The retail experiment:
Today's lesson will speed up your trading success if you actually do the interesting trading experiment I designed for you.
This is a potentially life-changing experiment that will very quickly (in less than a month) teach you many valuable trading lessons that open areas of your mind that you may not have activated yet.
What you will do is trade every price action signal you see for an entire month. The rules and conditions of the experiment will follow, but essentially you'll use every pin bar, wrong setup, or inside bar pattern you see on the daily or 4-hour chart of the major markets we do usually in the comments of the members discuss day. We recommend that you perform a chart analysis and recognize your own trades as well as follow the analysis in the daily newsletter for member ideas in the member area.
The goal of this experiment is threefold:
1. To eliminate your fear of entering trades, you need to pull the trigger more often and trust your judgment so that you don't have to live with hindsight (regret that you have not accepted trades that you knew you had) should) just get used to the habit of making trades instead of just watching and hesitating.
2. Reveal the randomness when reaching a risk-reward goal and reveal the really random distribution of winners and losers.
3. To stop you from trading too much in the future, by the end of this experience, you will understand that trading with every signal and making every trade will reduce your returns by upgrading your account for spreads / commissions and losing trades that we could have avoided filtering. To transform you from a machine gunner to a one-shot-one-kill sniper
The rules and conditions of this experiment are quite simple. However, you must follow them carefully so that the intended lessons can take effect and prove your point of view. The rules and conditions are as follows:
- Trade 1 microlot or smaller or demo trade, but actually trade on a brokerage platform to keep records and practice placing trades.
- Check out the approximately 10 markets that we follow in the daily members' newsletter and trade as many signals as you see fit, including pin bars, inside bars and fakeys, on 4 hour to daily Charts (except time frames under 4 hours).
- Apply a 2: 1 risk reward with a minimum stop of 0.5% of the market price and a minimum target of 1% of the market price (about 50 pips stop and 100 pip target on Forex). Adjust this for gold as well as indices and commodities accordingly.
- All trades are set and forget about setups, which means that you will either be stopped or reach your goal without messing with the trade once it is live.
- The goal is to determine the overall RR (risk reward). We measure a loss as 1R (single risk) and a gain as 2R (double risk). To learn more about why we measure results in R rather than percent, read our lesson on risk reward here.
Here are two sample trades so you can get used to how you actually do this experiment.
1. In the first example, we see a 4-hour chart EURUSD pin-bar signal that has formed at a support level in the context of the recent trading range that we saw on this chart (see also daily view).
Once you see a clear and obvious price action signal like the one below, simply set the stop loss (in this case, below the pin low) and the entry (pin high) and the target (2 times the risk) and then leave it to which trade goes.
You should also record the trading details in a spreadsheet / trading journal to keep track of your trades and stay accountable. Note that the risk reward is the most important "evidence" for every trade.
We set the RR to a strict ratio of 2 to 1. While the stop loss placement can be somewhat discretionary (see article link where you should place it), the profit target must always be twice the stop distance.
2nd. In the next example, we look at a signal in the inner bar that has formed in a recent uptrend in gold. This is a very simple trade that can be recognized and set up, adjusted and forgotten.
The stop loss is usually below the mother bar low, so the target is twice the stop loss distance. In this case, we can see that the goal for a win was hit, as well as the first example. Of course, not every trade will be a winner, and remember, one of the points of this experiment is to show you that you can't make EVERY trade because some are not worth taking. You have to learn to filter the good out of the bad.
Hopefully after each signal you see for a month, you will find that the trades like these two above that flow together are the ones you want to take most of the time.
Further considerations …
Make sure the price action signals you provide are the ones I teach. You don't just want to trade in what you think is a pattern. You have to start trading an actual benefit, that's the beginning. In fact, blindly typing "every pin bar" or "any fake setup" without other evidence can lead to amazingly profitable trades, as you'll find, BUT overall, it's not enough to achieve consistent long-term success. You need to refine and filter this edge so that you only use the absolutely most likely occurrences of these setups (something I discuss in other lessons and teach in my pro-trading course).
Traders should not approach the markets with pessimistic energy and try to avoid losing trades as this is impossible. Every trader will have losses from time to time and make a bad call no matter how good a chart reading technician is. Instead, traders should approach the markets with optimistic energy and focus on finding successful trades that bring a significant reward compared to their risk. This experiment is designed to make you pull the trigger on trades and avoid constantly freezing like a deer in the spotlight (pessimistic energy). It is designed to teach you that your advantage over a xyz period will randomly produce winners and losers, and that you can improve your results significantly by being a little more selective with the trades you make in the future. Place each trade with full confidence (optimistic energy).
When you've completed the experiment, there will be a ton of trades to look back on and learn from. You should study those that worked really well, those that didn't work well, and find some common denominators that will serve as filters for your trades in the future. As you grow and learn as a trader, your own experience, screen time, and ongoing studies will help you learn more about how to find the best trading options for price promotions on the market. Your ultimate goal is to end up trading like a & # 39; crocodile & # 39; that is ambushing for your ideal prey (your next trade with high probability).
From here, I would ask you to do two things now.
1. Publish your commitment to conduct this experiment in the comment section below.
2. Come back and answer your own comment after you have completed the experiment with answers to the following questions:
- What have you achieved in terms of overall profitability or losses? Example: 30 losses 20 wins and a total loss of return of -20 R?
- What trading habits will you continue and which habits will you end in the future?
- Do you think you will be more selective and filter trades more carefully?
- Are there any other lessons you would like to share here?
I hope you enjoyed today's lesson. I firmly believe that if you follow them, you will learn a lot of lessons that most traders will learn through years of trying.
Please leave a comment below with your thoughts on this lesson …
If you have any questions, please contact me here.