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A UK forex spreadbetting company called Alpari. Never heard of them before yesterday. It is spread trading so not suitable for USA traders I understand.
I have studied a two traders who have won competitions. Larry Williams and Marty Schwartz. Larry turned $10,000 into $1.1million in a year in the 1980's and then built a book/seminar business on the back of this.
He actually published all his statements online once to shut up the non-believers and I copied them down and put them into my money management program. He had a 78% drawdown and always experienced a 50% drawdown every month. So he was a massive risk taker. He actually had over $2 million but took a big loss just at the end!
Marty is also a wild trader, possessed and made more profits than all the others combined. He entered the comp to be the best and beat everyone. It sort of fired him up. He wrote The Pit Bull Trader.
These guys in a comp had a devil may care attitude and took huge risks that got many people into trading who soon realized what the 'feeling' of a futures contact meant.
Then came the ZenTrader. An approach where we still compete but sorta sweeter. As I studied risk and what I felt was my tolerance level I soon realized how much heat I could take on a trade of conviction. So I looked for the sweetest way to trade my convictions and finally found the sweet spot in both consciousness and entries.
Finally I found a formula to let me know if I was succeeding. The E-Ratio. MFE/MAE. When I keep this above 2.50 all is sweet!
A quick way to know if you are really 'In the Sweet Spot' in your trading is to constantly monitor your own E-ratio. Ninja does not calculate this, but may soon I hope. I actually helped Ray at Ninja many years ago get the performance analysis section with a few ideas.
My focus on keeping a healthy E-Ratio keeps me in a sweet state and shows me if I am succeeding. When you have a good E-Ratio you will always feel good in your trading.
Just divide the MFE figure by the MAE figure to get your E-Ratio. If it is over 2.00 good. If you let a trade go beyond your stop and it comes back to give you a small profit, it will show up in your E-Ratio(and spoil your figures...tut...tut). So the profit made is not the full story. What was the journey of each trade? E-Ratio tells you.
When I was working my way through this exact question in my own trading through trial and error I saw that I had to work on letting more trades run. Catching some really big winners does wonders for the E-Ratio.
To achieve this I use simple swing stops that give the market room to wiggle. In addition I developed the skill of 'adding to a winner'.
I could see I was able to find the trade but needed to stay with the move. I worked on stop management to achieve this.
By actually focusing and constantly calculating my e-ratio every day I began to notice the trades that 'killed' it and the trades that 'enhanced' it.
I also noticed some pro traders from Chicago used the terms on twitter MAE 2 ticks for gain of +3 points. In other words he was able to get in with only 2 ticks of heat. I'm unable to do that but it built a powerful message of how important it is.
OK, here are some classic examples of 'sweet no-think'
We have a population of some 1.8 million people. Three of our men have recently won 3 of the last 6 golf majors.
Darren Clarke just won the British Open on Sunday. Rory McIlroy won the US Open and Graeme McDowell won it a year ago. Here are a few secrets to Darren's success on Sunday.
A BBC reporter interviewed Bob Rotella a sports psychologist.The conversation went something like this.
BBC: What did you say to Darren?
BR: We talked about his attitude and his putting. We got him to go 'unconscious' with his putting.
BBC: Unconscious?
BR: Yes, look where you want it to go and hit it.
BBC: Doesn't mean to say he didn't miss one or two though?
BR: Oh well, I mean if you had to make them all in order to do it you'd never stick at anything. All we want to do is make every putt in his mind. I don't want you to be afraid of it. I don't want you to worry about running them by the hole. Darren, you're talented. Trust that your talented. That's sports.
Hi Shivaya,
I repeated these phrases several times in my trading over the last few days. It has been extremely helpful. I especially notice a confidence boost saying this when I am 2/3 of the way to my target and considering exiting early.
Much Thanks!
westsider