. Adding to winners should probably have some rules to it. Better to have bigger winners than more losers. - Go manage a portfolio on the side, invest a little / position trade. And when the urge to take a trade comes, find a good winning investment and add to it. I would not start dreaming of adding and adding and adding to Forex, but with stocks, sure. Buying an additional S&P call is like taking a new trade. Better this than gambling on 2019 EURUSD. - If you have a severe addiction and just can't help it, well... I guess in last resort there is still the option of going day gamble on the side, but this should not take your attention from your main business. This can easily eat up time & focus, and mess up results without adding anything positive.
Education
by MrRenev
1