So after a great start to the new year with a 1% gain on my account in the first week and a 3% gain in the second (keep in mind I'm only risking 0.5% per trade), I had a pretty bad week last week. 6 trades, all of them losses at 0.5%. The thing is though, it doesn't bother me that much because I have backtested my trading strategies over 1 to 4 years and I know they work over the long run. My winning percentage depending on which strategy I use will be between 27% and 47%. But my wins are all gonna be either two or three times as big as my stop loss. Market conditions change, but they can only change in so many ways. Either there is gonna be an uptrend, a downtrend, or sideways movement. Trends can be strong or weak. Movement can be clean or choppy. I've watched the charts for over a year now and I think I know when to trade and when to stay out. Time will tell if I'm right.
Suppose someone said they will give you 100 flips of a coin. Every time it lands on heads, you will have to pay the guy $5, but every time it lands on tails he pays you $10. You would be crazy to turn this down. The coin might land on heads 8 times in a row. At this point you might be thinking "oh shit, what did I get myself into?". If you flip it 100 times, in the end it will work out roughly 50/50 though. After a hundred flips you would have made a lovely bit of profit. Try flipping a coin yourself. You might land on one side 6 times in a row. That's with a 50/50 outcome. With my trading strategies the winning percentages are less than 50%, so it's not surprising at all that drawdown sometimes occurs and a losing run can occur. Every trader has to take losses. Sometimes he'll be on a losing run, but if the strategy works, he'll come out out of that losing run and win in the long run. Winning percentages used to bother me. I wanted to win 80% of my trades or higher at one point. Now, making money is all that matters.
Still, losses can be a bit discouraging, especially for a rookie trader like me. That's when I have to keep moving forward, putting in the work. A punk would cave into the pressure, but a winner would play a beat
and remember he's in this for the long run, so he can create the lifestyle of a champion. That's what winners do. Because I have visualized hiring the apartment below and trading from it. That's why I've spent many hours at the weekend backtesting, like some clown with no life. That's why I've been OBSESSED with trading for the last year and a half and have spent hours each day trading, studying, backtesting, and talking trading. So I can create the lifestyle of a king. I currently have a trade open which is close to hitting my profit target of 2:1 RR, so maybe I'll get back to winning ways by tomorrow morning.
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