Author Topic: Why being a disciplined trader MATTERS.  (Read 702 times)

PipMeHappy

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Why being a disciplined trader MATTERS.
« on: February 25, 2022, 05:58:52 PM »
Hello everyone...

I confess to have given into bad habits recently... I did it in the two months before Christmas and then again in January: I held on to losing trades far longer than normal, based on my ideas about the asset I was trading.

When I switched to trading the S&P500 in September-October of last year, I was still 'feeling my way' and trying to figure out what differences there were with EUR/USD, which I had been trading for the summer of 2020 and for most of 2021.

I have now had a really good month, and I looked at my trades through MyFxBook to see what I am doing right. So, what is it that is working better now?

1) I am using STOPS;
2) I am trading a time-frame that works better on intra-day targets;
3) I am using a combination of indicators that gives me confidence in entering the market;
4) I am not taking trades on the hoof/ on impulse, and (like @Leebax  mentioned before) I take my time, patiently waiting;
5) I use ATR for targets, so they are not plucked out of thin air;
6) I avoid trading first thing on Monday or last thing on Friday, and I avoid trading late into the evening any day, focusing mainly
    on Tuesday to Thursday with maybe some trades on Monday on Friday if the market looks motivated.

Since my disastrous January, I buckled down and had fourteen trades, again less trades but with better results:
10 were winners, and 4 losers, but the most important thing is that the losers were much smaller overall than the winners.

My monthly gain, as a result, is 57%, which is a good reward for staying disciplined, not overtrading, etc.

How did I come up with my strategy?

I looked back over many weeks and months to see how the indicators I chose gave signals for longs/shorts, and when
those signals worked or failed. I felt confident that, for the most part, there was a sufficient margin for profits even when
accounting for lagging between the indicator and price, therefore coming onto trades a little late and/or having to take
trades a little earlier lest one would miss them.

What do I use?

I use a 4h time-frame on the S&P500 and have a CCI and Bollinger Bands both set at 21-period, with the Band's standard
deviation set at 2.

I also have a 100- and 200- period moving average that I sometimes use if looking at the daily chart to see if we are approaching
either of these, as they are powerful indicators of possible reversals or strong continuation.

I also added the ATR more recently, again set at 21 periods, to help with setting targets.

My Return-to-Risk is 1:1, using a trailing stop loss, which I feel is working well on balance, giving enough room to the stop
while also allowing the profit targets to be hit most times and making up for the lack of 'home runs' where you leave a few
pips on the table in exchange for avoiding a lot of missed targets.

That is my strategy and my performance for now. I am really happy with how disciplined I have managed to stay and I am
determined, more than ever, to make this a habit.

Thank you for listening
PipMeHappy

Leebax

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Re: Why being a disciplined trader MATTERS.
« Reply #1 on: March 01, 2022, 02:36:16 AM »
Well done sir. We should ALWAYS remember that we can not win all the time. It's simply not sustainable, the underlying factor is about not giving up. You did the right thing and looked at what you were not possibly doing correctly and re adjusted. Which worked out profitable for you. Forex is a place that can make many people a lot of money. But at the same time the old saying is true "its the hardest place to earn easy money".

nice job keep it going @PipMeHappy
If you dont find a way to make money whilst you sleep, you'll work until you die

Magyar

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Re: Why being a disciplined trader MATTERS.
« Reply #2 on: March 01, 2022, 01:25:09 PM »
its the hardest place to earn easy money" very good words sir

PipMeHappy

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Re: Why being a disciplined trader MATTERS.
« Reply #3 on: March 02, 2022, 10:04:20 PM »
Thanks @Leebax  and @Magyar  for your posts - and nice to see, Magyar, that you are back!

The high percentage sounds impressive but relative to the account size it only means a relatively
small profit, and also it poses the question of how sustainable it may be.

I mean: pulling up a 50-Pound account by 50% means ending up with 75 Pounds at the end of it...
Now that percentage is not so impressive any more...
However, pulling a 50000-Pound account up by 50% means earning 25k.
If both accounts went up by 25% within a month, which one would be more impressive?
The percentages are the same, but what they do not show is the risk involved, margin (as a percentage
of equity) is used, potential for excessive leverage, etc.

All this makes me think that 66% with a small account in a month is actually not that impressive
but also, I add, it is not sustainable.

I am wondering what figures I will pull in the next few weeks and months, but I will try to stay
disciplined and not chase the money up (or down) as I used to.

:)

Magyar

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Re: Why being a disciplined trader MATTERS.
« Reply #4 on: March 03, 2022, 02:47:35 PM »
"Now that percentage is not so impressive any more."
It was you saying somethings like this on my thread that made me leave here before. I not know if you intend but this is offensive to people trying to learn with limited monies. Goodbye from me.

HeavLeighGill

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Re: Why being a disciplined trader MATTERS.
« Reply #5 on: March 03, 2022, 04:22:08 PM »
Good work! I think it's crucial to go back and see where things went wrong to make improvements in the way that you did.

PipMeHappy

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Re: Why being a disciplined trader MATTERS.
« Reply #6 on: March 03, 2022, 10:43:46 PM »
"Now that percentage is not so impressive any more."
It was you saying somethings like this on my thread that made me leave here before. I not know if you intend but this is offensive to people trying to learn with limited monies. Goodbye from me.

Hello Magyar,

thanks for saying that because I was not aware it was offensive.

This time I was just being self-critical, almost expecting someone to come in and ask those questions of me - just like
I asked them of you before.

