Why risking only 0.5%-2% per trade is absurd?
I’ve tried everything. From scalping, intra-day to swing trading.
My first mentor taught me price action and is a strong believer of swing trading. He taught me to trade on the higher timeframe, or 4h timeframe and higher. All timeframes below that are noises.
I devour his trading content and backtested every single day.
Back then, I was hungry for success. I have strong backtested data backing me on the live market. I traded live after this. I stick to my trading plan. I won some trades. I lost some trades.
I faced another problem. I was always looking at the chart, even though I executed my trade on the daily or 4-hour timeframe. My average trade duration is a few days. I couldn’t control the price, yet I’m stalking my trade.
This is different from backtesting. During backtesting, I can let my trade play out immediately using the fast forward button. In the live market, I couldn’t fast forward time! I started to mess around with my trade because I was always watching the chart. Trades aren’t playing out fast enough to meet my need to trade.
I realized at that time, this kind of trading style doesn’t suit me. I felt lost even with a profitable system. I drifted a few months searching for another holy grail.
I found a signal provider membership, but this guy is a mentor. My intention was to trade base off this guy’s signals. But who knows, after a few days of joining his signal, he decided to remove it.
He trades live in front of his mentee. I joined his live session and saw a trading beast. He’s actually scalping on the 5s chart live in front of his mentee. Some of them took his calls and profited. At that time, I can’t believe what I was seeing. How can someone even be fast enough on their execution on a 5s chart. I joined more of his live session and realized that this guy is legit. I love this style of trading because I was impatient and love to see how my trade play out immediately.
I booked several 1-1 sessions with him. I learned his way of trading. It was heaven to me. I realized that I’ve made something clicked in my head and is on my way to profitability. I backtested extensively and traded live soon after. I had decent results, passing phase 1 and 2 of MFF challenge. When I got my first live funded account, burst it. I haven’t got my psychology and emotion in control yet.
I wasn’t ready. I revenge trade after a series of losses. I did not limit the number of losses I can take a day. I over-risked on some trades, believing that they are high probability trades. I lost the account without reaching my first payout.
Should You Scalp Or Swing?
It depends on what timeframe you're trading on. But, price is fractal. Trading on the 4-hour timeframe requires the same technical analysis skills as trading on the 1-minute timeframe.
If you’re scalping on the seconds chart, you can take many trades within a day. Scalping on the lower timeframe also requires you to be accurate and fast in decision making. You can’t stop to think and go through your checklist. They have to come to you automatically. You need to focus and good at regulating your emotions as you’re more likely to get faked or stopped out. This is especially true if you’re scalping on the seconds timeframe. If you’re swing trading, it gives more room for error.
Scalping are for people who are impatient, or for people who loves adrenaline. It is fast pace and you can close your trades within minutes from execution. You can end your trading day within a few minutes or hours.
It’s easy to overtrade and take bad trades after a series of losses. This can increase the likelihood of revenge trading.
On the contrast, swing traders are good for people who loves freedom. You don’t have be in front of your screen whole day. You can spend a few minutes a day checking the charts, and attend to them when your alert goes off.
When the alert goes off, you can check the chart to see if the price is playing out according to your expectations. You can decide to take a trade, or to wait for another opportunity. This takes only a few minutes of your time and you can continue on with your life.
You don’t have to rush to make a trading decision. You are able to go through your trading plan without any pressure before taking a trade.
You don’t have to worry about overtrading. There are lesser opportunities in swing trading compared to scalping.
Too Many Choices Making You Feeling Lost
Many of you don’t know yourself. Let alone knowing what trading style fits yourself.
You do not know which trading style fits your personality.
Trading is like choosing what type of undergarments you want to wear. Some people like underwear. Some people like brief. Some people like boxer. Some people don’t like to wear anything.
You have to consider factors like your lifestyle, personality, personal commitment, trading skill level, and psychological strength.
These questions are often neglected. Solving them will cut down on your journey to be a profitable trader.
