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Advice needed - realistic expectations

  • #1
  • First Post: Aug 27, 2009 2:47am Aug 27, 2009 2:47am
I realise that this sort of question has been asked many times but I am unsure what to think because of my performance to date.

I have been trading on a demo account for 5 weeks, I knew nothing about FX trading and thought it would be fun to learn and play with.

In the first 5 days, learning the software, what you can do and reading these forums I lost thousands from my demo account.

But after I learned the initial rules of the game I started trading as if I only had $2000 dollars, limiting my trades to 10K and 20K lots, setting stop orders at acceptable levels (usually equivalent to $25, $50 or $25 plus 75% of previous profits)

I only enter trades when I see a strong trend/indicator or repeating pattern in the direction of a trend - I don't enter a trade for the sake of being in the market and I always watch the trades I have open.
I have set myself a few rules that when followed seem to work well.

My problem is this.
In the first 2 weeks trading in this manner my daily profit on the $2000 dollar limit I have set was about $40-$45. Always using to smallest 10K lot.

In the last 2 weeks I changed my strategy to include a few more 20K lots and I will hold a position longer before taking profits or closing the order.

My daily profit on the $2000 limit has risen to an average of $120.
I take profits as low as 60c if I feel the trade is going to go sour - Better than a loss.
My worst day has been a $185 loss, my best was a $320 gain.

In 2 weeks I have only had 2 days where I made a loss.
Right now I have 2 trades open with gross profit of $53 guaranteed by trailing stop orders. Oops they both just closed while I was typing this
Obviously this is leading me to think about opening a small live account.

What am I missing - this can't be sustainable or realistic can it ?
It has to be beginners luck or an easy market at the moment yes ?

Does anyone who only trades on a small account have any input.
I am curious to see if what has been happening over the last few weeks is a statistical fluke.
I am going to continue on the demo account for another month before taking the plunge, just wanted some feedback as to what a realistic sustainable account growth (or loss) should be like in a live account.
Any comments ?

If it makes any difference I am using FXCM and their default trading platform.
  • #2
  • Aug 27, 2009 3:46am Aug 27, 2009 3:46am
Quoting Alpha one
What am I missing - this can't be sustainable or realistic can it ?
It has to be beginners luck or an easy market at the moment yes ?
I can partially answer your questions. It looks as though you have had a run of good luck. It also looks as if you're on the right lines.

I don't see any reason why not to open a small live account except that you will have inevitable draw down. It's how you handle 3, 4 or 5 (or more) losses in a row. Can you keep trading with positive expectancy and proper money management? If you can answer that you will be OK.
Gone to a better place
  • #3
  • Aug 27, 2009 3:51am Aug 27, 2009 3:51am
Quoting Alpha one
I realise that this sort of question has been asked many times but I am unsure what to think because of my performance to date.

I have been trading on a demo account for 5 weeks, I knew nothing about FX trading and thought it would be fun to learn and play with.

In the first 5 days, learning the software, what you can do and reading these forums I lost thousands from my demo account.

But after I learned the initial rules of the game I started trading as if I only had $2000 dollars, limiting my trades to 10K and 20K lots,...
Can you post screenshots of your system? That we can judge whats the case.
/ ... clarifying decisions ... /
  • #4
  • Aug 27, 2009 4:30am Aug 27, 2009 4:30am
Do that for at least one year and you'll know the answer. I made the experience that there is no short cut. Everyone has to make his own mistakes. Just start small if you go live and use lower leverage than you use now (5:1 - 10:1 might be a bit too much for my taste)
  • #5
  • Aug 27, 2009 4:35am Aug 27, 2009 4:35am
Quoting Alpha one
I changed my strategy to include a few more 20K lots
How many more is 'a few more'?

On a 2k account, say using a 30 pip stop, you're pushing it with one 20k trade!

Growing your account by 6-16% per day is great, but a few down days at 10% per day and it's not so great any more!

If you've got a profitable strategy then your account will grow fast enough without using excessive leverage, there's no need to bet the farm
  • #6
  • Aug 27, 2009 5:21am Aug 27, 2009 5:21am
Quoting pipmutt
How many more is 'a few more'?

