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trading systems vs account size

  • #1
  • First Post: Aug 5, 2007 4:12am Aug 5, 2007 4:12am
I often read the trading system section to see with what weird and wonderful "trading systems" people have come up with. Most of the time it is pure entertainment for me. Especially if I see these cluttered screens and indicators from god knows where and that only god himself can understand. I have found the following trend occuring in almost all of the trading systems posted on this forum.

John Doe starts off by saying that he has developed a profitable trading system based on XYZ doing ABC.

After about 2-3 months and a lot of questions from a few disciples that decided to follow John Doe's trading system he then modifies his trading system or as he puts it "improve it for better entry positions and/or more pips". So you begin to get a John Doe version 1......and later a version 2...and later a version 3.....and later on everyone is confused.... including John Doe himself.

After about 3-6 months you will find John Doe roaming the pages of Pete's new trading system. And after a while Pete's new system goes thru the exact same stages as John Doe's system. And after 3-6 months you will find Pete roaming the pages of Jimmy's new trading system. And so the story continues......

So what is the lesson to be learned here? A trading system is a trading system. They are all the same. The problem is not the trading system. The problem is the size of your forex account. It's the size of your forex account that is the BIGGEST OBSTACLE in you way

if you have a $1 - $10 000 forex trading account you ONLY do forex for the fun of it and as a hobby. But you will NEVER make a living out of forex. Cause if you trade standard lots ($10 per pip) then you have only 1000 pips to manouvre with. And believe you me the JPY will take you out within a few days time. If you trade mini lots ($1 per pip or smaller) then it will take you ages to make enough money to live off

Only if you have a $30 000 - $50 000 plus forex account will you stand a chance of making a living out of forex. But you will have to choose your trades very carefully.

Only if you have a $100 000 - $1 000 000 forex account will you be one of the 5% that makes a living trading forex IF you only trade standard lot ($10 per pip). Cause then ONLY can you weather the storm of the market turning against you while still having enough capital to continue trading.

Remember....there is a reason why forex brokers offer you the oppertunity to open a mini account of $250 -$10 000 to trade an unpredictable market. Cause they know the odds are heavily against you. Nowhere else will you find a way of turning $250 into millions. Forex is no exception. There are no short cuts in life. It's like taking on the mighty Indian Ocean in only a small row boat. You stand no chance. If you wanna venture out to sea first find yourself a big enough ship that can weather the storms of the ocean.
  • #2
  • Aug 5, 2007 6:09am Aug 5, 2007 6:09am
Quoting iandekoker
After about 3-6 months you will find John Doe roaming the pages of Pete's new trading system. And after a while Pete's new system goes thru the exact same stages as John Doe's system. And after 3-6 months you will find Pete roaming the pages of Jimmy's new trading system. And so the story continues......
But why pick on me
  • #3
  • Aug 5, 2007 7:10am Aug 5, 2007 7:10am
Quoting PeterFM
But why pick on me
lol...sorry pete didnt mean to pick on u....
  • #4
  • Aug 5, 2007 7:18am Aug 5, 2007 7:18am
  •  Trader#0000
  • | Status: Unregistered Trader
Quoting iandekoker
if you have a $1 - $10 000 forex trading account you ONLY do forex for the fun of it and as a hobby. But you will NEVER make a living out of forex. Cause if you trade standard lots ($10 per pip) then you have only 1000 pips to manouvre with. And believe you me the JPY will take you out within a few days time. If you trade mini lots ($1 per pip or smaller) then it will take you ages to make enough money to live off

Only if you have a $30 000 - $50 000 plus forex account will you stand a chance of making a living out of forex. But you will have to choose your trades very carefully.

Only if you have a $100 000 - $1 000 000 forex account will you be one of the 5% that makes a living trading forex IF you only trade standard lot ($10 per pip). Cause then ONLY can you weather the storm of the market turning against you while still having enough capital to continue trading.

