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After 4 months my first profitable month started the day after I made these 3 changes
Hey guys. I've been day trading for 4 months now, which I know isn't long in terms of trading, but I just achieved 5 straight weeks of being profitable and consistent with my strategy/rules. Previously I would have 3-7 days of profit before going deeply red.
Disclaimer: I'm not offering any proof but the ideas below are here for you to evaluate on your own. I have no reason to be deceptive. I'm not offering any service or anything. I just know that these 3 specific changes will help most traders no matter what type of trading you do.
It feels like a big breakthrough (probably not my last breakthrough) and I did 3 specific things to achieve it:
(1) I stopped micromanaging my trades. I now set a stop and a profit, that's it. I don't scale in, I don't scale out. I only break even when it falls from being within 1 or 2 ticks of my take profit, to being within 1 or 2 ticks of my breakeven point. In most cases, my stop loses X amount or my profit wins Y amount. No more micromanaging this allows you to accurately record your win-to-loss ratio, which you must use to determine if your Risk-Reward is feasible.
(2) I tailored my strategy to fit my personality. More specially, I realized that I didn't have a the necessary amount of ice in my veins to trade a strategy that loses 6 times in a row before winning. I need the positive emotional reinforcement from winning trades consistently so I tailored my R:R closer to 50% win rate.
(3) Lastly and related to #2, I had to accept that I was going to lose trades. I needed to DROP THE MINDSET that I could come out profitable everyday. The mindset of trying to win back your losses on the same day is extremely detrimental. To combat this I PLANNED ON LOSING everyday, knowing that I will be profitable with just winning every 1 out of 3 days.
*bonus* (4) READ THIS IF YOU FEEL LIKE YOU'VE HEARD THOSE THREE TIPS PREVIOUSLY. The bonus tip is that I felt like I had already been doing good following my rules and managing risk etc. However, in reality I was sometimes telling myself that "well, since I've already lost a few trades, it's not a huge deal to break my rules and take 2 more." I was convincing myself that it didn't matter if I broke my rules in this instance, so it was possible for me to keep feeling like I didn't need to work on those things more. But in reality when I stopped cheating myself IN ANY CIRCUMSTANCE, is when I began my first profitable month+. You just have to stop cheating yourself. Said otherwise, every time you enter a trade you're building a trading habit. Every trade needs to go towards building good habits.
good to know that its only take u 4 months.
took me a few years.
Point 3 is the most game changing point in my opinion.
I added 1 more point for my trading , that is to plan my next move in advance if i lose a trade.
what should i do if i lose this trade ? if there's no answer then the answer is STOP trading.
Biggest hurdle of trading for most is the self journey along the way to understanding one's own personality. If you have discovered the type of trader you are in such a short time, hats off to you. I doubt you will find many that did in less than a year (or several in my case).
This is what I love about trading, its the fact that trading wont let me lie to myself. Every losing trade can become a constructive critique. Why did I just lose that trade? The answer more often then not has to do with a defect in my plan, and when remedied, takes me closer to consistency.
The trick here is knowing when the loss is actually a defect in your plan, and not just some random bad luck. Hard to make any kind of observation on a single trade.
I've seen people work for years trying to perfect their plan or backtest, but never find any real time success with the adjusted plan/strategy. They are constantly chasing a moving target. And since they are in effect trying to correct the defect that is random bad luck, they will never succeed.
Luck - good or bad - plays a much bigger role in trading than people believe.