Hi Guys...
Been thinking to write about it from quite a time now. Today, got an excuse from the busy schedule to do the same.
-------------------------------------------------------------------------------------
PAST History & Origin:
Free Account concept is something i thought of when i was exposed to FF's forum, some 2 years ago when i was reading ->DIBS Trading Strategy<-, explained by a helping Pit trader named Peter Crown .
Though the ALMOST mechanical DIBS highly motivated me to follow the
"Make a killing" law which states "Let your Profits run and cut your losers short", i was never able to use it alone as my trading style was not in harmony with the draw-downs it can have in choppy markets, even though its something so easy to trade and shows magnificent results in trending market.
There is a very important concept of "Free Trade" in DIBS.
"Free Trade" is literally a trade where you cannot lose. According to DIBS, after the price moves in your trade direction by pre-defined pips (depending upon SL), one has to close half of the size and let the half part run with original SL. That trade thus becomes "FREE" and has the capability to run for longer duration (if entry was good & at start of trend(in TF one trades)), with no risk at all. Original SL helps to give room for the trade to play out in direction of trade.
It though has the early risk of hitting SL, if point of entry is not good ( latter is quite discretionary in DIBS which is based on Inside Bars(IB's))
When you make a trade "Free", the psyche associated with it is superb. You got nothing to lose & if you are in the direction of trend, its a viable seed which will bear fruits later on (that too big fruits, in a major trend)
Explanation:
IMO, a Profitable Trader only requires 3 things.
Profitable Trader = Profitable Strategy + Good Pyschological Control/Discipline + Good Money Management(MM)
In a way, Free Account concept modifies the 'usual' MM's importance and focuses profitability more on first 2 factors.
Free Account concept originated from Free Trade Concept.
Its a unique yet bit tricky way to make your account act like a "Free Trade"
I will share my experience/may way of trading it down below.
In its basic form, one starts with a low sized account and trades it with whatever high win-rate strategy he/she has got, with least or no MM(Stoplosses) at all.
Makes it grow and withdraws the initial deposit amount asap. Withdrawal methods will be discussed later.
1) At start, Total risk (low) is the small account size.
2) As the account grows, risk becomes less (%age wise;with same lot-sized trades). While doing so, if one is losing, it depends upon him/her, where to place a equity stoploss (whole account or some pre-defined amount)
3) As and when profits are realized, initial deposit is withdrawn, making Total Risk in future as zero.
4) Now its a "FREE ACCOUNT" & one can trade it in different ways, though with sound discipline, as one surely has earned it.
5) THUS, hereon, Total Risk is only the time one will spent on trading this account, ONLY IF account is wiped off (and without any "milking").
6) Thereafter, withdrawals (to pay oneself) are done based on discretion & requirement (but "Regulated" based on some criteria esp. current equity size & time frame). I call this "Free Account Milking"
7) As the account grows, one has to have a pre-defined Equity level (Possible & Realistic; 300% to even 2000% for small accounts), where account has to be closed (a SPA;Read below) & whole amount is withdrawn & a new, same or low size (advised) Wanna-be-Free-Account is started.
This ensures Large % profit return; Minimizes the risk for future; Helps gaining capital for yourself or for other MM based strategies.
Few more things:
- Small account size, as much as possible (yet realistic), is better. Makes total risk smaller. (Once tried a 10$ account(non-realistic though) too on a nano lot broker & milked till Approx. 650$ size before it busted; PFA(300$))
- Early trades while converting a new account are very important and surely should be winners. Waiting for entries, for taking the same is VERY worth it.
- Account should be made "FREE" ASAP or ASA one can properly trade/move on with left-over capital.
- Why a separate account and why not a Equity SL to trade the same on big size account?
Bcoz Emotional & psychological control is not easy to attain and with high leverage and no/big SL, you are prone to allow the trade/s to have bigger draw-downs, which may/may not end with lot of pain or even total account-wiping.
- This concept is especially effective if you are low in capital and good in short time frame trading/scalping and want to generate capital for other strategies. (The reason for myself). High time frame trading with this concept would require big size accounts, which is not advised , except if that big size loss doesn't matter much, to you.
- Surely this type of trading is intensive & requires quick-decisions, esp. during early life of a account and is not possible to do for many traders. This may or may not be taxing for health but surely requires average to good psychological control & discipline.
Important Riders/Notes/Caution:
1) This is not an advise , esp. not for newbies to trade this way. Just something to share. if you are old enough in fx and got some spare money to trade this way. Surely this is not cooked food.
2) Trading this concept may help you lose your shirt, if you
- do not have a good understanding of any high win-rate strategy
- do not know scalping and are slow in making decisions (esp. when you have small sized accounts)
- think that no account will every be lost, while you start to convert a Wanna-Be-Free-Account.
3) Money Management has different methods. Withdrawals is the major MM in this concept ( esp. "Regulated" pre-decided withdrawals depending upon initial account size and present equity)
4) This concept in above explained form, starts in Low Risk-High Gain category. As the initial account size increases, it shifts over to HighRisk-High Gain category.
