A few specific questions for pro traders

By "pro" I simply mean "making a living solely by trading". Please, I do not want to hear about specific trading methods, specific fortunes gained from forex, huge gains in a month (typically based on risking enormous amounts per trade) or who the popular trading gurus are. I would just like a few specific pieces of information, without all the baggage that typically accompanies these types of threads. I am trying to get a *realistic* idea of how pro traders trade (again, not referring to their methods/systems).

1) How often do you trade on average?

2) What is your average win/loss ratio?

3) What is your average win in terms of percentage of risk? I.e., if the trade had a 50 pip stop loss and you closed out at 50 pips profit, that would be 100%. I am not interested in number of pips or dollars.

The reason I ask is that there seems to be an enormous amount of contradictory information. It is hard to sift the realistic responses from those posted by dreamers, scammers, paid posters, and the various Cults of Personality. I have been reading everything I can for the past two months but don't seem to be any closer to having a truly realistic idea of what it means to be a successful trader, i.e., one who can live off nothing but trading. Is a 60% win/loss realistic? How about 80%? Is it realistic to think one can take several trades a day and come out ahead most days?

Also, common responses simply don't seem to be reconcilable with oft-repeated warnings and advice. For example, it is commonly stated that to make a living, you must start with $100k of capital, or preferably more. This goes hand in hand with the "it's a marathon, not a sprint" mantra. Yet with the win/loss ratios often claimed, I can't seem to understand why this would be the case. With a 60% win/loss (many, many claim much better results) and, say, 3 trades per day, risking a fairly conservative 1% per trade, that would result in an income of around $5000 a month by the end of the first year, if one started with $10,000 in capital. And of course it would snowball from there.

I guess I just don't understand how one can be profitable but not VERY profitable, if that makes sense. If one wins significantly more often than one loses, and keeps risking that reasonable percentage, I don't see how they are not making quite a lot of money in a short amount of time. By "short amount of time", I don't mean three months after discovering forex or anything like that; I mean, say, a year after hitting that point at which you become consistently successful; that point might come after years of losing and of course is different for everyone.

Commandments like "you need $100k+ of capital to make a living" would seem to imply that the win/loss is typically something like 11:10, for example, where you only eke out one net profitable trade out of a whole slew of trades, so at a reasonable risk %, you would need large capital for that profit to be enough to live on. But at the same time, a win/loss ratio that poor would mean that you are basically just flipping a coin. So then you get to risk:reward, and having that one win be far larger than any of the losses; and if that is the only realistic way to do it, I would like to know.

It seems the vast majority of professional traders work for banks, or, better yet, pander for "students". I guess I have a hard time believing a trader is really trading 200 lots per trade (making up to $100,000 per successful trade), yet still bothers to charge people a few hundred dollars for a trading blog or signal emails. Things like this really make it hard to believe that anyone is really trading for themselves and making a living year after year, and if that is the case I'd like to know so I can have realistic expectations. Obviously I understand that most people making a living trading for themselves wouldn't likely be hanging out on forums anyway, which is another consideration.

I know a lot of times the answers are "find what works for you, there are many ways to do it, etc", but I guess what I'm asking is: Are there? The people who say that tend to say they are doing just that, but soon enough they seem to end up charging for their blogs, emails, forums, videos, etc, or working for banks or other firms, which suggests to me that they are not as successful as they claim.

Orcus

These are questions that plague us all, especially when we start out.

My stats are:

%win 80% (over the last 2 years)
Typical risk 40 pips
Typical gain 20 pips
MM strategy fixed fractional
% runners (>100 pips) 5% (This means %trades where I opted for >20 pips & got it)

Starting out live with 100K is suicide unless you have several YEARS of low equity trading experience. All that crap they say about psychology unfortunately is true.

Trading is above all a thinking man’s game. I constantly read articles on fundamentals and technicals. The quality of the article is irrelevant. What matters is that I am always exploring and evaluating price action and the fundamentals behind it.

Trading for a living is possible but in my case the ascension was very slow and deliberate. This is probably the best way to do it unless you have the experience of working in the business or being on a trading floor.

Thank you, John, for exactly the kind of straightforward response I was looking for. Hopefully others will follow suit (though I realized this is awful timing to post a thread, this being Christmas eve and all!).

Well, I'm not making a living trading yet, but I also don't have anything to sell you.

- Looking at the last two days my chart shows ~20 positions opened and closed each day. I trade long and short depending on what the charts show.

- Amazingly, except for clicking on the wrong spot, or closing multiple positions all at once for a net profit, all of them ended up profitable. Net asset value increases when flat were +2.5% and +4.1% respectively. This has been the way things have gone for the last four weeks of trading.

- My stop loss would basically be a long term resistance line... which would be very large compared to potential profit. I prefer to trade when there aren't any big news events in the pipeline.

If my account was ten times it's current size and my trading success stayed the same, then I might be able to replace my career income. However, if I were going to be removing money from my account on a regular basis I'd want to have a fairly large safety margin. So, I certainly understand when people make claims about needing large accounts to trade professionally.

Psychology is vital. When you have peanuts in your account it is trivial to let it all ride on a gamble and make huge gains. I have been able to scale my trading size as my account grows, so far, and that's a positive step. Basically, I have a maximum percentage I want to commit and I'll enter in a series of steps, if conditions warrant, while it continues to appear appropriate to do so.

