Statistical approach to risk management - Python scriptThis script can be used to approximate a strategy, and find optimal leverage.
The output will consist of two columns, one for the median account size at end of trading, and one for the share of accounts liquidated.
The script assumes a 100% position size for the account.
This does not take into account size deviations for earnings and losses, so use with a grain of salt if your positions vary greatly in that aspect.
Code preview
cdn.discordapp.com/attachments/592684708551327764/848701541766529034/carbon.png
TradingView does not allow posting external links until you've reached a specific reputation, so i can't use the url feature
Input explanation
WINRATE : chance of winning trade
AVGWIN : average earning per winning trade
AVGLOSS : average loss per losing trade
MAX_LEVERAGE : maximum leverage available to you
TRADES : how many trades per account you want to simulate
ACCOUNTS : how many accounts you want to simulate
the inputs used in the source code are from one of my older strategies, change them to suit your algorithm
Source code
pastebin.com/69EKdVFC
Good luck, Have fun
-Vin
Trading Plan
Is there hope for Forex retail traders wanting to make money?The numbers are disastrous. Virtually all Forex retail traders lose money. Most of those that persist lose big.
There is no improvement over time, no matter how many years they keep trying, and no matter how much help they get. There is no hope.
How bad are really the stats? And why are they so bad?
Let's look at the evidence.
Citi 2014 presentation of the Retail FX market
They say there are 4 million traders (implying FX), 1.6 million in Asia, 1.4 million in Europe, and 150,000 in the USA.
Mainly male (shocker) and of an average age of 35.
It does not add up.
An AMF doc from the same period looks at 15,000 traders from intermediaries representing 50% of the market.
So 30k for France and 1.4 million in Europe?
Americans are into stocks so their number is much smaller as expected.
An unsurprising quote from the doc: "FXCM accounts larger than $10,000 have profitability that are double the average.
Part of it is likely due to the natural selection of profitable averaged-sized accounts surviving and becoming large accounts."
And the CEO said in an interview the smallest accounts pushed the winrate down.
This doc says "Strictly Private and Confidential" so I won't share it even though it is accessible on the ECB website.
Conflicting evidence: The elusive profitable FX individual investors
According to the paper linked below, a studied sample of 1,231 accounts were found to be profitable on average (0.2%).
www.researchgate.net
Most people feel bad, demoralized, sick to the stomach, when they hear everyone loses money trading.
Me, I feel bad, disgusted, demoralized, when I hear that noobs have the ability to make money. Almost makes me want to cry.
There is something really rotten about clueless casuals finding success. Yuck I can just picture them being joyful and euphoric.
I don't know, I don't understand, where this data comes from.
I need to wash my eyes with some IG, FXCM, and myfxbook client positions data :)
I need to warm my heart by seing dumb monkeys constantly go against the trend and hold losers for weeks 😊
In this paper we do not know who the guinea pigs studied are, how long have they been in the business?
What we know is how long they subscribed to a service. And the average was 0.27 years, or 3 months.
Those are not your usual daygamblers as:
- The average opening equity is $90,854.03
- Average Holding Time for Trades (in h) 1,508.48 (63 days or 2 months)
- The average total net gain was $190.30 (0.2% of 91k), it might only be from interests
So this paper does not look at average Forex retail traders at all. Stats change completely when you remove the degenerates.
You look at FXCM and IG client stats, you might find 80% short on a big uptrend, then you look at myfxbook - which attracts all the "robot trading" clowns, and 95% are short!
The more daygamblers and "automated expert advisor 🤡" and 800 leveragers you have, the worse the stats.
Remove all these 🤡, and sure then you get a totally different result.
Conflicting evidence: 99% of noobs lose money, now that's what I like to hear
A Forex website with 120,000 subscribers at the time (mostly FX traders) surveyed in 2020 3,127 Forex traders from 32 countries.
97% of respondents trade Forex, 43% Gold, 24% stock indices, and 9% cryptocurrencies.
Half of users surveyed are 25 to 34 years old, mostly men, and 1 in 4 is 35 to 44. Roughly consistent with other stats, a bit younger.
72% of the Forex traders surveyed are fresh noobs, they had no previous experience before FX.
The retail "traders" surveyed are a tad bit delusional, as 50% of Americans, 59% of Asians, 44% of Europeans, 42% of Oceanians and aye aye aye 100% of Africans think they can achieve more than 5% monthly returns. Between 1 in 2 and 1 in 3, and even 88% of Africans, think they can make more than 10% monthly.
Typical stats: 53% have been trading for less than a year, I assume those are the "5% to over 10% monthly" types?
39% have been trading for 1-3 years, 7% for 4-10 years, and 1% for more than 10.
The success rates (I believe this is self-reported):
Conflicting evidence: Run for your lives! Forex is an evil scam!
This may sound like an exaggeration, but I have the video.
A lady from the french regulator, on television, was screaming "YOU HAVE TO FLEEEE FOREX DON'T YOU GET IT. R.U.N. A.W.A.Y!!!"
In the AMF report "Étude des résultats des investisseurs particuliers sur le trading de CFD et de Forex en France" they come up with scary stats.
Close to 90% of traders lost money in the 2009-2012 period, and even the more experienced ones that traded for the entire period (48 months) lost money at 87.56%.
They have a graph "losses by leverage" but nowhere on that graph is indicated leverage...
And of course there is no distinction between day gamblers and the rest, as their goal is to scare people away.
You cannot say I am biased towards defending Forex, you know how much I LOVE watching noobs break their teeth.
Honestly, this doc is pretty bad, and just pointless fearmongering with nothing to learn that we don't already know (90% lose money).
In a BOJ doc I saw that around 90% of individual "investors" were day gamblers. Explains why 90% lose money.
Ok so retail loses money when day trading I get it, but then how do institutional traders make money intraday? What is their secret?
Simple. They don't. That's the big secret.
There are other sets of data, like what FXCM did for us a few years ago, showing that traders with a risk to reward of 1:1 or more were greatly more profitable than bagholders with high winrate (3.12 times as much):
"Of the traders who traded 1:1 or higher risk-reward, 53% turned a profit; of those who didn't, 17% turned a profit."
Also they show 40% of their traders with 5:1 or less leverage make money, compared to 17% of the ones with > 25:1, and the ones that do make profit with this leverage probably only made a small deposit compared to their net worth.
For obvious reason you'll never hear from a broker the correlation between day gambling or not and profitability.
I heard from someone that worked at FXCM that they tried looking for an edge from their biggest losers, all that they found is they overtraded, this is again something you'll rarely hear from brokers for obvious reasons.
In the end all we can take out from all of this, is some win, most lose. There is at least some little improvement with experience.
"Intraday" Gamblers and leverage gamblers are gigantic losers that destroy the stats, as most of us I am sure already knew.
And as Locke and Mann (2000) show in a study "there is evidence that trading success is negatively related to the degree of loss realization aversion."
Might also want to add: Be a one trick! Warren Buffett is one big fat OTP that only value invest in blue chip US stocks in sectors he understands.
1 market. 1 strategy. And he is doing rather well unlike all the loud mouths with zero life medals that say he "misses out".
