No matter how much lipstick you put on that pig, I’m still not having coitus with her!
As many have already said, 1 post, starts a thread, and it is complete bollocks.
I was going to just pass, but I thought there are probably some new traders that are just lurking, no account, but the title of this thread may lure them in since they are getting stopped out for a loss on a regular basis. It is for you that I take time from my life to write this; not the OP. There is so much crap in post 1 it will take some time and sections to dig through and it will still not cover everything, such is the extent of the complete @#!$ he posted.
STOP LOSSES
Every single trade has a stop loss. If you didn’t explicitly set one, then it is the value of your entire account. Your broker will forcibly close all your positions to protect themselves. You have a de facto stop loss on each and every trade.
For myself I place a stop loss on every trade that is to protect my account against a black swan. For example, Little Rocket Man lands one in downtown Tokyo and I'm short JPY. These are large stops and I have yet to have one get hit. By luck, and luck alone, I have not been on the wrong side of events such as the SNB pulling the peg on the CHF. I do watch the news calendar carefully and daily. Not to predict an event, but to note the time of an announcement, and perhaps stay on the sidelines. I have a separate stop loss for the trade.
While some people call this a mental stop loss, that implies a fixed priced that you have not committed too, that is not exactly what I do. My stop loss on the trade is not fixed. It varies with the market. When the thesis, or concept of my trade idea has been proven wrong by the movement of the price, I exit the trade. No emotion, exit the trade and re-evaluate the situation. Did I miss some piece of data, did I miscalculate the probability? More frequently, I had all the data, I did everything correct, but the market moved in a different manner. That is to be expected, nothing to cause an emotional reaction. Close out and move on.
Your trading must be in a manner that no single loss, or more realistically, no series of 20+ net losses mixed with some wins, destroys your account.
RISK OF RUIN
This is a vast topic unto itself. The very short version is that there is a mathematical formula that accurately predicts whether or not you will lose your entire account before making your first live trade. Learn about this, understand every detail of it, get good data, get a large sample size of data, then perform the calculation. There are many other posts on this topic and webpages dedicated to it.
"Every battle is won or lost before it begins."
Sun Tzu
MARTINGALE
The original and very old idea, is that by doubling a wager after every loss, a person playing Roulette would eventually win. It is a terribly flawed idea, it does not work, a complete loss of your account is the eventual outcome. Some historical evidence shows the idea being used in the 1750’s in various casinos.
A man named Henry Martingale owned a casino in London in the late 1700’s and he encouraged all his patrons to use this concept. If the casino owner is encouraging a particular method of play, it is most likely to his advantage and not the punters. The same applies today if your forex broker is running a B book. Every trade you lose, your broker wins, so they give you lots of advice on indicators and reading the tea leaves of the squiggly lines. All designed with an edge for the casino (your fx broker) to win more from you.
The OP is using a form of Martingale. He adds to his losers without any limits. He wrote about placing 15 orders to cover 1,500 pips. First, 15 orders to cover losers is not a strategy, that is pure “Hold and Hope”. The moment you find yourself in a situation of “Hold and Hope” you are gambling, not trading, you will lose in the long run.
"Losers average losers"
Paul Tudor Jones
The OP claims to hold positions indefinitely until the market turns. Equity indices have a long term upward bias so that can work in that limited scope (assuming you have not shorted the S&P at the bottom of a crash, because then you are truly bent over and taking one for the team). In terms of forex, it is an entirely different situation. The market can swing for months or years will beyond 1,500 pips. Hold a position for 5 years while paying daily interest to your broker, you will be broken, you will lose. What happens when the move is 5,000 pips, planning on placing 50 losings trades and then hoping the world economies change in your direction?
While not explicitly saying it, 15 trades for 1,500 pips leads me to believe that the OP is trading a grid strategy at 100 pip intervals. The concept is mean reversion. That by constantly buying the market will somehow average out over time. Frequently it does, so this strategy often pays out a profit and lures you into trusting it. The problem is sometimes there is a news event, a change in policy on interest by a central bank, and nothing is going back to the mean, it is off on a massive trend, and your account will be closed out by your broker for a complete loss of everything. Or of course you can add more money to your account and hold for 5 years losing money every day in interest payments.
There needs to be an understanding of the difference between adding to a position on a pull back (I do this regularly) and adding and praying by adding to a reversal, over and over. Go and learn about pull backs versus reversals. It is a critical component of long term fx trading.
There are no shortcuts to serious profitable trading. There are thousands of traders over decades that have tried all these garbage systems. I certainly went through them in my learning phases (but I just looked at past data on charts, spent a weekend playing with the idea, saw that they will ultimately fail, no money traded, not even a demo account, just saw the obvious for myself). If any one of the many stupid ideas worked, then by now everyone would trade in that manner, and we would all be full of ourselves with how smart we are.
The OP says that he trades 20 forex pairs. BOLLOCKS. I consistently make money in spot FX, I trade 2 pairs (they are not correlated, one is a major, the other is a minor cross). At 20 pairs he is either trading extremely correlated pairs so that his risk profile is distorted and he is not aware of it, or he is trading exotics which is a whole other story of excess risk and issues, or perhaps he is just a liar.
He states that he closes positions with $120 profit. So despite that title saying that he trades without a target, he in fact trades with a target. Consider his theory of placing 15 trades for a win of $120. If you do not see the folly in this you need to learn more. How much more profitable it is to cut the loss early, recognize the reversal, trade in that new trend direction and make $12,000 (if he can make up numbers I might as well too).
I could go on and on about the false and misleading information the OP has posted; but I have things to do, like walk the dogs along the lake. I invite the lurker, the new trader, register an account, and ask a question, I for one will try to answer in a respectful manner to assist your learning. If you see responses that are offensive, or lacking good information, then just put that person on ignore.
“Believe nothing, no matter where you read it or who said it, unless it agrees with your own reason and common sense.”
Buddha
The catch to that is common sense is not so common, and reason needs to be developed.
edits: spelling, grammar, removal of vulgar
This may be, no is, the BEST post ever seen on ET. Thanks !