On a 2k account, say using a 30 pip stop, you're pushing it with one 20k trade! ... If you've got a profitable strategy then your account will grow fast enough without using excessive leverage, there's no need to bet the farm

So far I haven't needed 30 pips for a stop with any trade, I usually lose confidence in it before it gets to that point and cut the trade short. I only ever have 2 trades at a time, The 20K trades I only use if I am following a very strong trend.
To be honest most of the trades I do stay within 17 or 18 pips below my entry point, I try to work it that each trade is worth a $25 maximum loss for 10K and $50 for 20K
  • #7
  • Aug 27, 2009 5:49am Aug 27, 2009 5:49am
Demo is easy compared to live, no fear, no greed much less over all emotional baggage.

Maybe you can handle the live trade stress though, only 1 way to find out.

If you've got $2000 open a account with the Min you can, say $300 it'll force the greed to stay in check then just add as required if required, thats enough to trade at 10K or 20K.

Good luck!!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #8
  • Aug 27, 2009 5:55am Aug 27, 2009 5:55am
Other tips,

Sometimes you just can't predict a good entry point, so you in for 10K and -15pips but it still looks good buy another 10K put your SL at the same level as your first trade, doubled your earning potential for 50% more risk.

Been rehearsing above on a demo account this week, you'll get to a over all profit point frequently if only small, better than a loss and sometimes get some good pips from it you'd of otherwise barely scraped a profit on trade #1.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #9
  • Aug 27, 2009 6:17am Aug 27, 2009 6:17am
Quoting Turveyd
Other tips,

Sometimes you just can't predict a good entry point, so you in for 10K and -15pips but it still looks good buy another 10K put your SL at the same level as your first trade, doubled your earning potential for 50% more risk.

Been rehearsing above on a demo account this week, you'll get to a over all profit point frequently if only small, better than a loss and sometimes get some good pips from it you'd of otherwise barely scraped a profit on trade #1.

If you're going to average then you'll need to adjust your risk:reward and work out your win:lose to make sure the strategy is still viable.
  • #10
  • Aug 27, 2009 6:22am Aug 27, 2009 6:22am
Quoting Alpha one
To be honest most of the trades I do stay within 17 or 18 pips below my entry point, I try to work it that each trade is worth a $25 maximum loss for 10K and $50 for 20K
Don't you think 2.5% is a bit much? I guess if you've got confidence in the strategy and the numbers work out then it's ok, I prefer less risk but I guess it's a personal thing.
  • #11
  • Aug 27, 2009 6:32am Aug 27, 2009 6:32am
Quoting pipmutt
If you're going to average then you'll need to adjust your risk:reward and work out your win:lose to make sure the strategy is still viable.

Not 1 demo loser this week using my system, which is annoying demo accounts hey, before I used a SL @13 I'm doubling up @-10 with a SL @23 on #1 and @13 on #2.

It's all very well and nice if your with the trend and the trend doesn't change.

Price is cheaper, trend is still valid why not take advantage of the lower prices.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #12
  • Aug 27, 2009 6:38am Aug 27, 2009 6:38am
Quoting pipmutt
Don't you think 2.5% is a bit much?
Never really thought of it as a percentage, It is just an arbitrary figure to keep me from getting carried away, stop me from straying from the objective. The $25 an $50 points are the upper limits. Thats where I place my initial stop just in case there is a big unexpected swing before the spread is covered.
During the coarse of a trade I move it in and out in response to the 1M and tick charts.
  • #13
  • Aug 27, 2009 7:32am Aug 27, 2009 7:32am
Quoting Alpha one
Never really thought of it as a percentage, It is just an arbitrary figure to keep me from getting carried away, stop me from straying from the objective. The $25 an $50 points are the upper limits. Thats where I place my initial stop just in case there is a big unexpected swing before the spread is covered.
During the coarse of a trade I move it in and out in response to the 1M and tick charts.
I agree stick to $$'s rather than Percentages, having enough to sustain the bad times is important ofcourse.

