Two years anniversary of this blog and a closing summary

Thank you

2 years, 47 posts, 22k page views...

I started this blog in December 2013 to share my story of becoming a consistently profitable forex trader, to help myself clarify my thoughts and plans, and to get some more motivation to follow my own trading plan.

Now in December 2015 I believe I can say that this blog has met the objective stated above :-) 
And I hope it offered some helpful perspective and materials to my readers.

At this point I am most likely to discontinue posting here, but the materials will remain available online.

I will continue to be active in the markets and I will now most likely focus on strategies that offer the highest return vs. time spent on trading... such as weekly momentum stocks strategy and a portfolio of ETFs that I will re-balance quarterly.

Trend following system on forex and commodities, using daily bars... I continue to think is a good strategy and yet I came to realize that its time requirements and capital requirements to make trading it really worthwhile... are somewhat higher than I estimated.

And so I felt like sharing this insight also here, in all honesty. But anyway most aspiring traders will need to experience this on their own vs. just reading about it.

Thank you and all the best in 2016 and beyond. 
Michal

Two great trading books

Two great trading books I'd like to recommend

1. Stocks on the Move (link)
2. Following the Trend (link)
   by Andreas F. Clenow

His website is here.

What is absolutely unique about these books:

• mechanical properly backtested system, fully disclosed, tested on a large sample of markets and long period of time, with great results, with results that can be verified
• a story how it would likely feel like to trade the strategy, year by year, very powerful, so true... and those who actually traded a strategy will understand this part very well
• hints on how to properly test the systems: right data, considering dividents, special events; portfolio re-balancing, right benchmark, etc. Plus a unique, and critical, view on Wall Street and S&P500. 

I very much recommend them (this is not affilate link, this is an unbiased reco). 

I actually am planning to implement the stratgies from the book, on another account dedicated for them. 

Again, I really recommend these two books.

New resources

New resources and tools I use

This is to share a couple of resources I am using now and I am finding them very helpful.

Trello.com 

I now use trello boards and lists as my trading journal. I have a trading "board", then I have a list for each strategy or technique or system that I trade, and then an "item" for each market or currency pair. As I open each item, I paste chart screenshots and record my comments. It is very visual, very easy to find things, easy to use. It also makes it easy to share charts with a get image URL function.

Portable MT4

I have my MetaTrader 4 installations on box.com. And I launch terminal.exe with a /portable option. As a result, it stores the data in its sub-folder only. And box synchronizes it automatically across different PCs I am using.  Very effective productivity help this is for me.  For example, when I add a new script or chart template... it automatically gets added on all my PCs.  And backed up.

End of day Trend Following system rules

This is to present an end-of-day trend following trading system rules

Here I will provide specific rules for a trend following system I backtested and I believe it can be profitable.

Great book and a real profitable trader who shares his learnings

I wanted to share two links today

One is a website of Oli Hille at http://www.tradingbook.org/
He is authentic, a real trader, consistently profitable one, and sharing his valuable lessons with others.

The other one is a book by Brent Penfold, "The Universal Principles of Successful Trading".
I found it very relevant, inspiring in spite of some pessimism there.
Very realistic, very authentic, I can certainly relate to many experiences the author shared and I am finding his solutions very practical and real.

In fact, while I continue to trade discretionary trend following system today, I am planing to re-open the project of qualifying an automated trading system, to backtest is mechanically, and then trade manually.

I hope you will enjoy the two resources I shared.

It is so simple!

It is so simple.

How to become a consistently profitable trader?

Here is the action plan to become a pro trader, in its simplest form:

1. find and learn to trade a profitable trading system
2. execute it flawlessly

That's it.  Simple yet hard. 

I am not there yet. Writing helps me clarify my approach. Those who traded for a while will understand what I mean.

If I had a chance to read this "action plan" a few years ago, I would probably think: "blah, blah, just share a profitable trading system and I can make money". Yeah, this is less simple, now I know. Read on.

Zen Habits

I recommend a Zen Habits blog by Leo Babauta at zenhabits.net

His guidance for simplicity, meditation, focus, ways to implement good habits... I am finding all of this very related to forx trading!

Think about this. Good habits, which Leo on his blog provides lots of ideas how to build, are something you need to become a consistently profitable trader: habit to journal the trades, to test new systems, to properly review the markets, to approach trading in a calm and controlled way, etc.

Another one is simplicity that he is calling for... simple trading systems are ususally the ones that work best. Often thing as simple as buying on the break of the candle that touched the EMA 20, if we a re in an uptrend is better than a very complex system with lots of indicators.

See it for yourself :-)
I am finding Zen Habits materials very helpful and I hope you will as well.

BTW, I am repeating myself, I shared a link to this back in my January 2014 post ;-)

MercenaryTrader.com

I found something that I believe it highly valuable for all traders... 

MercenaryTrader.com

I found a link to MercenaryTrader in a book by Peter Brandt, which is also in the list of my top trading books. 

Ok, that's it. I felt like sharing this. Great stuff.

Back to basics - Trend Following and Channel Breakouts

Trend Following - and a specific system well-defined

"Trend is your friend" and trend following systems provide an edge, and forex is the right market to trade the trend following systems because it often trends... lots of good books and pro trades say this.

