Re: Confessions of a Retail Trader - Breaking Down Trades, Mistakes, and Mindset

4
Hi, thanks for posting your ideas, always useful to see traders perspectives. Hope you don't mind If I post some ideas on the back side?

I see that there is always a problem predicting breakouts from regions of tight consolidation, will it continue down or reverse and go up? General consensus says continuation of direction is the most probable but really no one knows who's sitting on the phone about to place a huge order that will decide the day.

Hence I tend to wait for one side to give in and see price shoot away from the tight range and head towards an obvious goal, then wait for a small pullback on route in a failed attempt to retest the breakaway entry, and then jump in on continuation back towards the goal. The strategy means less reward but does have greater probability of the win.

Don't forget to keep a quick, simple record of each trade. Strategy (eg breakout or pullback reversal), win or lose PLUS risk/reward.

So win/lose ratio can be matched against risk/reward ratio and over a number of trades can be plotted on a graph.
Any plot above the red line is a winning strategy.

so for example: if you're risking 1 to make 2 (R/R ratio 2) then your win rate only needs to be around 33%.

Anyway, back to the charts;