FXCM Trend Follower (By KaiKiat)
| Gain : | -98.64% |
| Drawdown | 99.38% |
| Pips: | -1855.0 |
| Trades | 133 |
| Won: |
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| Lost: |
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| Type: | Real |
| Leverage: | 1:100 |
| Trading: | Manual |
FXCM Trend Follower Discussion
Oct 23, 2014 at 03:05
94 Views
1 Replies
Nov 01, 2014 at 10:49
01.Nov.2014: I have been thinking a lot about my trading performance last week. How is it that after barely breaking even mid week in Wednesday, I proceeded to lose money and my insight about the roles of a trader. What a trader must bear or endure in the process of trading.
Discussion of Lesson 1
- Did not capture the yen weakening because I did not realize the full significance of BoJ lastest QQE. By the end of the week, it went from 109 to 112, >300pips of profit. That is in hindsight. As I didn't really understand the full significance of the event, I made 2 mistakes. First I faded the upside move after I thought that the move is done as the bullish candles get smaller on the H1 chart below the 111 psychological level. I was wrong. Secondly, I made the mistake of going long the USDJPY when I did not have the conviction to hold onto the trade. I was actually afraid that the retracement would come anytime soon. Yet I took the long USDJPY at 111.26 and went it went against me briefly I chickened out and close it at a loss even when I assured myself that I am prepared to take the loss as set by the stop loss level. Sometimes the difference profit and loss lies in not trading what I am not equipped and hence not supposed to trade.
Discussion of Lesson 2
If my hands are itchy and I really want to trade, I should use a demo account instead of risking my real account. A demo account that is linked to Zulutrade perhaps where I can gain followers if I am right with my trade record. If I am wrong, I have avoided losing real money.
Lesson Learnt
1. When there is no trade conviction, I should never trade.
2. Use demo account instead of live account for non conviction trade.
Discussion of Lesson 1
- Did not capture the yen weakening because I did not realize the full significance of BoJ lastest QQE. By the end of the week, it went from 109 to 112, >300pips of profit. That is in hindsight. As I didn't really understand the full significance of the event, I made 2 mistakes. First I faded the upside move after I thought that the move is done as the bullish candles get smaller on the H1 chart below the 111 psychological level. I was wrong. Secondly, I made the mistake of going long the USDJPY when I did not have the conviction to hold onto the trade. I was actually afraid that the retracement would come anytime soon. Yet I took the long USDJPY at 111.26 and went it went against me briefly I chickened out and close it at a loss even when I assured myself that I am prepared to take the loss as set by the stop loss level. Sometimes the difference profit and loss lies in not trading what I am not equipped and hence not supposed to trade.
Discussion of Lesson 2
If my hands are itchy and I really want to trade, I should use a demo account instead of risking my real account. A demo account that is linked to Zulutrade perhaps where I can gain followers if I am right with my trade record. If I am wrong, I have avoided losing real money.
Lesson Learnt
1. When there is no trade conviction, I should never trade.
2. Use demo account instead of live account for non conviction trade.
Nov 01, 2014 at 10:50
01.Nov.2014: What is the role of the trader?
1. Get the fundamentals of the trading currency pair right.
A very very very unprofessional (I remember that amateur according to dictionary.com means (https://dictionary.reference.com/browse/amateur) someone who engage in an activity for leisure and I am not an amateur. I am trading for the money not pleasure. Use demo for pleasure if I have to. That is an important point to remember because sometimes I trade for the anticipated pleasure of winning and it cause me to overtrade and I end up losing most of my trades. Aha a good realization , so I got to know myself better now.) thing to do is to lose sight of the fundamentals and get totally confused about the fundamentals or even worst, trade without consciousness of whether I am trading with or against the fundamentals. I get confused about the fundamentals when there are multiple turns of the currency pair. For example, the fundamentals of EURUSD is bearish. When it goes down, I remember it is bearish, when it retraces the first time, I understand that it is bearish, as the retracement goes deeper, I start to think that perhaps it is bullish when it is actually not. This might happen when my first loss of the short EURUSD due to the retracement. Then I set a market limit order underestimating the depth of the retracement. I lose the position again. The retracement deepens and I (now I realize that I don't have a gauge for the retracement. I now know that whenever there is a retracement, I should draw the Fib levels to see how far the retracement has gone. After a trending market (not range bound, very important. I should address it in the technical aspect of being a trader later. Aha another insight that I am reminded of.) think that the EURUSD is actually bullish when it is bearish. Sometimes it gets worst and I get so mind fucked by the volatility of the market that I don't even know what I am doing anymore. This happens when I am in front of the charts for too long. (Be aware when I am losing my mind. A good insight!!!)