Simplify Your Range Setups - How To Trade It?Hi Traders, today's topic regarding " How to simplify range setups? " If you are someone who's constantly giving back profits during range bound condition, this post is dedicated for you. Majority of traders are able to make money during trending condition, but only to watch huge chunk of their profits peeled off during a choppy/ range bound condition. These are few of the simple steps to improve your ability to trade the range safely.
1. Be patient
Majority find range bound condition difficult to trade due to the lack of patience. There's no way you'll be able to identify a range without giving it time to develop. When the market is experiencing some volatility contraction especially after a strong trend, it is a precursor telling you probably you need to take a step back. Give the market enough time to develop a clear structure, it will improve your decision making process. Avoid having the sense of urgency to get involved.
2. Widened SL
To trade the range safely, you must widen up your Stop Loss to prevent probes & spikes. Unlike any textbook range condition, a range bound condition in the live market contains plenty of fakeout. By widening your SL, it provides some cushion for your range setups to breathe and allow you to have a calm state of mind. Because once you get stopped out with a widened SL, it signals you probably the range condition is coming to an end.
3. Realistic expectation (RR)
Majority tend to ' predict ' the break rather than respect the market. Avoid having some unrealistic expectation if the market itself is presenting a tighter range. If it is a 50 pips range, by having a 100 pips target you are enforcing your personal will & expectation into the market. By doing so, you would always see some of the great range setups turning against you.
4. Identifying key Area of Value (S&R zone)
During a range bound condition, it's vital to spot key S&R zones and ignore the minor ones. The only Area of Value for range setups area is S&R zones, if you're trading a continuation pattern (Eg. flag) within a range, most likely it might fail.
5. Market direction
By identifying the market direction, you are improving the probability of success . Think about this logically, If the market had a prior bullish impulse, the probability of success to go long is higher, because buyers' are in control, the probability of market breaking above the range is greater too, vice versa.
Comment down below what's your worst experience trading the range!
"Trade what you see not what you think." - Warren Buffet
Trade safe as usual.
Do follow my profile for daily fx forecast & educational content.
Who makes money playing the markets directionally?> Retail & Day Gamblers: Absolutely no one day gambling profitably has been found to this day, and we keep looking for them.
There might be a handful of DAX & Dow Jones traders that make some money, I don't think they outperform the indices.
Compare day gambling to regular predation: Ever heard of an apex predator going for tiny prey over and over?
Tiger goes for prey at the bare minimum 10% of its size, up to 10 times its size. Also a tiger has a winrate of 5-10%.
Same for polar bears. High risk reward is universal. The exception would be grizzlys that found a niche with salmon jumping in their mouths.
The hyper massive apex predator going for small prey would be blue whales: They go for lots and lots at once, like a quant fund, not like a day gambler.
Traders at banks that have some liberties and hold some positions have an exposure limit at the end of the day. They can't hold Citibank with 10 billion usd just because they want to for example. Intraday they execute orders for clients and you can't stalk them non stop so they have some liberties during the day. So to go around their limits, because they all think they are the wonderboy who will be the next Jesse Livermoore if only the bank would give them their chance, they day gamble. As long as at the end of the day their exposure is below the limit all good. Wonderboys... One of these legends is Jerôme Kerviel. He didn't even day gamble he wanted to make big money so he cheated the system to hide his exposure. And lost 5 billion. Well that's what the bank said, and the government that sent them a big check of taxpayer money never bothered to audit them.
Needless to say to this day humanity has not found a single institutional day gambling wonderboy that makes money. It's like looking for life on Mars.
In Forex at least 90% of retail "traders" are day gamblers. In stocks a part of retail is made of passive holders, of course hedge fund clients, ETF too, and then there are lots of bagholders chasing the worst possible investment and holding to zero, and lots of day gamblers too. Retail investors in FX have a success rate of close to 0%, and in stocks passive holders underperform the indices at about 99%, retail stock day gamblers either lose money (~95-99%) or underperform the indices.
At any given time ~75% of FX retail loses money but this is taking all the ones lucky in the short term plus doesn't account for turnover (winners stay longer).
Overall in FX at least 95% of retail will lose, but when you know they almost all day gamble, sometimes with "EA and robots", you are not surprised.
The ones that do not day gamble hold losers for ages and get out of winners asap, just check brokers retail positions. At least 80% do this.
No day gambling and not holding losers is not even step 1. I would call it step 0. In nature not a single predator holds losers. Videos of predations show almost only the success, but pay attention they'll say "this tiger hasn't made a kill in 4 days" and also sometimes show them "losing", these top predators give up so quickly I am amazed, they ambush, jump, and if the prey starts running away immediatly the hunter just doesn't even try. It's like a law of the universe: losers insist on holding losers. That simple.
If speculating had an elo then 95% of retail would have 200 elo, being naturally bad and then add all the bs thrown around the internet and the scams... ==> 200 elo.
They're just that bad. Don't even have the nuts and common sense to cut losses which is not even a goal to have it's not even a step. Herbivore prey instinct.
Remove all the extremely bad trolls and then it's just a regular business the ropes of which you have to learn. You just can't fix stupid I guess?
> Hedge funds: They are (very) public, we hear about them most.
Stocks versus Forex: They all go into stocks, in the US there has to be maybe 10 funds dedicated to FX, and their phone never rings. Investors think stocks are magical money machines, they have all sorts of stereotypes about FX the "negative sum game", and also think stocks are better because they can be more diversified with a portfolio of 100 stocks that are all correlated.
You can add quants, arbitrage, and all sorts of strategy denominated funds we hear about in here I guess.
Most hedge funds mainly hold stocks to make their clients happy, and will do a bit of everything.
Even Warren Buffett had a position on USDMXN a few years ago.
1 "different" hedge fund we heard about in 2018 was legend manager James Cordier.
He had a good 100 leverage on volatile commodities.
You can't say "we never hear of these guys", he had a public fund like all hedge funds, and he even posted ideas on an investing website (I think he did so for 15 years).
1 client with a $1MM account with the guy linked his positions:
NatGas, Crude Oil, Gold, Silver, Soybeans, ICE Coffee.
JC had positions on dozens of contracts for each of these, on only a 1MM portfolio.
> Private equity, family office, venture capital, and individuals you never hear about:
Michael Burry started being heard about when 25 or 30 years ago he was posting stock picks on a forum. But he really got famous when he did "the big short". His clients were so mad with him after he made money, I think it is why he decided to leave and start his own thing. I am not sure exactly as I heard his positions were public.
There is a private equity guy that posts about economics & geopolitics on a social network, I forgot the name, he manages the money of a single billionaire.
Recently we heard about Bill Hwang, another legend. We heard about him because he got liquidated and crashed certain stocks he had massive positions in. Prior to that he started working for an institution, left with a few millions, started his own private business, and turned those millions into billions making 60% a year. Too concentrated and leveraged, he got too big, if he was smaller he would have gotten out without problem. Should have thought about it.
You also have some politicians that make record profits... I have an idea on how they make these profits.
Clearly they are the ones generating the highest returns. Note that none of these individuals are doing any day gambling.
> Pension/mutual funds, sovereign funds, etc:
They are running safer, more passive strategies so no one really cares. We care when Norway says they are going to sell 500 million krona, or when China says they're going to dump 1 billion usd on the market.
Other
Corporate for example. They simply buyback shares with their profits.
