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trading systems vs account size

  • #41
  • Aug 6, 2007 2:57am Aug 6, 2007 2:57am
I find this post quite humorous as everyone seems to be shuffling around trying to patch up the holes in their answer and thinking here and there.

I think there is a fundamental difference of opinion here: Those of us looking at pursuing trading as a full time job and income, and those that must leave it as a part-time endeavor due to current job/life constraints. I must say that I feel a bit privileged as I am able to have the time to grow an account into something worthwhile and quite livable. Other people don't, and it obviously seems to frustrate.

I full agree that even if you're about to try and make the jump to trading for income that you should cut your teeth on a real account, even if only $500 as losing real money hurts, no matter the amount. It definitely wakes you up to the reality that it's your money on the line and it's up to you to do right by it. Sure you might come at me saying that "losing $50 isn't that bad when you have a $30k account!" Trust me, if I had a $30k account, I wouldn't be losing $50, that'd be closer to $500-2,000 (god forbid).

Another thing driving the divide between those needing large amounts to live comfortably and those of us that don't is the time factor. I have more time to devote to trading and learning to trade and thus am able to work more actively towards my goal of growing my account where as someone working 40+ hours a week with kids has a lot more difficulty putting time into it. It's kinda like going to college in a way; you can either slug it out from the beginning and be on the other end of a diploma in three to four years, or if you're tied up in other things (like life itself) and you're only able to do a few night classes at a time, it's gonna take longer. Of course, some decide that they don't want to do that and cut a clear path out and shelve whatever it is that's keeping them in night classes and just duke it out working overtime in class so they're most likely coming out after two years with vengeance.

Be wary of the trader hustling for those 200-1000+ pips a week as they're the ones with the drive and desire to slug it out to the top. Yes it is entirely possible to net over 1000 pips in a week safely and without craziness applied liberally. No I am not talking out of my butt or selling snake oil. I've seen it done before, and I've done it on more than one occasion myself. It's all in how much you're willing to put into it and how you're willing to deal with the current situation you're in, good or bad.

To put things in perspective, no you don't have to live in someplace like Indonesia to live on a lower income. I can live quite comfortably here in Dallas, TX on $1,000 a month, or $250 a week. Do I live in a mansion with a trophy wife? Of course not, but I have a decent place to live, eat reasonably well, and have money to go out with on the weekends. So let's say that for every $250 of profit I take out, I leave another $250 in the account? Well, that starts to stack up before too long, and then $250 turns into $300, into $350, growing quicker and quicker between each period. This is all quite doable on a $10,000 account, and I'm talking about one at a proper broker on an ECN like ODL or HotSpotFXi. It's all about perspective and context. Hell, I'd make just about as much money doing that than I do working full time where I do!

Another thing that bothers me:

YOU DO NOT HAVE THE FULL ACCOUNT BALANCE TO WIELD AROUND AS POSSIBLE DRAWDOWN EQUITY ONCE YOU HAVE ENTERED A POSITION. YOU HAVE WHATEVER IS LEFT AFTER YOUR MARGIN REQUIREMENTS.

ALSO, PLEASE START THINKING WITH AN OPEN MIND AND LISTENING WITH AN OPEN EAR. YOU DO NOT GET AHEAD OR LEARN ANYTHING BY DENIGRATING OTHER PEOPLE'S EXPERIENCES OR IDEAS AND DISMISSING THEM. YOU GET AHEAD BY THINKING ABOUT THEM YOURSELF AND ANALYZING WHAT YOU TAKE IN.
Never underestimate the powers of the Force.
  • #42
  • Aug 6, 2007 2:59am Aug 6, 2007 2:59am
Quoting Que
So you believe you can turn 10% a month with a 50k account?

Yet, you insist a $300 account could not do the same?

I say, Invest $300 a month for 36 months. This is aproximately a car payment for most Americans. Compounded making 10% a month while keeping your regular job will net you $89,738.04 with only a $10800 investment over the course of 36 months.

Now do that for 4 years (48 Months the term of that standard car loan). You have invested $14400 and your account balance would be $288,051.70.

