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!
Yes… exactly! If you work on living a better life, your trading improves… and if you work on improving your trading, your life improves.
Hi Chris, love the lateral ideas that you put forward, that make traders think and not be formuliac.
I have tried various methods, and find that taking a small profit on trades seems to get me the best results. It seems that the best way to a large gain is in very small steps and regularly. Also it seems that markets always turn around so with a large enough fund invested conservitevly you can ride an adverse movement out.
And I have stopped listemnuig to advice , but just follow my own insticts. Advice seems to just cloud the issue
keep up the good work. Graham
Hi Graham,
Yeah, my trading improved by leaps and bounds when I depended on my own learning and experience instead of listening to what the “experts” said. Glad you like this post.
Chris,
Above all, your “anchor candle” concept is unique which gave me a lot . Thanks for your most valuable lesson.
You’re most welcome.
Hi Christ,
Thanks for sharing. Actually, you’re my best mentor on trading. 😀
Hi Susanto,
Glad to be of service.
Hi Chris
I read them but normally don’t reply to blogs but this one caught my attention.
The moment you let your mind influence your trading you lose. Trading has absolutely nothing to do with what we ‘think’. The currency market, being a zero sum market, has specific ( pip perfect ) price objectives to reach based upon the equilibrium shift. We plot these objectives and then let the market run its course.
This is not my blog site so it would be rude of me to explain more.
Hi Alan,
I appreciate your comment, and my opinion is that unless I’m understanding you incorrectly I’ll have to disagree.
One point I’d like to make is that the market is not zero sum, and it’s not just because of brokerage fees. When the losers can lose more than the winners gain (brokerage fees aside), it is not a zero sum game.
Hi Chris
I have been teaching folks to trade Forex for over five years now leaving a trail of wealthy people behind. Zero sum aside, it is just a mute point, I am not sure what you disagree with.
In the last 9 days trading I have made 69 trades, 12 losses and 56 wins for a return of 603.4% profit.
I value your opinion because it puts money in my pocket and if I agreed with you we would both be wrong on the subject of ‘thinking trades’. Sure the market moves via sentiment, as all markets do, but if traders don’t know how to plot it then they will be getting in at the turn points and lose because they simply ‘thought the market was going…’
We have to know a lot of stuff to be able to plot charts and I see very few so called professionals who can do it, not their fault they just had bad teachers and so the merry-go-round continues with bad teaching bad making things badder. For examples candle charts are just a gimmick, this is dark age stuff. Who cares what shape one candle is to another, it doesn’t tell you where the price is going, that’s a requirement to be able to trade, is it not?
Plot the chart, setup the trade and walk away. Thinking till the head hurts is not going to change the outcome at all. We either made a correct analysis or we didn’t with the risk/reward easily taking care of the wrongs.
Hi Alan,
It seemed from your previous comment that a zero sum market is one of the criteria (in your view) for the market to have “pip perfect price objectives”. That was the reason I mentioned that the market is not zero sum.
Also, without sounding too disagreeable I would have to say that I DO think that candlesticks can give reliable signals.
Lastly, I should qualify that the “thinking” should be done in the planning stage, not during the execution of trades.
These are just some of my own observations. I am sure there are many other ways to be trading, much of which I am unacquainted with.
The way I look at it, we should just stick with whatever works for us, as long as we understand why it does.
The candlesticks is where the LIGHT OF FOREX IS.Keep up the good works for revealing to us what the “so called gurus” are hiding from us.With your candlesticksmadeeasy,i can now now interprete the charts,& take trades with pinpoint accurracy. God bless you. You are a gift to our generation
Hey Paul, glad you liked Candlesticks Made Easy and thanks for the support!