My two cents .... Please note that this is my post in another thread and posting it here ONLY because of the Relevance of the topic / issue / thought process ....
I quit a high paying Job, a well respected responsibility and sound career for Trading (Fx Trading to be precise) ... Do forgive me for the length ....
1. Requirement analysis
Ask yourself – Why am I here? Why am I trading? Why am I trading Fx?
How does Fx trading help me differently than my other income sources?
2.Prepare a list of your immediate, near future and distant future needs, wants, assets, family obligations etc, in terms of Financial aspects.
I’m giving my example (not to boast myself) as there might be few people here, who might be in the same phase of life, like me.
I’m 40, married with a 9 year daughter. By god’s grace and efforts of my parents, I do not have to take care of them, FINANCIALLY. As we already own houses (fixed assets) in London and India, I do not need to worry about them as well. Therefore, my financial concerns are my daughter’s higher studies, her marriage and our old age. These aspects influence my MM which in turn influences my trading decisions.
All of us know that one bigger account gives more comfort, flexibility and larger profits. But, we have divided the total trade-able amount in to three different accounts. The reason being, trading (earning) is a road to a destination (life and Living) and as roads and destinations are different, these 3 trading accounts are also different. Though all the accounts are worth 10,000$, the way we treat each one of them are different. I trade my 10k aggressively, with more risk and profit from this account takes care of our present day to day necessities, expenses and luxuries, vacations etc. My wife, trades one 10k account with lesser risk and the profit goes in to different bank, savings and regular retirement returns investment portfolios which takes care of our old age requirements. My wife also, trades the third 10k account with least risk and the profit from this account, goes exclusively in to higher education of our kid. Please understand why I have made few statements in bold.
So, three different accounts of same size are traded in different way and the profits are put in to different more secured investments. This is my Life related MM strategy and this influences all our trading strategies as well.
3.Few of you know that I quit as a country head (serving last month of notice period) to dedicate more time to learn and earn from FX and to live comfortable retired life (what the heck, I’m already retired). My pay check was 70,000$ / year and this is what I have to earn, to compensate for my salary, from my 10k account. So, basic and broader plan is to earn 6k every month.
4.I understand and accept that few trading days will be range bound, few days will not have liquidity and few times, I might be sick. So I consider 15 trading days a month. Any extra trading day is a bonus. This means that i have to earn 400$ a trading day. I have also realised that MOST OF THE TIMES, A PAIR RUNS FOR 20 DAYS IN ONE DIRECTION AND IN OPPOSITE DIRECTION FOR NEXT 20 DAYS. Idea is to get about 60% of this one directional trend. This 400$ a day forms the core of my all trading decisions, plans, expectations, R2R etc. Open any 4H chart to know what I’m talking about, trend having a cycle of 20 trading days. Do not thank me. Buy me Bacardi.
5.So, the destination, goal is 400$. If I trade 1$ a Pip, I need 400 pips a day. If I chase this, either I become mentally retarded or sexually deprived. Jokes part, we know that it’s not humanly possible. So, I trade ONLY 10$ a Pip. With this, I have to keep banking 40 pips. But, all pairs will not give 400$ for 40 Pips. What is the solution? I always look ONLY for pairs that have enough room to travel minimum 50+ pips. 50 pips on any pair will almost give 400$. If not, give them a miss. Move on. Search all over after some time. Wait, wait, wait and wait some more, when the opportunity comes grab it, left, right and center.
6.Trading is just another source of income, nothing more, and nothing less as well. We have to make each of our $ stretch and earn more. HOW? POSITION SIZING. Every trade is taken with a pre-determined risk. Now, in my strategy, each trade is taken with risk of 250$ (not in terms of pips). As I expect better and higher R2R, once a trade gets in to 25+ (in EU, EJ, UJ, AU) and 30+ (in GU, GJ, EA, GA), I move the trade to BE and immediately open a new trade with same TP, as the 1st trade. As the 1st trade is already at BE, again my risk is 250$ all over. With this, I’m keeping my risk appetite at the same cost, but giving chance for higher profit. And I keep doing it for next every 25+ to 30+. Some time ago, I had 6 full lots running on GJ as it nosedived for 150+ pips. What is the R2R? Why the difference in pips for the trade to be at BE. First pairs have lesser volatility compared to the latter pairs. Period.
7.Trading is neither easy as kinder garden, nor tough like rocket science. It is how we treat the market, trading and the trade/s. We have our ways to make it simple. We also have ways to complicate it to the T. What do we want?
