Valuable Trading Lessons I’ve Learned This Year

As this year draws to an end, I have to say it’s been a tough one. Overall, I am still profitable by about 2800 pips. This is a huge contrast to my normal 5000+ pips. This year has been the hardest to get through, since my first, and I have learned some valuable lessons. Two of which I will share in this post:

Lesson 1: Have Backup Pairs – While I still believe that newbie trades should only trade one pair to keep things simple I have learned that backup pairs are important. Some periods this year my bread and butter pair GBP/JPY became a less efficient pair to trade. I went from profiting on 8 in 10 trades to profiting on 6 in 10 just because of how GBP/JPY was moving.

So I started looking at other pairs EUR/JPY and GBP/USD. When GBP/JPY wasn’t doing very well either both those pairs or at least one of them was doing very well.

So now I have changed my tactics slightly. I still only trade GBP/JPY week to week but I always do my EUR/JPY and GBP/USD analysis. This way I have them as back up pairs. If GBP/JPY starts to falter I can always move to trading the other pairs for a while.

The reason I do analysis on them weekly is just to keep myself familiarized with the pairs. I rarely trade line breaks on those pairs as I only like to concentrate on a single pair.

Lesson 2: Manage Trades on 15 Min Charts – I used to think it was useless to drop down to a lower timeframe to manage trades. I was wrong. When I take a trade I always enter on a 4hr chart. As soon as I am in the trade though I switch to the 15 min chart. The smaller timeframe allows me to see price action more clearly.

If for example I am in a short trade and it plummets down and the price action indicates that the bears are in control then all is good. However, if I am in a short trade and on the 15 min chart I start to see indecision (reversal) candles forming, I know that this trade might not go my way.

This has allowed me to close out bad trades before they go back and hit my stop loss. So instead of losing 50 pips I can see a potentially negative trade coming and close with a 30 pip gain. Or I can close out half my position with 30 pips to counter losses, if the trade ends up going bad.

These two simple lessons have helped change my trading and make me more profitable. I do consider myself a pro trader but I do still have things to learn. So if you trade my method take note of these two lessons. If you trade another method and things haven’t been going so well don’t give up. Look at your method and make the changes needed to improve it’s efficiency.

669 comments

spookie94

October 11, 2009

Thanks again for the priceless info. I too have been following Eur/Jpy & Gbp/Usd. Have you been able to tell what session works best for these 2 yet?

Andi

October 11, 2009

Great Insight, NICK, I LIKE IT

– Please consider to add GJ Triangle Arbitrage pairs in Nick’s Method, so we can “pseudo hedge” our main Pairs GBPJPY with GU & EJ.(Correlation TRADING with rescure THE BAD TRADE METHOD)

– Please consider to add ‘something” in Nick’s Scalp-line method, because Scalp-line(similar to VSA Uptrust or reverse Uptrust) can become “fake breakout”, maybe we still need ‘filter” to justify and open Scalp-line breakout..

Cheers, Buddy

nigel

October 11, 2009

Hey Andi Can you please claify your responce to Nicks comment? I am a a little lost .

Nigel

NickB

October 11, 2009

@nigel:

You’re not the only one??

Phreddy

October 12, 2009

Two good lessons Nick, thanks. I am looking forward to the time when I can manage the one pair though but it is nice to have a further target.

Andi – Yes agree with Nick and Nigel!

judenuel

October 12, 2009

Life is all about change and especially change for the betteoveriesr. Congrats for your disc

MiG

October 12, 2009

Great post Nick!

Thanks for sharing your valuable lessons learned.

Cheers,
MiG

-Scott

October 12, 2009

The true teacher is also forever a student. As you move to mastery and beyond, your insight continues to help others see what it takes to get good.. and make it last long term.

It’s great, and very telling of the nature required of a pro trader, that you evaluate your methods with objective desire for better trading, not just better timing.

Thank you for the continued ‘extra’ knowledge. To me, it makes the difference between ‘good’ and ‘great’.

-Scott

Phoebe Ejimbe

October 12, 2009

Wonderful post Nick! Thanks for sharing your trading experiences. I value them a great deal and have picked up quite a lot from reading your write ups.

Keep up the good work.

ADEDAYO

October 12, 2009

Thanks Nick for sharing your experience and for keeping in touch.

Naomi

October 12, 2009

Nick,
Thanks for all you do and keep up the great work. You are honest and unselfish, unlike most of the so-called experts out there.
Your lessons today, as always, are extremely helpful, and I appreciate your sharing them with all of us.

Ayman

October 12, 2009

Nick,

Your words above have many lessons more than those you mentioned. It is really telling when you mention a phrase like “I was wrong” that forex market or trading in general is like an ocean that everyone should always look for alternatives and never think that he/she is the “trading superman” !!

Thanks for sharing this Nick, it’s an amazing post that everyone should bookmark.

Regards,

Lori

October 12, 2009

I have been trading 6 years and I agree, this has been the hardest year yet. But we are not alone. There is a reason so many hedge funds and banks failed, and Bernie Madoff came to light.

Here’s hoping this year doesn’t repeat itself any time soon!

PatrickDK

October 12, 2009

Nick
Your honesty and willingness to put aside the ego of vanity is SO valueable for a noob like me who is still in the learning fase teoretically.
I haven´t yet entered real nor demo trading but recently opend an demo account at gft.

To navigate from scratch I find it more than belssed to follow your method, considerations and evaluations.

By being so into the bone honest, that is for me the most important. This tells me I can go with you all the way!

Thanks for sharing – really!

Regards.

dan cahill

October 13, 2009

Good stuff Nick..Thks..

Erico

October 13, 2009

Wonderful post man.

dallia

October 13, 2009

One advantage to doing a failed system like DBO this summer is that by looking at short time frame of a minute or so you do get sensitized to price action. I don’t recommend trading on a one minute chart unless your doing DBO ala FA but you learn PA. Where lower times frame suck at is findng S/R and major patterns. If your confused go up to 4HR charts.