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(can) small accounts make a living ?!

  • #161
  • Mar 4, 2009 5:21pm Mar 4, 2009 5:21pm
Quoting prunto
i never actually understood why people tend to calculate their profits in pips. You can have positive pips gain at the end of the week and still be down on your balance. all pips are equal only if you take exactly the same position size on every trade. most strategies demand you though to adjust your position size to the stop loss you need depending on different setups, market conditions, volatility and so on. The only really comparable way of calculating profits of different traders/systems/setups/trades per weeks/days/months is the percentage...
I've been watching this forum the last couple days and finally decided to chime in with, hopefully, useful feedback.

Hmm, I can't speak to your strategy, especially since I am still trying to develop my own. It sounds almost like the way I was approaching things for a while and subsequently wiped out one account. The problem I was having was I was over-leveraged on my losses and under-leveraged on my gains. So even though through most of my live trading I am BE, pip wise, I'm in the hole dollar wise. What I am doing now, is trying to make consistent profits with my strategy, as it is evolving, with pips only. The reason my goals are in pips is that it helps ease off the edge of emotions. My goal is to get to around 100 pips a day. When I consistently reach that goal, then I can play around with leverage more. By doing so, I avoid the feeling of "needing" to make up my losses, as I am not trying to think of those losses in monetary terms. It seems to me to be less personal that way. If I reach my pip goals, the monetary goals will follow.

BTW, I am the epitome of starting small. My first account was only 33 dollars with Oanda. I figured practising live was more useful to learn the psych aspects of trading and my personality. Boy has it been a journey, both fun and painful. Trading has taught me volumes about myself already and all for under a 100 bucks.
therealisttruest (FF wouldn't let me put my full ID because of length)
  • #162
  • Mar 4, 2009 6:10pm Mar 4, 2009 6:10pm
Quoting therealist
I've been watching this forum the last couple days and finally decided to chime in with, hopefully, useful feedback.

Hmm, I can't speak to your strategy, especially since I am still trying to develop my own. It sounds almost like the way I was approaching things for a while and subsequently wiped out one account. The problem I was having was I was over-leveraged on my losses and under-leveraged on my gains. So even though through most of my live trading I am BE, pip wise, I'm in the hole dollar wise. What I am doing now, is trying to make consistent...
I would bother with pip goals. Best to just concentrate on hit-rate and then take every set-up you can.
Living the adventure in my head.
  • #163
  • Mar 4, 2009 7:27pm Mar 4, 2009 7:27pm
Quoting H. Rearden
Radiant,

Although it would not be my direct advice (since my beliefs about the markets are different), I would say that there are some very good break-out strategies around that work on the basis of the UK-London open (between 6am GMT and 9am GMT)....
Hi Rearden,

Thanks for those meaningful insights. Appreciate it very much .

From what you said here, the more we share our system or the more people looking at the similar setup, the least effective our setup will be? Care to elaborate some more on this.

Playfish.
  • #164
  • Mar 4, 2009 8:27pm Mar 4, 2009 8:27pm
Quoting prunto
i never actually understood why people tend to calculate their profits in pips.
I am no expert, and I am still learning and I generally have a weird way of looking at things. What you said on position sizing ect is true...but how I am approaching it is try to get "my" emotion out of trading. I have a tendency to get emotional. So right now, I want to get to the point of getting steady pips, once I get that then I will worry about account size. Getting consistant pips is the first goal, and the hardest I imagine, but I am not going to worry about the "money", just the goal of pips. So, the lower number of pips as a goal, is un-emotional, I will start with a demo account, then a micro account, mini then standard. If I started out with standard lots, I would really be emotional, but in a micro acount *shrug* no biggie!

Just my reasoning...
  • #165
  • Mar 4, 2009 11:44pm Mar 4, 2009 11:44pm
Quoting Leonlorenzo
I would bother with pip goals. Best to just concentrate on hit-rate and then take every set-up you can.
this is very good advice.. Instead of thinking you need to get x amount of pips every day to succeed, start focusing on the the quality of the set ups as opposed to the quantity. Feeling like you need to hit a certain amount of pips per day will lead to overtrading, which will lead to more losses, which will eventually lead to losing all your money.