You can not have it both ways. Either it is or it is not possible to make 10% a month on a forex account. Capital has no relivance to that fact. My Broker lets me trade all the way down to .01 Mini lots. I can and do apply correct money management to my trades with an account as small as $300.

The difference is, you are advocating that people initially risk $50,000 to make a living on Forex. I am advocating you keep your job, invest a small amount over time and in less time then the average marrage in America you can have a substancial amount of savings and the ability to free yourself from a job working for someone else. Durring this time, you can keep your standard of living without risking health benifits, mortgage or food.
I most def. agree with you that $30 can be made per month with a $300 account.....AND I DONOT advocate ANYBODY intially risking 50k......This post is about TRADING FOR A LIVING, and what the CAP requirements might be!!!
You may want to STUDY the postings here.

What part do you not understand??? If you are working so as not to risk your benefits, you are a part time trader....NOT a full time trader whom derives all his/her income ane benefits SOLELY from trading.

Here is a simple example of a fulltime SCALPER trader....which I lean towards.

I trade 10 full lots ( 1 million usd ) , lets use eur/usd as an example....

I get a 1.2 spread on Oanda....whether it takes me 1 trade or 2 trades, I WILL NET my 10-15 pips PER DAY.....THAT is $1000 to $1500 PER DAY.

I've already netted 14 pips on usd/jpy.....go to post, it is listed LIVE.

I have run 2 LIVE trading sessions about a month ago....THE RESULTS are live, time stamped. Look them up.

Now I did not get here overnight.....but if you think stating that CAPITALIZATION in the FX market is "utter Bullshit" I don't know what else to say.

Plus it appears you are stating ADDING $300 into your account each month....that is not the same as STARTING with $300 and growing it from there......I'm not here to say your way is wrong.....slow and easy is best, BUT remember the TREAD content. Go to a banks dealing desk and utter your Capitalization is Bullshit remark and they'll laugh you out of the building.

And If any trader is not Capped correctly......YES, keep your JOB, until you can trade full time, IF that is one's desire. Enough Said!
Proper Prior Planning Prevents Piss Poor Performance
  • #43
  • Aug 6, 2007 3:08am Aug 6, 2007 3:08am
Quoting FxJarhead
I most def. agree with you that $30 can be made per month with a $300 account.....AND I DONOT advocate ANYBODY intially risking 50k......This post is about TRADING FOR A LIVING, and what the CAP requirements might be!!!
You may want to STUDY the postings here.

What part do you not understand??? If you are working so as not to risk your benefits, you are a part time trader....NOT a full time trader whom derives all his/her income ane benefits SOLELY from trading.

Here is a simple example of a fulltime SCALPER trader....which I lean towards.

I trade 10 full lots ( 1 million usd ) , lets use eur/usd as an example....

I get a 1.2 spread on Oanda....whether it takes me 1 trade or 2 trades, I WILL NET my 10-15 pips PER DAY.....THAT is $1000 to $1500 PER DAY.

I've already netted 14 pips on usd/jpy.....go to post, it is listed LIVE.

I have run 2 LIVE trading sessions about a month ago....THE RESULTS are live, time stamped. Look them up.

Now I did not get here overnight.....but if you think stating that CAPITALIZATION in the FX market is "utter Bullshit" I don't know what else to say.

Plus it appears you are stating ADDING $300 into your account each month....that is not the same as STARTING with $300 and growing it from there......I'm not here to say your way is wrong.....slow and easy is best, BUT remember the TREAD content. Go to a banks dealing desk and utter your Capitalization is Bullshit remark and they'll laugh you out of the building.

And If any trader is not Capped correctly......YES, keep your JOB, until you can trade full time, IF that is one's desire. Enough Said!
Ok,

Title of post:

trading systems vs account size

Nothin in that says Trading for a Living.


As a matter of fact the first 6 paragraphs you posted said nothing about trading for a living. Only in paragraphs 7, 8 and 9 did you vaguly refer to making a living with forex, but this did not make the meat of your post so the assumption from the title as well as the first post was this post had to do with you telling people not to open an account with less then $50,000.

