Comment by Peter jcp on February 23, 2013 at 9:55pm

Hi Lisa - I would agree that money management is one area all the successful traders seem to agree on. Unfortunately - I am not aware of any book or article that really helps you to maximise your returns whilst minimising your risk - and it possible using complicated mathematical formula based believe it or not partly on the Martingale method combined with probability theory.

It then is possible to predetermine you stakes on every trade based on your present ( current) market performance - so if you suddenly have 3 bad trades in a row - it is not always necessary to decrease you lot size - but instead increase it as the probabilities favour a few wins to follow.

Now please tell me other than a Maths Professor etc - who is going to have all this info at their finger tips - yes you have guessed - very rich successful traders - ie probably 0.005% of retail traders and then the large players 

With regards to trading methods or strategies - its a case of - "One mans meat - is another man's poison" and the obvious one - "There is more than one way to skin a cat"

Grigore makes an interesting point that if you have discipline and a trading method than is successful over 60% of the times and your win ratios are over 2 or 3 - and money management techniques - then in theory it should be easy to take a small account up to over a million plus.

He is correct - BUT - why is it less than one out of ten thousand are able to do it ?

That shows how hard trading really is - forget "rocket science" - trading takes longer to crack ;-))

Regards 

Peter

Comment by Lisa on February 23, 2013 at 10:16pm

I think why it’s so hard is the psychological factor / our innate human weaknesses ...

(being stressed, tired, hungry, monthly cycles (I guess that would apply for most of you ~ lol)

Even for those that want it bad enough, it is a performance based endeavor ...

and there are many, many factors that effect / affect our performance ...

that are simply are out of our control.

... and we can’t pull-a-Lance Armstrong doping trick (?) ٩(×̯×)۶ 

Martingale might even work if we could get out of our own heads :

Comment by Peter jcp on February 23, 2013 at 10:45pm

Very true Lisa - it is performance based and sometimes you are just not always firing on 12 cylinders. Funny enough I think you commented to me this week I had been quiet and and not been trading so much etc. You were correct - I had a bit of a cold ( noticeable on my video) and had additional pressures this last week. I had been helping a family member move house and during this last  3 months have had 2 friends from my college days - pass away. 

I reach the big  6 0 next year - yes 60 yrs old and you start to think more about your health and well being etc etc. I spent years of excess in my younger life and although I am still fit and very young at heart etc - age does catch up with you and so it can effect you at certain times ;-)

I must point out I have had massive stress related career and also what over 7 yrs of scalping - and still not grey haired and dont dye it ( lol). But then when you get your pension payments and  do I want a mobility scooter etc ??- it does bring you back down to earth.

PS will be doing a Triathlon this year plus as least 2 half marathons - so must training again and want my racing driving licence renewed and then back to the flying lessons - there's just not enough hours in the day to do more than 3 hrs trading  ;-)) 

Comment by Peter jcp on February 23, 2013 at 10:57pm

I have just seen your last comments Grigore and yes having an " Iron Will or Discipline" I also think is really important. The discipline to keep strictly to your plan - accept your losses - move on to the next trade - not get emotionally attached etc - is so difficult for the majority of traders to adher too.

Having a plan that will work is also of vital importance. So many traders have no plan at all - and then when they do have one - its does not always "cut the mustard" and can still result in a poor performance that then effects their psychology - which encourages further increased risk taking- and eventual reduction of capital

Comment by Sir Gissachance on February 24, 2013 at 12:36am

Good Evening Peter,

Another brilliant post by you which gives the new traders food for thought. As Goldfinger always says "The Market bleeds and then starts healing" and with these thoughts in mind one must be ready to stand aside or scalp, of course that really depends on technical abilities, planning and restraint, along with years of experience. Every trade has auto pilot and will take us into Focus mode as we read the market pulse and translate the Data instantly, naturally with the addition of an emotional setting of Zero. I would strongly urge the new traders to consider that if the price is not right then walk away. All of the aformentioned when not followed through are some of the reasons why 99.9% fail in this business. The bad news continues because let it be said some are sadly not biologically hard wired to fulfil those demands. I say demands because it takes a strong character to be disciplined enough to follow through. One should also not get carried away with thinking they have the market cracked with their latest shiney new plan or strat, which worked nicely for up to a year or two (or even more in some cases) and then the BFTE turned up.

