discipline and risk management traders allies
- Thread starter OscarR
- Start date
FinoptUSA- MBA
Active Member
I agree, but I tend to stay away from the term "discipline" because my personality loves impulsiveness. I rather the term "psychology". For instance, I love the lower timeframes for the quick price action, but for my mental capital to not be depleted, I am more successful on the higher timeframes. I have found understanding my psychological make-up helps me become a better trader. If that make me more discipline than so be it. I have hate the word discipline. I like to think of myself as a rebel. 
Totally agree with risk management. I did not see any success in my live account until I started truly understanding proper risk size. When a person understands the difference between 0.001, 0.10, and 1.00, trading life takes on a whole new meaning.
Totally agree with risk management. I did not see any success in my live account until I started truly understanding proper risk size. When a person understands the difference between 0.001, 0.10, and 1.00, trading life takes on a whole new meaning.
FinoptUSA- MBA
Active Member
As mentioned, it's only a personality thing. For some, the term discipline works just find. Some people strive with a disciplined approach. I just do better with my having my psychology right, or protecting my mental capital. It's all just preference of wording, but essentially the same thing.
I am or have learned to be very simple. The best RM strategy for me was truly learning the difference between lot sizes and how they move. Then, I put a small feeler trade on with minimum risk, if the trade goes my way, I scale in with higher lot size, and then close the higher lot out at a point, {ICT calls it the low hanging fruit), then I keep my small position on to take-profit, or possible collapse the trade, if price starts to play around.
If in drawdown, I l lower risk of each trade, until out of drawdown. This works for me. The best thing is to find what works for your personality. All the strategies in the world don't matter until you understand your views and responses to the market. I wasted so much time with this.
Lastly, to combat my impulsiveness, I learned to trade on the higher time frames. Not as fun, but definitely more profitable and safer for my account. I take less trades. Remember the market will use your weaknesses against you.
How did you come to realize that focusing on psychology and mental capital protection suits you better than adhering to strict discipline in your trading approach?
FinoptUSA- MBA
Active Member
Without the psychology there was no discipline, just impulsive trading. Psychology for me is the key. I would trade for the sake of trading before. Stopping to get my mind right opened the door to a new world. I knew how to trade and how to make entries and exits, but the why is what had me. Like why am I in the market now? Should I be in the market now? These were more important and along with understanding the risk associated with the moves. Once I began to ask the right questions to myself, my overall trading improved. Now don't get me wrong, I am not making money like these guru's, but my live account is doing much better. I am now ready mentally to do a Prop firm challenge.
FinoptUSA- MBA
Active Member
The higher TF made me wait for my set-up. Plotting my analysis on the higher TF made we wait until price came to the levels I needed. This was so boring for me because I like or liked the impulsiveness. Now, I have learned to take my time and wait for price to really show itself from my higher TF analysis. The pace is much slower and my mind has time to take in all the data presented and make a better decision.
I put on small risk and once price shows me that my analysis has a higher probability of succeeding, I put on more risk. My lifestyle has also become better. So much so that I actually avoid anything past M30. I use to live on the M1, M5 and M15 exclusively. My life has become better, my mental capital is much better, I actually turn down taking trades that I use to jump at. Now, I just wait until I am clear that I have a better set-up. I do a lot more thinking versus reacting.
The higher TF has become a blessing for me. I did a gold trade last week based off my Higher TF analysis. I started from 6MN (month) down to 1MN, D, 4H, entry on M30. Nice low risk and returned for 4-to-1 Risk-to-Reward. I enjoyed this trade so much, I am thinking of switching to Gold as my main pair from AU. It felt nice stalking the trade and then executing, versus just executing trades impulsively. Greater satisfaction too.
Hope this answers your question.
OscarR
Well-Known Member
Trading on longer time frames helped me avoid impulsive decisions. This made my trading more profitable and my account safer because I could see the bigger picture and trends more clearly.
I agree, trading HTF allows to wait to key levels and go with the main tide.
I can trade 1-minute charts but my setups are based on H4 areas and supported by D1 and Weekly charts. I used to trade m1 or m5 based trades and it was very discouraging. The best setup I came out with at that time was using H4 and m5. It gave like 10,000% increase in less than 200 simulated trades when backtesting.
Now, I only trade if in synch with timeframes 50-100 times higher than the one I am using.
Besides, I have also found that if I focus in one single asset per session, my precision dramatically increases because I know exactly where it is, what it did, where it is about to go. More than one trade per day can be considered overtrading. I would say that more than one trade per session. You are also tired in the afternoon, so if I get one good shot early, I will keep my charts closed for the rest of the day.
Now, I wanted to mention that the main problem with aspiring traders are at least two:
- They do not wait till the right moment and trade by fear. The main problem is execution. The aspiring trader execution is really bad.
- They do not do maths and understand that, if you want to live from trading. If you make 1% or 2% net monthly, you need a few hundred thousand dollars to live from it. And leverage won't change it, because if you get stopped out with high spread while leveraged, you will get a nice debt from your broker. Therefore, you eventually need that money flowing within your account. One can always trade with other's money, of course.
I am not saying there are people who earn more or much more than that, but I proportionally do not know almost anyone making 2% consistently per month. The average aspiring trader will never achieve it, that is for sure.
Trading will push the practitioner against the ropes very heavily, this is an extreme activity that requires people to train as if they were going to fight the world championship.
Well, in fact, you are trading against the rest of the world and you intend to win. So, that is trading. If you win it means some other person will be losing that money to give it to you. People who work in huge companies with all kind of mentors and coachs, teams of traders, psychologists, exclusive access to markets with ultra-high speed, deep market information you do not have, etc...
This is the reason I never will give up insisting that trading is not by far for most of people. Same as WFC is not either for most. I think new traders must be aware of it and do some maths.
With 6 hours per day, after three years one may find something if lucky. Otherwise, it is my personal opinion and what I have seen around after more than a decade actively in this industry and met hundreds of aspiring traders giving up or losing all, and a few only making it.
In trading, while psychology is vital for discipline and decision-making, having a robust strategy and market analysis knowledge is equally crucial. Balance psychology with technical aspects
However, trading on higher timeframes can lead to missing out on opportunities to profit from short-term price movements.
I trade intraday, for instance. Today, I set up a trade that I refined down to the 1-minute chart but used the weekly and monthly charts as my reference during Nasdaq market's opening time.
I got a weekly and almost monthly move with a risk within the 1-minute range. This can be further refined down to sub-minute timeframes.
This is truly one of the best techniques I use.
I learnt it from Michael Huddleston teachings.
The same can be done with any style. It is just waiting for different timeframes to converge at the same time in terms of bias.