I think that's it. If you have something to add let me know. We could add funds of funds if we wanted to. What else? That's it pretty much.
60% a year for Bill Hwang is pretty great, too bad he didn't take it easy when he got very big.
Trade: No, Maybe or Yes!!There are 6 (six) boxes of 4 hour (candlesticks) per day- best times to trade our at end of Tokyo to end of London- related to liquidity and volume.
Please look at hourly chart for more details- convert times to your location.
The Golden Rule of TradingOne of the fundamentals that every trader must know is how to evaluate the effectiveness of his trading methodology. In this article, we will explore core trading fundamentals that you must follow in order to survive and thrive in this business.
1. Never open a position without knowing the initial risk that you are willing to take. The initial risk is the point at which you will get out of the position to preserve your capital.
Very few people have the psychological makeup to keep a mental stop loss and respect it 100%, that’s why for the rest of us, there is the stop-loss that will automatically close our trade for us at a certain level.
2. Define your profit and loss in your trades as multiples of your initial risk.
These are the R multiples. If your risk is $1000 and you make $3000, you have a 3R win. If your risk is $1000 and you lose $1200, then you have a 1.2R loss. You must start to think in terms of risk/reward.
3. Limit your losses to 1R or less. If you don’t respect the stop loss that you have set and let a losing trade run then you are in real trouble.
This mechanism produces 4R losses or larger and can turn your great system into a losing system very easily.
4. Make sure that your profits, on average, are larger than 1R. Let’s say you have one 5R profit and four 1R losses.
If you add those up you have 5R in profit and 4R in losses, a net gain of 1R. Even though you lost money 80% of your trades, you still made money overall because your average gain was big. This is the power of having an average gain larger than 1R.
What is typically known as the golden rule of trading is a summary of these 4 rules:
“Cut your losses short and let your profits run.”
Here we are talking about doing your best to make sure your losses are 1R or less and that your profits are much bigger than 1R. In 2002, the Nobel prize for Economics was awarded to Daniel Kahneman, a psychologist and economist Amos Tversky for their development of “prospect theory”. This theory when applied to trading/investing showed that people have a natural bias to cut profit short and let their losses run, exactly opposite to the golden rule.
5. Understand your trading system in terms of mean (the average R) and the standard deviation (variability in the results) of your R multiples.
Your system, when you trade it, will generate a number of trades. The result of those trades can be expressed as a multiple of your initial risk or a set of R-multiples. You should know the properties of that distribution for any system that you plan to trade. And the majority of the people who trade the markets never know this. If you spend some time and calculate the mean and the standard deviation of your R multiples, you’ll know a lot about your system and what can you expect from it in the long run.
Trade with care.
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ACCUMULATION WYCKOFF ON EJIt is detailed wyckoff accumulation on EURJPY on 30 min TF. Remember price is fractal so you can find it on multiple TF.
Introducing The Satoshi All Time History IndexStarting today you can chart, follow, and research the price of Satoshis going back to 2010. Our new index is called Satoshi All Time History Index.
Satoshis, or sats, are the smallest unit of bitcoin (BTC). 100,000,000 satoshis make up one Bitcoin.
Satoshis are particularly important to the Bitcoin community because transaction fees are often measured as satoshis per byte or satoshis/byte. This makes the unit important to chart, follow, and analyze in detail. In addition, some people see sats as a useful way of addressing unit bias – where people prefer whole units over a fraction of a unit.
To get started with our new index, type SATSUSD into the search box and select it from the list. You can also bookmark the SATSUSD symbol page or share the link where needed.
We hope everyone enjoys this new addition. Please leave any comments or questions below.
Thanks for reading!
Always trade in the direction of the Momentum !Who goes long for a share when its bearish? Do you sell your shares if trend is bullish? how can one understand the status of a stock?
One of pillars of successful trading is to trade in the direction of the momentum. of course it is not guarantee your success in all trades but it is definitely a must thing to consider and is necessary for a good trade.
There are some indicators which show the momentum of the market among which " STOCHASTIC" and " STOCHASTIC RSI" can be mentioned.
Simply the momentum is bullish if fast line ( Blue in stochastic indicator) crosses slow line( Red in stochastic indicator) upward and Momentum is bearish if fast line crosses slow line downward.
It is OK to go long if Momentum is Bullish and is OK to go short if it is is bearish. 2 bullish reversals are shown in the chart which show a good point to buy shares . One Bearish reversal is also shown which indicates a good time to go short.
Bullish and bearish reversals in oversold and overbought zones are more powerful. when both fast and slow lines are in oversold zone ( below line 20) it tells us that down side should be very limited. if both lines are in overbought zone ( above line 80) we can expect a near bearish reversal.
Combination of this concept with Elliott wave patterns and Fibonacci levels can give you a powerful tool which is beyond the scope of this post . A simple and elementary example is shown in the TSLA chart which a bearish reversal coincides with 0.618 Fibo retracement and descending trend line.
My strong recommendation is just simply put away those ideas which encourage you to go long when momentum is bearish or (bullish but in overbought zone) and vice versa.
Good Luck in your trades
Trading Conviction: Missing Ingredient“How did you hold that winner for so long?” “How did you hold through that big move against your position?” “Why did you take so much size?”
Conviction is what allows you to have big, home-run trades that make your whole trading year. It keeps in winning trades even when things look uncertain. This is what separates amateur traders from pro traders. Learn how to build this in your trading:
What is Trading Conviction?
Conviction is defined as “a firmly held belief or opinion”. In the trading world, you will often hear traders say “that was a conviction trade”. Conviction trades are ones taken with large size, and are often responsible for the bulk of your PNL at the end of the year.
One of the most important characteristics of great traders is sizing big when the odds are in their favor. Not sizing big on your high probability setups is like betting small when you have pocket Aces in Texas Hold’em. You won’t be able to win in the long run if you don’t maximize profits on your high-probability setups. Capitalizing on winning trades is just as important as keeping losing trades small.
Knowing the Probabilities
To have a conviction on a trade, you need to have an accurate estimate of the probability of the trade becoming a winner. So where does conviction come from? Having a defined trading strategy. This means you have defined what type of Forex you trade, when you trade them, what constitutes buy and sell signals, and you have rules to protect yourself from your weaknesses.
You cannot have conviction if you don’t have a proven system you know has an edge. A lot of traders assume the effectiveness of a strategy by just what happened on the last few trades. You need to have a large sample of trades to determine a system’s effectiveness. If you don’t know how the trade SHOULD pan out, you won’t be able to ride the bumps on the road to your target (s) with big size.
“Competence breeds confidence”. Conviction is derived from confidence, and confidence comes from having a DEFINED strategy with an edge. Psychology does play a role as well of course, but the base of all successful trading comes from knowing what you should be doing during the trading day, and more importantly, what you shouldn’t be doing. And the only way to know this is to have a system and rules.
Differentiating Between Conviction and Stubbornness
This is where many traders go astray. They let their convictions prevent them from cutting a losing trade before it gets out of hand. Even on high probability trades, there is always a chance of them turning into a loser. “A conviction trade” results from trader completely accepting possibility trade could be a loser, thus eliminating fear.