For me, I used to be an impatient person. I’ve changed my lifestyle for the better. I took up breathing technique, meditation, and improved my mindset. I’ve learnt to be patient.
I understand that I do not like to take swing trades even though I’m a patient one. I’m lazy, and do not like to stare at the chart for 1 or 2 hours straight. I have to focus when trading on the seconds chart. Some days I will lose motivation and not trade at all. Without trading, I won’t be able to profit from the market. If I’m lazy, I have to find another way to profit from the market. I’ve stopped scalping on the seconds chart once I’ve accepted this fact.
Instant Gratification
But Keeley, we need more trades to let probabilities and the law of large number for our edge to play out. If we don’t scalp, how are we going to hit 100 trades trading the live market? I also love to see high RR trades so that I can post them on my social media to make myself look good!
First, trading is not a get-rich-quick scheme. You need years of consistency to achieve profitability. There is no end game here. You are always learning from the market. You can be consistent and trading your game plan for 5 years. But that one time you decide to deviate from your game plan, you can wipe out 5 years of track record.
You don't magically be profitable after watching 10 videos on demand and supply on the YouTube. You need chart time. You need losses. You need stress. You need to feel like you're giving up. You need to hit the rock bottom. You need to build your trading psychology. You need to build your resilience. Trading is not easy.
Next, the social media is a bad place to be looking at trading related content. You look at people posting high RR trades, earning thousands of dollars every single day. You don’t know if they are taking the trades on a demo account, or from a white-label broker. White-label brokers are their own server which they can fake their own trades.
Think about why are they posting all these? Are they selling you a course? Why would they sell you a $50 course if they are earning thousands of dollars a day? Ask them for verified track record from reputable brokers. I can assure you that none of them are able to provide you that.
Getting Lucky
Trading involves a little luck here and there. Saying that I become consistent and profitable based on my skills alone is a lie. I do need to have a certain factor of luck. A correct analysis can lose, and a wrong analysis can win. Anything can happen in the market. As long as you're following your rules, and you have a profitable system, you will be profitable in the long run.
I have a client who told me he used to flip $100 small accounts into thousands of dollars. He risked his whole account by over-leveraging and praying for the best.
He earned 1,600% within a few weeks. He asked me if he should replicate this strategy using more capital. If he's able to do it a few more times, he would be a millionaire.
I told him that he got lucky. He's getting cocky and greedy now. I told him that he's not going to like what I'm about to tell him. He's not going to believe me. I told him that if he's continuing this path, he's going to get burned. 1,600% is not a small amount. It's not something that you or me can do it consistently. Even the best hedge fund in the world has an average of 30% returns a year over a decade. Don't get fooled by all the Instagram posts.
He didn't believe me. Guess what? He lost all the 1,600% profits.
Not Using 1 or 2% Risk Per Trade
A few weeks later, he came back to me. He told me he will reduce his risk this time, but with a higher capital so that he can afford more losses. He doesn't listen to me.
I took a look at his backtested result and noticed that he has a high win rate, low RR trading system. The max drawdown he encountered was 3 straight losses out of the 100 trades. Not going to lie, but his backtested results looked pretty decent.
He told me that by risking 10% per trade, he can earn so much more. His backtested results showed him that the max loss he will encounter is 30% using this risk setting.
It looked decent, and the math shows that he can 10x his result in a short period of time. But yet again, he failed.
Why? He did not take into consideration his trading psychology. Let's understand why I recommend 1% a trade. Losing 10 trades in a row, I will be down 10%. But if I risk 10% a trade, I can't afford to lose 10 trades in a row. Even with a 70% win rate strategy, it is still possible that I lose 10 trades in a row. Statistically, it's low chance, but it's still possible.
You need to take into consideration your psychology after losing 10 trades in a row. If you're risking 10% per trade, you're at a risk of making revenge trades to gain back your losses. The sight of losing money can damage your ego, leading you to take trades not according to your trading plan.