Now read this thread:

http://www.forexfactory.com/showthread.php?t=41499

And tell me if Capital is king or if Money Management and proper Risk Management is King. I say the later.
Que
  • #44
  • Aug 6, 2007 3:09am Aug 6, 2007 3:09am
Maintaining a forex systems portfolio is very important for any forex system or signal trader. I have reached such a conclusion after seeing how systems have their ups and downs. Not any system can maintain a track record of straight monthly profits, month after month, without suffering some months of losses. A trader who depends on his trading income for a living, will find it hard when he has losing months. The goal of any trader is to maintain an always "Winning" results, month after month.
This can be achieved by having a portfolio of good trading systems. And as I noticed lately, for example, when one system fails, the other wins. And when this other system fails, the first one wins. So trading multiple "good" systems, and I stress "good" systems, can be a key for traders' success.
The advice I give is:
1- Trade 3-5 good systems
2- Allocate the trade size for each system, according to past historical results
3- Try to save every pip you can
4- Try to gain every interest you can
Trading for a living is not easy. It is a stressing full time job, which requires researching, testing, reading, learning, and innovating.
Trading for a living!
  • #45
  • Aug 6, 2007 3:27am Aug 6, 2007 3:27am
Quoting Gwan
Oh Sorry Bill, i 'm not living off from forex, but it is indeed cheaper to live in tropical island for comparison, a Mc Donald Fillet O'fish with cheese+Small Coke + Med Fries is less than $2 (that's why it is called junk food right?) but it still taste good... no refill though...
if you love vegetables you can cut the expense to 1/3.

as the thread become more confusing, should most of the mini trader broke, isn't it because it is retail? so that many use it, and try....
...
once i calculate, if i must live from forex with $200 a month with 10% return a year, i need $24.000 but if i can get 100% return a year, i still need $2.400.... i think it is all back to ROI (Return of Investment)

and yes, someone may ever become a billionaire from zero, even in forex
Hello Gwan

I know you don't live off forex. My point was that there are people on this forum that could live off a mini account because of the difference in cost of living. I remembered what you told me about food and rent etc. in Indonesia.
Sometimes we forget all things are not equal throuout the world. But forex gains and losses are.

Keep eating vegetables. McDonald's filet o fish is poison. But those prehistoric fish you've been catching over there (coelacanth?) might be good.

All the best
Bill
  • #46
  • Aug 6, 2007 3:38am Aug 6, 2007 3:38am
Some food for thought. Saw the video on youtube a few months ago. Now it is taken off, so too bad.


On April 30, Nippon TV broadcasted a special program entitled "Net sociaty for 20 years: The man who earned 2 billion yen($16 million) per 16 minutes at online trading".
This young man (29-years-old) who made high-class condominium of Minato-ku,Tokyo a trading room from this January has increased 1.6 million yen($13333) to 16.5 billion yen($137.5 million) in 8 years. He is most famous individual trader in Japan.
On the coverage day, he bought and sold 200 of transactions for 4 hours and a half and he put up profit of 30 million yen($250000).


So who says dreams don't come true?
  • #47
  • Aug 6, 2007 3:43am Aug 6, 2007 3:43am
Quoting Que
So you believe you can turn 10% a month with a 50k account?

Yet, you insist a $300 account could not do the same?

I say, Invest $300 a month for 36 months. This is aproximately a car payment for most Americans. Compounded making 10% a month while keeping your regular job will net you $89,738.04 with only a $10800 investment over the course of 36 months.

Now do that for 4 years (48 Months the term of that standard car loan). You have invested $14400 and your account balance would be $288,051.70.

You can not have it both ways. Either it is or it is not possible to make 10% a month on a forex account. Capital has no relivance to that fact. My Broker lets me trade all the way down to .01 Mini lots. I can and do apply correct money management to my trades with an account as small as $300.

The difference is, you are advocating that people initially risk $50,000 to make a living on Forex. I am advocating you keep your job, invest a small amount over time and in less time then the average marrage in America you can have a substancial amount of savings and the ability to free yourself from a job working for someone else. Durring this time, you can keep your standard of living without risking health benifits, mortgage or food.