Trading losses are just business expenses: Change the perspective of your trading." Trading is a business. Just like any business owner or entrepreneur, traders have expenses, frequently these expenses come in the form of losses." View losing trades as price you pay to find out if trade would be a winner.
Study Your Best Trades EVERY Day
Your brain needs to see the same setup play out over and over again to build conviction. Just like an athlete trains every day, you as a trader need to train your brain every day. Study best trades over and over again, and remind yourself how they usually play out so you can take big size on them. What you can do is after you run morning scans and build watch list, go back and study past names with similar setups, and remind yourself how they typically play out.
Summary
There are many factors that cause a trader to have or not have a conviction. Experience is a big one that I didn’t mention. But I think it all comes back to having a system with an edge, and taking the time to study past charts and scenarios on a daily basis. Starting sound like a broken record: Study 1000 charts a day. Seeing the same patterns play out over and over again is how you build conviction in your trades.
Can you hold Forex trades for several months for your profit pip reward, like example weekly chart of USDCAD from 1.30000 to 1.20000 (1000 pips)?
Still going lower at this time... maybe for rest of the month of May? With right risk management and plan you can- and increase lot size as trade profits.
Direction Easy✔️ Timing Hard ❌Hi Traders,
I think the analysis part of trading is the easy bit. By that I mean most traders usually have the correct direction in mind but timing is difficult. AUDJPY is a classic example. The analysis was simple. Price broke about daily resistance, retested it and I was looking for continuation. I entered the trade but price came back and took me out for a breakeven. Then, it continued it same direction I expected it to. Personally, I prefer to preserve my capital by going breakeven once in good profit and I do not even confident re-entering a trade if price retraces so sharp and took me out the trade.
1. How soon do you place your trade at breakeven once it is in profit?
2. Do you re-enter a trade is it took you out at breakeven and show signs of following your original trade idea?
Comment below.
2% Max LossMoney Man has not seen the need to adjust his levels as he still stands with his original idea that ETH needs to break a pattern, clear as day on the chart, to get buyers over the fatigue. The short term trendlines are telling us this and has proven themselves as guiding pattern formation. Logic thus would change the top of Decision 1 and bottom of Decision 2 to keep these lines inside it as we go.
So, he is taking this time to expand more on his ideas around risk. We all have heard about the Kelly Criterion, but also about the 2% rule (cap your losses at 2% of total allocation – the total you have allocated to trade in a particular instrument like ETH).
He would classify the Kelly Criterion as an advanced risk management tool, hard to pin down within so much variance that a market has. Advanced, you say? Then that must be what a new trader should use! Not so fast. New and even older hands typically calculate their acceptable risk before admitting defeat on a trade, via back testing. Here lies the rub as more important than; the “past results do not guarantee future results” understanding – there is the lack of experience in relation to their own emotional tolerance to red. You know: the old “close winners fast and let loser run” outcome.
Money Man has written about the well-known break-even parabolic horizon a long time ago and link that below. He mused then that that parabola is what sinks even brick and mortar businesses. Now he wants to give his thoughts on the 2% (used in this explanation – but could be more or less) risk to total allocation. There is another parabola hidden here (in red) and finding your sweet spot is the goal. So, your sweet spot would depend on your tolerance to loss (percentage) and its relationship to the chart / price action (distance on chart in percentage).
Many traders simply trade with their whole allocation and thus sit at the far left grey bar (100% of allocation in) and far left of the parabola, forced into a 2% below entry price stop loss placement. The other extreme is a trader who only uses 2% of their allocation on any trade to trade with and have no need for a stop loss if they believe in the 2% rule. There is the option to adhere to the 2% rule and adjust your position size according to where you would like to put your stop loss. The graph above tries to give a quick reference rule of thumb and illustrates how the distance of your stop loss parabolically grows the smaller your position size. Back of an envelope math but soothing to the adrenal glands if you can find your own sweet spot.
Where does the whole 2% rule come from? Money Man does not know for sure but knows that it has been around for a long time and has thus been discussed and “peer reviewed” extensively. Also, and more importantly, it speaks to another reality in the antifragility of staking your options in your favour while keeping your risks in check – an advantage you can still reap even if the percentage is too low for your liking. The reason for including it is that it could be a bridge between “betting 100% on every trade” and having a very well-developed dynamic trade size to stop loss placement distance dependent on market conditions.
Please double check the math that went into the above graph before use. Remember there are no guarantees, only probabilities. Very Important to me: Please like if you appreciate the effort, Please comment and develop this further and Please follow if you see this analysis thread going somewhere you would like to know about.
11 Rules for the Ordinary Trader
Through your trading carrier, you will learn to develop your own paths and ways to become successful in your own way, but there are many things that will give you a boost of knowledge in your trading carrier. Down bellow lists 11 different rules I have gathered from many sources.
Rule 1: Price has memory.
What happened the last time a stock hit a certain level? Chances are it will happen
again. Watch trades closely when price returns to a battleground. The prior action can
predict the future.
Rule 2: Profit and discomfort stand side by side.
Find the setup that scares you the most. That’s the one you need to trade. Don’t
expect it to feel good until you take your profit. If it did, everyone else would be
trading it. Wisdom from the East: What at first brings pleasure in the end gives only
pain, but what at first causes pain ends up in great pleasure.
Rule 3: Stand apart from the crowd at all times.
Trade ahead, behind or contrary to the crowd. Be the first in and out of the profit
door. Your job is to take their money before they take yours. Be ready to pounce on
ill-advised decisions, poor judgment and bad timing. Your success depends on the
misfortune of others.
Rule 4: Buy at support. Sell at resistance.
Trend has only two choices upon reaching a barrier: Continue forward or reverse. Get
it right and start counting your money.
Rule 5: Manage time as efficiently as price.
Time is money in the markets. Profit relates to the amount of time set aside for
analysis. Know your holding period for every trade. And watch the clock to become a
market survivor.
Rule 6: Don’t confuse execution with opportunity.
Save Donkey Kong for the weekend. Pretty colors and fast fingers don’t make
successful careers. Understanding price behavior and market mechanics does. Learn
what a good trade looks like before falling in love with the software.
Rule 7: Control risk before seeking reward.
Wear your market chastity belt at all times. Attention to profit is a sign of immaturity,
while attention to loss is a sign of experience. The markets have no intention of
offering money to those who do not earn it.
Rule 8: Big losses rarely come without warning.
You have no one to blame but yourself. The chart told you to leave, the news told you
to leave and your mother told you to leave. Learn to visualize trouble and head for
safety with only a few bars of information.
Rule 9 : Enter in mild times, exit in wild times.
The big move hides beyond the extremes of price congestion. Don’t count on the
agitated crowd for your trading signals. It’s usually way too late by the time they act.
Rule 10: Perfect patterns carry the greatest risk for failure.
Demand bruises on your trade setups. Market mechanics work to defeat the
majority when everyone sees the same thing at the same time. When perfection
appears, look for the failure signal.
Rule 11: See the exit door before the trade.
Assume the market will reverse the minute you get filled. You’re in very big trouble
when it’s a long way to the door. Never toss a coin in the fountain and hope your
dreams will come true.
Yours truly,
Jacob Schildcrout
**Note, I dont take credit for these rules, these have been gathered from sources for your convenience***
3x ETF SOXL vs other 1x semi ETFs over various time horizonsI compare SOXL returns with SOXX, SMH, and PSI, all ETFs in the semiconductor space.
