New to the forum. Struggling trader could do with a steer.

[Shamperz]

Hi Guys

New to the forum and although not brand new to trading, my god do I still feel like a complete noob!
Half my problem is that I always put the cart before the horse. I’m the kinda guy who unless I know everything about something, I feel like I know nothing. But then spread my learning so thin that I have the opposite effect in the end.
I’ve devoured weeks and weeks worth of YouTube videos on technical analysis from various sources. I’ve driven myself mad listening to endless podcasts in the car on trading psychology. I’ve read a fair chunk of the recommended reading on trading (I’m the one who took ‘mastering the trade’ on holiday for some light reading!- although id be lying if I said I understood half of it or even finished it).
But because I have this nasty habit of jumping the gun, I come full circle and realise I’m probably still struggling with some of the basics. In fact I know I am. I feel like I have learned more than enough to become a competent trader I’m just struggling to fit the pieces together.
I feel like a well trained marathon runner ready to go but just can’t find the bloody start line!!

I do a normal guy 9-5 job so am fitting all this in around it. I’ve danced about over the last 18mths over which instrument and market to trade and always circle back to Forex. It just seems simpler to me than other markets and the continuous nature of it means I’m not bound by opens and closes as much as stocks for example.

Ill just lay out the the areas I really struggle with and if anyone has any advice id be very grateful.

1. Everyone says finding a strategy is the easy bit but whenever I find one that makes sense to me and start backtesting it, it seems to immediately fall apart. I’d like to think 2 years or 100 trades would be a reasonable sample size but even after half way, im finding my win rate to be really poor. (25-40%). I think my issue here is the quality of my backtesting. I can’t help but find nuances along the way that question the validity of the strategy. One specific example is zones – bloody zones!!!

2. Zones/areas of interest whatever you wanna call them. So I understand what zones are and what they’re for. But from what I’ve seen of how others use them, even though they may identify their levels similarly, they may draw their zones slightly differently to ones another (wider/narrower etc). So my issue is that if there is any subjectivity at all in identifying levels and zones, how is one meant to use them to back test an existing strategy if you cannot apply a strict uniform method of applying them to a chart? My little pea brain hurts thinking about this and is a big reason my backtesting ends up failing. Please someone tell me im making too much of it.

3. Is it really possible to have a set of strategies that once you have set up, you can execute almost mechanically just by reacting to a notification? I’m mean im not suggesting im lazy and not prepared to do the work, (although I am lazy )) but when the time comes to pull the trigger whatever time of day, I really need to be able to react quite quickly. Even the 1hr chart is probably too fast for me. I’m now realise im not patient enough for the daily as I want to see my trades play out in a reasonable time so I can learn quicker. For this reason im leaning towards the 4hr chart as my sweet spot.

4. One more area I need explaining to me like im a five year old is how swing traders make any where near as much as day trader? I know at this point it’s not so much about a volume of cash as getting it right, but after that, id like to think I stand a change at some real returns. I’ve heard anecdotally that swing traders can capture bigger profits as they’re focussing on the bigger swings in the market. Ok, but if I am risking say 1% per trade with a 2:1 R/R as an example, then surely im only getting back twice what I put in, but as a swing trader its taking me sooo much longer than a day trader who may be doing that a dozen times a day. My trades will take that much longer to play out so how on earth is it possible for swing traders to make just as much as someone taking multiple more trades in the same timeframe where you have only done a few. I just don’t get it. (Please be gentle with me) can someone please explain this to me with a simple mathematical example (simpler the better with me).

Im sure I have more questions but just wanted to get a few out of my scatterbrain while I have a moment.
Never really done the forum thing yet as a resource for trading advice so super excited to see how it goes.

Thanks in advance for any help.

Stu

 

[timsk]

Hi Stu,
Welcome to T2W.

That's one hell of a debut post! To address all the points you raise will take forever and and the reply will run into pages - so don't be too surprised if you don't get a lots of responses. A tip going forward is to keep your posts as short as possible, ask one or two questions at most in any one post and make them lazer focused. That way you should get more replies. That said, I'll offer a few opinions about each of your four points . . .

1. A success ratio of 25% - 40% is too low and totally unsuitable for a novice trader. The drawdown on your account is likely to be large with the probable outcome that you'll abandon the strategy after a run of losers. Psychologically, it's a killer and is very much the domain of experienced fund managers - not newbie retail traders. So, you need to find a strategy that gives you a minimum success ratio of 50% - preferable more. A coin toss will achieve this - so all you have to do is find something that gives a marginally better expectancy than that!

2. Manually drawing zones, support and resistance and trend lines can indeed be subjective and, if this is a problem for you, then I suggest you use tools (indicators) that draw them for you. For example, a current thread (in which the thread starter claims to be very experienced and successful) uses Volume Profile and Volume Weighted Average Price (VWAP). Mountains of stuff on YouTube and elsewhere about both tools. Here's the thread: Beyond Price Action.

3. 'Yes' is the answer to your question in the first sentence. That said, I don't - and never have - so I'm not best placed to offer specific advice as to how to go about it. The sort of thing people do is, say, if you're interested in taking a long trade in an uptrend and you're waiting for a pull back to a zone of interest - e.g. VWAP - you could have an alert so you can then see if your specific setup is triggered. Alternatively, if you know in advance that if price pulls back to a specific level that you want to go long at that point - you can enter a limit order (with a stop loss and take profit order attached to it).

4. My advice on this last point you won't like. Sorry! Decide what type of trading suits you best and gels best with your work and family commitments. If it turns out that it's swing trading - go with it. Don't think about whether or not you'll make more money as a day trader than you would as a swing trader: not least because the probability is that you won't make any money doing either! Just focus on being the best trader you can be. If you're good, you'll make good money via either route.

Hope that helps.
Tim.

 

[tomorton]

Select a strategy which matches your character and life-style, your hours of availability, your potential screen-time, any favoured areas of knowledge or expertise, subjects you actually enjoy researching.

The strategy should be unsophisticated, rational, as objective as possible, and widely known as a viable system. Then demo trade it until you understand why it works. This will tell you much about trading but it will also tell you how to assess strategies. Your second choice of strategy will be far better than the first.

One thing I have lately come to understand about well known and rational strategies - on an individual market they work very well most of the time: but not all of the time. But all of the time they are working very well on most markets. This uncertainty can be maddening - it's why accountants cannot trade for love nor money - but that's the game we play.

As Tim almost said, "Don't worry, be happy!"