The Breakthrough
I went to the in-between, which is intra-day. I have no idea why this did not occur to me earlier. Intra-day suited me because I have a day-job. Trading on the 15-minute timeframe isn’t as slow as taking swing trades. It’s also less stressful compared to scalping on the seconds chart.
I will look at the chart before i leave for work. If there are any opportunities, I will set a limit and leave for work. My strategy is set-and-forget, so the trade will either hit the TP or SL. I do not have any MT4 or MT5 on my phone so that I won’t mess around with my trades.
I finally found consistency and seen profitability in my trading. I’ve gotten my first funded account with FTMO, with a payout in April this year. In May, I got another funded account with The Funded Trader. Earlier this month, I’ve gotten another funded account with My Forex Fund.
My life has started to change all because of I’ve made the decision to understand myself.
Tips
I came up with a framework that can help you on the right path immediately.
Consider these questions.
Do you stalk your trades when you’re in any position?
Are you able to endure stress and pressure?
Do you have a social life?
Do you have a day job?
Are you able to trade at work?
Are you lazy to look at the charts?
These questions can guide you towards understanding yourself and understand the type of trades should you take.
Taking Accountability
Trading alone is hard. Being consistent is even harder. It's hard to hold yourself accountable if you don't have the discipline.
Having someone who has been there done that before is important. An accountability partner can provide valuable advice that can define and reach your goals faster.
A mentor is helpful in guiding you too.
A mentor must be able to look at any strategy and tell you what's not working and what you should stop. A mentor should not force you to use his strategy. He must be able share his mistakes. He must be able to show you solid trading results via 3rd party verification. 3rd party verification should be Myfxbook or Fxblue, not screenshots or excel worksheet. He should walk you through development as a person outside of trading.
Stay consistent. Stay safe. Success is just around the corner.
If you enjoy such content, feel free to click the like button and subscribe for more.
Let me know what are your thoughts and learning points in the comments below so others can learn from you too!
Please let me know what kind of topic you would like to read next :)
Happy weekend!
@MillionaireTiger @CaptainTiger @TigerStars
My first mentor taught me price action and is a strong believer of swing trading. He taught me to trade on the higher timeframe, or 4h timeframe and higher. All timeframes below that are noises.
I devour his trading content and backtested every single day.
Back then, I was hungry for success. I have strong backtested data backing me on the live market. I traded live after this. I stick to my trading plan. I won some trades. I lost some trades.
I faced another problem. I was always looking at the chart, even though I executed my trade on the daily or 4-hour timeframe. My average trade duration is a few days. I couldn’t control the price, yet I’m stalking my trade.
This is different from backtesting. During backtesting, I can let my trade play out immediately using the fast forward button. In the live market, I couldn’t fast forward time! I started to mess around with my trade because I was always watching the chart. Trades aren’t playing out fast enough to meet my need to trade.
I realized at that time, this kind of trading style doesn’t suit me. I felt lost even with a profitable system. I drifted a few months searching for another holy grail.
I found a signal provider membership, but this guy is a mentor. My intention was to trade base off this guy’s signals. But who knows, after a few days of joining his signal, he decided to remove it.
He trades live in front of his mentee. I joined his live session and saw a trading beast. He’s actually scalping on the 5s chart live in front of his mentee. Some of them took his calls and profited. At that time, I can’t believe what I was seeing. How can someone even be fast enough on their execution on a 5s chart. I joined more of his live session and realized that this guy is legit. I love this style of trading because I was impatient and love to see how my trade play out immediately.
I booked several 1-1 sessions with him. I learned his way of trading. It was heaven to me. I realized that I’ve made something clicked in my head and is on my way to profitability. I backtested extensively and traded live soon after. I had decent results, passing phase 1 and 2 of MFF challenge. When I got my first live funded account, burst it. I haven’t got my psychology and emotion in control yet.
I wasn’t ready. I revenge trade after a series of losses. I did not limit the number of losses I can take a day. I over-risked on some trades, believing that they are high probability trades. I lost the account without reaching my first payout.
Should You Scalp Or Swing?
