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For a micro lot trade, I allocate at least $200 of capital. So with an account size of $1,000, I would only allow five open positions at the same time. I trade to produce good results, improve my systems, and get everything as stable as possible. And something that is predictable or stable is not very entertaining. Trading heuristics is like climbing the Mount Everest in a Tshirt because it was warmer in the valley below.
If I need improved results, I will then change one thing. For example, I will change the take profit point value from 20 points to 30 points, and that will create a different result. There are sometimes totally valid reasons not to do something. If you decide that you don’t want to do something, that is no problem, but it doesn’t mean that you couldn’t do it if you wanted.
It is always possible to trade a few small accounts and keep the rest of your trading capital on a bank account just in case something happens.
An automated system just does what it is told to do, and it will not violate the trading plan because of emotional reasons, nor will it do revenge trades.
Errors are unavoidable. I don’t think that I would still be able to trade if all the errors I made so far would have been on a real account.
First, we use a demo account to get started. Once we are satisfied with our results on the demo account, we would switch to a so called cent account.
It doesn’t really matter if you use automated trading or if you are a discretionary trader. I think that you never will have a situation where you are totally satisfied with your results.
I wanted to find out why some currency pairs work well and others don’t, and I tried to improve the results for the ones with the bad results. Today I don’t do that anymore.
If you think you found a market advantage and you reverse the buy and the sell trades, you should be able to prove that the results are now worse.
Most losses are produced when human traders try to manipulate their own rules to make a revenge trade. Actually, I think that I don’t know anybody who has any time left that is not needed otherwise. You probably should backtest your trading system and adjust the risk settings in a way that will increase your chances to survive the next forex earthquake.
Trading heuristics is like selling Christmas trees in January because the sales in December have been so good.
A broker makes money when you win and when you lose. Therefore, his main goal is to make you trade as much real money as possible.
Mistakes are unavoidable, but with a good statistics solution, you might be able to improve the quality of your decisions. From time to time I read about people who talk about trading systems that really work, and most of the time those people only have 50 or 100 trades to back up their opinion. For new developments I use demo accounts, and I encourage all course members to do that for at least three months before they trade on a real account.
How often do you see a perfect constellation where all the standard indicators have the same signal? Maybe twice a year.