How long can I use compounding? | Forex Factory

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How long can I use compounding?

  • #1
  • First Post: Jan 19, 2006 4:54am Jan 19, 2006 4:54am
Hello,

I have talked yesterday with an experienced trader, I shared with him my plans to move on with compounding. As I make more or less stable 10-20% monthly you can imagine I reach the 500$/pip level in a year or two. He laught in my face: "Are you crazy?" - he said. Dont you know how it works? THEY (brokers)play against you, they know much more about the market, they will sweep you from the market as soon as you start to take some reasonable amount of THEIR money.

No need to say I feel confused about it. So it is not enough to have a good system, good money management, good discipline and so on and so on. Now I need to consider the plans of some evil forces.... sounds crazy.

Obviously, playing 100$/pip makes decent income, but what if I planned to go on? Some peoplne say that 1000$/pip means NOTHING on the market, on the other hand I hear voices that going too far means problems.

Where is the truth?
time is money! Z
  • #2
  • Jan 19, 2006 6:53am Jan 19, 2006 6:53am
Zazzy,

The amount of this type of fear is so prevalant on this board it's a little bit infuriating. Why don't you go ahead and make 10-20% a month first, and then worry about that when you get there. Are you going to let that fear stop you? Why put a mental fear barrier in front of you if you have the capabiltiy to make 10-20% a month. It's incredulous.

It's a market, a big one. There are many brokers for you to use and compare. You will know if you are getting swept. You will get swept every now and then, that's called a losing trade. That's different then getting fleeced.

Here is another thing to consider. Along the way to producing your 10-20% monthly gain, how often are you almost stopped out of your position, within a few pips and then it reverses to be a winner? You can expect if you have a large stop loss order that the market is trading very near, it may get taken out. But how often are your winners a few ticks away from getting stopped and then reverse?. Probably not very many. If you are really making 10-20%, I'm going to venture to say, not often. If your making 10-20% a month you probably have decent entries.

Keep track of each trade you make and how much you were down in it. I know for me, a large percentage of my winners, the trades that pay me, I'm never down much in and no way close to my stop loss. Hence no conspiracy swept theory.
  • #3
  • Jan 19, 2006 7:50am Jan 19, 2006 7:50am
Zazzy, for more information about this subject (Broker manipulation and trading against retail traders), please visit this thread:

http://www.forexfactory.com/forexfor...ead.php?t=3781

This thread is by far one of the best threads and discussions over this forum, you will find a great wealth of information there....

I agree that you should focus right now at your 10%-20% monthly return, although I see this as a little bit high for conservative trading...The rule still applies, high reward = high risk, no exceptions...Keep your objectives as realistic as possible...If you have a proven trading strategy that will give you 10-20% return per month, keeping your risk within your accepted margins, then great, implement it...

Just my thoughts...


Thanks,

Nader
  • #4
  • Jan 19, 2006 8:49am Jan 19, 2006 8:49am
Quoting narafa
Zazzy, for more information about this subject (Broker manipulation and trading against retail traders), please visit this thread:
thanks a lot, I will study it

Quoting narafa
I agree that you should focus right now at your 10%-20% monthly return, although I see this as a little bit high for conservative trading...The rule still applies, high reward = high risk, no exceptions...Keep your objectives as realistic as possible...
I didn't give up my current job, since I feel also the return is quite high and risky, however the biggest drawdown I had by now was 3 weeks ago and it was ca. 9%, so it is still allright I think.
time is money! Z
  • #5
  • Jan 19, 2006 11:27am Jan 19, 2006 11:27am
How much are you risking per trade (percentage of your pot you could lose on one trade) ?
  • #6
  • Jan 19, 2006 11:46am Jan 19, 2006 11:46am
Quoting hagadol
How much are you risking per trade (percentage of your pot you could lose on one trade) ?
I invest about 2/3 of my equity in every trade. I dont use stops since I play on a safe pair.
time is money! Z
  • #7
  • Jan 19, 2006 11:56am Jan 19, 2006 11:56am
imo:
If you are trading sufficient lots to be "Targeted" for disposal, then you must be moving these numbers.

Quoting Aroon
http://www.freecotcharts.com/charts/EU.htm
Remember also, that if in fact you were to be targeted, so would the rest of THEM.

