About smartcasualtrader

I trade forex for a living, dream of being the finest forex coach in history, and dream of a more inclusive society

How I beat the forex market. Or any game.

Image

519190164

Plan, reflect, and know the game

When I first started dabbling in forex, the singular assumption to make money in the game of forex was a simple one: Be right.

If you have that assumption, dump it.

I play games. Computer games, sports mainly.

In games, the goal is to win. To beat as many enemies as you can. Beat more than your opponent. Score more than the opposing team. Follow the strategy.

If you watch soccer, you’d know that it’s entertaining simply because there’s no “sure win”.  Through luck, a goal can be scored. An injury can happen. Bad umpiring.

Computer games, you can lose (or cheat) when there’s a bug to exploit.

Same with trading.

I beat the forex market be reflecting on my edge. By changing my perspective on what exactly is “winning”.

And here I am telling you, to beat the forex market, which consists of small time retailers and big banks, central banks, and cheaters, you’re set up to lose.

That’s the first thing you need to realize: You are set up to lose.

Embrace that fact. And find out why. What are the exploits others are using against you? Who are your opponents?

You don’t know, don’t you?

Acknowledge that.

Acknowledge what you don’t know.

And sharpen your own edge. Your own personal edge that no one knows except you.

When I play a computer game, I want to win, of course.

And pro gamers don’t just “git good”. Yes. Skill is important. But so is patience, deep understanding of their own weaknesses, as well as their opponents’.

Without knowing your opponents in the forex market, and acknowledging you are set up to lose, you need to change the rules your way.

You’re not going to beat the winners if you don’t know what the game is. You’re not going to beat the winners if you don’t know what you don’t know.

You’re not going to “win”, if your idea of winning is making money.

Winning in forex is about sharpening your edge, knowing your own personality, and thinking deeply what the other side of the trade has against you.

Being on the defensive is an option. Trade small. And through many, many trades, start to get a feel of how market action works.

Know what edge the others have against you. Speed of execution. Stop runs. Information you don’t have.

Just like computer games, I aim to win  by understanding how the game is designed. For example, if there’s a mechanic in the game to cook materials or build materials, you simply must know it’s there for a reason. Use it. Don’t say “I’m gonna just ignore it.”

If there’s a way to reduce electrical damage,  find out how to, because there’s a reason why the mechanic is there. Because clearly if you don’t make use of the mechanic, you will lose to enemies who attack with electricity.

ThinkstockPhotos-514070332-300x211

Yup. No electrical resistance=death

So what are the mechanics in the forex market available that you can utilize to sharpen your edge?

Here’s a handful.

  1. You can control lot size. Use it. Brokers want you to maximize your margin. Don’t do it. It’s like going in without “margin calls”, which can kill you.
  2. You can trade 24/5. At different timeframes. Brokers want you to trade quickly, trade more, so they earn commisions and from spreads. So don’t. Trade larger timeframes that are comfortable for you.
  3. News are sentasionalized to stir emotions in you to trade. Recognize it. Ignore it. Read the fine print and realize the ambiguous language analysts use that don’t tell you anything. Don’t trade on emotions. This is a powerful edge you can develop.
  4. There are only few important instruments that matter. The rest are just “made up”, tempting you to make more trades. But don’t forget co-relation and exposure. You’re just being dragged to think the more things to trade, the higher chances you can “hit the jackpot”. No. Focus on the very few that matter. Ignore the rest.
  5. Losing is part of any system or strategy. Remember you are set up to lose. But there are strategies that include “losing” as part of a long term winning strategy. So stop thinking beating the forex market is about winning every trade you take. And when you lose, jump to the next strategy. No.

There are many more. Just like computer game design, understand how the game is designed, and reflect on how to achieve “winning” in an efficient manner.

Know what you don’t know. Know what you don’t have. Know what edge you can never have against those who have privileged access to.

And finally, realize the market does not give you what you want from it.

Instead, take what it offers. And be happy with it.

 

Happy trading.

Advertisements

2018 March Performance: Best so far

Capture

Ain’t too shabby. But don’t get cocky.

Slowly but surely, the power of compounding is working its magic. I am happy, and surprised, with this month’s performance. Close to 20%* increase in NAV in a month is not something I see very often, but happy to share that it is possible.

What does the future hold? I don’t know. And this is what aspiring traders must always, always be wary of. Just because your have 20% growth this month, it doesn’t mean it will repeat the next.

Disclaimers apply.

*Note that I have an unrealized loss of $11k that I might just writeoff, but still I’ll be happy taking the overall increase in NAV if I do.

Happy Trading.

#smartcasualtrading

When Success is Failure: Loss of Momentum

momentum

Using momentum as a trading strategy but prices have to move

I haven’t blogged is such a long time until recently I’ve been getting pings of readers liking my old posts, which got me thinking what happened to my momentum in blogging and setting up Smart Casual Trading™ in the first place.

Linking it to trading, using oscillators or momentum indicators is one of the many ways of trading. The thing is, you need prices to move. You need force. And this force is provided by liquidity, traders entering and exiting the market at various prices, herd mentality, trading psychology, greed, fear, all these leading to rational and irrational actions that result in action: Buy or sell.

These actions create the force to push prices up, down, sideways, and with the movement of prices, comes momentum, which I’ve mentioned many times, is simply an indicator, which is always, always dependent on price movements.

In simple terms, if there is no price movement, no force, no action, there will be no momentum.

In 2017, I made enough profits to match my previous full time salary. To me, that is success, and achievement, a goal that I aimed for.