5) A "Wanna-Be-Free-Account" (WFA) is a new small sized account, you want to covert into a "Free" Account.
6) A "Busted Wanna-Be-Free-Account" (BWFA) is an account which gets wiped off before it is made "Free" . Loss = Account size + Time spent(usually small)
7) A "Free-Account" (FA) is an account which has been made "Free" by withdrawing the deposit amount. Loss Possible= Only Time spent
8) A "Break-even-Free Account" (BEFA) is one which gets wiped off after making it "Free" before "milking". Loss = Only Time spent.
9) A "Profitable Free Account" (PFA) is one which gets wiped off after making it "Free". Profit = cumulated withdrawals from "milking"
10) A "Successful Free Account" (SFA) is one which reaches the threshold equity level and is closed successfully. Profit = 'Milked' withdrawals +Threshold Equity
11) This strategy is very good for generating capital in short term, if you understand all above properly. I am still not sure in long term , but plan to test the same (say 3 year Period). I will surely update the thread in next 2 years to share my results, be it Profits, Loss or Breaking-even
-------------------------------------------------------------------------------------
My Experience:
I have been trading this concept from past 12 months+, along with 2 of my other non-scalp strategies(Automated & Non-automated; which are on different accounts)
I traded some 10 Accounts in this period (Barring the 10$ account, as mentioned above)
Following is the breakup/results :
4 Accounts of size 500$ (Threshold Equity was 4000$; PFA accounts have approx. "milked" profit in brackets)
1) BEFA
2) PFA (400$)
3) BWFA
4) SFA
Then 6 Accounts of size 300$ (Threshold Equity was 3000$; PFA accounts have approx. "milked" profit in brackets)
1) SFA
2) BWFA
3) SFA
4) SFA
5) PFA (1100$)
6) SFA
My Strategy (for these accounts) is mainly based on:
- PA in M5, H1 & H4 (A lot of screen time has no replacement)
- Basic Pivots (In W1 and D1 TF) & PA based Support and Resistance (Mainly in D1 & H1 TF)
- Major Trendlines
- Basic patterns only mainly Triangles, H&S, Wedges and channels
- Entry and Exits are based on charts of M5 TF in direction of higher TF Trend (D1 & H1)
- I do Scalp & also let the trades run, based on higher TF Trend (if present). 75% Trades are in the direction of major trend. 25 % Trades are retracement trades with TIGHT BE Stoplosses.
- I do Scale in (frequently) and Scale out(rarely), based on "Ascertained" trend.
- I follow "Save your Ass First" rule the most. My Trading History has large number of BE trades, doing the same. After a BE trade, at the same time, i search for Entry at a better level and enter the same, if possible, till the trade works out. I do not follow the Price for a entry after entry level is breached.
- I usually try to make 120 pips out of a 100 pip move, by trying to cling onto last moment pushes/pulls of PA, timing on retracements. Consequently, duration of trades is small.
- Usually Trade Win-rate in such accounts varies from 70-95%. I often have 85%+ win rate in first 10 trades. Also %age Equity in Winners is usually 2-20times the %age equity in Losers.
- I Trade EURGBP(95% Trades) and EURUSD and GBPUSD (5% Trades). EURGBP is a great pair for its unlimited chop and strong trends(when present). More ->Here<-
I would try to post more about it, probably with screen-shots, in future (if time permits, at weekends)
-------------------------------------------------------------------------------------
PRESENT:
Presently, i am testing a lower risk account size (i.e. <300$) and will be posting a thread regarding the same.
It will be kind of a challenge thread for myself as its very difficult to generate good profit from a very small account. I plan to modify my threshold equity levels 10 times more and accordingly modify my withdrawal plan in a bit more aggressive way. Will update this thread about the same. Lets WnW.
UPDATE1 (24th Nov 2010): Thread named ->SAINT's FREE Account Concept- $100 to $10,000- Attempt Journal<- is live now.
UPDATE2 (11th Mar 2013): Thread named ->SAINT's Free Account Concept- $100 to $0.1 Million - Attempt Journal<- is live now
-------------------------------------------------------------------------------------
FUTURE:
I plan to evolve myself more in my entry & exits and small TF PA identification mainly for PAIR EURGBP only, and accordingly increase my WFA to SFA conversion ratio.
I plan to build approx 100K USD capital doing the same Thereafter, i do not have any plans yet.
(NOTE: This target is irrespective of my other trading strategies and style(Automated/Non-Automated) and time spent on them)
Update(11th Mar 2013): 100K USD net capital target is almost done.
My next & final target for this type of trading, is to generate me a net of $1 Million. That's all.
As they say it "The first million is the hardest" . Hope i am able to do the "hardest" & then i am sorted.
-------------------------------------------------------------------------------------
THREAD RULES:
1) No useless sarcasm/unrelated comments/your lost-shirt stories/ racial remarks will be allowed.
