Traders or Gamblers?

Many people, me included, have said from time to time, that trading is nothing more like gambling.

Without going into the definitions of "to trade" and "to gamble", the statement is true in many ways. I guess when someone says "you're gambling", he usually doesn't imply any compliment. Quite the opposite.

So do reckless traders equal gamblers? Do professional and disciplined gamblers equal traders?

For me, gamblers just want to play and enjoy the excitement of playing, be it at the roulette table or in the market. Traders, meanwhile, want to win.

Gamblers can't resist the temptation to wait and not playing. Traders would wait patiently if it needs be, and strike only when the odds are on their side.

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4 hours before the FOMC rate decision, where will XAUUSD go ?

With 96.5% chance that the Fed will raise rate by 0.25% (I remember it was over 98% just a few days ago), the market is ready for the hike. But the Fed can still move XAUUSD price drastically if they hike more than expected (which is very unusual given the recent trend), or pause the hike. Perhaps what's more likely is the expected 25bps hike being doled out, and followed by a hawkish statement.

In this H4 chart, the "death cross" from the twin tunnels was formed around 20 June, after Gold fell steadily from the historical high on 4 May 2023. As of today, it's on the verge of forming the "golden cross" which might signal a bullish extension. However if the golden cross failed, it's effectively a death cross, which might see God drop further to 1900 level.

Likewise on the D1 chart, SMA20 crossed below SMA50 on 30 May, and is looking to cross above it again, forming a golden cross of its own. A failed cross will again point to 1900 level. It's worth noting that recent bull run from 1900 appears to be a retracement which topped at Fib61.8, adding another reason to expect seeing an immediate downward rally

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2023W18 Review

Desperation

Petulance

Vengeance

Demotivation

These were among the emotions that drove me this week

No surprise, it's a devastating week, where I lost over 200p, $100, or about 30%

The only surprise was I still have my account

But with just over $100 remaining, it's as good as busted

The 20p challenge didn't work for me, at least not in this state of mind

Was too desperate to prove something

After taking a few days of break, I've reverted to trading demo again

Turned out to be rather positive performance, with less emotional stress and fear

So... how do I know I'm ready for live trading again?

1. When I'm profitable with at least +80p weekly gain for 4 out of 6 profitable weeks
2. When I'm getting Grade B for 4 out of 6 weeks of at least Grade C
3. When I can declare that I'm on top of my emotions while trading a demo account

The last one isn't scientifically measurable, but let's start like this...

Grade: E

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Dealing with Floating Profit

How to deal with floating profit / loss?

We always being told not to sit on a losing position, also not to sit on our hand watching our winning position turn sour.

There are so many theories, philosophies, rules out there regarding this topic, but just recently heard from Jason, "trading is not about how much you earn, but is about how much you don't lose".

When a trade goes in my favour, SL has been moved to breakeven, price is approaching my initial target, should I:

1. wait till it hit the profit target and call it a day, or

2. take away the TP and set reasonable trailing stop to let the profit run?

Usual thoughts will be in the direction of "how can I maximise my gain?", and therefore we will try to find ways and rules and truths on how to "leave the least on the table". We want to earn more. However, if we think in the direction of "it's about how much I don't lose", then we will be happy to take away the initially planned profit. After all, that's our PLAN. We should not regret for following our plan (provided we planned it properly). We should only regret if we do not follow our plan (even though the outcome might be a desirable one for now).

Protect ourselves, before thinking to take something out of the market.

不入虎穴焉得虎子，但上得山多终遇虎。。。所以上山前先铺好退路，穿上铁布衫软胄甲，到时就算遇了上山大王，也得保个全身而退。

Thanks to Trading Buddy for the reminder.

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Moving Stop Loss

I came up with an entry plan.
I came up with a stop loss.
I came up with a target price.

My entry was matched.
My target price was hit at the end of the day.

I lost money.

Why??
I was too kiasu that I moved my SL to a tighter margin too early, a SL that's lower than the initial plan, but not a level that will make me break even.

Lesson learnt? Don't move your SL unless it's to break even level (protect profit), or to put a trailing stop. What good it has to change a SL from 50pips to 30pips? If I could afford 50pips, why reduce? If I think 50pips was a reasonable margin, why change?

It reads, fear.

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The Biggest Obstacle is Yourself!

Had been away for vacation for more than a week, haven't been doing much homework yet.

Anyway, thanks Trading Buddy for sharing this nice piece of article. There are truth in every word of it!

"In this crazy business we call forex trading it may be difficult for some to imagine that anyone can remain profitable over the long haul. The markets themselves are often wildly unpredictable so much so that most people find it extremely difficult to be profitable on a single day let alone being able profit of the course of years. Nonetheless there a select few that are able to trade for a living.

These exceptional individuals are able to consistently make a living in a field in which that vast majority of people that try to do so fail miserably. So then what is it about those people that set them apart form the rest of the word? Is it that they are smarter than every one else, or because they have some secret inside information that the rest of the world isn’t privy to? The answer to both of those questions is no, because the real reason behind their success is that while everyone else it looking for the system that is going to solve all of their problems, these traders are working on the only thing that matters… themselves.