Maybe i should use an example to proof my point. If i have a $300 account it will be stupid to play standard lot ($10 per pip) cause the market needs to move 30pips and i am broke. I am sure we all agree on that. If i play $0.01 lots that is 1 cent a pip then 10 pips earn i 10 cents, and 100 pips earns me $1. Ok so i am gonna need 200 pips a month to make $2. I make between 700 and 2000 pips a month so the best i can do it $200 and the worst i can do it $7. Ok both scenario's is a waste of my time since i can spend my time better to make more money.

however if i have a $100 000 account then i can play $2-$5 lots. Now 10 pips are worth $-20-$50. And 100 pips are worth $200-$500. And again if i make my usual 700-2000 pips per month then the best i can do is $10 000 and the worst i can do is $ 1400 a month. It is still not great BUT i now afford myself the luxury of not having to close losing trades unless i want too. And that is worth A LOT to me.
  • #48
  • Aug 6, 2007 3:46am Aug 6, 2007 3:46am
Quoting fxreport
The advice I give is:
1-Trade 3-5 good systems
2-Allocate the trade size for each system, according to past historical results
3-Try to save every pip you can
4-Try to gain every interest you can
Trading for a living is not easy. It is a stressing full time job, which requires researching, testing, reading, learning, and innovating.

That's funny
In a non-offensive way, don't get me wrong.
It's funny because I spent the last three weeks writing to at least three people they should stick to ONE system and learn it inside out until they know what they're doing, what the system is doing and when where what why.

I mean, er, think about it. If you have 5 systems that all perform equally well bottom line and you keep your total risk identical, then all you are doing is randomizing the TIME of the average loss, not changing the profitability in itself.
Now forgive me my language, but to me that feels a lot like trying to polish a turd. No matter how you try to hide it, it's still gonna stink(that'll be having the losing months).

Now one of the hardest things to accept is that with regular profit comes regular losses. They are inevitable. You win and lose trades, but your bottom line should remain positive.
Now whether you look at this every week or month or year is up to you, as is living with bad times. But if you can't take a drawdown or need to hide it by juggling so many systems you don't know where your head is in the end, then I don't know if that's the psychological makeup that's gonna be capable of sustaining consistent profit in the long run.


I'd say
1. Find a system, learn it, figure out why it works, UNDERSTAND why it works(of Nr. 1 importance for trust and confidence) and then build on it / get it to a point where your entry/sizing/exit becomes (almost, depending on whether it's mechanical or (part-)discretionary) completely automated behavior
2. Use a diligent, proper and suitable MM
3. Don't fuss over giving back half your pips on a PL if that's how your system works. See 1. for that
4. Don't fret over paying interest if that's the kind of trade you need to be right now. See 1. again
5-50. Keep a record. Record your mistakes, your success, look over your trades, remember them, don't stop learning, keep an open mind but isolate yourself from other opinions when it comes to your trading and positions, take time off, free yourself from having to trade, don't fret over missing a trade, don't be afraid of losses, don't blame yourself for market behavior, don't shoot your neighbour when your fifth consecutive stop loss hit occurs. Plus 40 other things I wrote in my signature and various posts all over FF.

Phew!

Personal perspective/opinion on things, I could of course have it all wrong
Trust price. Know yourself.
  • #49
  • Aug 6, 2007 4:00am Aug 6, 2007 4:00am
how is ur trading going. I remembered u pm me a while ago. hope u got my response
  • #50
  • Aug 6, 2007 4:02am Aug 6, 2007 4:02am
Quoting SeekingLight
I do. Anything under 10-30k should not be using mini lots. They are by far too big. Micro sizing is a must for any account below those levels to allow proper MM. If you are forced to use a minimum of 1 USD/pip then you are seriously overstaking and using by far too much risk. Your chances of blowing out even when using a functional system are far far far greater (do a risk analysis / simulation if you don't trust me writing it) and you can basically just GIVE your broker the 500$ if that's what you're opening the mini with.

I know half the public forum will dispute and ridicule this statement, but I believe that most of those screaming how they have turned 200$ into 2000$ and how it's perfectly fine to trade mini end up being the ones writing something along the lines of "blew my third account" in 6 month's time.

Just my opinion and personal experience.