But as a Newbie a bad time could easily slip into a account blower and you'll blow the account just the same with $300 or $2000 pretty much.

Thats why I say keep your account small and funds ready to top it up.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #14
  • Aug 27, 2009 9:19am Aug 27, 2009 9:19am
Quoting walb99
Can you post screenshots of your system? That we can judge whats the case.
Its not really a system, I have some basic rules and a worksheet to take notes. I know most of you work in pips but I try to keep my rules within a dollar value - I am new at this so it's easier. I have a gaming controller set to perform macro and hotkey functions. It lets me close out and place orders really quickly, switch charts , zoom etc.
I actually play it like a tactical FPS game.

Anyway thankyou for your input so far guys, I will at the moment put my success down to luck, I'll keep plugging away on a demo account until I am convinced otherwise.

I wrote down some of my rules and things that I noticed I do regularly below.

 

  1. As stated above I keep to 10k lots, sometimes 20k.
  2. I never enter the market just to be in it.
  3. Set my stop loss to less than the equivalent of one of three points depending on the days performance and the breadth of the trends fluctuation. $25 or $25 plus 75% of previous profit or $50 <- rarely.
  4. If I lose confidence in a trade take $0 or low profit rather than a loss when possible- sometimes caution makes me close too early
  5. I never hold on "just in case it comes back"
  6. Follow the trends not a currency.

When I am looking for a trade I first go through each currency pair looking for a strong trend on the 15 and 5 M charts once I find a good one. I usually do the following.

 

  1. I plot the trend line through the median point for the 15M and 5M charts
  2. I plot the upper and lower trend line for 15M and 5M charts, taking note of statistical outliers.(ignore them and place the line inside them)
  3. If there is no prevalent trend pushing it outside the previous 24 hour high and low then I mark them on the chart too.
  4. I switch to the 5m, 1m and tick charts
  5. I check "entry" and "take profit" points with Fibs.
  6. If the trend is strong, I make an entry order to be triggered just inside the upper or lower trend line I have already marked but I wait till it has passed the "turn around" point before putting it in place so I catch it on the back swing to reduce the risk of a reversal occurring immediately after placing the order (hope that makes sense)
  7. If the price/trend has recently stepped up or down out of a previous trend line then I place the entry order to be triggered above or below the last bit of support or resistance . If a jump or drop occurrs away from my target then I might get lucky and miss it, the resistance level may provide a buffer(again hope that makes sense)
  8. After placing an order I monitor it Using the 5, 1M and tick charts , I have EMA 7 , 21 and 50 indicators on a line graph.
  9. I do some trades of oportunity eg : I wait till NY trading comes on, often there is a large movement in price on a USD currency pair. I trade the correction of that jump.( happened yesterday with USD/NZD I think)

If I can't find a good straight-forward trend I rely on other tools, such as Fibs or measuring the distances between major reversals/changes.

  • #15
  • Aug 27, 2009 10:25am Aug 27, 2009 10:25am
Quoting Turveyd
Not 1 demo loser this week using my system, which is annoying demo accounts hey, before I used a SL @13 I'm doubling up @-10 with a SL @23 on #1 and @13 on #2.

It's all very well and nice if your with the trend and the trend doesn't change.

Price is cheaper, trend is still valid why not take advantage of the lower prices.
Averaging is fine, so is martingaling.....if the numbers stack up!

One martingaled and averaged trade that loses can wipe out a BIG chunk of previous gains, and a succession of them can wipe out an account. One non-martingaled and non-averaged trade which goes right immediately returns proportionately less than the risk taken, in other words it can take a lot more wins to cover losses.

Don't believe me? Ask Xaron about one of the manager's he tracks who was up 40% and everything was going great.....he's now down 71% in less than a month.

As far as calculating in dollars goes, it's meaningless unless presented in percentage terms. $50 doesn't sound like a lot to risk, right? But on a $300 account it's nearly 17%! 3 losses and the account has to double just to break even.