Remember....there is a reason why forex brokers offer you the oppertunity to open a mini account of $250 -$10 000 to trade an unpredictable market. Cause they know the odds are heavily against you. Nowhere else will you find a way of turning $250 into millions. Forex is no exception. There are no short cuts in life. It's like taking on the mighty Indian Ocean in only a small row boat. You stand no chance. If you wanna venture out to sea first find yourself a big enough ship that can weather the storms of the ocean.
Iandekoker, I only have a small account. I only have a small account because I am still learning. I seriously hope that you are not advocating that beginners open $30,000.00 accounts without any experience? As for you comments on lot size, I trade with Oanda, which allow me to open positions of any size (ie there is not standard lot size). This has allowed me to trade with sound money management in place.
  • #5
  • Aug 5, 2007 8:17am Aug 5, 2007 8:17am
I look at it this way . For the small time that I have been tradeing (mini account ) As long as your not greedy and your not trying to compete with the big majors banks a person can do fine doing forex. Right now I do 25 to 35 pips a day and some times its only 15 pips. Depending if I am doing 2 or 3 lots . I relize this is nothing compare to all of you . But in time one can make a liveing out of it. You just need to build it up slowly. Forex is not the only thing out there to invest in. But if you are trying to make a liveing out of it . Just look at what your needs are to live on and try to build up on that. If you can get by on lets say $700.00 a week . Then build your plan on that then. With about 25 % more to put away in a saveings account each week or back into your forex account to work with. It all depends on your life style thats all.

Thanks for Your Time

Larry Liles
  • #6
  • Aug 5, 2007 9:20am Aug 5, 2007 9:20am
Quoting iandekoker


A trading system is a trading system. They are all the same. The problem is not the trading system. The problem is the size of your forex account. It's the size of your forex account that is the BIGGEST OBSTACLE in you way
.
It's sweeping generalizations like this on public forums that set me down many a wrong path and cost me many a pretty penny.
Without context, this kind of advice is dangerous nonsense.
All systems are not the same. In fact, the only thing they all have in common is that none work in all market conditions.
Under-capitalization is contextual. A lack of understanding of position-sizing and responsible money-management creates the damage that is often attributed to under-capitalization.
A $5000 bank is perfectly adequate for an experienced scalper using one minute candles and 10 pip stops during sessional openings.
$30,000-$50,000 banks are required for professionals trading daily candles using the same position-size with much larger stops.
Ignorance is the greatest obstacle facing any trader.
The smallest edge can be turned into a healthy living with appropriate trade management and position-sizing.
The best edge known to man will send you broke fast without these things.
  • #7
  • Aug 5, 2007 9:29am Aug 5, 2007 9:29am
Quoting PeterFM
But why pick on me
Don't feel all alone Peter......He started this picking on me first.
the hell of it is it hit way too close to home....
I think most go through this at the begining, fortunatly that has been a couple years ago now.
Same Whore .... Different Dress
  • #8
  • Aug 5, 2007 9:36am Aug 5, 2007 9:36am
The problem is the trader and his psychology
Trade what you see, not what you think.
  • #9
  • Aug 5, 2007 10:06am Aug 5, 2007 10:06am
Quoting karmostaji
The problem is the trader and his psychology
Or the trader and his psychosis

iandekoker - people all have to start somewhere. Certainly you get lots of people losing on mini accounts and small-lot trading, but better that than jumping in untrained with their life savings (though an unfortunate number still do that). They have to test the waters, find out if the the work suits them and if they are suited for the work. A few grand lost to find out that you really don't want to be a trader is a (long run) cost-effective experience for many, especially if it gives someone information on what to look for in a money manager.
.
  • #10
  • Aug 5, 2007 10:15am Aug 5, 2007 10:15am
BTW, do you know if there are other brokers like OANDA that allows you to trade any size lots?

Since I´m a beginner that is a very important issue to me.
  • #11
  • Aug 5, 2007 10:54am Aug 5, 2007 10:54am
I don't know how others feel about this, but once you manage to have position sizes so that your risk is 1% but each pip moves at least 1$/EUR/GBP/whatever your currency is, then you're pretty much in a good ball park for a lower class income per month if you manage consistency.

Say you got 10k. 1% is 100$. If you manage to compound 2-3% every week you're pretty soon at level where you're averaging in good money.

