Lessons From Month 1 Selective Trading

I decided to get serious with my trading a month ago, and that meant no testing out of stuff and sub optimal trades on my live account. All testing of new stuff (Gap trades, touch trades, sub optimal setups) are to be done on a demo account. I started a small live account where I only take setups that jump in my face, setups where I don't need to squint and ponder if it is a good trade.

Results of Month 1

Winning Ratio: 8 wins, 1 loss. 89% win rate (All Forex trades)

Total R Gain: 2.7R

% Account Gain: 5.9%

I set out with an initial target of 5% monthly return, and I'm happy to have achieved it. However it isn't so much about the statistics, but the lessons I learned along the way. It is hard to put it in words but I'll try.

• I learned that all the professionals are right. You'll never really succeed and excel as a trader unless you get very serious and treat it as a business. The following points are so cliche and boring but believe it or not, it transformed my entire trading mindset and has helped me more than any book or course. We often go around seeking mentors without realizing we can also be a mentor to ourselves.
• It is important to have a measurable goal (in my case 5% monthly)
• It is important to have a trading plan complete with entry/exit and money management strategies
• It is important to journal all your trades and jot down the lessons learned in that trade

• One of the hardest and yet most important thing for a trader to do is to be selective. Our urge to trade (itchy finger syndrome) is an account killer. An example would be to take a pin bar in the midst of consolidation, or to short right into support just because our favorite bearish engulfing candle has just appeared. We are especially susceptible to over trading when we just had a good trade or feel like we're on a roll. The common psychology is to think that we have extra profits this month so losing some won't hurt. It is also easy to over trade when the markets are dull. My biggest flaw is over trading, so the results of being selective have really convinced me that I need to overcome this.


• We will never be able to trade well unless we have a sense of confidence when we pull the trigger on a setup. But we will never have this sense of confidence unless we've made a conscious decision to be very selective about the setup and have seen it work time after time. That way we won't be affected by losing trades or temporal draw down because we know for sure that we have a positive expectancy setup. The past month has boosted my confidence on trading PA setups at confluence levels so much that I know any losing trade in future is either due to my poor decision or just part and parcel of the unpredictable market.


• From my trades, my problem is taking profits or exiting too early. I need to trust in my trades more. I also need to identify confluence levels which can be used to manage the trade before I take it. If this level is far away from the entry point, I need to think whether I will be comfortable with a potential huge retracement/drawdown before the trade works out.


• It is ridiculous to trade Singapore equities on a small account. I mean I knew that all along but this is really beginning to sink deep. Simply put, if the above trades were on my equity account, I would only have made 0.4R after the exorbitant commissions. That and all the unexpected news, manipulation, and overnight risk is beginning to make me shun away from SG equities more and more.

I've achieved 5.9% this month, that doesn't sound like much but it means that if I'm trading a 1 mil account for a prop firm, I would have made the firm 59k and based on a 50/50 profit sharing, I would have made around 30k in a month. It also means I will nearly double my account in a year (5.9% compounded monthly without withdrawal). I'm trying to think like that so my trading will be based on what the chart is saying instead of what my current meager P/L is saying. 

And here is why I'm excited about future possibilities: 

• None of the trades this month fulfilled my A+ criteria. They were mainly B to B+ trades, and a couple were sub optimal in hindsight but I got lucky. Now what if I had more A+ setups in a month...
• I still do not consider myself an experienced trader. I have limited setups that I'm confident in, but I'm constantly reading, learning, and demoing stuff. Now imagine that I have more tested and proven setups in my trading arsenal...
• Because my trading method is highly discretionary, I still make a lot of mistakes. I get out of a trade too early or too late. Now imagine how much better my trading decisions will be with a few more years of experience...
• I'm currently risking a fixed 2% per trade. However once I gain experience and know for sure that there is a 90+% chance of an A+ trade working out, what is there to stop me from risking >3% on that trade? That way I'm able to make more on A+ setups

With all that in mind, I really believe that achieving a monthly return of >20% is not unattainable. Yes that is the realm of top traders, but how can I become a top trader unless I first believe that it is possible and make concrete plans to achieve it?