Belief. Disbelief. Frustration. Fear. Anger.
Those are all emotions each of us experiences on our path from fledgling to experienced trader. There are so many lessons to be learned along the way, the list is endless.
A great number of aspiring traders hit a wall that seems insurmountable. They make it to a state of give/take or consistently breakeven. After awhile, the frustration emotions lead them to believe that no one really makes money in the markets. There's even a rather lengthy thread on that very topic in this forum that exemplifies this emotional process.
One (of many) reason some members here flame everything in sight is due solely to that type of frustration. They honestly feel & possibly fear that successful trading is all just one big lie, perpetuated by the varied sinister vendors.
Most of those traders struggling to reach their definition of success are indeed nearer the goal than they think. Here are the three pillars of success I lean on to make a lot of money in the emini markets:
#1: Dependable method approach. Gotta have the tools to execute trades with at least 45% win rate while achieving at least +2/-1pt profit ratio scale.
#2: At least 90% of my trades are with the trend. I'm buying pull backs on the way up, selling lifts to resistance on the way down. I no longer try to fight a market... I work real hard trying to flow with it instead.
My biggest problem is no longer repeated losses, it is now trying to catch surging price action running away from me. Which challenge would you prefer? Fighting a tape for small potential gains / repeated big losses, or trying to catch rides on the directional train running away?
I hunt for the bigger price moves, expecting to catch them while knowing they exist every week inside directional swings, just as they always have.
I can easily endure trades of -1.5pt ER, 0pt ER and -1,0 ER before hitting +4pt ER and +3pt ER in a normal range day whereas too many traders would be -1pt, 0pt, -1pt, +1.5pt and +1.5pt respectively, same exact trades.
#3: Years of building = testing mechanical systems taught me all about Optimal F and the varying account management tactics. I use a modified version of Optimal, which basically adds contract size on the way up and scales back on the way down.
That coupled with methodical tactics or trade execution is what allows ANYONE (not just me) to make +100% monthly gains or more on a consistent basis, depending on liquidity of market and leverage involved. Done wrong, this same approach will drill an account straight to zero $$ in a hurry.
One tweak I use would be the tactic of doubling - tripling contract size when conditions are ripe for a big swing move. There are numerous days where I'll enter full positions, trail stop to entry (par) on that lot while entering a second block, then repeat the process a third time with one-block normal risk to initial capital (and full risk of all unrealized gains) but three-block leverage if the market continues direction.
When all charts indicate a big move is probable and price action starts cascading lower or plowing higher, I step on the trend and quite often pad my account 25% to 50% in a single day just like that. The key to scaling in is <b>doing so in favor of price action, not against it!</b>
This week has strong potential to offer one of those situations described above. If they start pushing price action up or down strong this afternoon, it could break thru a ton of stops and plow straight away. We'll see.
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Three pillars to success:
#1: viable method or system
#2: trade in harmony with swing = trend bias
#3: correct account managememt
Of the three, account management is toughest. For one-lot traders, it's very simple. Only trade when all chart conditions are ideal. That's it. Sit on your hands until the best signals come along, then take them. Execute that trade, then sit on hands until the next high-odds setup per your approach comes along.
Once the account grows AND experience skills have grown, tweaking account managememt i.e. how contracts are managed is the rocket fuel which makes dramatic difference in equity curve growth over time.
I spent $3,000 annual lease on software for one year that ran monte carlo projections and optimal projections up-down-sideways, which never resulted in one extra dime from mechanical system profits.
But... those lessons on % probability of going broke AND the dramatic difference in dollar results based squarely on how many contracts are traded when optimum have been invaluable since.
Education in life never costs... it pays huge dividends, often in a completely different realm than was first expected. That is true for everything we learn, it is all applicable across the entire aspect of living.
Hope this helps,
Austin