Lesson
1. Be aware of the fundamentals before I trade. I must be clearly aware before I place my trades whether I am trading with or against the fundamentals.
2. Don't anyhow trade. I am not an amateur. I don't trade for pleasure. I am a professional trader. In other words, I trade as an occupation (have to check the meaning) as a livelihood or for gain (according to dictionary.com, https://dictionary.reference.com/browse/professional?s=t)
2. Position my trade according
This builds on the 'don't anyhow trade', I am not an amateur and I am a professional trader who trade for a livelihood or gain position. This involves getting the technical right. As a trader, there is no point saying that I got the fundamental rights but I lost because I got whipsawed (reminds me of trade expectancy, E=( (1+(W/L)*P)-1. (W=average amount win, L=average amount lost, P=winning trade/total trade) E=0.4 means for every dollar risked, will earn 40cents; be prepared to lose money (very important point) with confidence in the system that I will make money in the end) for the simple reason that the role of the trader is to position himself such that it is highly probable (remember that it is probable not a certainty, that is why position sizing is important and always remember that a trader lives and dies by his profit and loss statement) and be able to take losses AND gains.
I have realized that I have neglected on how to handle gains and not be overconfident. The idea of focusing on losses steams from my understanding of the adage that take care of the downside and the upside will take care of itself. So I focused on handling losses and did not put in effort on handling the gains. This resulted in me having a higher probability (noticeably) higher probability of losing money after I made money because I will be overconfident. I note that because I am used to trading small amount of money, I tend to oversize my trade position relative to my account balance so that the gains will be worth it and this resulted in significant losses when losses occur and with outsized gains when they occur too. (So far losses outweigh the gains). A part of positioning myself goes back to the practice (which I wrote in the gist overview but worthy of mentioning it again) is to focus on finding the right trades consistently (that is how my ICM Demo Account had (and not lose it) +60% after 2 months unintentionally and the lesson that I derive from it.) instead of keep thinking of making money (also links to not an amateur, professional and don't anyhow trade understanding).
I think the proper way of handling gain and loss (which includes unfilled position and position I choose not to take due to lack of conviction and other reasons and the untaken trade turns out to be profitable) is not to let the gain or loss affect your next trade. When there is a gain, don't be overconfident (which I learnt again and again the consequences of it) and don't overtrade. Anticipate a loss with a proper position size so that the loss will not decimate too much of my account balance for me to start trading again.
Use market limit order to enter on the intra-day retracement for trending market or trade the range of the range bound market. For range bound market, use market stop order to enter the trade to ride the breakout (something which I thought of but I seldom use).
In other words, the role of a trader, is to do what the average man on the street is not able to and hence not able to profit consistently and that is to get the fundamentals right and position his trades accordingly with high probability of gains and take the gains and losses professionally. A trader must be able to accept loss even when he is whipsawed with or without proper positioning.
Lesson 5 discussion
Something which I didn't say above which is important. Don't count your eggs before they hatch. An open position, no matter how appealing it is at the moment, is still unrealized profit until it closes and not be too happy or overconfident. It happens too many times when the unrealized profitable position turns into loss. I have to wait until the position is closed or at least the stop loss is pushed up above the entry before starting a new position.
Lesson
1. Don't anyhow trade. I am not an amateur and I don't trade for pleasure. I am a professional trader who trade for a livelihood. (a point worth repeating)
2. Understand trade expectancy of my trading system to better handle losses and not take it too personally
3. Focus on getting the right trades and not on winning
4. Use the correct position size so that loss will not be detrimental for me to restart again (helps if I don't have too many open position)
5. An open position even if profitable or at a loss, does not mean that it will end up as profitable or loss. Don't assume profitability and open another position. Don't assume loss and close the position. This assumes that the position is opened professionally and there are no adverse news big enough to challenge the fundamentals and change the technical.