Start thinking about how you can take the best setups, and strive to be loser free. I blew a large account 2 years ago cause i was chasing the money, trying to get rich quick, trying to live of the forex so i could quit my job....

As soon as I started trading to be more accurate, and took only the highest probabily setups, and switched to the higher time frames, I was able to increase my earnings and my accuracy to unreal levels.

case in point, trade to become accurate and the money will come.
Things can get Real ugly, Real quick!!!
  • #166
  • Mar 5, 2009 1:10am Mar 5, 2009 1:10am
Quoting H. Rearden

It is a very fine line while in a trade to distinct between what could be a good exit or a premature one. Actively managing your trades is one of the hardest parts in this business....we all know the devil on the left and the angel on the right, arguing about taking the money and run or pushing for more (while in profit) and (while losing) to cut or to hang in with conviction that it will turn.


H. Rearden
That is the problem that i'm facing at the moment!! Usually I enter my trade using limit orders, when the limit order is hit, i will start worrying whether this trade will be a winner or loser...when the market turn against me, I let it hit my stop loss, but when the market is in my favour, i keep moving my profit target...i became more and more greedy...the price will never hit my profit target, sooner or later, the market change direction, and i will be hoping the market to turn again, and follow my profit target...in the end, i will end up break even or only a very small gain....

I'm trying very hard to overcome my greed...it is tough!!
  • #167
  • Mar 5, 2009 1:32am Mar 5, 2009 1:32am
Quoting Atltrader
this is very good advice.. Instead of thinking you need to get x amount of pips every day to succeed, start focusing on the the quality of the set ups as opposed to the quantity. Feeling like you need to hit...


THIS IS GOLD GOLD GOLD. I COULDN'T AGREE MORE. WORK OUT YOUR HIGHEST PROBABILITY SET UPS, ONLY TAKE THEM AND RIDE THEM.

forget the need to have to trade and only trade when you should.
  • #168
  • Mar 5, 2009 1:43am Mar 5, 2009 1:43am
Give time for the pattern to show its shape and then just "follow the smartmoney path" and you will be good. As someone posted - its not the quantity but the quallity that matters. Market is precise and trader doesnt need to use wide stops, unreasonable stops. With a tight stop its possible to profit from pocketing dayly/weekly/monthly or even full yearly range. Cut your looses short and let the winners run. And always use proper money management of 1%. When you get good at identifying certain patterns you can increase your leverage. Remmember as your risk increases your emotions might kick in and you might fail to trade your plan.
  • #169
  • Mar 5, 2009 1:57am Mar 5, 2009 1:57am
You obviously need something concrete - procedure, tools, ability to read PA ... - for exits. If you have nothing except your instincts and feelings, the result will certainly be what you just described.

For instance, you could count waves (like I do), or use S/R-levels (based on earlier tops/bottoms or fibs). Depending on your trading style, an "indicator", which counts daily fib levels, could be useful.

But I'm rushing, let's wait for a while, I'm sure that H.Rearden has something in his pocket for us...

R

Attached File(s)
File Type: mq4 Bobokus fibo daily zone.mq4   5 KB | 470 downloads