CONCLUSIONS AND FINDINGS:
YTD 2021 SOXL has not provided any net benefit over it's peers. And if you use stop loss orders you've probably lost money on it due to its extreme volatility. Smaller quant ETF fund PSI is the better performer on most/all time horizons YTD or more recent, especially from a risk/reward perspective. Only when comparing SOXL against the others on a time horizon of 1 yr or longer does SOXL outperform it's peers.
Importantly however, charts mimic real life only to the extent we make the purchase the entire position at once and don't touch it over the entire time frame. But this is not what most traders do. Thus, I recommend holding SOXL only if you're going to buy it and not set any stop loss orders, touch it, trade it, or even look at it for a year or more. But you probably can't handle that. I can't either. Thus the better, more realistic strategy for most traders is to get PSI or one of the other primary ETFs covering this space.
How to Trade Price Action Daily!Hello Fellow Traders, Here is a Educational Video (How to Trade Impulse/Correction/Impulse) .
Key things to Remember:
When Trading This Type Of method - You Should Always have an Open mind when it comes to "Where the Market will Finish The correction"
The Strongest Levels of Fibonacci is the 61.8 & 38.2 (These Are Generally the levels that the Market Loves to Finish its correction)
The Best way to follow This Method is if the following conditions apply.
Conditions -
1. Look & Find a Big Impulse On bigger Timeframes (Weekly, Daily or 4Hours)
2. Wait for The Market to Finish its Impulse (You will notice the market starts to move the opposite direction to the original Impulse)
3. Pull Your Fibonacci From The Start Of the Impulse to the End of the Impulse Aka ( From high to low = Sell OR Low to High= Buy)
4. Be Patient and wait for the Market to Reach the Aka Strong Levels (61.8 Or 32.8) OR Which Ever is Better Align With Good Structure!
5. Once you Have a smaller Timeframe break of structure or Momentum Change (You will look for an Entry Based on Market Environment + Structure)
6. Enter Your Trade Preferably of 1hOur Or 4hour Timeframe (whichever has given confirmation mentioned in point 4)
7. Always Use Risk Management / 1% Risk to Trade Entries using this Method
8. Patience is the Key to Success!
Let Me know if you have any Questions or Comments Below!
Your Support Is Appreciated!
Happy Trading & Goodluck!
See You in the Next Educational Video!
Global Fx Education
The importance of intelligence to tradingINTELLECTUAL QUOTIENT
The one we hear the most nonsense about and for 1 legit piece of info there are 500 TB of crap.
People are super insecure about this. Even in investing circles, where individuals are at or above average, still insecure.
Academics using Finnish data (because at 19-20 men have to pass an IQ test for the military) found that
25% top IQ (IQ > 110) make up 50% of market participants
25% bot IQ (IQ < 90) make up 9% of market participants
So virtually everyone reading this should be average or above, and I don't do simple magical indicators so that probably adds another filter.
Academics looked at tech stocks on the Helsinki stock exchange and found that in the sample period 1/1995-11/2002 the annualized returns (dividends etc included) were:
- For the 42% with the lowest IQ 9.52%. The 1rst to 4rth stanine. IQ <96. I'll call them INT 1-4.
- For the 4% with the highest IQ 14.45%. The 9th stanine. IQ > 126. I'll call them INT 9.
A significant difference. Remember the vast majority are passive investors that just follow the market as a whole.
Imagine 1/3 of a country invests, they have a separate life they're not all active.
Much of the difference in performance - which is monotonously correlated with IQ - comes from lower IQ individuals joining at the wrong time.
But even when ignoring the timing, and looking at returns as if they all joined equally over time (by adding weights to the data) scientists found that INT 9 (IQ > 126) returned 14.84% and INT 1-4 (IQ < 96) returned 12.65%.
So not only wrong timing but also wrong stock selection. I am guessing they regrouped 1-4 to not humiliate people with intellectual disability (INT 1)?
Sources:
papers.ssrn.com
papers.ssrn.com
Proven by science, all the big liars saying it does not matter are big liars trying to be liked.
About market timing. There is a clear pattern, it just jumps at you.
Page 61 of IQ, Trading Behavior, and Performance you can see for yourself so I'll keep it short:
Basically like it or not, people with an IQ over 105 (37% of the population), which already is the majority of market participants, are the ones buying during the bull market, and the average and below all rush in when prices start to go parabolic, making them go even more parabolic, smart people step away, and 1-5s hold the bag and keep buying when the price is clearly in a bear market (poor pattern recognition).
To all the people that joined crypto in 2017 and are going "oh no not me": The Finnish data set only looks at men over 20.
And the vast majority of those are well over 30. They had more than enough time to earn some money, hear about stocks, and get into investing.
The European demographic pyramid is really terrible. And of course older people invest more than broke young people that study or barely started to work.
People get into investing in waves. The tech bubble was when plenty of 20 yos (back then) got in. I didn't know I could invest by myself before 2017.
All of us 20-30s are just a tiny minority that makes no difference stat-wise compared to the vast number of middle aged workers and retirees.
For my defense I entered at the top, during the parabola but I was not a permabull, all the bagholding 1-5s were laughing at me for being bearish...
I like it here, how it is now.
If Bitcoin goes vertical to over 100K the 25% at the bottom will start to appear again. And start arguing. And making circular logic. And screaming. And sending threats. Oh boy.
INT 6 represents 17% of the general pop & in this data 23-24% of market participants, INT 7-9 23% of the general pop is 36-37% of market participants.
You know, even today after they lowered the level drastically, only 1/3 of people completes college education (or equivalent for us French), and they're not 1-4s.
Seems obvious to me that someone that struggles with a division won't be making money in the markets, do people think this is manual labor?
But whatever, as I said, IQ matters because these 4 things matter:
1. Pattern Recognition: The ability to understand the world through analogies. Predicting a crash because many elements are similar to the previous crash is not very different to looking at a bunch of dominos in an IQ test and guessing which one is next in the list.
2. Numbers skills: being able to quickly calculate risk, volatility, as well as understand probabilities. Good way to avoid holding a bag and waking up "Oh what? How am I down 75%? Didn't see that coming". You have to see that coming. You need to know how much you'll make or lose if the price goes up/down by x percent, how likely it is to happen using implied volatility, and much more.
3. Planning & Problem Solving: NEW problems. Not "learn by heart your school lesson" problems. Parrots and college professors do not make great traders. Learning by heart is useless. Every time it's different. "This time it's different". You can mix this with pattern recognition and it becomes obvious where I'm getting at: dumb money ALWAYS goes "this time it's different". You should be able to adapt to new variables, solve new problems, and be able to recognize how NOT different they are. All snowflakes are different. This is literally IQ at its finest and nothing more.
You either see the "different" pattern of dominos and can solve the problem or you don't have the IQ and simply do not see it (and insult people that do see it call them stupid and conspiracy theorists).
4. Dealing with a lot of info: being able to analyse much information, while ignoring distractions.
Academics that looked at data unsurprisingly found that higher IQ individuals had more diversified portfolios.
And also, higher IQ individuals are able to analyse more data as well as ignore distractions (according to a BBC article).
How to increase my IQ?
