The inner conversation that most traders would said to themselves when they see others make money from trading , be it forex, futures , commodities, cryptocurrencies, etc.
Buy Low, sell high. That's logical.
Use this moving averages. Looks simple on chart. buy above it , sell when it is under.
Add RSI - Above 70 means overbought so sell and below 30 means over sold so buy. This is good.
So there are strategies that traders love to have in their system. However, true winning takes more than strategies to make money $$$$.
You also need proper risk management . Oh, you mean, risking 1-2% per trade ? That is easy what ? Yes, in theory it appears to be. In practice, like this trade, when you have lost 3 times consecutively, your emotions take over. You are filled with rage, anger, imbalanced and wants to seek revenge so you double up your risks to 4-5% to accelerate. If you are lucky, you made it else you lose even more to the Market.
And if you succeed, you would do so again and again till your accounts go bust.
Then you feel rejected, feeling helpless, your days are no longer sunshine and you have to save enough more money to pay for your debts (argh...). During lunch time, when your colleagues shared about a winning trade, you kept to yourself ,thinking it is just one lucky trade and he too will suffer like you. You felt bitter, betrayed .......
In a nutshell, that is what many traders go through.
Then you asked (glad you do), if it is not strategy, not capital management,what is it that causes most traders to lose money, again and again ?
The answer is Traders' emotional control.
Some traders jump from one strategy to another , confusing themselves and get entangled in a web of bollinger bands, stochastic and moving averages. Others spent thousands of dollars chasing gurus who promised them 80-90% winning trades (is achievable when you have 100 pips as SL and 10 pips as profit target). Unknowingly to many, strategies is only a small fraction of a trader's success.
Next, we talk about capital management. You have to be CONSISTENT. Trading is a number game, like it or not. So, you would need a certain sample size to warrant the quality of your findings. Hmm... let me see if I can make you understand better. If a poll is done online to gauge Trump's winning at the 2nd election, what do you think the results would be ? If 65% of the people think he will win, then the probability of him winning is very much higher. But if you only interview 100 people in the whole of USA and all think negatively of Trump, that 100 (sample size) is too small to make any meaningful representation.
So, it is the same as trading. 3 losing trades even consecutively does not mean the end of your trading career. You would need at least 100 trades minimum to assess if your strategy, capital management and most importantly, emotional control is working for you.
With only a 50% win rate and at 1 :1.5 RRR, you can still be profitable month after month.
50% win rate out of 100 trades can be losing 50 trades consecutively before the 51st trades become profitable till the 100th trades. It is all random and because of this randomness, it is almost impossible to predict if a trade that you execute will win or lose. The outcome is what you cannot control even if you use the right strategy , employ proper capital management. This two variables you are in better position to control it but the wavering part is your own feelings.
And that is why there is so much hype and coverage on robo-advisers now where they preached it eliminates the evil side of you - the greed and fear and help you to make money easier. I choose to reserve my comments on this for now but the crux of trading manually is to be able to manage oneself throughout the whole process.
Conclusion ?
If you have only trade 20 or so trades and are losing money, you need to carry on trading.
If you are not sticking to a fixed % risk per trade, do it now. Keep it to 1% for at least 12 months.
How about emotional control ? You need to build a strong belief system in yourself that trading can be profitable for you. You gotta to trust your strategy and not jump from one to another.
A good area to start is ask yourself when you think of money, what comes to your mind ?
Do you believe deep down that you will become a millionaire some day ? Who do you look up to in terms of money matters ? It can be real or fictitious character.
Parents , friends, etc - how strong are their impact on you in terms of money ? Do you see them suffer under poverty, living on their monthly wages and can hardly afford any luxury things in life ?
Review your own past and present words. When you see something you like, do you think to yourself you can't afford it and is better not to think about it? Or does it motivate you to strive harder within yourself to find a way to achieve it ?
This part about money can be a long and laborious but necessary steps that you need to discover for yourself. Be gentle with yourself as you are digging up past history and certain parts may be hurtful. Maybe your parents were divorced and money is a constant topic when they quarrel or something like that. And that bruised feeling that you had in you make you want to be financially independent - it drives you to succeed. But you forgot that it takes time and in the quest of your financial pursuits, you have turn the rage in you to be your firing power.
The more losses you incur, the more you want to seek revenge from the Market. The latter is really a collective pool of millions and millions of people emotions daily. The battle between the fear and greed. Some day, fear wins and short sellers make money and drink champagne. Other days, greed wins and bulls celebrate.
I hope this has given you a fresh perspective or help you to close the gap that you are seeking to find answers to your losing streak.
There may be only one Warren Buffett but you need not be the next one to retire rich. Have the unwavering beliefs that you too are entitled to this abundance, prosperity and joy that many ahead of you have had.
Read these verses every day and night.