Quoting bearking
That is the problem that i'm facing at the moment!! Usually I enter my trade using limit orders, when the limit order is hit, i will start worrying whether this trade will be a winner or loser...when the market turn against me, I let it hit my stop loss, but when the market is in my favour, i keep moving my profit target...i became more and more greedy...the price will never hit my profit target, sooner or later, the market change direction, and i will be hoping the market to turn again, and follow my profit target...in the end, i will end up break...
  • #170
  • Mar 5, 2009 2:58am Mar 5, 2009 2:58am
Quoting bearking
That is the problem that i'm facing at the moment!! Usually I enter my trade using limit orders, when the limit order is hit, i will start worrying whether this trade will be a winner or loser...when the market turn against me, I let it hit my stop loss, but when the market is in my favour, i keep moving my profit target...i became more and more greedy...the price will never hit my profit target, sooner or later, the market change direction, and i will be hoping the market to turn again, and follow my profit target...in the end, i will end up break...
Use a Trailing Stop Loss like Jacko does. It locks in the profits as the market goes in your direction and closes your trade when the market starts to turn against you. It is a good mechanical device to lock in your profits. I think it is outlined on the first page of his thread, Jackos House of Pleasure and Pain.
  • #171
  • Mar 5, 2009 4:23am Mar 5, 2009 4:23am
Quoting bearking
That is the problem that i'm facing at the moment!! Usually I enter my trade using limit orders, when the limit order is hit, i will start worrying whether this trade will be a winner or loser...when the market turn against me, I let it hit my stop loss, but when the market is in my favour, i keep moving my profit target...i became more and more greedy...the price will never hit my profit target, sooner or later, the market change direction, and i will be hoping the market to turn again, and follow my profit target...in the end, i will end up break...
Theres nothing wrong with, breaking even or small gains. As long as you limit your losses, you will be very successful. I believe 10% of trading is based on luck ... the other 90% is based on losses. Limit your losses will give you a better longevity. The entire name the trading game is, Profit & Loss Limits. Nothing else really matters as a trader.
  • #172
  • Mar 5, 2009 4:42am Mar 5, 2009 4:42am
Good morning people,

Thank you again for your comments, questions and replies overnight.

Before I will continue with the schedule, I will try and answer briefly some of the posts in a moment.

There will be no 'one-fits-all' approach, nevertheless, in general I like to keep matters very simple and give advice that everyone can somehow profit from.

Coffee first.

H Rearden
  • #173
  • Mar 5, 2009 4:46am Mar 5, 2009 4:46am
Quoting forexfixer
Use a Trailing Stop Loss like Jacko does. It locks in the profits as the market goes in your direction and closes your trade when the market starts to turn against you. It is a good mechanical device to lock in your profits. I think it is outlined on the first page of his thread, Jackos House of Pleasure and Pain.
this is how you shoot yourself in the foot

not to be shot in the head later, lol

in other words I don't recommend using trailing stops
  • #174
  • Mar 5, 2009 4:50am Mar 5, 2009 4:50am
Quoting bearking
That is the problem that i'm facing at the moment!! Usually I enter my trade using limit orders, when the limit order is hit, i will start worrying whether this trade will be a winner or loser...when the market turn against me, I let it hit my stop loss, but when the market is in my favour, i keep moving my profit target...i became more and more greedy...the price will never hit my profit target, sooner or later, the market change direction, and i will be hoping the market to turn again, and follow my profit target...in the end, i will end up break...
well, moving your stops and take profits is a weird way of using them.

unless you expect the market to spike/fakeout but then you probably would use limit orders to enter the market, not exit.
  • #175
  • Mar 5, 2009 5:19am Mar 5, 2009 5:19am
Quoting Narrew
I would imagine that we will get to your market beliefs as we go on...I wonder what your thoughts are on targets. My feelings are not to approach trading with an amount of money per month, but in pips (ok, thats a fine line, just have to convert pips to $). At this point I want to learn how to make 400-800 pips per month (and break that down to weekly and daily targets). Once I can do that consistantly (that is the key of course) then I can worry about account size. From what I have seen, 100-200 pips per week shouldn't be out of line to shoot for,...
Hi Nerrew,

Overall targets as well as individual trade targets are important of course, but as you rightly put it not so easy to tackle.

I will simply give you an example how I try to master this. By no means is this a must - but it made it easier for me over time.

Now, compare the scenario (again) with a regular business of a private hospital. (I say private for arguments sake since in a public hospital the doctors get paid regardless of how many patients come in per month)

You are working in this hospital with many other doctors, each a specialist in their own field. How does the doctor now the following:

How many patients will there be for him to treat during a month on average?
(How many trade opportunities will there be for the trader that trades a specific setup?)

How severe will the complaint of the patient be?
(What risk/reward will the average trade bring?)

Will there be patients you can't help?
(Will there be losing trades?)

The answer lies very often in your trust and judgement: trust, because like the doctor, you have to trust that people will break a bone or get otherwise ill - or you would be out of a job. Judgement because you have to look at each patient individually because the symptoms might be similar - but not always the same.