There is a way. Only 1 way I know of:
"Scientists found that multitasking reduced men IQ by 15 points, lowering them to the level of an 8 year old".
I am certain it's not like this for women, prob just reduces it by 5 points or something, or maybe 0 idk.
We men tunnel vision. So ye just focus on 1 goal only and get good at it.
This "multitasking" will make you a complete noob. Literally an 8 year old to be more precise :D.
Women have same average IQ as men also. I don't really know what the differences are for investing, probably not much.
They're probably better at being organised too. That's just... so bad for me you have no idea. What a mess.
Obviously it's also possible to learn about numbers and improve at it... And one learns to recognize snowflakes by studying plenty of snowflakes, regardless of his abilities (just will be easier for someone who scores higher that's all).
EMOTIONAL QUOTIENT
Why do I write so much? Good thing there is very little research about this, so not much to say.
First, no, women do not score higher (in IQ either btw). Just because there is the word "emotional" in it people assume silly things.
It's just a word. Irrelevant. So I'm calling it brzbjfbrhdjf from here on.
These are pretty self-explanatory honestly.
People with high brzbjfbrhdjf perform better than people with low brzbjfbrhdjf.
There are exceptions. I found that people with LOW empathy made better debt collectors XD Better serial killers too I bet!
A doc, not sure how serious, shows how they tested portfolio managers, and these had significantly higher brzbjfbrhdjf than average people.
There is very little research on brzbjfbrhdjf, as opposed to IQ that has a lot of it, but there sure is a lot of "understanding" media articles about brzbjfbrhdjf, saying how great it is, as there are tons of articles saying how awful IQ is (insecure much?) and none praising it or just listing some of the positives.
The market does not care where you bought, remember? It's about what the market is feeling, so go scream "BITCOIN IS GOING TO ZERO!" and find out if:
- They are mocking you (honestly): They are complacent, euphoric or thrilled, depends. Can't really teach this... Have to "feel it" idk.
- They are angry (includes mocking you but if you have high "empathy" & "social skills" you can tell they are mad): Anxious
- They go "pfff", "I'm over it", they sigh: Well capitulated and depressed, bottom?
So many people think the world revolves around them, and when there is someone they don't like they get persuaded that person is dumb or loses money XD
They think if they believe hard enough it will happen? I find it stupid, so the term "emotional" intelligence might be accurate, the intelligence part anyway.
I could go on but I think that's enough. If I find something interesting I'll share.
It might be more important than IQ, OR not be more important but since all investors have high IQ anyway then IQ won't matter but "EQ" will differentiate between the mediocre ones and great ones. Having both = jackpots. OF COURSE here we talk about people that put in the hours. Obviously just having "good genetics" won't make you Mr Olympia if you drink beer all day long and never work out, know what I mean?
People with low empathy can make money by the way, plenty of autists (famous for not being able to understand people feelings) are great money manager.
Remember Michael Burry? Predicted the housing crisis and shorted morgage swaps, great at stock picks. Famous now, made lots of money.
You know what else Michael Burry did? Short WAY too early. Because people were still way thrilled back then.
And he quit managing other people money (I doubt he understood their stress), in an interview he explains how they were mad even after he made them lots of money.
A guy with low empathy dealing with very emotional people (very emotional doesn't mean high "emotional" intelligence) and very little self-management (also little ba**s).
1. Self-Awareness: is the ability to understand how emotions affect yourself and other people.
2. Self-Management: is the ability to control impulsive decisions.
3. Motivation: is having a passion for what you do along with a curiosity for learning.
4. Empathy: as in the ability to understand how people feel (fear, euphoria, etc).
5. Social Skills: as in being aware of the people around you, people with different point of views.
The military gets the best results by filtering at entry. Rather than punish everyone because of some gamblers, regulators ought to filter at entry.
In some video game, would a MAGICIAN starting with 0 STR and built as a melee tank do well? No.
People with low "IQ" and "EQ" have nothing to do in this business. Better to do something else.
What else that I do not know. Society has a problem with low IQ individuals, there are no jobs for them. Tech advanced too fast humans can't keep up.
Just convince intelligent women to focus on their careers and give welfare to dumb ones when they have kids, that'll solve the problem long term!
I do not have autism (kinda disappointed), it's not that I do not KNOW this sounds distasteful to people, I am very aware of it, it's just that I don't give a rat's ass.
Not going to start lying to be popular. Plus everyone can keep burying their heads in the sand, things will just keep getting worse.
Specific to investing, people will low IQ/EQ will be told everyone can make it, buy a course or whatever, waste hundreds of hours, lose their money, quit. Oh great.
But for a moment they felt really good and had high hopes. High hopes that got completely crushed. Great. At least some bullshiter got to be the nice guy!
Most "1-4s" know they're not super smart and avoid the market, most people that get offended are 5+ but get offended in their name because they're so virtuous or something.
But idk recently they're trying to "democratize" investing, and all sort of random people with no clue what they are doing and a gambling mentality are jumping in to pump the pyramid scheme higher. This can only end badly. So I wonder, are the people pushing for this nonsense really "well intentioned"? Or just trying to keep the pyramid scheme alive a bit longer and pump their holdings at the expense of "useless eaters"?
How To Add Emojis To Your ChartIf you publish a lot of research from your TradingView account, emojis will give readers another way to engage with your work. Emojis are recognized globally and can help others better understand how you're thinking or feeling. They can also be used as quick reminders or notes.
Here's how you can add emojis to your chart:
1. Copy and paste an emoji directly into the text box tool like this 👋. If you need help finding an emoji to copy and paste, there are several websites that make this easy to do. You can add emojis to any text box or drawing tool that supports text.
2. The second method is to use the Signpost tool. The Signpost tool is located in the Annotation Tools menu on the left-side of the chart. Select the Signpost, place it on the chart, and then open its settings to add an emoji. The Signpost tool can be used to leave detailed notes at specific price levels. It is easy to use, fully customizable, and it can be dragged to any point on your chart. We've included a few examples on the chart above where we've also customized the background color of each Signpost. 😎🐻 🥶🐂
Thanks for reading! Let us know if you have any questions or comments. Our team is always listening and waiting to help.
PATTERNS & PITFALLS #1
The market is designed to make you fall into traps, and make you doing things. By nature, we tend to overcomplicate things and trading is one of them. As in coding, the best way to code is to Keep It Simple Stupid (kiss).
One of this thing is what i call “The Home Runs Chaser”. A large majority of retail traders, slowly tendto look everyday for a stock heading up to the moon. Why does this happen? How we slowly enter into that thinking process when we start trading?
So you start trading for few days or few weeks, you see a stock on an uptrend and you go long, take money and then you see the stock going up fast after you exited, what do you tell yourself?
“Damn it, i should have held it a little longer, if only...”
And then it happens a few more times, and BINGO you’re in it, you’re in the trap designed by the stock market:
- You start looking everyday for home runs.
- Now you have the “win or loss” mentality
So you allow yourself to lose it. You see gains but you’re focusing on the holy grail, the holy target!
LOOKING FOR HOME RUNS WILL LEAD YOU TO NOT GETTING PAID !!!
Plus it will frustrates you a lot because most of the time, you won’t have the home run.
=> We must enter the right way of course, as usual, BUT BUT BUT, we must take quick wins when it’s on our side.