The only problem isn't to achieve levels that are at least as good as a burger flipper. Putting aside for a second that there's no pension, no dental plan, healthcare....(oh and did I mention, your losses are all yours, but your wins get taxed? Beautiful.)

The problem is - if you have to completely live off of your trading income, how on earth are you going to grow the account at these amounts?

Also it's insane performance pressure.

But if anyone asks me - the real problem remains the psychological one. Discipline, patience, absence of emotion.

We're human and we've been brought up with a lot of mind mechanics making us act exactly the wrong way in trading when we start. Trader888's posts in another thread to this regard are very enlightening and true.

In almost any case where there's a problem it's not the system, it's the trader(erratic behavior, not following through on rules, MM, using discretion where it is disallowed, not knowing how to use it properly where needed,lack of experience, lack of patience, revenge trading, being unable to accept that losing is part of winning and the list goes on and on and on..).


..
Trust price. Know yourself.
  • #12
  • Aug 5, 2007 10:56am Aug 5, 2007 10:56am
Quoting Pip Rage
All systems are not the same. In fact, the only thing they all have in common is that none work in all market conditions.

I'm gonna say nah, one thing all INDICATOR based systems have in common is that none work in all market conditions.

Price will be price in all market conditions. No setup - no trade

As simple as that.
Trust price. Know yourself.
  • #13
  • Aug 5, 2007 11:29am Aug 5, 2007 11:29am
Quoting SeekingLight
The only problem isn't to achieve levels that are at least as good as a burger flipper. Putting aside for a second that there's no pension, no dental plan, healthcare....(oh and did I mention, your losses are all yours, but your wins get taxed? Beautiful.)..
Pays to live in Canada; at least there is reasonable health care and in most provinces dental care for the kids plus a minimum guarenteed old-age plan (ok, it's not much); while the both wins and losses are incorporated. I have a couple of income streams, and losses in one can be written off against gains in the other. For FX and trading in the US equity market (because I know the gov't doesn't trust us to report accurately, so we are more likely to get audited) I attach my entire trade report each year; what they do with the paper (it was something like 140 pages last time) is their problem.....
  • #14
  • Aug 5, 2007 11:34am Aug 5, 2007 11:34am
Quoting CHECKstar
Iandekoker, I only have a small account. I only have a small account because I am still learning. I seriously hope that you are not advocating that beginners open $30,000.00 accounts without any experience? As for you comments on lot size, I trade with Oanda, which allow me to open positions of any size (ie there is not standard lot size). This has allowed me to trade with sound money management in place.

No what i am saying is that you demo the account you plan on trading live one day.
  • #15
  • Aug 5, 2007 11:38am Aug 5, 2007 11:38am
Quoting LarryLiles
I look at it this way . For the small time that I have been tradeing (mini account ) As long as your not greedy and your not trying to compete with the big majors banks a person can do fine doing forex. Right now I do 25 to 35 pips a day and some times its only 15 pips. Depending if I am doing 2 or 3 lots . I relize this is nothing compare to all of you . But in time one can make a liveing out of it. You just need to build it up slowly. Forex is not the only thing out there to invest in. But if you are trying to make a liveing out of it . Just look at what your needs are to live on and try to build up on that. If you can get by on lets say $700.00 a week . Then build your plan on that then. With about 25 % more to put away in a saveings account each week or back into your forex account to work with. It all depends on your life style thats all.

Thanks for Your Time

Larry Liles
My friend i hate to burst to bubble, but you will never make a living out of forex trading a mini account. In time you will agree with me.
  • #16
  • Aug 5, 2007 11:43am Aug 5, 2007 11:43am
[quote=Pip Rage;1524051]A $5000 bank is perfectly adequate for an experienced scalper using one minute candles and 10 pip stops during sessional openings.

Ignorance is the greatest obstacle facing any trader.
The smallest edge can be turned into a healthy living with appropriate trade management and position-sizing.