6. Take profit and loss professionally
1. Get the fundamentals of the trading currency pair right.
A very very very unprofessional (I remember that amateur according to dictionary.com means (https://dictionary.reference.com/browse/amateur) someone who engage in an activity for leisure and I am not an amateur. I am trading for the money not pleasure. Use demo for pleasure if I have to. That is an important point to remember because sometimes I trade for the anticipated pleasure of winning and it cause me to overtrade and I end up losing most of my trades. Aha a good realization , so I got to know myself better now.) thing to do is to lose sight of the fundamentals and get totally confused about the fundamentals or even worst, trade without consciousness of whether I am trading with or against the fundamentals. I get confused about the fundamentals when there are multiple turns of the currency pair. For example, the fundamentals of EURUSD is bearish. When it goes down, I remember it is bearish, when it retraces the first time, I understand that it is bearish, as the retracement goes deeper, I start to think that perhaps it is bullish when it is actually not. This might happen when my first loss of the short EURUSD due to the retracement. Then I set a market limit order underestimating the depth of the retracement. I lose the position again. The retracement deepens and I (now I realize that I don't have a gauge for the retracement. I now know that whenever there is a retracement, I should draw the Fib levels to see how far the retracement has gone. After a trending market (not range bound, very important. I should address it in the technical aspect of being a trader later. Aha another insight that I am reminded of.) think that the EURUSD is actually bullish when it is bearish. Sometimes it gets worst and I get so mind fucked by the volatility of the market that I don't even know what I am doing anymore. This happens when I am in front of the charts for too long. (Be aware when I am losing my mind. A good insight!!!)
Lesson
1. Be aware of the fundamentals before I trade. I must be clearly aware before I place my trades whether I am trading with or against the fundamentals.
2. Don't anyhow trade. I am not an amateur. I don't trade for pleasure. I am a professional trader. In other words, I trade as an occupation (have to check the meaning) as a livelihood or for gain (according to dictionary.com, https://dictionary.reference.com/browse/professional?s=t)
2. Position my trade according
This builds on the 'don't anyhow trade', I am not an amateur and I am a professional trader who trade for a livelihood or gain position. This involves getting the technical right. As a trader, there is no point saying that I got the fundamental rights but I lost because I got whipsawed (reminds me of trade expectancy, E=( (1+(W/L)*P)-1. (W=average amount win, L=average amount lost, P=winning trade/total trade) E=0.4 means for every dollar risked, will earn 40cents; be prepared to lose money (very important point) with confidence in the system that I will make money in the end) for the simple reason that the role of the trader is to position himself such that it is highly probable (remember that it is probable not a certainty, that is why position sizing is important and always remember that a trader lives and dies by his profit and loss statement) and be able to take losses AND gains.
I have realized that I have neglected on how to handle gains and not be overconfident. The idea of focusing on losses steams from my understanding of the adage that take care of the downside and the upside will take care of itself. So I focused on handling losses and did not put in effort on handling the gains. This resulted in me having a higher probability (noticeably) higher probability of losing money after I made money because I will be overconfident. I note that because I am used to trading small amount of money, I tend to oversize my trade position relative to my account balance so that the gains will be worth it and this resulted in significant losses when losses occur and with outsized gains when they occur too. (So far losses outweigh the gains). A part of positioning myself goes back to the practice (which I wrote in the gist overview but worthy of mentioning it again) is to focus on finding the right trades consistently (that is how my ICM Demo Account had (and not lose it) +60% after 2 months unintentionally and the lesson that I derive from it.) instead of keep thinking of making money (also links to not an amateur, professional and don't anyhow trade understanding).
I think the proper way of handling gain and loss (which includes unfilled position and position I choose not to take due to lack of conviction and other reasons and the untaken trade turns out to be profitable) is not to let the gain or loss affect your next trade. When there is a gain, don't be overconfident (which I learnt again and again the consequences of it) and don't overtrade. Anticipate a loss with a proper position size so that the loss will not decimate too much of my account balance for me to start trading again.
Use market limit order to enter on the intra-day retracement for trending market or trade the range of the range bound market. For range bound market, use market stop order to enter the trade to ride the breakout (something which I thought of but I seldom use).
In other words, the role of a trader, is to do what the average man on the street is not able to and hence not able to profit consistently and that is to get the fundamentals right and position his trades accordingly with high probability of gains and take the gains and losses professionally. A trader must be able to accept loss even when he is whipsawed with or without proper positioning.
Lesson 5 discussion
Something which I didn't say above which is important. Don't count your eggs before they hatch. An open position, no matter how appealing it is at the moment, is still unrealized profit until it closes and not be too happy or overconfident. It happens too many times when the unrealized profitable position turns into loss. I have to wait until the position is closed or at least the stop loss is pushed up above the entry before starting a new position.
Lesson
1. Don't anyhow trade. I am not an amateur and I don't trade for pleasure. I am a professional trader who trade for a livelihood. (a point worth repeating)
2. Understand trade expectancy of my trading system to better handle losses and not take it too personally
3. Focus on getting the right trades and not on winning
4. Use the correct position size so that loss will not be detrimental for me to restart again (helps if I don't have too many open position)
5. An open position even if profitable or at a loss, does not mean that it will end up as profitable or loss. Don't assume profitability and open another position. Don't assume loss and close the position. This assumes that the position is opened professionally and there are no adverse news big enough to challenge the fundamentals and change the technical.
6. Take profit and loss professionally
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