=> Sometimes we have low wins when the stocks have low momentums and sometimes big wins if they are big.
But at every trade: you should take partial profits along the way.
Exemple: you enter long in stock XYZ at 20$ with 100 shares. Your target is 22$. Instead of waiting the price to reach 22$ to sell your 100 shares, what you should do is to take partial profits. So at $20.49 you sell 25 shares, then at $20.99 you sell again 25 shares. If it goes over 21$ then you wait for the price to reach 21.30 to sell again 25 shares BUT if the price goes back to 20.50, just sell 25 shares to secure a bigger win. The remaining of the 25 shares are sold at ~ $21.97 in the case it goes up, or sold
at ~ $20.20 if the price drops.
That’s how you secure a win and not let the trade goes against you.....
And if you have to leave your computer, just use the trailing stop with an ok spread between the price and the stop just not to be stopped too quick if the price moves down a bit before going up.
The Fibonnaci Retracement, A Traders Best FriendWe all know what the fibonnaci is. But how do implement it into trading and how does it work?
The tool i use the most is the fibonacci retracement. You drag it across the chart. Drag it on starts to ends of trends and you have a fibonacci retracement now.
How does it work?
Now that you have drawn your fibonacci you see these ,,zones". The most common number used in fibonacci tools are 0.618 or 1.618, also known as the golden ratio. The most common example of the fibonacci retracement you'll see are rejections from 618 zone to 382. The 764 zone is thought to be a strong rejection zone. The 1 and -0.618 are thought to be reversal zones. Between 0.5 and 0.618 is the ,,golden zone" for shorts or longs.
Now lets say we have a fibonnaci with the numbers 1, 0, 0.5, 0.618, 0.764 and -0.618 and i draw it on a up trend from start to finish. What is most likely going to happen is the price will go into our ,,golden zone" and retrace up. Take profit will be -0.618 or 0. And our stops will be just bellow 0.764. You can customize your fibonnaci to your likings and test to see what works and what doesn't. The zones i recomend most are those i mentoned earlier in the example.
Remember to draw the fibonnaci on trends, NOT consolidation.
If you liked this little guide leave a like and share it to a friend ;).
Ways to solve our overtrading issuesHello, I have an overtrading problem.
There are solutions, they are just not on the internet on trading websites. They come up with the same useless nonsense you'd expect "take some time off the screen", "don't try to get rich quick", "defeat your overtrading", "get motivated get a plan and force yourself to stick to it", "be patient" 🤦♂️.
What is next? "Brush your teeth be a good boy and do your homework"? Or even better "do not overtrade". My brain doesn't care that "less is more" my brain is thirsty.
Really there is no such thing as "placing the threshold here". There is not such thing as "not (under/)overtrading". You always either overtrade or undertrade.
If we want to compare this to drawing a line, or in other words placing a barrier, it would be like placing a barrier but not 2 or 3D, there would be 20 dimensions, and all opaque, and ever changing, and you do not know which one is more important which one is less. Good luck learning by heart how to do it in a book.
Of the past 5 months 4 of those had nearly no good setups for me, it was very hard. I can't just do nothing. So I took really terrible setups. Way too many.
Ok let's skip the excuses. Even if I am not trying to go only for the ideal stuff at all, I've been taking way too much, I went through my logbook and I would say I took 2-3 times too many.
We want to compete, we want to play the game.
Most people, and most people this idea is targeted to, are at an intermediate level to advanced.
Beginners that do not even have an edge well overtrading is not really hurting them is it. They do not give back profits, there are no actual profits to give back!
A word for beginners. Since we're going to end up investing anyway aren't we? Well perhaps they might as well start with managing a simple low risk portfolio.
Build a solid base. Might as well start with the easiest part. Least difficult. And might help avoid overtrading from the start. If I could start over I would not hesitate.
Once an intermediate has his niche, a few currencies, his favorite websites & tools, and an edge, well that just won't do will it.
There is no resting on laurels until we really have plenty of knowledge, strategies, instruments we can handle.
Constantly look for more edges. And progressively widen the business with more currencies. Can also add commodities.
With time the base grows, like a strategy game. Might want to test the new strats on a separate low stakes accounts while running the core one on the real account.
A player with several edges, and a wide array of instruments, as well as a couple years experience, is what I'd call advanced.
At some point if we try adding even more instruments or strategies we'll just mess it up, it takes enough time to manage our vast business already.
And after several years the strategies sort of come without looking for them anyway. Plus the markets do not have infinity opportunities to offer.
Just keep doing research, improve your understanding of the market, keeping updated on everything...
A serious advanced trader will be busy, no worries here. The issue is there are not enough opportunities. We want to compete, we are eager to fight.
If nothing happens in the market, price is just random as far as we know (only retail day gamblers will say it's not and we know how well they perform), what to do?
Well there are some tricks:
- First use and abuse adding to winners. If you're going to overtrade anyway, might as well do it with a winner than some choppy garbage. Not ideal, use this in last resort. Adding to winners should probably have some rules to it. Better to have bigger winners than more losers.
- Go manage a portfolio on the side, invest a little / position trade. And when the urge to take a trade comes, find a good winning investment and add to it. I would not start dreaming of adding and adding and adding to Forex, but with stocks, sure. Buying an additional S&P call is like taking a new trade. Better this than gambling on 2019 EURUSD.
- If you have a severe addiction and just can't help it, well... I guess in last resort there is still the option of going day gamble on the side, but this should not take your attention from your main business. This can easily eat up time & focus, and mess up results without adding anything positive.
5 Strategy - To help you towards your long term Financial Goals!Hello Traders, Newbies & Fellow Friends!
Today I decided to post this Educational & Motivational Post for Everyone to Read!
I hope your Enjoy this Journey with me!
Before we start!
Id like to mention a few Things:
Financial Freedom is Not an amount of money , Its a state of mind!
Trust Your Brain, Not Your Gut - "When things are going well, people think it’s going to be springtime forever,” & “When things are dark and stormy, they think it’s going to be wintertime forever. But I’m a student of history, and it’s always cyclical."
Cultivate Patience - Mastering your finances is just like mastering your mindset—it doesn’t happen overnight. It takes years, if not decades, to see a true transformation. “I think the secret to patience is knowing what your outcome is and focusing on still making progress, It’s about momentum and being a student of what works.”
These five strategies can help you stay on track toward your long-term financial goals:
1. HOME in on what matters!
Be strategic about the financial news that you consume. If you are trading on the Forex Market, there’s no need to check your chart every 10min. You will only drive yourself crazy. Instead, spend those 30 minutes doing something valuable like reading a book or watching a YouTube channel (Global Fx Education) about a financial strategy.
“We’re drowning in information but starving for wisdom,” “The only way to stay strong and centered is to be clear on what you want to serve, stand guard at the door of your mind, and make sure you’re feeding your mind something besides Nonsense. - invest in yourself!!
2. LEARN to be comfortable with risk!
Even the safest trading conditions have a level of risk—tolerating it is simply part of the game. “Risk is the secret to success,” “If you want to succeed at any level— in Forex Market, in your contribution to the world—you have to learn how to deal with this four-letter word.”
