Would you trade the same idea twice?

In this episode of Truth About FX, Walter digs into the subject of trading ideas, signals and execution. He asks an important question when deciding which road to take: Is this according to my beliefs? Have I tested this with my system? Walter also talks about an essential method of determining when you have reached your turning point.

Download (Duration: 6:04 / 6.94 MB)

In This Episode:

00:40 – trades that didn’t work out

01:42 – why you’re losing trade

02:43 – wrong approach

03:48 – too much emphasis hurts

04:34 – freight train

05:14 – a fruitful area

05:37 – fortitude

Tweetables:

Keep following your system. [Click To Tweet].

Don’t modify your systems based on recent trades you had.  [Click To Tweet].

Just take losses and just try. [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter! How many times will you trade the same idea? For example, if you’ve had two losers at support and resistance level, what would it take for you to trade the setup for the third time?

Walter: That is a great question, Hugh. I’ve actually, just this week — I think forty-eight hours ago — I had couple of trades that didn’t work out. One of them I got triggered on — actually, two of them I got triggered on — one of them I didn’t get triggered on. The two that I got triggered on was like blasted almost immediately, got stopped out.

Today, we have another signal and I am going to take them. I got two signals so I am going to take them most likely during the London session. This is a timely question. My thing is to concentrate. We’ve been talking a little bit about this in the private forum, the group that we have and, really, the focus should be on executing your system.

This isn’t meant to, like to demean anybody or to say you are wrong or whatever, but my belief is that when you have losers, there’s a couple of things that could be going on here.

If you are following your system to a T, and you know that it’s profitable in the long run or you believe it to be based on historical data –and you can argue what you want about historical data — but if that is what you believe, then the only reason why you have a negative or a losing trade is because of bad luck. I mean, that’s really the only reason.

This question assumes that there is something going on here that needs to be fixed. That is what I am reading between the lines. I would say,  “Definitely no”. Keep following your system.

In other words, let’s say these two signals that I take today are stopped out again and then next Tuesday — which should be a few trading days from now like three-trading days from now — I get another signal on the same pairs in the same direction, I’ll take them again.

I’ll look at it is, focusing on executing my system. I am staying through to what it is,