John 10.10
Mark 11.24
Proverbs 11.24-25
Issaiah 40.29-31
See you on the other side .
Buy Low, sell high. That's logical.
Use this moving averages. Looks simple on chart. buy above it , sell when it is under.
Add RSI - Above 70 means overbought so sell and below 30 means over sold so buy. This is good.
So there are strategies that traders love to have in their system. However, true winning takes more than strategies to make money $$$$.
You also need proper risk management . Oh, you mean, risking 1-2% per trade ? That is easy what ? Yes, in theory it appears to be. In practice, like this trade, when you have lost 3 times consecutively, your emotions take over. You are filled with rage, anger, imbalanced and wants to seek revenge so you double up your risks to 4-5% to accelerate. If you are lucky, you made it else you lose even more to the Market.
And if you succeed, you would do so again and again till your accounts go bust.
Then you feel rejected, feeling helpless, your days are no longer sunshine and you have to save enough more money to pay for your debts (argh...). During lunch time, when your colleagues shared about a winning trade, you kept to yourself ,thinking it is just one lucky trade and he too will suffer like you. You felt bitter, betrayed .......
In a nutshell, that is what many traders go through.
Then you asked (glad you do), if it is not strategy, not capital management,what is it that causes most traders to lose money, again and again ?
The answer is Traders' emotional control.
Some traders jump from one strategy to another , confusing themselves and get entangled in a web of bollinger bands, stochastic and moving averages. Others spent thousands of dollars chasing gurus who promised them 80-90% winning trades (is achievable when you have 100 pips as SL and 10 pips as profit target). Unknowingly to many, strategies is only a small fraction of a trader's success.
Next, we talk about capital management. You have to be CONSISTENT. Trading is a number game, like it or not. So, you would need a certain sample size to warrant the quality of your findings. Hmm... let me see if I can make you understand better. If a poll is done online to gauge Trump's winning at the 2nd election, what do you think the results would be ? If 65% of the people think he will win, then the probability of him winning is very much higher. But if you only interview 100 people in the whole of USA and all think negatively of Trump, that 100 (sample size) is too small to make any meaningful representation.
So, it is the same as trading. 3 losing trades even consecutively does not mean the end of your trading career. You would need at least 100 trades minimum to assess if your strategy, capital management and most importantly, emotional control is working for you.
With only a 50% win rate and at 1 :1.5 RRR, you can still be profitable month after month.
50% win rate out of 100 trades can be losing 50 trades consecutively before the 51st trades become profitable till the 100th trades. It is all random and because of this randomness, it is almost impossible to predict if a trade that you execute will win or lose. The outcome is what you cannot control even if you use the right strategy , employ proper capital management. This two variables you are in better position to control it but the wavering part is your own feelings.
And that is why there is so much hype and coverage on robo-advisers now where they preached it eliminates the evil side of you - the greed and fear and help you to make money easier. I choose to reserve my comments on this for now but the crux of trading manually is to be able to manage oneself throughout the whole process.
Conclusion ?
If you have only trade 20 or so trades and are losing money, you need to carry on trading.
If you are not sticking to a fixed % risk per trade, do it now. Keep it to 1% for at least 12 months.
How about emotional control ? You need to build a strong belief system in yourself that trading can be profitable for you. You gotta to trust your strategy and not jump from one to another.
A good area to start is ask yourself when you think of money, what comes to your mind ?
Do you believe deep down that you will become a millionaire some day ? Who do you look up to in terms of money matters ? It can be real or fictitious character.
Parents , friends, etc - how strong are their impact on you in terms of money ? Do you see them suffer under poverty, living on their monthly wages and can hardly afford any luxury things in life ?
Review your own past and present words. When you see something you like, do you think to yourself you can't afford it and is better not to think about it? Or does it motivate you to strive harder within yourself to find a way to achieve it ?
This part about money can be a long and laborious but necessary steps that you need to discover for yourself. Be gentle with yourself as you are digging up past history and certain parts may be hurtful. Maybe your parents were divorced and money is a constant topic when they quarrel or something like that. And that bruised feeling that you had in you make you want to be financially independent - it drives you to succeed. But you forgot that it takes time and in the quest of your financial pursuits, you have turn the rage in you to be your firing power.
The more losses you incur, the more you want to seek revenge from the Market. The latter is really a collective pool of millions and millions of people emotions daily. The battle between the fear and greed. Some day, fear wins and short sellers make money and drink champagne. Other days, greed wins and bulls celebrate.
I hope this has given you a fresh perspective or help you to close the gap that you are seeking to find answers to your losing streak.
There may be only one Warren Buffett but you need not be the next one to retire rich. Have the unwavering beliefs that you too are entitled to this abundance, prosperity and joy that many ahead of you have had.
Read these verses every day and night.
John 10.10
Mark 11.24
Proverbs 11.24-25
Issaiah 40.29-31
See you on the other side .