Trading should be based on goals and what we’re trying to accomplish,”
3. FOCUS on what you already have!
High achievers always tend to focus on self-improvement!
But if you’re always focused on what’s missing, you’ll never be able to attain true happiness. 𝗖𝗵𝗮𝗻𝗴𝗲 𝘆𝗼𝘂𝗿 𝗺𝗶𝗻𝗱𝘀𝗲𝘁 to focus on what you do have: Perhaps you don’t possess enough money to travel and donate as much as you would like to charity, but you do possess enough to pay for a sizable share of your child’s college For Example. That’s big!
4. DON’T MAKE impulsive decisions.
If you find yourself tempted to make rash decisions with your money, you’re not alone. “Humans aren’t really wired to be great investors; it’s just not the way we are built,” we often make decisions based on emotions or intuition rather than facts.”
5.KNOW your limits!
The world’s most skilled investors didn’t make it big due to one or two lucky investments—they’ve spent their lives learning how to be the best at what they do.!
Like an wise man always Told me - Rome wasn't Built in a Day, Take careful consideration in everything you do.
Notes - Adjust Your Worldview
With the volatility of the Stock market & Forex Market, political division across countries and unpredictability of the pandemic, it can often feel like we’re living during a terrible time in history. But a little dose of perspective can remind us that’s not necessarily the case.
It’s human nature to see things with a negativity bias, But it’s important for Investors / Traders to have an optimistic outlook on the world. “If you accept that it’s a great time to be alive—life expectancy is going up, the population is growing, we’re innovating and we’re getting better every year—then that’s the kind of place where companies / Assets / Markets can thrive,” “And if they thrive, you’re going to do well as an investor / Trader.”
Those who choose to view the world through an optimistic lens will prosper, Remember this - “Some people freeze to death in the winter,” while “Others learn how to snowboard and spend time with their family by a warm fire because they know winter is not forever.”
Thank You All For Reading This Motivational / Educational Post!
I hope it Has changed Your View / Trading Psychology For the future!
I have Left my Previous Educational Posts Below!
Something Great to do today - Like, Share this Post, Leave me a comment Below!
Global Fx Education
Stay Safe!
Forex retail traders in a nutshell99% of retail FX traders are scalpers or day gamblers or "swing" traders.
According to a paper on the BOJ website I'll link below, in 2015 a mindblowing 57% of retail clients were "scalpers".
86% were either scalpers (0 to 1 hour) or day gamblers (1 hour to 1 day).
They excluded those with positions held over 1 month, 1 week to 1 month was only about 5%, much much smaller than all the day gambling.
"Share of accounts by investment time horizon"
So it's not 86% of trades it's really 86% of accounts. For something very niche that no one does.
www.boj.or.jp
Can't blame the FX brokers for giving their clients, which are nearly all gamblers, what they want.
These gamblers looking for excitation and with get rich quick dreams. Success rate of 0% not even 1% not sure what's going on up there.
They're not even meant for this business at all.
Becoming a trader when you have risk & loss aversion facepalm. "It's ok I can work on my flaws and improve"
It is like if being an exterminator would pay a whole lot and so people with a phobia, terrified of rats would start getting into the business "Yes I'm scared to death of rats but I can make it work, for the money do not try to demoralize me". Or snakes & spiders maybe that's a better example, more people scared of wittle spiders.
Clearly ridiculous. "My whole lower body is paralysed but that won't stop me from running a marathon (on my hands?) and winning!".
Since Europe banned binary options (gosh what a scam), which was at least forcing day gamblers to have fixed losses, and with the exception of a few turbos, day gamblers really have their work cut out for them: At least with online casinos they have a fixed loss. Bet 1 coin lose 1 and that's it.
But when they day gamble Forex there is not "hard loss" so they can keep letting the loss get bigger and bigger (due to loss aversion).
Some regulators want to fight retail trading, and keep spreading FUD about it "99% lose".
What do you expect? Doesn't mean it's soooo hard, 99% lose but do not forget 99% are drunk gamblers!
Forex especially since the late 2000s and even more since 2013-2015 has very little trends, not much volatility, and not that much returns to offer, so it gets a more and more negative image but FX traders are allowed to look elsewhere when nothing happens.
Maybe really dumb regulators are going to ban it the moment it turns and becomes very profitable again.
They have all these mental flaws:
- Risk Aversion
- Loss Aversion
- Caring what others do and think
- Casino mentality
- Emotional behavior in general (FOMO, regret, confirmation bias, denial, etc many more)
About the casino mentality here are 2 articles about a recent comment by Charlie Munger:
www.nasdaq.com
www.investopedia.com
These day gamblers, at least they should pick the correct tools where they might have a chance.
The best one has to be the DAX (the Dow Jones might come close too):
Pros:
- Very small costs (house edge is the smallest)
- Lots of activity while it is open for 8 hours
- I think about 1/5 days are good trend days
- 90% of days have the top or bottom of the day in the first 90 minutes I think, or something like that
- There are other cool stats but I don't really remember
- AND many other day gamblers also bet on it! The money gamblers hope to win has to come from somewhere, well here it comes from other day gamblers.
So I'm guessing all the day gamblers just do the same thing? Buy the trend when there may be one, and what separates the winners from the losers is the ones with the biggest... personalities hold their winners and have what it takes to exit losers fast... And that's it... Zero intelligence...
I do not know or understand what gets the vast majority into this whole super short term game, broker propaganda? That's just how gambling mentality works?
99% can't just all be gamblers? Did people lie to them and tell them this is how you are supposed to trade? Why did I never hear about this lie myself?
Does it come from what they saw in some movies and tv? (I never watch tv).
Think like a Hedge-FundImagine that you are a Hedge-Fund manager, you have a lot of money to invest.
You are looking to invest in AAPL for example.
Let's assume for the debate, that you as a fund manager can buy any amount of stock that is traded that day.
This assumption is made because we want the Anchored VWAP to represent our position line.
Anchored VWAP = is a tool that you can use that calculates the average price of volume that was traded from a certain point.
In practice, since you don't have a lot of money, if you could buy 1/100M stocks each day (100M is avg volume, which means you will buy /100M), your position line will be very similar, but proportional to a private account.
You decide to grow your position line when the price is after a big correction and it moved above the EMA.
You go only LONG, you buy every stock that is traded (you are a Huge hedge fund manager, remember?)
Path 1:
You start to accumulate a position. Your position line is growing in size, but it also rises in price since you are buying stocks at a higher price.
In green, you can see your position line which is also your break-even line.
As you can see, the price is always above the green line, which means that you are in GREEN all the time while you are in this buying campaign.
Path 2:
The light blue line is where your position line will get "stuck" and will not rise if you decide to stop and not add more to your position from that point in time.
Path 3:
Path 3 is your position line given that you keep adding to your position even in the sideways action. You just keep buying and buying.
Red line:
The red line is the Anchored VWAP that will be if you want to start selling all your position. You sell every day and keep selling.
This is your average selling line.
Conclusion:
You can see that either if you choose path 2 or 3, you will all the time be in GREEN position.
If you choose to stop buying and start selling (Path 2), your average return on the position will be 32%.
You entered little by little, minimum risk in the position. You have a lot of "AIR" from path 2 to where the price is currently in.
This post is a continuation of the post about average-up strategy. The same line of thinking.
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