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Should I Ditch My Trading Method? – Part 2

Discussion in 'Forex Beginner Q&A' started by Currency Expert, May 19, 2016.

  1. Currency Expert

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    “Trading can be a matter of probabilities. Sometimes you'll be at the right place at the right time; at other times you won't. That's all right. If you are consumed with perfection and finding the ultimate trading opportunity, you will often miss the trades that are right in front of your nose.” – Joe Ross


    Developing a Winning Trading Method

    There are repercussions to be experienced when using a certain approach. You have to think about various market conditions when creating a strategy; otherwise you would end up being frustrated. So what you need to do is to look for proven and time-tested trading setups. You would not only need to create a speculation approach that works in the long run, but you would also need to use it flawlessly in particular market conditions. This is what would let you appreciate the merit of such trading approach.


    1. Your method needs to respect the dominant bias. Many veterans of the markets who have developed numerous trading strategies agree that they prefer to pick trades in the direction of the trend.

    1. Honestly, it would also be helpful if the method can detect when the dominant bias would be coming to an end or when it would no longer be logical to follow it. This is the real secret behind consistency.

    1. Define your entry points which stack the odds in your favor. For example, it is better to buy a pullback in the context of an uptrend or sell a rally in the context of a downtrend. This allows you to set optimal stops and targets. Buying a rally in the context of an uptrend may cause you to get stopped out before the price has the chance of moving in your favor.

    1. You must always give yourself an RRR of 1:2 or 1:3. This ensures that you make money with only 40% or less hit rate. Then if your hit rate is 50% or above, how happy you will be!

    1. It would be very difficult for you to sustain a huge roll-down on your account if you risk only 0.5% or 1% per trade. This also means that your losses are small and easily recovered.

    1. Of course you continue to trades every new setup as long as you are winning. When your losses exceed a predetermined amount, you may stop trading for the day if you are an intraday trader, or stop trading for the week if you are a swing trader, or stop for the month if you are a position trader. This is the best way to avoid continuous losses in a losing streak. By the time you resume trading, it is probable that you would stumble on a winning streak. For example, I stop trading for the month if I go down more than 7%.

    Conclusion

    It is normal to become emotional after a losing streak. However, veterans remain calm in a losing streak. They believe in their strategies. They simply know that a winning streak is around the corner, and they remain faithful to their trading rules. This has become their second nature, so easy. This is not easy for noobs who tend to ignore the realities of trading. Market wizards experience losses triumphantly. You too need to use subtle approaches and recognize great trading opportunities.


    According to Jack Schwager, if you asked most people to categorize good trades and bad trades, you would find the answers to be quite simple… If it makes money it’s a good trade, and if it loses money, it’s a bad trade. That’s not true at all…


    His quote ends this piece:


    “Any approach will give you instances of winning or losing. If you have an effective approach, you will hopefully make more money than you lose. If you take a trade that follows your process exactly (whatever that process may be… fundamental, technical or otherwise), and if that trade loses money, that was not a bad trade. It’s only a bad trade if you deviate from your process and lose money. I would go further and say that if you deviate from your process and make money, it’s still a bad trade. People have to differentiate between trades that are consistent with a winning strategy, and trades that are inconsistent. That’s the mark of good and bad trades.”(Source: Thoughteconomics.com)



    Source: www.tallinex.com
     
  2. Mistalee

    Mistalee New Member

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    If you think that your trading method is not suitable to earn more and more profit, then you should change that.
     
  3. Blossom

    Blossom New Member

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    In order to answer this, one needs to understand where he is at current point. If your trading method not giving you any profit then it is time to leave it and find new one for good trade.
     
  4. jologs

    jologs New Member

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    hmmmm, depending on the results, if ou keep getting bad results then try something different, look into babypips.com for some basic training and basic strategies to start with, 5 years trading hotforex and i still believe that basic is the best.
     
  5. Blossom

    Blossom New Member

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    Yeah, that is what i said. If your system is not working properly and not giving any good amount profit then it is better to leave it.
     
  6. sininfinity

    sininfinity Active Member

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    Well there is no proper way to answer this question. If one works on a trading strategy long enough then it would be difficult for him to ditch it. It would be better to modify it so it brings positive pips again.
     
  7. Mistalee

    Mistalee New Member

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    Yeah...! Some people thinks that there trading method will yield some profit in some trials, but when they don't yield it, it is better to change it instead of continuing the usage of same strategy again and again.
     
  8. platinumtraderfx

    platinumtraderfx New Member

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    The method you use is very bad, I think you should switch to fundamental analysis or change indicators you use in your trade. For example I use combination of ATR and Moving Average in my Hotforex platform, simple but yet working perfecrely for me.
     
  9. Mistalee

    Mistalee New Member

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    Also it is not necessary that if one method is successful for other traders would be affective to you in the same way as they are affecting to them. You need to plan ahead and select appropriate trading methods to be successful.
     
  10. tiptip

    tiptip New Member

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    I ditched my trading method the one that i used to work with because it really made me make losses but i tried scalping and i found interesting EA that helped me in FreshForex.
     
  11. Mistalee

    Mistalee New Member

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    Yeah that is the only way to become successful in Forex Trading, you need to ditch the methods which aren't yielding you much money.
     
  12. sininfinity

    sininfinity Active Member

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    A profitable strategy can give different results when 2 seperate traders are trading it. Even with one strategy one trade can make profit and another can suffer loss. One has to make the strategy his own to make it work.
     
  13. Mistalee

    Mistalee New Member

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    Yeah...! Depending on a strategy every time would be dangerous, every trader need to change his strategy to make things work according to his plan.
     
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