This is part 3 of my lessons, take heed here, this is where I learn to question and think.
Many things that it might take a while to get my thoughts in order, but here are the key points that have re-shaped my trading career.
I spent a lot of time in chat rooms and blogs. Too much I think. But if you need to visit someplace try Etoro OpenTrade, a great social network place to learn to trade and meet traders. Here I was convinced that indicators are not necessary to become a successful trader. I found a few people on the forum that I always read, whenever they posted. I joined OpenTrade where I found further assistance in the form of FijiTrader. A series of threads, authored by FT, devoted to Psychology, and the finer points of money and risk management, finally started to smooth off the final rough edges.
There was another trader called BigMoney, whose thought processes were, at times, beyond me, but who made me think about what I was doing. More importantly, he made me go out and do my own research when I had a question, rather than just hoping someone could give me an answer. Admittedly, I wasn't always sure what question I needed to ask, but I would sit back and consider what I was struggling with, and this, in itself, helped me focus.
I stopped reading the various currency pair threads, again for no other reason than I discovered I needed to make my own decisions, and not rely on other people's guesses.
As I moved to longer time frames, I took less and less interest in news releases. I still occasionally check FxEmpire's calendar, simply to see if there's anything going on that might make me consider tightening stops. To be honest, I forget to check more often as time goes by.
I decided on my own method, having tried to create a MA crossover system months before, that was based essentially on ParabolicSAR. I was always in the market; I took every signal come hell or high water, there was no discretion used and it made more than it lost. I set up a whole string of buy and sell orders with a fixed 50-pip stop loss and 50-pip take profit. Went away for 2 weeks, came back to find myself at break even on all trades.
At last I felt I was on the verge of a breakthrough. What I needed now was the last little thing to help me over the final hurdle. Once I found out what it was, I couldn't believe how simple it was, and why on earth hadn't I realised it before.
The first occurred as a natural result of trading with PSAR. I stopped using Market Orders. In blogs I read about trailing entries, but I didn't really understand the significance of what they were saying. I did notice though, that as I was now placing Buy/Sell Stops above/below the current price, this naturally kept me out of a lot of bad trades. If price didn't reach my entry it was because it was heading the other way. Simple!
- The real secret is - Trade With The Trend. You read it all the time in any senior trader's posts, you steadily ignore it as you search for other answers to your trading dilemmas; you add another indicator (and tweak it every time you lose). You head off and start trading a new method you found in another blog post. All you have to do is keep with whatever method you employ now, but keep any eye on the longer time-frame charts (Daily for me) and only trade with the trend. Yes, you'll miss pips on retracements. Yes, you'll still get losing trades. Nevertheless, I'm sure you'll discover that this simple rule will change your trading outlook in a way that no other change can.
Sorry, it wasn't very magical, and I don't suppose it will make me as much money, short-term, as the author of the Harry Potter books, but, now I know it, no-one can take away from me.
Join me for part 4 tomorrow.. and share my secrets.