Donchian applied his system to stocks and commodities and I believe forex is little more complex
Lets 1st understand what Donchian is.
Donchian is break out system.Like any other break out system one does not know for certain if BO is real or fake.Donchian solution was to take every BO and cut losers and run the winners.In theory this is great but psychologically can you take every BO and cut the losers if proven wrong?Could you take 10 fake outs in a row before a winner?Lets say you did pick a winner but down 150pips trying now you need to get 150pips just to break even.In forex average swing is around 100pips.The pressure to get out of that hole would be enormous to the point that average trader won't be able to handle.
I am just giving you overview that BO systems looks great in theory but hard to implement in real trading.This is more true if your account is 500-5k basically mini account.Small accounts can't handle repetitive coin toss up systems that is BO. This is why most retail trades spend enormous amount of time on accurate entry because our account size can't handle multiple false entries.Banks love Donchian system because they can also handle significant draw downs and they don't have to be accurate.
REgards
Donchian applied his system to stocks and commodities and I believe forex is little more complex Lets 1st understand what Donchian is. Donchian is break out system.Like any other break out system one does not know for certain if BO is real or fake.Donchian solution was to take every BO and cut losers and run the winners.In theory this is great but psychologically can you take every BO and cut the losers if proven wrong?Could you take 10 fake outs in a row before a winner?Lets say you did pick a winner but down 150pips trying now you need to get...
Ignored
If a retail trader trades like a bank, they don't have to accurate either. This is why I don't use mt4. 10 cents a pip is too high for any account less than 4500 dollars.
{quote} If a retail trader trades like a bank, they don't have to accurate either. This is why I don't use mt4. 10 cents a pip is too high for any account less than 4500 dollars.
Ignored
Hi Jim
You could trade 10C even 5C but even you score big (relative) your profits still would be peanuts.I mean putting all hours of work and you show 50dollars profit end of month is hardly worth doing.
Take 50dollars and divide how many hours it took you to earn and I bet your hourly will be 25-50c
Looking at it that way you could earn more flipping burgers.Most retail traders including me over trade because that's pretty much what needs to be done to grow account quick.
Regards
