OK, it took a while, but I Finally realize my difficulty with being successful have less to do with my strategy and more to do with my inability to take a loss. I know it sounds simple, but if you don’t have the discipline to exit a trade when it goes against your stategy then you are doomed to fail.
The problem is that sometimes it works – going against your plan – and THAT simply reinforces your bad decision.
The only think I can think of to overcome this weakness is to commit to a trade by not watching it. That is, set a take profit and stop loss and turn off the computer. The trade will either fail or succeed. It doesn’t matter if it could have succeeded if only you had moved the stop just a little bit.
It’s a numbers game – pure and simple.
So, let’s get into the numbers.
First, the trade. It is a simple as betting (yes, I said betting) that the market will reach one level before the other. You can mess with all different risks – 1:1, 1:2, 2:1, etc – it all comes down to pulling the trigger and walking away.
So, my next experiment is to give it a whirl. I think I can read the market well enough that I can win greater than 50% of the time using a 1:1 RR. I’ll ignore margin for my calculations because I think it’s not worth clouding the objective.
I’ll also base my strategy on POINTS or TICKS so dollar risk doesn’t have to be part of the calculation. However, since this is a prop firm challenge, I’ll target my risk at $250 per trade on NQ. An NQ tick is worth $5 so a price would have to move 50 ticks to win or lose with one lot.
When the market is volitile, 50 ticks (12.5 points) can happen in a blink of the eye, so I think one lot is fine. But when the market is slow, there are a lot of things that can happen that can go counter to the strategy, so I think I’d increase my lot size in slower markets – thereby getting to a win/loss quicker while the strategy is still valid.
Regardless, the result will always be a $250 win or loss. This will enable me to walk away and not move my stops and eliminate my personal weakness.
Let’s say I can win 60% of my trades. That means, for every 10 trades I would win 6 and lose 4.
6×250 = $1500
4×250 = $1000
Net profit = $500
At 70%..
7×250=$1750
3×250=$ 750
Net profit = $1000
I am thinking about not allowing myself more than 3 trades in a day. On a $50k Apex account, that’ll give me 10 losing trades without wins before blowing the account.
If I have the attitude that it WILL take time to make money and accept it, then I will eventually make money. Just not as quickly as being risky.
That is my plan…