With regards to History, Famous Characters, TV, Radio, internet, reading books, newspapers, magazines or any other form of media, then let it be said "Never let the Truth get in the way of a good story" So caution when downloading that into B.R.A.I.N. hardware. However, if you find it works for you then use it. 

Peter, I Loved your "Does not cut the Mustard" comment, I have not heard that one in awhile.

Did I also hear you say you are getting fit for Flying lessons and can I ask, wont that hurt your arms? ; 0 )

Best Regards,

Sir Gissachance (PPND)

Comment by Lisa on February 24, 2013 at 12:47am

60 ...

this Capricorn is hitting a big 0 this year too ~ ehhhh ...

this one is starting to loom in my mind.

lol ~ I like old tunes ♪♫•*¨ 

Comment by Lisa on February 24, 2013 at 2:25pm

Comment by Ricardo Kempff on February 25, 2013 at 1:06am

Well, I've had 3 loses in a row this month and I have a very low winning rate, just 10% and proud of it, but in the last move I covered all my loses and doubled it and yeeehaa!!!!!!!!!!!!! I am out for now, enjoying my winnings, I allso recovered the loses of the three prior bad months. So my method is quite simple, I expect to have an order opened for at least three days. I put myself in a position of lowering risk as trade progresses and I use very tight SL (50 pips) and I seek for the unusual, something most suckers are not aware off, we all see the same data but we interpretate differently and I asume next time will be slightly different, for me it is a rock, papper, scisor, spoock, lizzard game. The key is to think independantly and dare to do what the vast majority are not doing. What I do is use very tight SL and using no TP and closing winning when stress beats me up, but I try to get something more than 1:3, less than that is for wuzz and excuses makers. Not taking loses and cutting winners short is for cowards and not protecting the account balance will not give you an edge.

I have a friend who constantly is showing off his 5 or 8 % per month, well, this one leaves open in big red and closes in little green, I always tell him "protect your capital don't be an idiot", he says "it always comes back, you stupid, why you take loses", and I say again "what if never comes back or a jawboning catches you in the wrong side". He ultimately launches the allevergoodforidiotsexcuse "the system has to collapse for me to lose my capital", well, In that case I will still have the papper for making a bonfire and have some protection from fire. I've heard better excuses for not using seatbelts and here nobody uses it, except by me. Let's say you have 100 usd and you open your order and now it fell down to 90, you thing well, it will come up, but what you are not seeing is that brokers are taking 10 USD from you to cover somebody else's position, you are not in posession of 100 USD anymore. As I say I do the opposite, I wait for a winning trade and leave it open and use the money I haven't earned yet and put that non-earned in risk.

Another think is if you are relying on math formulas just remember what happened to LTCM:

http://www.youtube.com/watch?v=tsZRndV5lIc

Comment by Ricardo Kempff on February 25, 2013 at 1:11am

protection from cold, correction must be added

Comment by talisman on February 25, 2013 at 2:08am

hi peter- good post again.  the common ground between successful traders in my mind is understanding what you control and focus on that.  it seems that moneymanagement is a specific example of something you control, so most assume it is the secret so to speak. i would suggest it might be a little broader than that.

i had it explained to me that 2 traders could trade the same signal in opposite directions ( with similar goals and timeframes in mind ) and they could both be profitable.  on each occasion one of them would win and the other would lose.  in the long run they could both win.  when one truly understands this, and why this is possible , one takes a huge step towards success.

you ve given me a few little gems over the time ive been at fxstreet.  you have contributed in a gentlemanly fashion, ive yet to see you act condascending or arrogant.  its one thing to be a good trader, but quite another to be a good trader and a jolly good fellow. you are for darn sure a jolly good fellow and ill take this opportunity to congratulate you on your awards of late.

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