My current plan is to grow my account over the next year or two, improve my timing, improve my ability to let my winners ride, and then scale back my maximum "at risk" percentage such that my record suggests I can still easily make more than I'd plan to withdraw each month. If and when I get to that point, I probably won't be found on forums very often...

I have been trading for about a year and a half, and started to see more success after buying four different books several months back. I bought a basic book on currency trading, a book on swing trading, a book on technical analysis and finally a book written by a forex trader which discusses his own strategies.

For credential purposes only, and to get that out of the way, I do live solely off of a trading income, and have done so for quite some time now. So, whether you believe me or not, I have first hand experience that it CAN be done. I just want that to be clear. As far as why I lurk around on this forum, that reason is mine alone.

Now, to address your post, I would honestly say that you are going through a normal trader's process of doubt, but that you are asking the wrong questions in your search for the next step in your trading. You are asking for rules or boundaries that other successful traders have. You are wanting a set-in-stone guide or model to follow, based on what others before you have done. Again, this is normal. Humans are used to boundaries. We have all grown up in a world full of specific paths or directions laid out before us. We live in very well defined boxes of what we can and cannot do, and therefore we are very used to the luxury of never having to think for ourselves.

The Foreign Exchange market offers no such environment. Its boundaries are transparent, its walls are permeable. Information and speculation drive value that can be interpreted simultaneously by millions of people in millions of different ways. It is an environment that provides a level freedom very few have experienced. This inexperience equates to vulnerability to the new trader, and as such he will fall victim to out of control uninformed trading and an ultimate depletion of funds.

That being said, traders need to understand what little boundaries and limitations the FX market does provide. You need to understand what box you trade in. The above questions you asked will not define this box, in fact the answers could create false boundaries that may potentially hinder you in trading to the fullest potential.

So, I realize I have not really addressed your post. I do not intend on giving you specifics of how many trades, average W/L, etc. (No disrespect intended). But based on what you wrote, I think you already can piece together what aspects of a professional are needed to succeed. You mention that they have worked at banks, etc. That does not mean you must work at one, but that perhaps understanding how a bank participates, how they manage inventory or risk, how they influence the market, how a large order is dispersed, etc is valuable. You recognize that a lot of people say that its all different for everyone... This is true, so why try and ask things like what the average win size is? Instead figure out how the successful view market related information, how they think about the market in general, manage the money they are making, adapt to circumstances, deal with drawdowns, give away information... These aspects are far more important, and often times successful traders exhibit similar habits in the aforementioned areas, but how many trades a day they take might be completely different. Successful trends are rarely found in the system or statistics.

As for how can someone be profitable but not VERY profitable. First, just consider that making money is one thing. Keeping money is entirely different. Money management goes beyond a the open and close of a trade. Secondly, consider that the greater position you use to enter the market, the harder/slower you are at getting in and out. Strategies must change as your account grows, and the result can reduce gains. Additionally, and this is my experience only, my risk per trade fluctuated as I developed as a trader. You do not need to know specific percentages, but the process explains why I do not own the world at this point.

When I started, I knew it would be foolish to trade with high risk, therefore I kept position sizes small. As I gained comfort and grew in confidence, I needed to grow my account to a point that I could live off of, so I traded with greater positions. I was not gambling, and there was still a very small chance of me "blowing out" my account. In fact, what I consider "big" risk might be considered "small" to many others. Anyway, once my account was at a reasonable size, I reduced my risk again. There is no point in risking large sums of money and enduring large amounts of draw down when I can pull very comfortable amounts of money from my account to live off of as it is. Risk should be increased only when there is a chance of pushing your account into the next bracket of income.

Alas, it is time to celebrate the eve before Christs birth, and I must go. Hope this helps your development.

One of the best posts in FF History. Right there.

Thanks to all and have a happy holiday!

Gaston, thank you for your answer. I just wanted to address one of your questions:

"You recognize that a lot of people say that its all different for everyone... This is true, so why try and ask things like what the average win size is?"

The answer is that I was/am not sure if that is actually true to the extent it's usually meant. In other words, just because a lot of people say "it's different for everyone; different methods work for different people", I do not know if that's true. I did/do not know if it is reasonable to expect to make a living using, for example, significantly different risk:reward and win:loss ratios, or if that is just something people say out of wishful thinking or to promote their own "strategy". There are those who say that "all" successful (over the long-term) traders have low win-loss, but their wins are much larger than their losses, and that to expect to have a consistently high win-loss is nothing but a fantasy. Others would say that the way to go is to to rack up loads of smaller wins. The problem is that I don't know which, if either, are speaking from actual, extended, successful experience, since there is (of course) lots of "noise" from scammers and newbies. If all the "real" traders follow methods with similar R:R and W:L, then that would suggest to me that that is the path to follow for consistent results over the long-term, through varying market conditions.

Basically, with this thread I am hoping to channel my energies in the right direction rather than pursuing all sorts of scattershot theories, most of which may be roundly dismissed by "real" traders as dead-ends or unrealistic.

Gaston does it again!

Hopefully we can get a few more great responses post-holidays.