So are you saying you close all your positions over the weekend?
Hello Steviet,
I continue to be intrigued with your system So I have a couple of questions regarding your money management strategy. I read in your previous post that you risk only 2% of your account balance for every trade, so in trading 5 pairs you risk only 10% of your balance correct. But my question is how do you compute this risk percentage? does 2% simply mean the number of lots in relation to your account balance? or do you also take into consideration the number of pips you would lose if the trade didn't go your way. So the larger the stoploss the smaller the lot size?
Thank you in advance,
Mikhail
Hi Mikhail,
The answer is here somewhere but I guess it's not easy to find.
OK, the 10% is an average as is the 2% - normally it works out far less risk but occasionally more.
I trade a micro account because of my lack of start up capital and the % is worked out on my account balance. I'll give you a couple of examples.
Say my account balance was $200 and I was setting up 5 brand new trades. I would use $4 of that on each pair which would equate to 4 cents a pip on pairs ending in USD. So 100 pip loss would be $4 - if my initial stop loss is less than 100 pips then I am obviously risking less and the risk diminishes as the s/l is tightened.
Say my account balance was $20000 and I was setting up 5 brand new trades. I would use $400 of that on each pair which would equate to $4 a pip on pairs ending in USD. So 100 pip loss would be $400 - if my initial stop loss is less than 100 pips then again the risk is less.
As my account balance grows I can increase the position size but never the risk. You may be able to help me here - is 0.1 lot equivalent to $1 a pip on pairs ending in USD? If so, I would only trade this method on another platform with a minimum of $5000 account balance trading 0.1 lot per pair. This could be increased to 0.2 lots at $10000 an so on.
Does this help?
Kind Regards
Steve
So a simple math forumula would be:
Pip size = Account balance * percent risk / intial stop in pips
$1 per pip is only 0.1 lots for EURUSD and GBPUSD. Others are slightly less, of your major 5. There is a formula to compute pip value. If you like I can post it. Phil already did here...
http://www.forexfactory.com/showpost...78&postcount=2
Thanks for the clarification
I was asking if I had it right... Is that what you are doing??
Thanks for a fantastic journal...
Does that include trades with leverage. How would you calculate it then?
Hi Mikhail,
The answer is here somewhere but I guess it's not easy to find.
OK, the 10% is an average as is the 2% - normally it works out far less risk but occasionally more.
I trade a micro account because of my lack of start up capital and the % is worked out on my account balance. I'll give you a couple of examples.
Say my account balance was $200 and I was setting up 5 brand new trades. I would use $4 of that on each pair which would equate to 4 cents a pip on pairs ending in USD. So 100 pip loss would be $4 - if my initial stop loss is less than 100 pips then I am obviously risking less and the risk diminishes as the s/l is tightened.
Say my account balance was $20000 and I was setting up 5 brand new trades. I would use $400 of that on each pair which would equate to $4 a pip on pairs ending in USD. So 100 pip loss would be $400 - if my initial stop loss is less than 100 pips then again the risk is less.
As my account balance grows I can increase the position size but never the risk. You may be able to help me here - is 0.1 lot equivalent to $1 a pip on pairs ending in USD? If so, I would only trade this method on another platform with a minimum of $5000 account balance trading 0.1 lot per pair. This could be increased to 0.2 lots at $10000 an so on.
Does this help?
Kind Regards
Steve
Hi Steve,
I have been following your thread silently for quite some time. I love the simplicity and pragmatism (if this means something in plain English?) of your system. Thanks for your gentle wit in answering all the questions.
I’ll be following your thread and test a modified steviet’s system on demo. I’ll let you know if I discover something worthwhile…
I have a question for you: did you select those 5 pairs just because you backtested them and they worked or did you select them out of many other pairs you backtested?
I compared U/J, G/J, E/J and the two other one look easier to trade with your system than U/J. Same with U/C, E/C, G/C…???
By the way this is my first post ever on FF…
Cheers
Jean-Louis
So far, I'm finding USDCAD a real challenge but the others have been good to me. I'll keep plugging away with these five unless the pattern continues with UCAD in which case a substitute may be needed.
Kind Regards
Steve
Hey Steve,
First I just want to say thanks for being open with your excellent system. I have adopted the core rules of your system and with a couple of little differences. I'm only using candlestick and fibs to make my decisions, and my time is at 0GMT instead of 10PM GMT.
For the USD/CAD I figured there were only three choices on how to deal with this tightly ranging currency without introducing too much noise into the system.
1: Drop/Replace the currency
I figured this wouldn't be a good long term solution, as at some point all pairs are going to range. Not to say replacing it with another one that's working better wouldn't work - but my reasoning for not doing this is it's too early to tell.
2: Adjust the SL rules for a ranging currency. For example, 20 pips inside instead of 10 pips on the outside.
I felt this violated the core of the system as it's a long term system to reap big gains on a few trades. Can't catch a trend if your playing the range.
3: Change position sizing.
This is what I ended up going with, and not wanting to complicate things, took a simple approach.
When a currency is ranging I open with half the normal position. If a position that is ranging is still open at 0GMT then I have the option to leave it be and adjust SL as normal, or if I feel it's now trending or going to trend I can add another half lot to make it a standard position size. This is the only rule.
You cannot add more then a standard lot, and you cannot take away a half lot from a standard lot trade for any reason. This keeps you in the market to catch the biggies, while at the same time limiting losses.
So, a new week again - all 5 trades were stopped out Friday so have opened new positions as the market opened.....
USDCAD Long 1.1491 (s/l 1.1434)
USDCHF Long 1.2070 (s/l 1.1873)
GBPUSD Short 1.9516 (s/l 1.9738)
USDJPY Long 116.44 (s/l 114.79)
EURUSD Short 1.3177 (s/l 1.3374)
Initial stop losses are much bigger than normal due to the large range seen on Friday but are set as per plan. Come Monday evening we should be able to tighten them significantly.
Kind Regards
Steve
hope you are well..
i am new to fx trading...
it seems like ur trading system has put up good profit from different currencies pairs...
do you have any recent trading signal so i can enter into live trade..
keep up good work
god bless you
thanks