It depends on what timeframe you're trading on. But, price is fractal. Trading on the 4-hour timeframe requires the same technical analysis skills as trading on the 1-minute timeframe.
If you’re scalping on the seconds chart, you can take many trades within a day. Scalping on the lower timeframe also requires you to be accurate and fast in decision making. You can’t stop to think and go through your checklist. They have to come to you automatically. You need to focus and good at regulating your emotions as you’re more likely to get faked or stopped out. This is especially true if you’re scalping on the seconds timeframe. If you’re swing trading, it gives more room for error.
Scalping are for people who are impatient, or for people who loves adrenaline. It is fast pace and you can close your trades within minutes from execution. You can end your trading day within a few minutes or hours.
It’s easy to overtrade and take bad trades after a series of losses. This can increase the likelihood of revenge trading.
On the contrast, swing traders are good for people who loves freedom. You don’t have be in front of your screen whole day. You can spend a few minutes a day checking the charts, and attend to them when your alert goes off.
When the alert goes off, you can check the chart to see if the price is playing out according to your expectations. You can decide to take a trade, or to wait for another opportunity. This takes only a few minutes of your time and you can continue on with your life.
You don’t have to rush to make a trading decision. You are able to go through your trading plan without any pressure before taking a trade.
You don’t have to worry about overtrading. There are lesser opportunities in swing trading compared to scalping.
Too Many Choices Making You Feeling Lost
Many of you don’t know yourself. Let alone knowing what trading style fits yourself.
You do not know which trading style fits your personality.
Trading is like choosing what type of undergarments you want to wear. Some people like underwear. Some people like brief. Some people like boxer. Some people don’t like to wear anything.
You have to consider factors like your lifestyle, personality, personal commitment, trading skill level, and psychological strength.
These questions are often neglected. Solving them will cut down on your journey to be a profitable trader.
For me, I used to be an impatient person. I’ve changed my lifestyle for the better. I took up breathing technique, meditation, and improved my mindset. I’ve learnt to be patient.
I understand that I do not like to take swing trades even though I’m a patient one. I’m lazy, and do not like to stare at the chart for 1 or 2 hours straight. I have to focus when trading on the seconds chart. Some days I will lose motivation and not trade at all. Without trading, I won’t be able to profit from the market. If I’m lazy, I have to find another way to profit from the market. I’ve stopped scalping on the seconds chart once I’ve accepted this fact.
Instant Gratification
But Keeley, we need more trades to let probabilities and the law of large number for our edge to play out. If we don’t scalp, how are we going to hit 100 trades trading the live market? I also love to see high RR trades so that I can post them on my social media to make myself look good!
First, trading is not a get-rich-quick scheme. You need years of consistency to achieve profitability. There is no end game here. You are always learning from the market. You can be consistent and trading your game plan for 5 years. But that one time you decide to deviate from your game plan, you can wipe out 5 years of track record.
You don't magically be profitable after watching 10 videos on demand and supply on the YouTube. You need chart time. You need losses. You need stress. You need to feel like you're giving up. You need to hit the rock bottom. You need to build your trading psychology. You need to build your resilience. Trading is not easy.
Next, the social media is a bad place to be looking at trading related content. You look at people posting high RR trades, earning thousands of dollars every single day. You don’t know if they are taking the trades on a demo account, or from a white-label broker. White-label brokers are their own server which they can fake their own trades.
Think about why are they posting all these? Are they selling you a course? Why would they sell you a $50 course if they are earning thousands of dollars a day? Ask them for verified track record from reputable brokers. I can assure you that none of them are able to provide you that.
Getting Lucky
Trading involves a little luck here and there. Saying that I become consistent and profitable based on my skills alone is a lie. I do need to have a certain factor of luck. A correct analysis can lose, and a wrong analysis can win. Anything can happen in the market. As long as you're following your rules, and you have a profitable system, you will be profitable in the long run.
I have a client who told me he used to flip $100 small accounts into thousands of dollars. He risked his whole account by over-leveraging and praying for the best.
