What I wish someone had told me
Day 21 of 26 · 9 min read · By DT Terminal
The things most traders learn the expensive way: trade fewer setups, follow the strategy you have before looking for a better one, treat losses as a cost of business, size up slowly, give a strategy a real sample before judging it, record everything, and protect the downside first.
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Fewer setups, not more
This is the list I wish someone had given me before I started. None of it is a secret, and most traders learn it the expensive way.
First: new traders collect setups. But every setup is its own strategy, with its own win rate and its own R, and each needs its own sample:
| Setups you trade | Trades each, out of 100 |
|---|---|
| 1 | 100 |
| 2 | 50 |
| 3 | 33 |
| 5 | 20 |
| 10 | 10 |
Five setups and 100 trades leaves about 20 each, too few to judge any of them. And when the account drops, you cannot say which setup is to blame.
Go deeper
You have spent three weeks on reading the market, building a strategy and, in the backtesting lesson, testing it. This lesson is different: it is the list I wish someone had sat me down with.
Setups pile up because every video adds one, every losing week makes the current one look tired, and the chart fills up with reasons to click. Chapter 5 shows how little 20 trades can tell you, and if you cannot say which setup is to blame, you cannot fix anything. Adding a second setup later is easy. Untangling five that were traded at once is close to impossible.
The strategy matters less than following it
When results disappoint, the instinct is a new strategy. More often the problem is the gap between the strategy and what you traded: the impulse entry, the moved stop, the winner closed early.
Worked example
Example 01: One strategy, followed some of the time
The worked example, with every number walked through, is in the app.
The first thing to improve is rarely the entry. It is how often you take it exactly as written.
Write the plan as Trading Rules
Go deeper
A strategy is only what your record shows it to be, and the record only shows the strategy if you traded it as written. Your own record will give you your own on-plan and off-plan figures. In the example, nothing about the strategy changed.
In Trading Rules you can write rules for before, during and after trading, and mark the ones that are critical. The Rule Violations goal makes how often you follow the plan counted rather than guessed.
Losses are a cost of doing business
A shop pays rent whether or not it sells anything. A strategy pays losses. At a 40% win rate, 60 of every 100 trades lose by design, and the strategy can still be sound.
One setup, taken twice: trade 1 stopped out for −1R, then trade 2 took it the same way and reached the target for +2R.
DT Terminal ChartsEURUSD · H1Sample dataNet +1R. Skip the second trade after the first loss and you keep the cost but miss the return. So one trade's result is the wrong thing to grade:
Go deeper
A planned 1R loss on a trade that followed the rules is the business running, not the business failing.
On the chart, trade 1 bought the level at 1.08500 with the stop at 1.08300 and the target at 1.08900. A win that broke the plan also makes you more likely to repeat it: it pays you for the habit that will cost you most. Price came back after trade 1, and trade 2 took the same level.
Size up slowly
Going from demo to live, or to a bigger size, changes how a loss feels even when the percentage stays the same. The common mistake is to jump size after a good week. Here is what 10 losses in a row take at each risk level, risking that share of the current balance each time:
| Risk per trade | 10 losses in a row | On $5,000 |
|---|---|---|
| 0.25% | −2.47% | −$123.60 |
| 0.5% | −4.89% | −$244.45 |
| 1% | −9.56% | −$478.09 |
| 2% | −18.29% | −$914.64 |
| 5% | −40.13% | −$2,006.32 |
Worked example
Example 02: The same run of losses at two sizes
The worked example, with every number walked through, is in the app.
Go deeper
A good week is exactly when confidence runs ahead of the sample. The small run is annoying, and you trade on with the same rules. At the bigger size it is the same trader, the same strategy and the same luck: only the size changed, and with it how hard it is to keep following the plan.
A common approach is to raise risk in small steps, each one only after a full sample at the current size that followed the plan, and to step back down after a drawdown you set in advance. A hundred trades that followed the plan at the current size is closer to a sample. The full table of what each risk level does is in Day 4.
Stop strategy-hopping
Day 9 showed that one trade says almost nothing and that losing runs come with every edge. Strategy-hopping forgets both: a few wins, a normal losing run, and you decide it has stopped working.
A strategy shows a 45% win rate at 1:2. Its true win rate plausibly sits here, at 95% confidence:
| Trades taken | True win rate, plausibly |
|---|---|
| 20 | 25.8% to 65.8% |
| 50 | 32.1% to 58.7% |
| 100 | 35.6% to 54.8% |
| 200 | 38.3% to 51.9% |
| 500 | 40.7% to 49.4% |
Until the bottom of the range climbs past breakeven, about 63 trades here, the results cannot tell this strategy from a losing one.
Interactive tool
Sample size checker
This interactive tool runs in the app, with your own numbers.
Check your sample in Analytics
Go deeper
Breakeven at 1:2 is 33.3%. The uncertainty is wider than it feels. Before you reach the sample, a losing run tells you about variance, not the strategy. Quit before the sample is big enough and you have learned nothing about the strategy. Write the sample size beside it: this many trades, taken the same way, then review.
Analytics shows your win rate, average R and expectancy, and filters by strategy. Check those figures in the checker before you decide anything about a strategy.
Record everything
The trades you remember are not the trades you took. Memory keeps the big win and the painful loss, and blurs the middle, where the truth about a strategy lives.
For every trade, record:
- The trade: entry, exit, size and result, as the broker filled it.
- The setup, so each one builds its own sample.
- The rules: followed or not, and which one broke.
- The chart: a screenshot at entry.
- The why: what you felt and why you clicked.
- The skips: setups you passed on, and why.
Sync the account and the first item takes care of itself: nothing goes missing or gets tidied up after a bad week.
Go deeper
Every idea in this lesson depends on a record: counting setups, measuring how often you follow the plan, judging a sample. Without one you are guessing about all of them.
A screenshot lets you see later what you saw then, and a line or two is enough for the why. A synced account brings every trade in as it was filled. The rest of the record is yours to add.
Protect the downside first
How much you make is partly up to the market. How much you lose is mostly up to you. Traders who last set rules about losing first:
- A stop on every trade, set before the entry, never moved further away.
- A fixed maximum risk per trade.
- A daily loss limit.
- A drawdown level at which size comes down.
- No adding to a losing trade.
A 20% drop needs 25% to get back, and a 50% drop needs 100%. Gains can wait.
A verified record with no blowups, built from broker-synced trades, says more than one spectacular month surrounded by gaps.
Go deeper
- The maximum risk per trade stays the same on good days and bad ones.
- The daily loss limit: after a set number of losses, or a set loss in R, the platform closes for the day.
- At the drawdown level, size comes down, or you go back to demo for a while.
- Adding to a loser only brings the average price closer.
A hole that deep cannot be climbed out of quickly, and trying is how accounts end. A record of broker-synced trades nobody could edit says more to a prop firm, or to you. The downside rules keep you in the game long enough for the upside to show up in a sample.
Check yourself
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