I am sorry you felt my line of questioning was offensive, I really wanted to see you thrive and not under-sell your efforts
for pennies.

The point of under-investing is still one I would make to anyone, not just to you, starting out on wanting to be a trader,
as it is something that I had to battle with myself along with so many other newbies in turn.

So it comes from my own, painful experience, to want to perhaps shake newer traders into some state of awareness
of how much they can improve their chances by not undercapitalising, for one.

I hope this reads like a sincere message, not yet more criticism.


PipMeHappy

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Re: Why being a disciplined trader MATTERS.
« Reply #7 on: March 03, 2022, 10:44:07 PM »
Good work! I think it's crucial to go back and see where things went wrong to make improvements in the way that you did.

So right!!

Kaitsu

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Re: Why being a disciplined trader MATTERS.
« Reply #8 on: March 04, 2022, 07:38:08 AM »
"Now that percentage is not so impressive any more."
It was you saying somethings like this on my thread that made me leave here before. I not know if you intend but this is offensive to people trying to learn with limited monies. Goodbye from me.
Hi @Magyar ,
That comment by @PipMeHappy regarding percentages on small accounts was definitely not intended in any way as offensive against small account traders. I really hope you will be able to see that and continue here now that you have returned.  :D

@PipMeHappy was only saying that if we just quote percentage changes in account balances it can give a misleading image of how well the account has actually performed.

I have often written about that myself. Another example of how percentages are misleading is comparing two accounts with the same results but different balances, eg:

$10000 account trades 1 lot makes profit of $1000 = 10% gain
$5000 account trades 1 lot makes profit of $1000 = 20% gain

Which account performed better? Which account had greater risk exposure? and so on.

These are just account parameters and I would suggest most traders use them frugally. The most important factors are strategy performance measures and managing risk/money exposures. There is no sense in targetting percentage increases as a success parameter. The market offers what it offers and sometimes it is more favourable for a strategy and sometimes less so.

There is absolutely nothing wrong or belittling about trading a small balance account. It is actually harder and more challenging than with a larger balance - so you deserve praise, encouragement  and commendation rather than any disparaging comments or attitudes!  :D
« Last Edit: March 04, 2022, 11:48:06 AM by Kaitsu »
Ships are safe in harbour - but that is not what ships are for....

Peterma

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Re: Why being a disciplined trader MATTERS.
« Reply #9 on: March 04, 2022, 10:47:45 PM »
I not know if you intend but this is offensive to people trying to learn with limited monies.

Likely I'm about 3 times your age.

I started out with what you call limited monies -  I grew up in a tiny house with no electricity, no water and a thatched roof - but a thirst for knowledge that was not limited by money.

Know this and know it well - if you allow lack of money to to limit your appetite for learning then you have lost, but on the other hand you recognize that money is a mere commodity that comes your way with knowledge then your future is good :)


PipMeHappy

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Re: Why being a disciplined trader MATTERS.
« Reply #10 on: March 06, 2022, 09:16:45 AM »
I not know if you intend but this is offensive to people trying to learn with limited monies.

Likely I'm about 3 times your age.

I started out with what you call limited monies -  I grew up in a tiny house with no electricity, no water and a thatched roof - but a thirst for knowledge that was not limited by money.

Know this and know it well - if you allow lack of money to to limit your appetite for learning then you have lost, but on the other hand you recognize that money is a mere commodity that comes your way with knowledge then your future is good :)

Jeewiz Peterma, that sounds so Angela's Ashes but likely as children we do not perceive some degree of poverty as anything other than our normality, maybe until other children mock us for being 'less than' and
then social awareness kicks in. Young children could not care less if they get ten presents or one
for their birthday... And here you are, a well-adjusted denizen who found his way into adult life: as all people who journey upward in society, it is (without sounding too cliche) we who CAN be the
architects of our lives... up to a point. Stats show that people whose families etc. have invested
in them are much more likely to aim higher than those who did not have that investment in them: so many young people are lost to a spinning wheel of low-paid lives or destitution because nobody
dared to believe or invest in them. By the time teenage brain development is done and nobody
invested in a child's learning properly, it is often almost too late. I see it in classes: teenagers who come to college having been given normal, just NORMAL education, can put thoughts together logically and articulate thoughts in writing, and are generally emotionally more stable; those who cannot articulate thoughts (whether or not they have been screened for additional learning needs) come into class already disadvantaged and it is often too little too late what we can do to redress the balance: their choices will be very different from those of their peers who benefited from better life chances early on.

Same with trading: if you have

poor initial and sustained investment
poor  training
poor tools

you will have very few chances of competing. We all like stories of success-against-all-odds
and of rags-to-riches: but the fact that they are so exceptional should ring alarm bells and
tell us that we should not rely on what is a complete life-lottery chance (the one in a billion).

But it is also good to measure "success" to a scale that is more suited to our own aims: if you
are destined to be a billionaire then your definition of what being successful is or looks like will
be very different from anyone else. Trading successfully in the financial markets is not a one-size,
Wolf-of-wall-street fits all: if you managed to eek out some extra % from personal investment
to top up your income or to make a part of your savings works for you, then that is your success.

I am more at that end of the scale therefore my aims are very different from those who trade big
for bigger goals, full time.

Kaitsu and Peterma have it right: trade to your limits, not someone else's, and use a number of tools to assess your own "success", not just % gain.

Peace.
« Last Edit: March 06, 2022, 11:12:00 AM by PipMeHappy »