8.Few things I keep doing day in day out and week in, week out.
a.Every day, as soon as I wake up (1 hour in to Tokyo), I look at ADR on the 8 pairs that I trade and qualify them. A pair with more than 100 pips range qualifies to be traded on that day, starting from the highest ADR pair on the extreme left of my MT4. The reason is to catch 60% of the ADR and if a pair has less than 100 pips ADR, it will not reach my target of 50+.
b.After deciding on the pairs to be traded, I go to 4H TF and mark the nearest S/R levels. If they are too close to the market, give it a miss. I trade to make profit, not because I have a 10k account.
c.Each of my trade/s is/are opened with 50 pip TP and 25 pips SL and each trade is moved to BE at 25 – 30 pips depending on the pair. Once a pair is moved to BE, I open one more trade immediately. I do this with ALL my trades. As I do not trust any trade manager EA’s, I activate 250 points (25 pips) TSL.
d.If a trade takes too much time to get in to profit, I know that my entry is wrong and kill the trade immediately, either for small profit / loss.
e.For a pair to be traded, one market of the pair has to be open. For example, I do not trade EU in Tokyo session, nor do I trade AJ in NY session. The reason if both markets of a pair are closed, liquidity will be negligible. Period. Best time is when both the markets of the pair are open.
f.Candles convey a lot of stories. I read and respect them a lot. If the O and C convey the direction (HH, LH, LL, HL), H and L (the gap between them) convey the liquidity / momentum. Is the candle sizes are small, if there is no gap at all between O,H,L and C, I DO NOT TRADE.
g.I will have only 1 trade open at any point of time. Gives time, energy and all important patience. If I have to open 2nd trade (either the same pair or the other), the 1st trade should already be at BE.
h.I do not think / feel what market / price might do. If a set up qualifies my parameters, I trade or move on.
i.I do not do top down analysis as too much information can actually confuse our mind more than it can help.
j.I do not install / follow too many indicators as by doing them I was always harmed by Analysis Paralysis.
k.What I technically lack, I make them up with my MM and discipline.
l.I do hear, read and try to understand what others have to say about a pair. But finally, I stick my strategy always all ways.
I do not know if all this banter actually helps any one as each trader is different and I strongly believe that Trading is more about the Psyche of the trader.
If anyone needs any help, I’m more than willing to share and help.
I quit a high paying Job, a well respected responsibility and sound career for Trading (Fx Trading to be precise) ... Do forgive me for the length ....
1. Requirement analysis
Ask yourself – Why am I here? Why am I trading? Why am I trading Fx?
How does Fx trading help me differently than my other income sources?
2.Prepare a list of your immediate, near future and distant future needs, wants, assets, family obligations etc, in terms of Financial aspects.
I’m giving my example (not to boast myself) as there might be few people here, who might be in the same phase of life, like me.
I’m 40, married with a 9 year daughter. By god’s grace and efforts of my parents, I do not have to take care of them, FINANCIALLY. As we already own houses (fixed assets) in London and India, I do not need to worry about them as well. Therefore, my financial concerns are my daughter’s higher studies, her marriage and our old age. These aspects influence my MM which in turn influences my trading decisions.
All of us know that one bigger account gives more comfort, flexibility and larger profits. But, we have divided the total trade-able amount in to three different accounts. The reason being, trading (earning) is a road to a destination (life and Living) and as roads and destinations are different, these 3 trading accounts are also different. Though all the accounts are worth 10,000$, the way we treat each one of them are different. I trade my 10k aggressively, with more risk and profit from this account takes care of our present day to day necessities, expenses and luxuries, vacations etc. My wife, trades one 10k account with lesser risk and the profit goes in to different bank, savings and regular retirement returns investment portfolios which takes care of our old age requirements. My wife also, trades the third 10k account with least risk and the profit from this account, goes exclusively in to higher education of our kid. Please understand why I have made few statements in bold.
So, three different accounts of same size are traded in different way and the profits are put in to different more secured investments. This is my Life related MM strategy and this influences all our trading strategies as well.
3.Few of you know that I quit as a country head (serving last month of notice period) to dedicate more time to learn and earn from FX and to live comfortable retired life (what the heck, I’m already retired). My pay check was 70,000$ / year and this is what I have to earn, to compensate for my salary, from my 10k account. So, basic and broader plan is to earn 6k every month.