You see at the end of the day a system is only as good as the trader that’s implementing it. So if you have the best system in the world but your mindset is horrible then you have no chance at succeeding as a trader. You need to learn how to control your emotions such as greed and fear of taking a loss, as well as changing the way you think about trading. For example many new traders see trading as a quick route to riches instead of the business that it is. This disconnect between their idealization of trading and the harsh realities of this business is the reason why so many of them fail. The few that go on to be successful traders have eliminated or at the very least limited these negative thinking patterns and if you hope to join them one day then you are going to have to do the same. So from now on instead scouring the internet looking for new trading methods and techniques, take some time to figure out the thinking patterns and emotions that are harming your trading and get rid of them."

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Staying vs. Exit

"Don’t be afraid to exit a trade if it starts to become unpredictable or out of character. However, don’t close out a trade just because you are nervous, if it still meets most of your criteria."

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My Reply to Trading Buddy

"thanks for the sharing
it's tempting and itchy watch pairs drop as we thought, but not quite exactly as we planned
but i'm glad to take it as a free lesson also

not only when we lose money that got lessons to learn, but it's the same when we're not making money (or loss); why missed, why i choose not to trade, why others make money and me not:

1. i missed because it was more momentous than i predicted earlier
2. i chose not to trade because it might mess up my plan - imagine in a military operation, when everyone is on position, waiting for a target to go near to a certain location and then the sniper will pull the trigger followed by other units' actions. but now the sniper saw the target was walking sooo slowly, and so easy to hit the target, so he releases a shot.... whatever the outcome is, it would make the operation plan invalid.
3. others make money and i don't because it's not my strategy. Germany could thrash England 4-1 because they played team game, quick in counter attack, strong physique. If Brazil use the same tactic to play against England, maybe different result because their playing styles are different. Use their own tactic maybe they'll win 1-0, but it is still a win.

at least this time market's movement didn't make me confuse :D if it moved according to what i initially planned, but i still got swung out, then i'll have to stare at the wall for a few moments first to gain clearer mind...haha"

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Feedback

"The real world is a feedback mechanism. When you climb on the bathroom scale and find you are twenty pounds overweight, that is feedback. if you are fired, broke, or divorced, that, too, is feedback...unfortunately, many ... don't accept or learn from the feedback they receive..."

-- Robert T. Kiyosaki

confusion in making trading plans is a feedback
not being able to see a clear direction is a feedback
shrinking fund size is a feedback
feeling lack of confidence is a feedback
can't understand what other traders are talking about is a feedback

likewise,
being able to read the market movement is a feedback
market movement well within your prediction is a feedback
increasing fund is a feedback

Life's full of feedback in one form or another, but they are useless if you can't make use of them to work for your benefit.

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Range

Got one reminder from my fellow trading buddy today, that market can go in any of the three directions: up, down, flat. So, how to plan a trade? Study the chart and find a range, higher than which will mean a uptrend and vice versa. Will it work? I'll try...

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GBPUSD#6 - Question: What is Reversal?

I am always confused, how to define reversal? Then I recall Ayumi had a similar doubt. After re-reading the table quoted from Investopedia, I'm still wondering.

While it's easy to always assume market moves in my preferred direction. At this moment, I just think everything is going down. But to be a trader, it's important to "trade what you see, not what you think!"

Some traders were already calling for an uptrend of some pairs like EURUSD and GBPUSD, while I was thinking anything that goes up is merely "retracement".

But after seeing EURUSD and GBPUSD running loose like bulls, I was left wonder, what should my strategy be?

From the area highlighted blue in the chart above, should I call it a retracement from what I labeled White L1? Even yes, should I trade against the major trend, i.e. trading the reversal?

If the retracement wave is a big one (across at least 1 or 2 weeks), what's the pros and cons of trading the retracement?

Trading a retracement wave of a 4H chart or less might be strenuous, requires much attention, what about something larger than that?

Another point to ponder.

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Remember the F Chord Experience

Had a short talk with my mentor. I complained about difficulty in seeing a clear trend of the market.

Not that I expect myself to be seeing trends like a pro anytime now, but, just a vent of frustration.

While talking, I reminded myself of my guitar learning journey when I was back in middle school.

If you ever learned guitar, you might agree that the first major hurdle to overcome was getting the F Major Chord right. You must have cursed and grumbled on numerous occasions when you had to press 2 strings firmly with only your index finger!

Many people, including myself, had tried to find ways round it - use two different fingers for different strings, skipping one of the strings, or skip learning the chord even guitar altogether! But after a few futile attempts, I came to realise that there's NO way round it. If here was, someone would have thought about it some decades ago.

Just like in a hurdle race, the first major hurdle can be the finishing line for many. But for those who had leaped over it, they would gain momentum, confidence, and pace. No smooth run after that, more hurdles to come, but they don't appear as difficult as the first one.

I have no problem with F Chord now of course. If any beginner comes to me asking how to learn F Chord? The only answer is, practice! I guess that's the magic word I'll get if I were to ask "how to see market more clearly?" Having said that, predicting the market trend is just the first hurdle. More to come. Will they appear less difficult than the first one? Maybe not.

Pat on my own shoulders and say, "Jia You!"

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