WaveRider
Master Sergeant
- Messages
- 350
I am a barely successful in a tiny live account, not a big account, but please don't flame me. It's easy to say you got it all figured out when you have nothing to lose but I'm not saying that. This isn't a holy grail, just a mental experiment to see if we can simplify what seems so complicated.
The two parts of the trade decision machine are the part that makes the money (the trader) and the part that limits risk (the trading plan). Here it is and some blah blah after.
The trader's role (the part that changes, adapts, that can't be programmed) - this part tends to be the decision to trade:
1. Snaps price action action S/R and identifies, weight of psych levels, pivots and other S/R. Even indicator only traders look at floors and ceilings to guide trading. Done before trading decisions can be made.
2. Identifies news and other volatility factors indicating when to stay out or in based on rules below - is in this section because the news release may be so small as to not affect the trade. Or are we near the Sunday gap? A historic number? This is the peripheral vision.
3. Reads candlestick patterns for possible market sentiment, or uses fibs or gartley patterns to gauge where the market is going. This is the real judgment non EA thinking part. This is the compass part. Are we likely up or down today? Oh if only I could get my forex compass working!
4. Determines good entry and exit points (but in line with the plan's rules below).
The trading plan's role (the part that doesn't change) - this part tends to be what keeps you out of the trades and limits risk exposure
1. Manages money to a predetermined % per trade loss acceptability. Generally 2-4%. This step iterates position size based on acceptable risk of loss, not desired gain.
2. Enters at a predestined acceptable R:R ratio. Generally 1:1 or better, or whatever, but it should meet some reasonable criteria.
3. Plots best lot allocation such as what portion of profit to take at the points specified by the trader - such as: TP of 50% at 0.5R:R, take 25% at 1:1 and let 25% trail stop until out. This is a mechanical, boring listing of how to break trades up, if at all, to let profits run and cut losses. This should be mechanical to remove fear and greed. This is when Sive says "move stops to break even."
4. Identifies common and ideal trades and how to trade them. This should probably be listed first. This serves as the outline for the judgment of the trader above. Which patterns to trade, such as head and shoulders, and how to execute ideally. New trades can be added but should be written down, tried in demo, tinkered with and finalized before live trading. News traders have made extensive notes on how to trade each kind of news release so when that release comes up again, they have in mind their strategy. This also determines entry and exit because this section will tell you when a pattern is negated and no longer valid.
Failing at forex is usually both parts not being anything close to being ready.
Every trading plan needs
1. Which way are we going on the TF I care about? Up or down.
2. Where do I get in?
3. Where do I TP.
4. Where is my analysis wrong and I take the loss?
For the first part (trader):
Clear mind, as unemotional as possible, following a routine of looking at news and snapping lines and fibs. Honest about whether there is a trade or not. Patient to wait for the right pitch. The trader's enemy is the trader. He needs to stick with his plan. Fear, greed, revenge. Those are the things a trader is needs to route out. Consistency, stability, honesty. He needs these. Also there is no substitute for seeing thousands of charts. This builds a good trader.
For the second part (trading plan):
Developing a plan takes some time to be both successful and fit with a person's personality. Every forex school says one should make trading as mechanical as possible, leaving few decisions to the trader. Clearly outlined, firm numbers listed. If the trader says when to trade, the plan says how to execute.
The two parts of the trade decision machine are the part that makes the money (the trader) and the part that limits risk (the trading plan). Here it is and some blah blah after.
The trader's role (the part that changes, adapts, that can't be programmed) - this part tends to be the decision to trade:
1. Snaps price action action S/R and identifies, weight of psych levels, pivots and other S/R. Even indicator only traders look at floors and ceilings to guide trading. Done before trading decisions can be made.
2. Identifies news and other volatility factors indicating when to stay out or in based on rules below - is in this section because the news release may be so small as to not affect the trade. Or are we near the Sunday gap? A historic number? This is the peripheral vision.
3. Reads candlestick patterns for possible market sentiment, or uses fibs or gartley patterns to gauge where the market is going. This is the real judgment non EA thinking part. This is the compass part. Are we likely up or down today? Oh if only I could get my forex compass working!
4. Determines good entry and exit points (but in line with the plan's rules below).
The trading plan's role (the part that doesn't change) - this part tends to be what keeps you out of the trades and limits risk exposure
1. Manages money to a predetermined % per trade loss acceptability. Generally 2-4%. This step iterates position size based on acceptable risk of loss, not desired gain.
2. Enters at a predestined acceptable R:R ratio. Generally 1:1 or better, or whatever, but it should meet some reasonable criteria.
3. Plots best lot allocation such as what portion of profit to take at the points specified by the trader - such as: TP of 50% at 0.5R:R, take 25% at 1:1 and let 25% trail stop until out. This is a mechanical, boring listing of how to break trades up, if at all, to let profits run and cut losses. This should be mechanical to remove fear and greed. This is when Sive says "move stops to break even."
4. Identifies common and ideal trades and how to trade them. This should probably be listed first. This serves as the outline for the judgment of the trader above. Which patterns to trade, such as head and shoulders, and how to execute ideally. New trades can be added but should be written down, tried in demo, tinkered with and finalized before live trading. News traders have made extensive notes on how to trade each kind of news release so when that release comes up again, they have in mind their strategy. This also determines entry and exit because this section will tell you when a pattern is negated and no longer valid.
Failing at forex is usually both parts not being anything close to being ready.
Every trading plan needs
1. Which way are we going on the TF I care about? Up or down.
2. Where do I get in?
3. Where do I TP.
4. Where is my analysis wrong and I take the loss?
For the first part (trader):
Clear mind, as unemotional as possible, following a routine of looking at news and snapping lines and fibs. Honest about whether there is a trade or not. Patient to wait for the right pitch. The trader's enemy is the trader. He needs to stick with his plan. Fear, greed, revenge. Those are the things a trader is needs to route out. Consistency, stability, honesty. He needs these. Also there is no substitute for seeing thousands of charts. This builds a good trader.
For the second part (trading plan):
Developing a plan takes some time to be both successful and fit with a person's personality. Every forex school says one should make trading as mechanical as possible, leaving few decisions to the trader. Clearly outlined, firm numbers listed. If the trader says when to trade, the plan says how to execute.