Nevertheless, like the markets will most likely be there with all their movements, you can operate from the belief premise that if you do your job right, you will be paid at the end of the month. (sticking with the intention of the thread)

Like some 'systems' won't work anymore (trying to answer another readers - I believe Playfish's question at the same time), some diseases will be eradicated by the invention of a cure. (The systems won't work because too many traders have identified the same small inefficiency in the market)

That does not mean, its over for the trader who traded that specific setup - there are many others that will carry on working - some even better with the shift of liquidity into them.

Hope this helps.

H. Rearden
  • #176
  • Mar 5, 2009 5:34am Mar 5, 2009 5:34am
Quoting bearking
That is the problem that i'm facing at the moment!! Usually I enter my trade using limit orders, when the limit order is hit, i will start worrying whether this trade will be a winner or loser...when the market turn against me, I let it hit my stop loss, but when the market is in my favour, i keep moving my profit target...i became more and more greedy...the price will never hit my profit target, sooner or later, the market change direction, and i will be hoping the market to turn again, and follow my profit target...in the end, i will end up break...
Hi Bearking,

The problem with limit orders is that they are getting triggered when the market is actually moving against the desired direction of the trade. A difficult scenarion psychologically. This is why I use only market orders and buy/sell stops - to ensure I am with the flow when entering, not against it.

Depending how the market behaves after entry, you have to manage the trade - as mentioned - based on on your risk parameters. If the market goes to take out your stop straight after entry, so be it. Don't compromise your risk strategy - ever!

There will be another chance if you were on the right track - it takes conviction to reenter, I know - but if you plan right, then you should have enough amunition for more than one single shot at a specific setup. The market has a funny way to often behave as we expect, but not in a straight forward manner. It will take our carefull planned stop out just to then run 50 or 100 pips in the desired direction.

By the same token though, don't try too many times. Twice is usually enough to establish that your idea could be wrong.

H. Rearden
  • #177
  • Mar 5, 2009 6:38am Mar 5, 2009 6:38am
Quoting H. Rearden
Twice is usually enough to establish that your idea could be wrong.
I like this advice.
  • #178
  • Mar 5, 2009 6:46am Mar 5, 2009 6:46am
Quote
There will be another chance if you were on the right track - it takes conviction to reenter, I know - but if you plan right, then you should have enough amunition for more than one single shot at a specific setup.

Hello Rearden,

Could you please elaborate a bit more on this statement. I guess this must be specific to the strategy you follow in the market.

I trade price action (pin bars, outside bars et all) and once my stop is hit, the setup violated and I don't get any other chance to enter the same setup even though the market takes out my stop, and then comes back in my favored direction.
  • #179
  • Mar 5, 2009 7:03am Mar 5, 2009 7:03am
Quoting Eklavya
Hello Rearden,

Could you please elaborate a bit more on this statement. I guess this must be specific to the strategy you follow in the market.

I trade price action (pin bars, outside bars et all) and once my stop is hit, the setup violated and I don't get any other chance to enter the same setup even though the market takes out my stop, and then comes back in my favored direction.
Hi Eklavya,

The only time when what I said is impossible is a 'runaway-market' when the price just does not look back.

Otherwise, if your setup dictates an entry (or exit) limited to a pip or 2, then it will be difficult for you to get another chance.

I suggest then rather having a method based on such precision, base it on low-risk areas (supp/res, new hi's and lo's break-outs etc.) where the price often re-visits the area before making a more sustained move.

I will become more clear when I put some of my own setup's in the thread.

H. Rearden
  • #180
  • Mar 5, 2009 7:20am Mar 5, 2009 7:20am
...and I forgot to say:

If you miss an entry and it turns out that you have missed a good trade, do neither of the following 3 things:

1) worry about it (there will be other opportunities)

I say this because a part of what I will put in the thread will deal with finding the right time frame in order to get enough opportunities in a day/week/month to be able to miss some and not to have to worry.

2) chase the market (there will be other opportunities)

The later you get on board a move, the smaller the possible outcome - that can go as far as jumping in when its about to turn again and you could end up with a loser.

3) if 2 happens, revenge trade (there will be other opportunities)

You will have losers - if you intend to re-enter, make sure that your analysis is still in line with your belief about the possible direction you intend to profit from. If the price tells you otherwise, step back and re-assess the situation.

H. Rearden
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