Sign up to save your podcasts
Or
Share EP7: How to have Confidence in Trading
Share to email
Share to Facebook
Share to X
Share to email
Share to Facebook
Share to X
Or
EP7: How to have Confidence in Trading
Confidence is a key factor in forex trading. In this episode of Truth About FX, Walter talks about gaining confidence in trading, reward and risk ratio, the danger of getting off-track from your system, and how to cope with a losing streak.
http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP7_How_do_I_gain_Confidence_in_Trading.mp3
Download (Duration: 04:33/ 5.22 MB)
In This Episode:
01:05 – minimum profits
01:44 – drawdown
02:12 – get off track
03:34 – simply bad luck
04:04 – let go
Tweetables:
Try to have a little bit of long haul perspective. [Click To Tweet].
Use statistics to construct and predict your likely drawdown. [Click To Tweet].
Sometimes, having a loser is just simply bad luck. [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: Hey, Walter. How’s it going?
Walter: Good, Hugh. How are you doing today?
Hugh: I’m pretty good. Today’s question is: how do I get confidence? I feel like every trade is a loser and I miss out on all the big winners and I’ve had it before. What do you say to that?
Walter: I’ve definitely had that feeling many, many times. The way that I approach it is, I’m trying to get a little bit of perspective. For example, one way to look at it is to say, “does the casino get upset that someone took five million out of the casino today and won five million”. The answer is no, because the casino is really looking over the long haul.
Even if they have a day when they make very minimal profits or even a loss, they know over the long haul, they’re going to make money.
There’s a couple of tricks that you can do with your money. One is to take a look at your systems. Maybe if you haven’t traded live, you’re trading in forex tester or doing some backtesting and you have your win rate, your average winner, your average loser. With that information right there, what you can do is you can basically construct what you’re future is likely to look like.
In other words, how likely would that win rate and that reward/risk ratio — which is basically what you get when you get your average winner, average loser — you’re able to know what kind of drawdown you should expect.
You can calculate whether you have a 70% chance over the 30% drawdown or 5% chance over 30% drawdown. Given all of those parameters, those three things, that’s the other way to do it. As you can say “I know, I have 75% chance of having a 30% drawdown given my systems parameters, why should I be so surprised it happened?”
To me, the real concern is that you get off-track by changing your system because you’ve had a few losers in a row. That’s the real danger because then you’d start trading something that you didn’t test in the first place.
To me,
View all episodes
By Walter Peters (FXJake) and Hugh Kimura (Trading Heroes)Confidence is a key factor in forex trading. In this episode of Truth About FX, Walter talks about gaining confidence in trading, reward and risk ratio, the danger of getting off-track from your system, and how to cope with a losing streak.
http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP7_How_do_I_gain_Confidence_in_Trading.mp3
Download (Duration: 04:33/ 5.22 MB)
In This Episode:
01:05 – minimum profits
01:44 – drawdown
02:12 – get off track
03:34 – simply bad luck
04:04 – let go
Tweetables:
Try to have a little bit of long haul perspective. [Click To Tweet].
Use statistics to construct and predict your likely drawdown. [Click To Tweet].
Sometimes, having a loser is just simply bad luck. [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: Hey, Walter. How’s it going?
Walter: Good, Hugh. How are you doing today?
Hugh: I’m pretty good. Today’s question is: how do I get confidence? I feel like every trade is a loser and I miss out on all the big winners and I’ve had it before. What do you say to that?
Walter: I’ve definitely had that feeling many, many times. The way that I approach it is, I’m trying to get a little bit of perspective. For example, one way to look at it is to say, “does the casino get upset that someone took five million out of the casino today and won five million”. The answer is no, because the casino is really looking over the long haul.
Even if they have a day when they make very minimal profits or even a loss, they know over the long haul, they’re going to make money.
There’s a couple of tricks that you can do with your money. One is to take a look at your systems. Maybe if you haven’t traded live, you’re trading in forex tester or doing some backtesting and you have your win rate, your average winner, your average loser. With that information right there, what you can do is you can basically construct what you’re future is likely to look like.
In other words, how likely would that win rate and that reward/risk ratio — which is basically what you get when you get your average winner, average loser — you’re able to know what kind of drawdown you should expect.
You can calculate whether you have a 70% chance over the 30% drawdown or 5% chance over 30% drawdown. Given all of those parameters, those three things, that’s the other way to do it. As you can say “I know, I have 75% chance of having a 30% drawdown given my systems parameters, why should I be so surprised it happened?”
To me, the real concern is that you get off-track by changing your system because you’ve had a few losers in a row. That’s the real danger because then you’d start trading something that you didn’t test in the first place.
To me,