4.I understand and accept that few trading days will be range bound, few days will not have liquidity and few times, I might be sick. So I consider 15 trading days a month. Any extra trading day is a bonus. This means that i have to earn 400$ a trading day. I have also realised that MOST OF THE TIMES, A PAIR RUNS FOR 20 DAYS IN ONE DIRECTION AND IN OPPOSITE DIRECTION FOR NEXT 20 DAYS. Idea is to get about 60% of this one directional trend. This 400$ a day forms the core of my all trading decisions, plans, expectations, R2R etc. Open any 4H chart to know what I’m talking about, trend having a cycle of 20 trading days. Do not thank me. Buy me Bacardi.
5.So, the destination, goal is 400$. If I trade 1$ a Pip, I need 400 pips a day. If I chase this, either I become mentally retarded or sexually deprived. Jokes part, we know that it’s not humanly possible. So, I trade ONLY 10$ a Pip. With this, I have to keep banking 40 pips. But, all pairs will not give 400$ for 40 Pips. What is the solution? I always look ONLY for pairs that have enough room to travel minimum 50+ pips. 50 pips on any pair will almost give 400$. If not, give them a miss. Move on. Search all over after some time. Wait, wait, wait and wait some more, when the opportunity comes grab it, left, right and center.
6.Trading is just another source of income, nothing more, and nothing less as well. We have to make each of our $ stretch and earn more. HOW? POSITION SIZING. Every trade is taken with a pre-determined risk. Now, in my strategy, each trade is taken with risk of 250$ (not in terms of pips). As I expect better and higher R2R, once a trade gets in to 25+ (in EU, EJ, UJ, AU) and 30+ (in GU, GJ, EA, GA), I move the trade to BE and immediately open a new trade with same TP, as the 1st trade. As the 1st trade is already at BE, again my risk is 250$ all over. With this, I’m keeping my risk appetite at the same cost, but giving chance for higher profit. And I keep doing it for next every 25+ to 30+. Some time ago, I had 6 full lots running on GJ as it nosedived for 150+ pips. What is the R2R? Why the difference in pips for the trade to be at BE. First pairs have lesser volatility compared to the latter pairs. Period.
7.Trading is neither easy as kinder garden, nor tough like rocket science. It is how we treat the market, trading and the trade/s. We have our ways to make it simple. We also have ways to complicate it to the T. What do we want?
8.Few things I keep doing day in day out and week in, week out.
a.Every day, as soon as I wake up (1 hour in to Tokyo), I look at ADR on the 8 pairs that I trade and qualify them. A pair with more than 100 pips range qualifies to be traded on that day, starting from the highest ADR pair on the extreme left of my MT4. The reason is to catch 60% of the ADR and if a pair has less than 100 pips ADR, it will not reach my target of 50+.
b.After deciding on the pairs to be traded, I go to 4H TF and mark the nearest S/R levels. If they are too close to the market, give it a miss. I trade to make profit, not because I have a 10k account.
c.Each of my trade/s is/are opened with 50 pip TP and 25 pips SL and each trade is moved to BE at 25 – 30 pips depending on the pair. Once a pair is moved to BE, I open one more trade immediately. I do this with ALL my trades. As I do not trust any trade manager EA’s, I activate 250 points (25 pips) TSL.
d.If a trade takes too much time to get in to profit, I know that my entry is wrong and kill the trade immediately, either for small profit / loss.
e.For a pair to be traded, one market of the pair has to be open. For example, I do not trade EU in Tokyo session, nor do I trade AJ in NY session. The reason if both markets of a pair are closed, liquidity will be negligible. Period. Best time is when both the markets of the pair are open.
f.Candles convey a lot of stories. I read and respect them a lot. If the O and C convey the direction (HH, LH, LL, HL), H and L (the gap between them) convey the liquidity / momentum. Is the candle sizes are small, if there is no gap at all between O,H,L and C, I DO NOT TRADE.
g.I will have only 1 trade open at any point of time. Gives time, energy and all important patience. If I have to open 2nd trade (either the same pair or the other), the 1st trade should already be at BE.
h.I do not think / feel what market / price might do. If a set up qualifies my parameters, I trade or move on.
i.I do not do top down analysis as too much information can actually confuse our mind more than it can help.
j.I do not install / follow too many indicators as by doing them I was always harmed by Analysis Paralysis.
k.What I technically lack, I make them up with my MM and discipline.
l.I do hear, read and try to understand what others have to say about a pair. But finally, I stick my strategy always all ways.
I do not know if all this banter actually helps any one as each trader is different and I strongly believe that Trading is more about the Psyche of the trader.
If anyone needs any help, I’m more than willing to share and help.