On a related subject. does anyone have a decent site to get "Posted Stops"?

B
$0.02
  • #8
  • Jan 19, 2006 2:21pm Jan 19, 2006 2:21pm
Quoting Zazzy
I invest about 2/3 of my equity in every trade. I dont use stops since I play on a safe pair.
2/3 of your equity in every trade???!! This is way too much...What is the safe pair?? The AUD/USD which is considered one of the safest pairs among others is NOT actually safe...It's just how we see things from our side...If you look at this pair when the volatility increases, you will get a sense why there is no so called safe pair...Even the EUR/GBP is not considered a safe pair...

This means that you are losing 2/3 of your capital in just 1 wrong trade??? Sorry to tell you, this is not good judgement...2 wrong trades in a row (It happens to everyone) and you are almost blown out...


Thanks,

Nader
  • #9
  • Jan 19, 2006 2:43pm Jan 19, 2006 2:43pm
Quoting narafa
2/3 of your equity in every trade???!!
I mean I involve 2/3 what is not equal (i think) to RISK 2/3

The biggest loss in one trade was about 3.5%
The biggest row of losses made ca. 9%
I play already 15 weeks

My way:
Safe pair is not enough, my key is the right timing - it makes miracles, believe me! It can make every trash strategy work, on every pair! why play 24h and exposure the equity on high risk level? choose the hours you beleive the chart moves right and enjoy the profits!
time is money! Z
  • #10
  • Jan 19, 2006 5:18pm Jan 19, 2006 5:18pm
Quoting Zazzy
I play on a safe pair.
These is no such thing as a 'safe pair'!

Simon
  • #11
  • Jan 19, 2006 5:40pm Jan 19, 2006 5:40pm
Quoting DrRock
These is no such thing as a 'safe pair'!

Simon
sure there is. if I look 2 years back and still dont see any move where the 1/3 resting margin might exceed, then ....it doesnt mean the critical move can or cannot happen tomorrow....but is says very much about the probability - it probably doesnt! I think everyone's edge is based on the same - on the probability
time is money! Z
  • #12
  • Jan 19, 2006 6:25pm Jan 19, 2006 6:25pm
Quoting Zazzy
Hello,

I have talked yesterday with an experienced trader, I shared with him my plans to move on with compounding. As I make more or less stable 10-20% monthly you can imagine I reach the 500$/pip level in a year or two. He laught in my face: "Are you crazy?" - he said. Dont you know how it works? THEY (brokers)play against you, they know much more about the market, they will sweep you from the market as soon as you start to take some reasonable amount of THEIR money.

No need to say I feel confused about it. So it is not enough to have a good system, good money management, good discipline and so on and so on. Now I need to consider the plans of some evil forces.... sounds crazy.

Obviously, playing 100$/pip makes decent income, but what if I planned to go on? Some peoplne say that 1000$/pip means NOTHING on the market, on the other hand I hear voices that going too far means problems.

Where is the truth?
Zazzy,

You want the truth? OK, here it is.

The single biggest reason people can't make this plan work is that they fail to realize that as you get bigger and bigger, as a trader, your game-plan has to change with your size.

You start out trading $10/pip and nobody in the world cares what you do. At $1,000/ pip, believe me, the house cares. Their sophisticated software will figure out how you trade, eventually figuring out where your "puke point" is and how to get you to place the stop order or push the button.

As you get bigger, you have to move to larger trading time-frames in order to defeat the stop-hunting banks and hedge-funds.

The second biggest reason is statistical. With your risk parameters, you give up a large portion of your account with a loss. That's like playing heads/tails for all the marbles. If your account started with $1,000, you would reach $1 million if you doubled it ten times. Your odds of winning 10 trades in a row, that double your account, are 0.097%. That means you have a 99.903% chance of losing.
vegas
  • #13
  • Jan 19, 2006 6:55pm Jan 19, 2006 6:55pm
Vegas,

Will you come out with a weekly chart method that will more feasible for those with hugeeeee account ? Or the daily chart is more than sufficient ?
The future depends on what we do in the present.
  • #14
  • Jan 19, 2006 8:42pm Jan 19, 2006 8:42pm
Quoting compro99
Vegas,

Will you come out with a weekly chart method that will more feasible for those with hugeeeee account ? Or the daily chart is more than sufficient ?
compro99,

If I were managing a multi-billion dollar hedge fund or pension plan, I would consider using the same concepts in VWB on a weekly basis. But I hardly think any trader would consider a method where you could be in a trade for 5 years.

