Trading Model: DO you have it ?

Today I am writing about trading model. I brought up this area is because most new trader, or even the average trader themselves has taken for granted and skip the way it should be in order to develop themselves into a professional trader.

The fact that most trader horde into any new system they get on and then did not even perform due diligence to ascertain the system probabilities, on top of that they quickly rush into using it live , where most psychological factor are high compare to the system they use. Guess where that cycle is going to end up again…

If you answer , they quit using it as they lose a lot, and the cycle begin again finding new system , new knowledge and even new guru. I call this the cycle of ‘IT’. Why IT ? Because that’s what they thought about, ‘ This is it…’  ‘ It will be the one system….’ ‘It’s the answer!!’ …. until it become too late..’ It’s a disaster… ‘It’s the broker….’  and so on.

To be a professional trader, you need to plan your development properly and this is what I called the Trading Model Cycle.

1. A trader found out a system that looks tradable and able to pull profit.

2. After learning the rules and system inside out, he then test it on a simulation , a trade simulator or a demo account.

3. After a series of testing of 500 – 1000 trade test, he found out the winning % vs the Losing %. Concluded that the system is worthy to be used on a trading environment.

4. He then do another test using risk management skill ( building up discipline and money management skill ). He test it using 1%, 2% risk  with different RR 1: 2 or 1: 3 and 1: 1 .

5. All 3 has a different Risk to ruin ( this is where he chooses the winning math probability) in order to use in a real trading environment for a long term.

6. After knowing that system’s model and building up his own skill set using the particular system, He then feel confident and ready to use it on live trade.

7. In his mindset, that such system can be expose to market conditions that changes. He knows this hence he got the skill of risk management in place.

8. This is the stage where he is profitable in the long run as a professional trader.

 

Notice that I put it down as a number of steps. Here is how it look like on a Chris Lori’s Cycle development. By the way, chris lori is a professional trader, a hedge fund manager. He emphasize this always on some of his webinars. And I agree 100% of it.

trading model

Now my question is DO you have a trading model ?..

Have you done due diligence ?

Do You really know your system well ?

Do you know which winning % perform better in the long run with your RR ?

If you doubtly answer all the above question  with hesitation, then it is not enough and that you have a long way to even become a professional trader.

Trading is all about probabilities. If you don’t know your very own probability, how can you survive at all ?

Trading in the Forex market is a great big ocean, but the sick part is , its not fish inside it, but sharks and jaws Only. Are you armed enough to face those beast ?

Are you SKILLed enough to be a professional killer in the ocean, biting bits of that large sharks.

Remember, it the math is working in your favour over the long run, you got nothing to worry with your losses. Because you know with such risk management , you know that it only take 2 – 3 trade to cover back and profit those losses.

Do you want to blame anyone or but your self ? You are the one that made the decision clicking that mouse to trigger the trade. Did any one force you to click it ?

SO now, do you understand that having a trading model is very important. DO you want to get better quick ? Increase your learning curve by using forextester. DO you want to monitor your performance ? Then use a trading log. There are numbers of trading log template out there. The best one so far are at http://www.forexsmarttools.com…  I think that is the correct address, but you can google it.

To conclude, below is a GBPUSD trade INtraday. I was long on the GBPUSD last week friday. ANd been holding this trade untill today. FInally it reach the supply intraday soon.

gbpusd_intraday

 

There is a fresh demand of Yesterday which could be also a good place to long.

 

 

Happy hunting!!

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