The flip side to that, is on reflection, this success came about from simply doing the same things over and over again, recognizing what works, reflecting on what doesn’t, and realizing mistakes, and taking action on those mistakes.

The nagging thought at the back of my mind, is whether this loss of momentum, of a force to try new strategies, test the unknown, venture and expand into what I wanted to be a successful project in Smart Casual Trading™, will result in my failure.

Failure to grow.

Sure, profits are still being made, the account is growing. But what about Smart Casual Trading™? I reflect now that, because I have succeeded in making consistent, sustainable profits that can cover the costs of living and more, I have lost the momentum in pursuing my other passion: Coaching and education.

Momentum needs a force. A call to action. And, action itself.

I am apparently considered an “established” and “expert” trader. I don’t proclaim to be one myself, I consider myself just a regular guy who had the tenacity, to the point of desperation, to make forex trading work for myself. I had the call to action. I took the action. And I had the momentum, and here I am now, an independent retail forex trader making a full time living from trading the forex market.

What happened to the momentum to push Smart Casual Trading™?

I guess, I have to say at this point..

Stay tuned.

Thank you to those who have chosen to follow my blog. You are the calls to action for me.

 

My personal problems with Trend Trading, the supposed Holy Grail

market-trending

I think it is safe for me to say every aspiring trader starts off with trend trading strategies. It’s easy to understand, easy to interpret, and easy to execute. I personally started as a trend trader. With the typical rules starting with:

  1. How to define the trend
  2. Where to place the stop-loss
  3. Let the trade go or take profit at a high Reward: Risk ratio (such as 2-3x your risk)

Then it gets more complicated.

  1. Which timeframe?
  2. Which indicator?
  3. What settings for the indicator?
  4. What is this thing called “drawdown”?

Initially, I think most traders go through the beginner’s luck stage where their first few trend trades work out well.

Then they find they keep getting stopped out, and then give up, and go looking for other magic, holy grails.

The Turtle Traders have finally come out with their full story for a while now, in case you didn’t know. And the Turtle Traders have always been regarded as the de-facto proof that trend trading is the holy grail. The problem is not with the system. The problem lies within ourselves.

And that is why I cannot trade trends. Well, at least unless I can change who I am, and my own personality, my own biases, my own perspective of the market.

Asking me to be a trend trader is like asking an introvert to become an extrovert.

I have had success with trend trading and deep in my heart I always know it is the best, proven, method to trade profitably. So why did I give it up?

I gave up trend trading for a divergence approach for the same reason why you would switch your favourite restaurant to another which is more suitable for you. Perhaps it is nearer your workplace, or home. Perhaps you feel more comfortable there. Even though the quality of food may not be the same, you made the switch, because overall, you have found your new “favourite” and you’re comfortable and happy patronizing the new restaurant. Despite knowing it’s not as good, not as good value for money.

Similarly, I trade divergences and retracements, despite knowing for a fact trend trading reaps (theoretically) much higher rewards per risk over the long term, because I like trading divergences and retracements.

To be honest, while I have tried to compare results between my own trend trading method vs my divergence methods, I just gave up doing it because it was simply awful to test them at the same time. It is probably better if I had a partner to trade one method and I another, and then compare results. Then again, always remember, results tell nothing about the future, but only what happened in the past.

So here’s a short list why I don’t like to trade trends anymore. Please take this as an opinion piece, there will be fans and haters, but here are simply my thoughts on why I don’t like to trade trends:

  1. I don’t like to be stopped out in a whipsaw price movement (which is expected in a trend trading strategy)
  2. I don’t like to let profits run. I like to set profit targets. And trend trading requires you to set high profit targets, or let it run, which can be very infuriating. (Requires the amount of zen as the ocean in my perspective)
  3. Trends are best seen on hindsight, and this is one of my biggest problems with trend trading.  As Elder nicely put it, you can’t trade in the middle of the chart. You are only faced with the “hard right wall” which is where the price is now. And there is no way you can know if the trend will end, whipsaw, fakeout, or be your friend.

And that’s why I don’t like to trade trends. Sure, for every point above, trend traders, breakout trend traders will have their counter points. And that further reinforces my point: The choice lies within yourself.

Happy trading, may you find your edge in your own trading strategy.

 

Tribute to Chester Bennington

chester-linkin-park.jpg

the frontman of Linkin Park, whom many of us in my generation grew up with

I woke up to he news of Mr Chester having passed away due to suicide.

Linkin Park’s music, fronted by Chester with his distinctive style and expressions through his screams and yet fluid vocals, gave solace to many who can relate to the songs the band wrote.

I am one of those who found solace in their music during the worst times of my life. It may sound crazy, but it is known as a fact that when feeling low, listening to music that express your feelings can be therapeutic, instead of you expressing it yourself through self-hurt.

Suicide is not something to be taken lightly and the irrationality of it is well understood by those who are lucky, privileged, perhaps, to have never experienced going through depression, anxiety, or other mental illnesses that create thought loops that lead to one conclusion, as one of their song titles aptly put: In the End  (it doesn’t even matter)

I won’t be adding contrived statements on how this is related to trading. I have already discussed about mental issues affecting trading in a previous post.

Dedicated to those who are pushed to the edge. There is always the choice to be made. TO jump, or to step back, and pick yourself up again. Fail, pick yourself up, and carry on away from the edge towards infinite possibilities that you never knew were there.

Dreams are meant for you to happen. Ending it all ends everything, including your chance at making dreams come true.

Trade Smart, Trade Casual, and seek help if you find you’re pushed to the edge.