In short, the daily chart is more than sufficient for us.
vegas
  • #15
  • Jan 20, 2006 3:18am Jan 20, 2006 3:18am
Quoting vegas
Zazzy,
You start out trading $10/pip and nobody in the world cares what you do. At $1,000/ pip, believe me, the house cares. Their sophisticated software will figure out how you trade, eventually figuring out where your "puke point" is and how to get you to place the stop order or push the button.As you get bigger, you have to move to larger trading time-frames in order to defeat the stop-hunting banks and hedge-funds.
They dont have to - I set tp and limit order, the see everything I'm going to do. The only problem THEY might have - I dont use stops. Of course this can turn tu be MY problem if the market moves strongly, but I take the risk.


Quoting vegas
The second biggest reason is statistical. With your risk parameters, you give up a large portion of your account with a loss. That's like playing heads/tails for all the marbles. If your account started with $1,000, you would reach $1 million if you doubled it ten times. Your odds of winning 10 trades in a row, that double your account, are 0.097%. That means you have a 99.903% chance of losing.
The same statistics (real one since almost 4 month) says my biggest loss ever was 9%. Backtesting (since 2004) gives nearly the same result. If it doubles or even triples I rebuild the loss in a month or two. Fast enough I think to take the risk.
time is money! Z
  • #16
  • Jan 28, 2010 2:40am Jan 28, 2010 2:40am
Quoting vegas
Zazzy,

You want the truth? OK, here it is.

The single biggest reason people can't make this plan work is that they fail to realize that as you get bigger and bigger, as a trader, your game-plan has to change with your size.

You start out trading $10/pip and nobody in the world cares what you do. At $1,000/ pip, believe me, the house cares. Their sophisticated software will figure out how you trade, eventually figuring out where your "puke point" is and how to get you to place the stop order or push the button.

As you get bigger, you...
Nobody can guess on winning 10 trades in a row. But yes, We can guess to have ten winning periods in a row. And even 20. If you believe in your strategy because you backtested it (properly backtested it) over a large period of time, you can guess on having only winning periods.
  • #17
  • Edited 3:57am Jan 28, 2010 2:56am | Edited 3:57am
[quote=vegas;39185]Zazzy,

You want the truth? OK, here it is.

The single biggest reason people can't make this plan work is that they fail to realize that as you get bigger and bigger, as a trader, your game-plan has to change with your size.

You start out trading $10/pip and nobody in the world cares what you do. At $1,000/ pip, believe me, the house cares. Their sophisticated software will figure out how you trade, eventually figuring out where your "puke point" is and how to get you to place the stop order or push the button.

As you get bigger, youyou have to move to larger trading time-frames in order to defeat the stop-hunting banks and hedge-funds.

The second biggest reason is statistical. With your risk parameters, you give up a large portion of your account with a loss. That's like playing heads/tails for all the marbles. If your account started with $1,000, you would reach $1 million if you doubled it ten times. Your odds of winning 10 trades in a row, that double your account, are 0.097%. That means you have a 99.903% chance of losing. [quote]
__________________
Nobody can guess on winning 10 trades in a row. But yes, We can guess to have ten winning periods in a row. And even 20. If you believe in your strategy because you backtested it (properly backtested it) over a large period of time, you can guess on having only winning periods.
  • #18
  • Jan 28, 2010 3:38am Jan 28, 2010 3:38am
Just to let you know, this thread is from 4 years ago....
  • #19
  • Jan 28, 2010 3:59am Jan 28, 2010 3:59am
Quoting moneymaker2
Just to let you know, this thread is from 4 years ago....
hahaha! I didn't notice! I thought it was January 2010!
  • #20
  • Jan 28, 2010 4:13am Jan 28, 2010 4:13am
Quoting MightyII
hahaha! I didn't notice! I thought it was January 2010!
Yeah I got sucked in to0 and thought Vegas had returned
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