By now, you’ve probably heard about most, if not all of these trading tips:
- Always trade with the trend
- Let your profits run
- Psychology/Discipline is more important than strategy
- Only take trades with a risk-reward ratio of at least 1:2
In my opinion, the reason these “tips” are so popular is because they are simple to understand, rather than because they are effective in practice.
I mean sure, they make sense conceptually.
But theory and practice often diverge, especially in the unpredictable world of trading. What seems like a good idea at first, often does not translate into the results you’re looking for.
After all, many retail traders follow these tips and lose money in the end… so it’s clear that things aren’t quite so simple.
Perhaps then, it is time to start questioning the validity of such conventional trading wisdom.
Fun Experiments
Start by asking yourself, “what if I did the opposite of what people say?”
Instead of trend trading, try counter-trend trading.
Instead of letting your profits run, try setting conservative profit targets.
Instead of a risk-reward ratio of 1:2, try 1:1… or even less!
I’m sure you can come up with other ideas…
Of course, you’ll want to be smart and test them on a demo account.
If Your Tests Made Money
If you end up making a profit from your tests, you could be on to something.
The key then, is to figure out why you’re making money doing the opposite of what everyone else is doing.
Valuable lessons can be learned there.
If Your Tests Lost Money
If you lose money on your tests, you’d also want to figure out why.
How come you’re losing regardless of whether you follow conventional trading advice, or do the opposite of it?
What could that mean? What does that suggest about your trading?
Again, some valuable insights can be gained here.
Different Strokes For Different Folks
There is no one best way to be trading, as everyone responds differently to each trading approach.
So what you want to do is to find out the type of trader you are, by doing the opposite of what you’ve been trying to do, and observing your experience of it (and of course, the results).
Just like how a fish doesn’t know it’s in water until it’s been taken out of it, you won’t know what your trading blind spots are until you try something dramatically different.
Hi,
Don’t know exatcly what’s the best way trading. Think it’s a matter of
time to find your own way. Some are trend trader and some reversal trader.
I tried a lot of systems, spend alot of time and lost some money on diff.
useless systems.
I found my way after a lot of backtesting and stupid mistakes. Thank’s
god on demo accounts.
I’m defently a reversal trader, using live chat room binary options
trading signals. And there I make plus 2-3 trades a day, which is enough
for me.
And then a use a boost system 1:2 with tight stop loss, easy to get
between 100-150 pips a day on 1-2 hours work.
And then I use the techniques from your easy candlestick. Special anchor
candles and bullish shaven candles works out fine.
So these thing’s I got in hand now after 1 year is enough to make me a
quiet successfull trader.
Which I’m very happy about, it’s a free life with less stressfull work.
Keep in touch.
Cheers
Kris
Very cool. 🙂
Love your posts Chris, very refreshing! The cool thing about trading is that there is no way to avoid self development to succeed. You have helped me a lot on that matter ( Icarus/ Pipmavens inner circle). Thanks a lot!