【RCScalping】How to solve when you cannot follow the rules
Hello, this is Ryoma!
Are you able to follow the rules in trading?
・You shift your stop loss or end up losing big because you can’t stop it.
・You place average down orders (nampin) that aren’t part of the rules.
・In unrelated areas, you enter intuitively thinking “this is a chance.”
・You think “this method is no good” and start looking for the next method.
Of course, there are people who can follow the rules and trade calmly without any effort.
However, isn’t it overwhelmingly the case that more people break the rules even though they know it’s wrong?
I used to be someone who couldn’t follow the rules, and I did all the things written above.
So, this time I’d like to write about what helped me resolve my inability to follow the rules.
The trigger for being able to follow the rules
・Use a method that suits you
・Consult with trusted traders and peers
If I can be of help to others in similar situations, I’d be happy.
Use a method that suits you
First, the first thing is to check whether the method suits you.
What does “suits you” mean?
Please confirm the following two things.
① The balance between risk-reward and win rate suits you
② How much discretionary judgment is required
① Risk-reward and win rate
For people who break the rules, I recommend “trades with small loss and large profit even if win rate is low.”
As a premise, when you execute a mechanical trade with one rule in FX,
the win rate tends to converge to 50% for a risk-reward of 1:1,
meaning it’s easy to reach a draw.
In reality, they are more prone to losses due to unfavorable spreads and fees, but
you can compensate for that with chart patterns and other technical analysis.
By changing the risk-reward, the win rate also changes, but
it’s unrealistic to artificially raise only the win rate or only the risk-reward to favorable levels.
This is evident even when looking at numerous excellent EAs.
If we consider these as the baseline,
even with a risk-reward of 2:1, a good system would only achieve about a 70% win rate at best.
Of course, even with this, the profit can still be substantial with a good balance of risk-reward and win rate.
But how would you feel if you traded in real life with this setup?
If you lose once, you’d need two wins to recover.
Moreover, with a 70% win rate, you would frequently have two consecutive losses.
When you actually trade, can you remain consistently calm?
Choosing a high-win-rate method means accepting the reality that stop-loss damage can be large.
Conversely, with a risk-reward of 1:3, you can win with a 30% win rate.
Even two consecutive losses, one win can put you in the plus.
Wouldn’t this be better for your mental well-being?
Ever since I stopped chasing win rate, I’ve been able to follow the rules.
② How much discretionary judgment is required by the method
What does a method that requires discretionary judgment mean?
How much vague language is included in the rules,whether it can be run by a robot,that is,
and as a conclusion,for those who tend to break the rules, I strongly recommend a method that can be executed with zero discretion.
As an example, consider stop-loss rules.
1, “Set to overlap with the 20-period SMA at entry”
→ Everyone can set this without making a mistake.
Even if it becomes a stop-out, it is clearly “according to the rule.”
2, “Consider deception and set slightly below the 20-period SMA at entry”
→ It’s unclear how many pips “slightly below” means.
It depends on volatility, and this won’t run as a robot.
To make it clear, you’d need to specify how many pips or support it with another condition.
In other words, there is a hole in the rule.
Moreover, if you trade with the vague rule in the second example, it can cause problems for people who tend not to follow the rules.
Consider a retrace with a wick immediately after a stop loss
Wouldn’t you reflect, “My stop-loss setting was wrong?”
Wouldn’t you think, “Let me widen the stop a little so I don’t get stopped out next time?”
In reality, you don’t need to think like this.The fact is that you can trade according to the rules.
However, due to lack of experience or poor judgment, you blame yourself and lose confidence.
Furthermore, if you seek advice from the strategy seller and they say “it’s fine because it’s according to the rules,” that might be okay.
But if they say, “the stop-loss position is bad” and point it out in a convenient way, that’s terrible.
There are people who find discretionary judgment enjoyable.
But if your results aren’t as expected, first try trading along a “discretionless but trustworthy” method to achieve results.
Consult trusted trading veterans and peers
If you’ve been unable to trade as you wish for a long time, give up trying to solve it alone.
Anyone has reflected many times, saying, “Next time I’ll follow the rules and trade calmly.”
Yet the result up to now is why we’re here.
Talking to someone and expressing the confusion you’re carrying can lighten your mind.
To consult, you need to identify the problems, which clarifies what the issue is and what you should do next.
Perhaps you’ll receive good advice.
They might point out issues you hadn’t noticed on your own.
I also previously consulted someone, and it became a very big trigger for me to follow the rules.
“If you can’t cut losses, you’re a failed trader.”
“Compared to you who packed in knowledge, a elementary school student trades much more honestly.”
They even said things like that.
You’re right… I have no excuse.
If you have any concerns, please feel free to message me.
I don’t know if I can help, but it might be a turning point for you.
That’s all for now.
See you again.
RCScalping ~ 1-minute indiscriminate scalping ~
↓A method to stay profitable with a rational, correct strategy.