OK, great, but many people including myself ask: "Fantastic, sounds good, I buy it, but how?"  How exactly to trade? How do I do "trend following"?

Read on for my take on the channel breakout system, as defined by Courtney Smith in his book called: "How to Make a Living Trading Foreign Exchange: A Guaranteed Income for Life".

It offers a specific, almost mechanical set of rules to trade forex, in a trend following method, on an end of day basis.

Price Action by High Quality forex trading

Price Action trading system

This is my take on "price action" trading. There are many places with similar approach described, and I make no attempt to be innovative here. This is what works for me, and I learned it from many sources, other traders and mentors.

This is what I call Price Action at its core, in a nutshell, simplest, best to make trading Effortless. Now, am I consistently profitable trading this method? I wish I could say yes, let me say , in all honesty, that I believe I am on track. Read on to see a complete approach defined here, incl. how to get organized.

Become consistently profitable in Simulator first

The power of simulated trading

Get a year of trading experience in a few hours!

A very powerful tool available for us on a learning journey to become consistently profitable trades is a trading simulation software.

With a good trading simulator you can "trade" on historical charts. What is great about this is that, unlike in demo, you can fast forward the time :-)  Of course, to get the value of learning, we should not "cheat".

You can literally get a year of experience in a few hours. This is a fantastic way to learn and test your trading system, before you go live.

Enjoy the process and keep learning

Enjoy the process

Today I felt like sharing some of my recent insights on trading.
Here they are: enjoy the process, keep learning.

Let me elaborate a little bit. Becoming a consistently profitable trader is hard, few people are able to achieve this, it requires significant and consistent effort, and it takes time. Given this reality, it is much better, and you will be more effective, and certainly more likely to persist, if you enjoy the process. What to do to actually enjoy it?  Well, it is a matter of mindset and attitude isn't it? Surely we should take out the monetary pressure away, while we learn. Trade small size, focus on high quality execution, not on making money.

Trading quotes

Collection of my favorite trading quotes

This list is a continuous work in progress. I will be adding new trading quotes as I find them.




"Persistence is instrumental to success. Most people faced with the early failures of some of the Market Wizards would have given up" - Jack Schwager


"Market success is a matter of finding the methodology that is right for you, not finding the one true methodology" - Jack Schwager

Books added to top trading books list

I added two new books to my list of top trading books. 

"One Good Trade" and "The Playbook" by Mike Bellafiore.

See my recommendation added at the end of my post on top trading books.

Both books by the author are very good. While he talks about prop trading desk, trading U.S. stocks and ETFs on a 1 minute charts and "tape reading", while I trade forex End-of-Day, so a very different approach, but everything about trading mindset, psychology, how to think, how to develop, how to learn - I am finding all of this very relevant and helpful for high quality end of day forex trading, which I do. 

You can also visit their blog.

Your Account Balance chart - simulation tool

Your equity curve Monte Carlo simulation tool

Intro

This is to share my tool to simulate how your account equity curve may look like, given your assumptions of a win ratio and a reward to risk ratio.

Qualify a trading setup

How to qualify a trading setup? 

Here is what I recommend that you do if you are serious about trading a given setup: whether it is a pinbar, or a 1-2-3 pattern, or any other price action or other trade opening setup for that matter.

This is a critical step, a milestone, in the discovery process of your own trading system, a system that is right for you, that you will be able to trade effortlessly once you are ready. The setup is a key building block of the trading system.

It takes a lot of work, you may need to to practice like Patton's soldiers, but here is a specific action plan I followed, and I will follow for new setups I am learning to trade:

Trade opening filters

Trade opening filters

To have a complete trading system you need trade open criteria, entry method, initial stop loss placement, trade management plan, positing sizing method. For a complete trading plan, you need to add list of markets, broker, computer, trading hours, mental preparation, emergency plan, etc.

This article talks about one component of the trading system, i.e. filters you can use to decide if to open a trade.

Filters

Filters are criteria that needs to be met for you to open a trade. This is a list of things that, if not met, you do not open a trade. A good filter will eliminate losing trades. It will also occasionally eliminate a wining trade; that's trading. 

Confluence factors for trade opening

Confluence factors for trade opening

A complete trading system building blocks include open criteria, entry method, stop loss, closing method, position size algo, etc. But there is more.

This article talks about one more component of the trading system, i.e. confluence.

Trade opening setups

Trade opening setups

To have a complete trading system you need trade open criteria, entry method, initial stop loss placement, trade management plan, positing sizing method. For a complete trading plan, you need to add list of markets, broker, computer, trading hours, mental preparation, emergency plan, etc.

This article talks about one component of the trading system, i.e. possible setups you can use as a trigger to open a trade and place your entry order (order type will depend on entry method).

What would General Patton say about trading

General Patton speech to his soldiers during the World War II... here is what I imagine he would say to his Traders :-) 

Credit. This is where I took the idea from, the fxmonster.pl blogger who posted a speech of Patton to traders, in Polish. Here I found the English original. Version below, I created based on fxmonster's idea and the original.

Read on if you are OK with some profanity, as in the original version...