Also please realize that you can stake 500$ per pip with a micro account as well. For some reason people keep on thinking that just because you CAN use as little as a few cents that you HAVE to. No, you CAN. But what IS important is that you don't HAVE to use 1 USD/pip min and that's all the difference in the world.

A good way to tell how this enforced overstaking by the brokers is the way they squeeze you dry is that whenever I asked about anyone offering micro when looking around for a new broker they all started go "oh, er, well, hmmm, you know, that's THEORETICALLY possible, but..." or just right out blatantly "no sorry, we don't offer micro".

Right. It's sooooo impossible to allow for a local dealing desk which they all operate pooling and offsetting of micros, but it's not silly to implement account management for 200-500$ sizes. Righto, righto..

Funnily enough some of the support desks/chat folks actually agreed that it's impossible to implement proper risk management with a mini only account with such small a size....how's that for a laugh

sorry forgot to direct my message at you. how is ur trading going? i remembered you pm me a while ago. hope u got my response
  • #51
  • Aug 6, 2007 4:14am Aug 6, 2007 4:14am
Quoting billflet
Hello Gwan

I know you don't live off forex. My point was that there are people on this forum that could live off a mini account because of the difference in cost of living. I remembered what you told me about food and rent etc. in Indonesia.
Sometimes we forget all things are not equal throuout the world. But forex gains and losses are.

Keep eating vegetables. McDonald's filet o fish is poison. But those prehistoric fish you've been catching over there (coelacanth?) might be good.

All the best
Bill
lol...no Bill please read ur message again. U did mention that Gwan is living off forex.....lol....but anyway.....
  • #52
  • Aug 6, 2007 4:21am Aug 6, 2007 4:21am
Quoting fxreport
Maintaining a forex systems portfolio is very important for any forex system or signal trader. I have reached such a conclusion after seeing how systems have their ups and downs. Not any system can maintain a track record of straight monthly profits, month after month, without suffering some months of losses. A trader who depends on his trading income for a living, will find it hard when he has losing months. The goal of any trader is to maintain an always "Winning" results, month after month.
This can be achieved by having a portfolio of good trading systems. And as I noticed lately, for example, when one system fails, the other wins. And when this other system fails, the first one wins. So trading multiple "good" systems, and I stress "good" systems, can be a key for traders' success.
The advice I give is:
1-Trade 3-5 good systems
2-Allocate the trade size for each system, according to past historical results
3-Try to save every pip you can
4-Try to gain every interest you can
Trading for a living is not easy. It is a stressing full time job, which requires researching, testing, reading, learning, and innovating.
i here what you say but dont u agree that most indicators are lagging? and therefor i find it hard to base my trading on something that has happened in the past? I prefer to see what is currently happening in front of me in real time.
  • #53
  • Aug 6, 2007 5:16am Aug 6, 2007 5:16am
diversification is a key of survival, no? many trading system may gives some trader a better trade, while for some other one system will overwhelmed the other.
soo.... account size vs trading system......

who's winning?
i put bet on the trading system
  • #54
  • Aug 6, 2007 6:14am Aug 6, 2007 6:14am
while we are agreeing to disagree i hope everyone took notice of the shooting star on gbp/usd h4 chart. that would have given you 150 pips if you went short.
  • #55
  • Aug 6, 2007 6:49am Aug 6, 2007 6:49am
Quoting Gwan
diversification is a key of survival, no? many trading system may gives some trader a better trade, while for some other one system will overwhelmed the other.
soo.... account size vs trading system......

