Practice method to produce results in the shortest time #10

Practice with real trading using small lots

Hello. This is THE DAYTRADE.

Let’s reflect on the practice we’ve done so far.

• Decide the trend on the daily and 4-hour charts, and draw one horizontal line
• On the 1-hour chart, narrow down the entry location
• On the 5-minute chart, only watch the timing of N waves
• Repeat with past charts
• Look for reasons to pass and record the reasons for decision

This time, finallypractice trading on the actual chart in a real environment.
However, the lot size (the amount moved per trade) will be kept very small.

Backtesting and real trading are completely different

In backtesting, I could judge well.
But when it comes to the real thing, I can’t do it in the same way.

This is the path most people go through.

The reason is, because real money is involved in the real trade.

• When a loss appears, you become scared and cut it early
• When there are profits, you fear it will shrink and take profits too soon
• After a loss, you want to recover and trade before the conditions line up

The emotional swings that didn’t occur in backtesting will certainly appear in real trading.
Can you judge according to your standards even amid these swings? That’s what this practice is for.

Why “small lots”

What happens if you suddenly use large lots in real practice?

One loss becomes large, and your emotions swing greatly.
With large swings, you can’t judge according to your standards.
And what started as practice could end up significantly reducing your funds.

With small lots, even if you lose, the pain is small.
Because the pain is small, you canfocus on whether you judged according to the standard.

The purpose at this stage is not to increase money.
to practice adhering to the standards in real trading conditions.

Decide your exit before you enter

What matters in real-practice is to decide where you will exit before you enter.

My decision-making rules are as follows.

• Decide the stop-loss level before entering
• If it moves by the same amount as the stop-loss width, move the stop to the entry price (breakeven)
• After that, trailing stop by pursuing the swing low on the 5-minute chart (or the high on the downward trend)

If the exit is decided in advance, you won’t be swayed by unrealized losses or gains; your actions won’t change.
Just move as decided.

How to practice real trading with small lots

① Lower the lot size to a level you won’t mind losing
Aiming for “losses are painful but won’t affect daily life.”

② Before entering, write the reasons in order starting from the daily chart
Use the template from #9. Write one word each for the daily, 4-hour, 1-hour, and 5-minute charts.

③ Before entering, decide the stop-loss level
If you can’t decide, you don’t enter. That is also a valid form of “pass.”

④ Once entered, just move as decided
Even if your feelings sway in the middle, do not change the rules. Record any swings.

⑤ After it’s over, first check whether you followed the standards
Rather than whether you won or lost, first verify whether you entered and exited according to the standards.

Raising the lot size is for later

When you start winning with small lots, you’ll want to raise the lot size sooner.

But there’s no need to rush.

Once the number of times you judge according to the standards increases and you can keep the same performance even when emotions swing.
Raising the lot size is fully fine after that.

Raising the lot size will again change how your emotions swing.
At that time, you can raise gradually.

What to do today

• Lower the lot size to the point you won’t mind losing
• Before entering, write the reasons in order starting from the daily chart
• Before entering, decide the stop-loss position (if you can’t decide, don’t enter)
• Once entered, move as decided
• After it’s over, first check whether you followed the standards

Summary

• Backtesting and real trading are different. Real trading involves emotional swings
• With small lots, you can focus on practicing the standards
• The purpose at this stage is not to increase money
• Before entering, decide the exit
• Raising the lot size should come after you can follow the standards

Next time is #11 “Quality of reflections over quantity of practice.”
We will explain how to reflect on emotional swings that appeared in real trading.

Pursue correctness rather than win rate.
In real trading as well, correctness does not change.

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Note: There are individual differences in practice results and outcomes, and profits or the duration to learn are not guaranteed.
Note: Trading involves risk of loss. Even with small lots, losses can occur. Results vary by individual, and profits are not guaranteed.