He earned 1,600% within a few weeks. He asked me if he should replicate this strategy using more capital. If he's able to do it a few more times, he would be a millionaire.
I told him that he got lucky. He's getting cocky and greedy now. I told him that he's not going to like what I'm about to tell him. He's not going to believe me. I told him that if he's continuing this path, he's going to get burned. 1,600% is not a small amount. It's not something that you or me can do it consistently. Even the best hedge fund in the world has an average of 30% returns a year over a decade. Don't get fooled by all the Instagram posts.
He didn't believe me. Guess what? He lost all the 1,600% profits.
Not Using 1 or 2% Risk Per Trade
A few weeks later, he came back to me. He told me he will reduce his risk this time, but with a higher capital so that he can afford more losses. He doesn't listen to me.
I took a look at his backtested result and noticed that he has a high win rate, low RR trading system. The max drawdown he encountered was 3 straight losses out of the 100 trades. Not going to lie, but his backtested results looked pretty decent.
He told me that by risking 10% per trade, he can earn so much more. His backtested results showed him that the max loss he will encounter is 30% using this risk setting.
It looked decent, and the math shows that he can 10x his result in a short period of time. But yet again, he failed.
Why? He did not take into consideration his trading psychology. Let's understand why I recommend 1% a trade. Losing 10 trades in a row, I will be down 10%. But if I risk 10% a trade, I can't afford to lose 10 trades in a row. Even with a 70% win rate strategy, it is still possible that I lose 10 trades in a row. Statistically, it's low chance, but it's still possible.
You need to take into consideration your psychology after losing 10 trades in a row. If you're risking 10% per trade, you're at a risk of making revenge trades to gain back your losses. The sight of losing money can damage your ego, leading you to take trades not according to your trading plan.
The Breakthrough
I went to the in-between, which is intra-day. I have no idea why this did not occur to me earlier. Intra-day suited me because I have a day-job. Trading on the 15-minute timeframe isn’t as slow as taking swing trades. It’s also less stressful compared to scalping on the seconds chart.
I will look at the chart before i leave for work. If there are any opportunities, I will set a limit and leave for work. My strategy is set-and-forget, so the trade will either hit the TP or SL. I do not have any MT4 or MT5 on my phone so that I won’t mess around with my trades.
I finally found consistency and seen profitability in my trading. I’ve gotten my first funded account with FTMO, with a payout in April this year. In May, I got another funded account with The Funded Trader. Earlier this month, I’ve gotten another funded account with My Forex Fund.
My life has started to change all because of I’ve made the decision to understand myself.
Tips
I came up with a framework that can help you on the right path immediately.
Consider these questions.
Do you stalk your trades when you’re in any position?
Are you able to endure stress and pressure?
Do you have a social life?
Do you have a day job?
Are you able to trade at work?
Are you lazy to look at the charts?
These questions can guide you towards understanding yourself and understand the type of trades should you take.
Taking Accountability
Trading alone is hard. Being consistent is even harder. It's hard to hold yourself accountable if you don't have the discipline.
Having someone who has been there done that before is important. An accountability partner can provide valuable advice that can define and reach your goals faster.
A mentor is helpful in guiding you too.
A mentor must be able to look at any strategy and tell you what's not working and what you should stop. A mentor should not force you to use his strategy. He must be able share his mistakes. He must be able to show you solid trading results via 3rd party verification. 3rd party verification should be Myfxbook or Fxblue, not screenshots or excel worksheet. He should walk you through development as a person outside of trading.
Stay consistent. Stay safe. Success is just around the corner.
If you enjoy such content, feel free to click the like button and subscribe for more.
Let me know what are your thoughts and learning points in the comments below so others can learn from you too!
Please let me know what kind of topic you would like to read next :)
Happy weekend!
@MillionaireTiger @CaptainTiger @TigerStars
Prop Firm Funded Trader
Find out more about me here: linktr.ee/kt_fx
Find out more about me here: linktr.ee/kt_fx
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