Having a modicum of intelligence means I am able to read criticism without my defence mechanism kicking in.
I can't argue with any of the observations made, in fact if I am to be successful I need to listen to traders who have taken the time to pass on their wisdom. I am so very close to making this work now and I am certain I WILL make money from trading. To achieve that though I need to employ an iron discipline.
I can't argue with the fact that I am still losing money. I have learned to trade at a smaller size which is why my losses have been considerably smaller than previously. I knew I should only trade one instrument at a time but I broke that by trading 3 indices and that resulted in my loss last month. I simply cannot break a golden rule like that or I will continue to pour money into IG's coffers.
I spent the weekend as advised by someone from the comments section listing every trade I've made in the last 5 months, the results astonished me.
Winning trades 781
Losing trades 329
More than 2 out of 3 trades I make are winners, yet I lost money?
I have a talent for making successful trades that is only eclipsed by my talent for losing money so the question is how can I utilise my talent for spotting a winning trade and earn from it?
The answer is simple: if I played a ratio of 1:1 I would make money, for example 10 points stop loss, 10 points limit.
So when I next trade I resolve the following.
Only trade one index at a time
Every trade to have a 10 point stop loss
Maximum 10 trades a day over very short time frames
At £2 point if every trade lost I'd be £200 down for the day, that's my maximum loss.
I then have the option of closing for a 10 point win or keep an eye on the open winning trade and bring my stop loss up to 10 points.
I will trial this for one week at £1 point and post my results at the end of that week.
Good luck with your trading and thanks for everyone who has taken the time to comment.
You have a better win rate than me over the past few months so that's something positive!
ReplyDeleteAiming for 1:1 is good but would it be possible to aim for something higher? How much would this reduce your win rate? If you are not tracking different take profit areas (even if you are not trading them) then I would make sure to note those down as well so that you can examine some "what if" scenarios. For example, if you're looking to go long on the FTSE at 6600 with a 10pt stop and 10pt TP, I would also note down if the price reached 6620 (TP2) and 6630 (TP3). After you collect this extra data and have something statistically significant you can optimise your position management further to get a better risk reward.
I aim for a minimum of 1:2 so I only need a 33% win rate to breakeven. This improves the chances of being consistently profitable a lot but it also means that I have to make sure to only trade areas that will provide a move big enough for that risk reward (something that is strategy dependent).