Oh my friend i have this feeling you will lose more than one account in future. Warren Buffet doesn't use 1minute candles to scalp. That is a 100% guarentee that you WILL loose you account. But like you say ignorance is the greatest obstacle
  • #17
  • Aug 5, 2007 11:46am Aug 5, 2007 11:46am
Quoting johnedoe
Don't feel all alone Peter......He started this picking on me first.
the hell of it is it hit way too close to home....
I think most go through this at the begining, fortunatly that has been a couple years ago now.
LOL damn so i had to choose two names of actual users on the site....how is that for luck....i hope you see the humor in it....
  • #18
  • Aug 5, 2007 11:55am Aug 5, 2007 11:55am
Quoting iandekoker
A trading system is a trading system. They are all the same.

Quoting iandekoker
if you have a $1 - $10 000 forex trading account you ONLY do forex for the fun of it and as a hobby. But you will NEVER make a living out of forex

Quoting karmostaji
The problem is the trader and his psychology




I'M SERIOUSLY TIRED OF THIS 95% VS 5% THINKING

I started with $400 blew that account out of stupidity, and thank the LORD for that.
I Demoed another 6 months with REAL feelings and started another LIVE account with again $400, 2 months later I was at $1 000 or $10 a pip

Today I ask the Q http://www.forexfactory.com/showthread.php?t=41478

Enough Said.
  • #19
  • Aug 5, 2007 12:01pm Aug 5, 2007 12:01pm
Quoting iandekoker
LOL damn so i had to choose two names of actual users on the site....how is that for luck....i hope you see the humor in it....
I gotta say it craked me up when I saw it....LOL
Same Whore .... Different Dress
  • #20
  • Aug 5, 2007 12:06pm Aug 5, 2007 12:06pm
Quoting iandekoker
I often read the trading system section to see with what weird and wonderful "trading systems" people have come up with. Most of the time it is pure entertainment for me. Especially if I see these cluttered screens and indicators from god knows where and that only god himself can understand. I have found the following trend occuring in almost all of the trading systems posted on this forum.

John Doe starts off by saying that he has developed a profitable trading system based on XYZ doing ABC.

After about 2-3 months and a lot of questions from a few disciples that decided to follow John Doe's trading system he then modifies his trading system or as he puts it "improve it for better entry positions and/or more pips". So you begin to get a John Doe version 1......and later a version 2...and later a version 3.....and later on everyone is confused.... including John Doe himself.

After about 3-6 months you will find John Doe roaming the pages of Pete's new trading system. And after a while Pete's new system goes thru the exact same stages as John Doe's system. And after 3-6 months you will find Pete roaming the pages of Jimmy's new trading system. And so the story continues......

So what is the lesson to be learned here? A trading system is a trading system. They are all the same. The problem is not the trading system. The problem is the size of your forex account. It's the size of your forex account that is the BIGGEST OBSTACLE in you way

if you have a $1 - $10 000 forex trading account you ONLY do forex for the fun of it and as a hobby. But you will NEVER make a living out of forex. Cause if you trade standard lots ($10 per pip) then you have only 1000 pips to manouvre with. And believe you me the JPY will take you out within a few days time. If you trade mini lots ($1 per pip or smaller) then it will take you ages to make enough money to live off

Only if you have a $30 000 - $50 000 plus forex account will you stand a chance of making a living out of forex. But you will have to choose your trades very carefully.

Only if you have a $100 000 - $1 000 000 forex account will you be one of the 5% that makes a living trading forex IF you only trade standard lot ($10 per pip). Cause then ONLY can you weather the storm of the market turning against you while still having enough capital to continue trading.

Remember....there is a reason why forex brokers offer you the oppertunity to open a mini account of $250 -$10 000 to trade an unpredictable market. Cause they know the odds are heavily against you. Nowhere else will you find a way of turning $250 into millions. Forex is no exception. There are no short cuts in life. It's like taking on the mighty Indian Ocean in only a small row boat. You stand no chance. If you wanna venture out to sea first find yourself a big enough ship that can weather the storms of the ocean.

It's been my experience that position trading requires either more capital or smaller position sizes than either swing trading or day trading. I have to wonder how many traders actually make the link between their respective trading style, position size and risk managment in terms of maximum lost per trade.
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