who's winning?
i put bet on the trading system
show me a trading system that managed to give you 100 plus pips today when gbp/usd move well over 150 pips? most trading systems would only confirm the trade once the currency has moved about 20-60 pips. While trading the shooting star candlestick formation on the 4hr char would have given you an instant 100 pips...even 130 pips if you let ur trade ride it out
  • #56
  • Aug 6, 2007 7:11am Aug 6, 2007 7:11am
Quoting iandekoker
Ok let's put this issue to rest. Please provide me or find someone who will provide us with a detailed account statement in which we can see how they turned $250-$5000 into hundred thousands or millions? THERE IS NO SUCH PERSON. Everyone is either still working on it or have blown their account. But in any case i do not wanna convince you that is impossible. Only time and a lot of wasted efforts will convince you. But i wish you the best of trading.
I agree that this issue should be put to rest but also think that onus of proof lies with the person making the accusation. If you have some concrete evidence that it is impossible(or even improbable) that people can profit fom minis, I suggest you produce it.
Brokers are bookies. They make a profit from the spread whether their clients win or lose and they don't have to expose themselves to positional risk to make this profit.
The collapse of Barings bank is an apt demonstration of what happens when the bookie decides to become one of the punters.
They only have to make a market when there is little or no order flow but they will offset the risk by hedging with other institutions very rapidly.
Those who don't lose money hand over fist.
I agree that there are very few people who have traded from $300 to millions very quickly but I think that has more to do with a lack of skill then some sinister plot by brokers.
I also think that a rookie who starts with a $50,000 bank is about to lose $50,000(or a large part thereof) and a rookie who starts with $300 is about to lose $300. What amount would you rather lose?
I don't believe that the rookie with big account has any advantage over the rookie with a small one. In fact, I could argue that the one with the big account is carrying greater psychological baggage than his counterpart.
It's this baggage combined with ignorance that blow most rookies' accounts.
Most people fail at forex for the same simple reason why most people fail at anything. They give up.They get burned and they give up.
I wonder how many give up because they read a post on an internet forum telling them that succeeding is impossible without a mountain of money.
If you have any tangible evidence to prove your claim, produce it.
  • #57
  • Aug 6, 2007 7:31am Aug 6, 2007 7:31am
Quoting Pip Rage
I agree that this issue should be put to rest but also think that onus of proof lies with the person making the accusation. If you have some concrete evidence that it is impossible(or even improbable) that people can profit fom minis, I suggest you produce it.
Brokers are bookies. They make a profit from the spread whether their clients win or lose and they don't have to expose themselves to positional risk to make this profit.
The collapse of Barings bank is an apt demonstration of what happens when the bookie decides to become one of the punters.
They only have to make a market when there is little or no order flow but they will offset the risk by hedging with other institutions very rapidly.
Those who don't lose money hand over fist.
I agree that there are very few people who have traded from $300 to millions very quickly but I think that has more to do with a lack of skill then some sinister plot by brokers.
I also think that a rookie who starts with a $50,000 bank is about to lose $50,000(or a large part thereof) and a rookie who starts with $300 is about to lose $300. What amount would you rather lose?
I don't believe that the rookie with big account has any advantage over the rookie with a small one. In fact, I could argue that the one with the big account is carrying greater psychological baggage than his counterpart.
It's this baggage combined with ignorance that blow most rookies' accounts.
Most people fail at forex for the same simple reason why most people fail at anything. They give up.They get burned and they give up.
I wonder how many give up because they read a post on an internet forum telling them that succeeding is impossible without a mountain of money.
If you have any tangible evidence to prove your claim, produce it.
My tangible evidence is your and every other $250-$5000 mini live account's monthly statement out there. Unfortunately i cannot post other people's monthly statements as i have no access to it. And of course nobody is gonna publish their monthly statements on this forum....

ps....once again u did not pay attention when u read my first posting...my premises was someone trading for a living. Now why on earth would a rookie quit his dayjob open a $50 000 live account and then try to make a living out of it, if he did not investigate and/or gained some knowledge and experience in forex first?

But anyway...good luck turning ur $250 account into thousands...i wish u the best...may u make lots of pips
  • #58
  • Edited 11:54am Aug 6, 2007 11:50am | Edited 11:54am
Quoting Que
Ok,

Title of post:

trading systems vs account size

Nothin in that says Trading for a Living.


As a matter of fact the first 6 paragraphs you posted said nothing about trading for a living. Only in paragraphs 7, 8 and 9 did you vaguly refer to making a living with forex, but this did not make the meat of your post so the assumption from the title as well as the first post was this post had to do with you telling people not to open an account with less then $50,000.

Now read this thread:

http://www.forexfactory.com/showthread.php?t=41499

And tell me if Capital is king or if Money Management and proper Risk Management is King. I say the later.

Que,

I think you have me mistaken for the originator of this thread. My 1st Post was #25 I think.

