A common theory with trading is as follows. 10% is having a good strategy, 30% is having good risk management and the final 60% is psychology.
If we as traders fail to address the final psychology part of the sentence above then we as traders will fail in the markets.
The chart shown in this idea is EURGBP working the 30 minute time frame.
The strategy is a rules based mechanical approach working a 1:1 RR to fixed stop loss and take profit targets.
I know I have a proven edge with this strategy as with all my ideas the built strategy tester report is at the foot of this idea shows the strategies credentials.
Position sizing is correct I trade this strategy on a stand alone account for this pair and I'm happy to risk 2% per trade of my capital from said account.
So where does the psychology part come in to all this?
The emojis on screen show the emotions I would of been feeling with this trade once upon a time! An emotional roller coaster!
The chart shows three trades. A short which hit TP followed by a long which hit SL.
Then the trade I'm using for this idea which lasted a full 13 days!
But this is where sticking to the plan and the rules I set help remove that emotional roller coaster.
Not sticking to that plan could of created many outcomes.
I could of closed for less profit than intended as part of the plan or worse still could of cut my losses only for the trade to go on and hit TP target.
The above would of then led to more emotions thus effecting my future trading decisions and choices.
With each trade I enter I am comfortable with said outcome whatever that maybe.
That comes from trading a proven strategy, having correct risk management and then by sticking to the rules of the trading plan for the strategy.
Sticking to a plan removes any subjectivity and helps take care of the psychological side of trading.
I even automate my strategies now and not checking trades every minute of the day has helped removed all those up and down feelings the emojis on the chart represent.
I'll end with one final thought patience has to be part of your plan. The markets take from the impatient and give to the patient ones among us.
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I try and share as many ideas as I can as and when I have time. My trades are automated so I am not sat in front of a screen daily.
Jumping on random trade ideas 'willy-nilly' on Trading View trying to find that one trade that you can retire from is not a sustainable way to trade. You might get lucky, but it will always end one way.
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Also, see my 'related ideas' below to see more just like this.
Absolutely agree with you Darren. Keep up the great work.
TradingView
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Plan the trade before you make the trade! Thanks for writing this and sharing it with everyone here.
Blakberi
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The psychology component cannot be understated. Having great self-awareness and cultivating a 'Mr Spock' type character is helpful 🖖🏼
Blakberi
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@Blakberi For those of you who aren't familiar with Star Trek, Mr Spock operates by logic without emotional contagion. He is also very precise and methodical.
nnajipromise222
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Great idea but what if price didn't reach TP but it's on good profit already
TradeXMBL
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I mean looking at the entry, it was very poor, holding trades and being "patient" in this game is why people lose their money. You should have cut your losses ages ago and looked for a better entry, instead you waited for the pair to hopefully go up and had your fingers crossed. Luckily due to energy/petrol crisis in the UK Eur/GBP rose, otherwise you would have lost the position. The risk to reward ratio also doesn't make sense here.
However I appreciate the mentality behind it and I like the message for newbie traders out there.
(This is my opinion only, always up for discussion. Trading is a matter of opinion)
DarrenHill
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@Matl101, I trade with facts not opinions really though - totally 'process over prediction'. It's a mechanical strategy with an edge - as you can see in the data. A simple 60-65% win rate encompassed with a simple 1/1 RR provides a positive expectancy here - doesn't matter how wide or tight the stop loss is the risk in % terms is the same - we use ATR to allow for the volatility at that time too you see. Thank you.
TradeXMBL
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@DarrenHill, that genuinely doesn't make sense, as you are predicting the move. unfortunately you do not have a crystal ball and you are guessing where the market will go based on analysis that every tom/dick and harry are doing as a retail trader.
Especially with what's happening in the world right now, technicals and using indicators will lose you a lot of money as the market is super volatile and prone to drastic moves due to news/tapering/energy crisis etc.
But I respect your view on this :)
DarrenHill
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@Matl101, no predicting. A simple mechanical entry. I'll leave the predicting to you bud.
TradeXMBL
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@DarrenHill, Well looks like you area ahead of the market making millions then, keep it going. *insert sarcasm here*