You often see these pretend big shots trying to impress by talking about how many millions they trade or how many thousands of dollars they made, at the end of the day it's totally meaningless unless it's presented as a percentage, along with risk. Of course if they really were big shot successful traders they would know that, it's a bit of a giveaway really.
  • #16
  • Aug 27, 2009 11:03am Aug 27, 2009 11:03am
Quoting pipmutt
Averaging is fine, so is martingaling.....if the numbers stack up!

One martingaled and averaged trade that loses can wipe out a BIG chunk of previous gains, and a succession of them can wipe out an account. One non-martingaled and non-averaged trade which goes right immediately returns proportionately less than the risk taken, in other words it can take a lot more wins to cover losses.

Don't believe me? Ask Xaron about one of the manager's he tracks who was up 40% and everything was going great.....he's now down 71% in less than...

The flip side of that is the odds off taking a loss are low, you've just got to be good enough to make the wins count and stay out of harms way, if your risking the account to make 10pips then your doomed in short.

But on the flip side, with the size of my account ( tiny ) percentage terms is meaningless, back when I had a £70 account I made £70 and doubled it on a 110pip move, 100% in 1 hour kinda meaningless.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #17
  • Aug 27, 2009 11:19am Aug 27, 2009 11:19am
Quoting Turveyd
The flip side of that is the odds off taking a loss are low, you've just got to be good enough to make the wins count and stay out of harms way, if your risking the account to make 10pips then your doomed in short.

But on the flip side, with the size of my account ( tiny ) percentage terms is meaningless, back when I had a £70 account I made £70 and doubled it on a 110pip move, 100% in 1 hour kinda meaningless.

Why are the odds of taking a loss any lower than anything else?

The size of your account doesn't matter, $10 or $10 million, it's all about managing risk, having a comparable reward, and staying in the game. If a trader wants to punt on red or black then there are more enjoyable places to do it.

100% in a hour on a 110 pip move? No thanks, with around a 2% drawdown on spread alone it's a train wreck just looking for a place to happen

Sure it's fun to have a reckless gamble in the market, I do it myself sometimes on a throwaway account, but for a serious trader looking for longevity it's unthinkable!
  • #18
  • Aug 27, 2009 11:55am Aug 27, 2009 11:55am
A reality chk may be found here.
http://www.forexfactory.com/showpost...9&postcount=32

Quoting Alpha one
I realise that this sort of question has been asked many times but I am unsure what to think because of my performance to date.

I have been trading on a demo account for 5 weeks, I knew nothing about FX trading and thought it would be fun to learn and play with.

In the first 5 days, learning the software, what you can do and reading these forums I lost thousands from my demo account.

But after I learned the initial rules of the game I started trading as if I only had $2000 dollars, limiting my trades to 10K and 20K lots, setting...
In trading, there is no bullshit. You either make money or you don't.
  • #19
  • Aug 27, 2009 12:00pm Aug 27, 2009 12:00pm
Quoting pipmutt
Why are the odds of taking a loss any lower than anything else?

The size of your account doesn't matter, $10 or $10 million, it's all about managing risk, having a comparable reward, and staying in the game. If a trader wants to punt on red or black then there are more enjoyable places to do it.

100% in a hour on a 110 pip move? No thanks, with around a 2% drawdown on spread alone it's a train wreck just looking for a place to happen

Sure it's fun to have a reckless gamble in the market, I do it myself sometimes on a throwaway account, but...
Averaging down means you'll lose less often, but when you do lose your losses will be ofcourse bigger if not HUGE.

I can't trade below $1 per pip, so that was the only option I had at the time and when it works its good and when it doesn't it's ofcourse REALLY BAD!!

Far too much focus on FF, on MM and staying in the game, sadly little focus on making boat loads of money, I guess pretty much everyone is losing and just trying to make there money last longer in the hope they can crack it.

Lifes a risk, start taking some, end of the day your wasting TIME sadly we only have a limit amount of this.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #20
  • Aug 27, 2009 12:34pm Aug 27, 2009 12:34pm
Quoting Turveyd
Far too much focus on FF, on MM and staying in the game, sadly little focus on making boat loads of money

Without the first you're almost guaranteed not to achieve the second.
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