Plus, I was not writing to "novices".....To me Capital/MM/and RM are all one and the same.....different for sure, but lumped into Money. ( CAPITAL )...having it, using it, preserving it......

If you research any of my posts, I ADVOCATE 7-1 margin, 10-1....but never more than 20-1.

Also true, I do not use stops.....and I have my reasons why I do not use them.

And in my 3rd Paragraph.....I STATE....Managing Money is equally IMPORTANT.
Proper Prior Planning Prevents Piss Poor Performance
  • #59
  • Aug 6, 2007 2:17pm Aug 6, 2007 2:17pm
Quoting FxJarhead
Que,

I think you have me mistaken for the originator of this thread. My 1st Post was #25 I think.

Plus, I was not writing to "novices".....To me Capital/MM/and RM are all one and the same.....different for sure, but lumped into Money. ( CAPITAL )...having it, using it, preserving it......

If you research any of my posts, I ADVOCATE 7-1 margin, 10-1....but never more than 20-1.

Also true, I do not use stops.....and I have my reasons why I do not use them.

And in my 3rd Paragraph.....I STATE....Managing Money is equally IMPORTANT.
You are correct, my appologies, I did mistake you for the origional poster. Just realize all my posts were to that end. From reading the first post, and the title, I did not get the impression that this thread is all about making a living, rather turning it into a living.

Also, I do post my statement, It may not be impressive as I am very new, but it has every single live trade I have made, good or bad (Mostly bad heh). I will make it in the business, and if this month is a positive month, I will start to impliment my $300 a month plan.
Que
  • #60
  • Aug 6, 2007 2:22pm Aug 6, 2007 2:22pm
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......
I'm with you up to this point.

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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.
I disagree. All trading systems are not of equal value. Not by a long shot. And a losing system is not of equal value with a winning system. I don't see how you can lump them in together unless you make the assumption that all systems are losing systems, or all systems have positive expectancies. That's clearly not the case. The trading system "universe" is like a great continuum with systems of all type going from nearly infinitely "bad" to nearly infinitely "good" based on the way you want to measure system performance.

My preference is to measure performance based on trading it on a given account with a given maximum drawdown for each system (such as 40% max DD). Given the max DD for any given system, you can figure the optimal or near optimal trade size assuming the system will continue performing as it has in the past. (There are ways to test and monitor this assumption, but that's beyond the scope of this thread.) In this way I can objectively measure system performance on a same sized portfolio, with a given maximum drawdown or risk, and can objectively see that all systems are not created equal. It's not even a close judgment call because performance differences between systems is huge when performance is measured in this way.


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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
The first (and largest) hurdle is the trading system. Once you have overcome this obstacle by creating a proven profitable trading system and you determine the optimal size that may be traded with the system, you can objectively determine if you will be able to trade for a living given the amount of funds you have available. Yes, really small accounts will need to be turned into large accounts in order to trade for a living. But the goal of trading for a living, or trading to draw income from your trading account is a fallacy in my opinion. People should be trading to get wealthy, rather than to replace their day jobs with another far more risky job.


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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
I'm going to again take issue with the statement that smaller accounts cannot be traded in a business-like manner as is implied by the "hobby" statement. That's just a cop out. Can you make a living off a small account? It's purely a function of the return your system provides at a given risk level, and how much money you define as "making a living". To make a living off a $10,000 account, you'll probably need to greatly exceed a 30% return per year and you'll have to make use of compounding of gains, rather than withdrawal of gains. You probably need a system that can perform at 30-50%+ per month nominally. Compound that and in 6 months you have built up a decent sized account. The only real way to achieve this "dream" (that I've discovered) is to measure system performance as I've stated above, and find a system that can get you those premium returns while only returning a 30-40% maximum drawdown on your account.

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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.
Trading at .1 x leverage - why bother with the principal risk at all? Makes more sense to put it in a long term interest bearing account and avoid the principal risk for the type of return you will get trading that size. And a note for the plungers, large accounts can blow out just as easily as small accounts if a losing strategy is employed or too much leverage is used, turning a winning strategy into a losing strategy. It may be easier to make a living with larger money, but it still isn't easy.

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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.
Well put.
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