2) Constructive criticism allowed, with conditions in point (1)
3) All those still posting, can feed their online ego, before the post is reported & deleted.
4) Got an edge which can be applied to this? more than welcome!
5) Anything related which can't be posted can be PM'ed, except sarcasm-bubbles.
6) No requests of any sort, plz.
-------------------------------------------------------------------------------------
P.S.
NOTE: I will be adding/deleting/editing stuff in this first post, as and when required and as and when i want to share more related stuff/results
Been thinking to write about it from quite a time now. Today, got an excuse from the busy schedule to do the same.
-------------------------------------------------------------------------------------
PAST History & Origin:
Free Account concept is something i thought of when i was exposed to FF's forum, some 2 years ago when i was reading ->DIBS Trading Strategy<-, explained by a helping Pit trader named Peter Crown .
Though the ALMOST mechanical DIBS highly motivated me to follow the
"Make a killing" law which states "Let your Profits run and cut your losers short", i was never able to use it alone as my trading style was not in harmony with the draw-downs it can have in choppy markets, even though its something so easy to trade and shows magnificent results in trending market.
There is a very important concept of "Free Trade" in DIBS.
"Free Trade" is literally a trade where you cannot lose. According to DIBS, after the price moves in your trade direction by pre-defined pips (depending upon SL), one has to close half of the size and let the half part run with original SL. That trade thus becomes "FREE" and has the capability to run for longer duration (if entry was good & at start of trend(in TF one trades)), with no risk at all. Original SL helps to give room for the trade to play out in direction of trade.
It though has the early risk of hitting SL, if point of entry is not good ( latter is quite discretionary in DIBS which is based on Inside Bars(IB's))
When you make a trade "Free", the psyche associated with it is superb. You got nothing to lose & if you are in the direction of trend, its a viable seed which will bear fruits later on (that too big fruits, in a major trend)
Explanation:
IMO, a Profitable Trader only requires 3 things.
Profitable Trader = Profitable Strategy + Good Pyschological Control/Discipline + Good Money Management(MM)
In a way, Free Account concept modifies the 'usual' MM's importance and focuses profitability more on first 2 factors.
Free Account concept originated from Free Trade Concept.
Its a unique yet bit tricky way to make your account act like a "Free Trade"
I will share my experience/may way of trading it down below.
In its basic form, one starts with a low sized account and trades it with whatever high win-rate strategy he/she has got, with least or no MM(Stoplosses) at all.
Makes it grow and withdraws the initial deposit amount asap. Withdrawal methods will be discussed later.
1) At start, Total risk (low) is the small account size.
2) As the account grows, risk becomes less (%age wise;with same lot-sized trades). While doing so, if one is losing, it depends upon him/her, where to place a equity stoploss (whole account or some pre-defined amount)
3) As and when profits are realized, initial deposit is withdrawn, making Total Risk in future as zero.
4) Now its a "FREE ACCOUNT" & one can trade it in different ways, though with sound discipline, as one surely has earned it.
5) THUS, hereon, Total Risk is only the time one will spent on trading this account, ONLY IF account is wiped off (and without any "milking").
6) Thereafter, withdrawals (to pay oneself) are done based on discretion & requirement (but "Regulated" based on some criteria esp. current equity size & time frame). I call this "Free Account Milking"
7) As the account grows, one has to have a pre-defined Equity level (Possible & Realistic; 300% to even 2000% for small accounts), where account has to be closed (a SPA;Read below) & whole amount is withdrawn & a new, same or low size (advised) Wanna-be-Free-Account is started.
This ensures Large % profit return; Minimizes the risk for future; Helps gaining capital for yourself or for other MM based strategies.
Few more things:
- Small account size, as much as possible (yet realistic), is better. Makes total risk smaller. (Once tried a 10$ account(non-realistic though) too on a nano lot broker & milked till Approx. 650$ size before it busted; PFA(300$))
- Early trades while converting a new account are very important and surely should be winners. Waiting for entries, for taking the same is VERY worth it.
- Account should be made "FREE" ASAP or ASA one can properly trade/move on with left-over capital.
- Why a separate account and why not a Equity SL to trade the same on big size account?
Bcoz Emotional & psychological control is not easy to attain and with high leverage and no/big SL, you are prone to allow the trade/s to have bigger draw-downs, which may/may not end with lot of pain or even total account-wiping.
- This concept is especially effective if you are low in capital and good in short time frame trading/scalping and want to generate capital for other strategies. (The reason for myself). High time frame trading with this concept would require big size accounts, which is not advised , except if that big size loss doesn't matter much, to you.
- Surely this type of trading is intensive & requires quick-decisions, esp. during early life of a account and is not possible to do for many traders. This may or may not be taxing for health but surely requires average to good psychological control & discipline.
Important Riders/Notes/Caution:
1) This is not an advise , esp. not for newbies to trade this way. Just something to share. if you are old enough in fx and got some spare money to trade this way. Surely this is not cooked food.
2) Trading this concept may help you lose your shirt, if you
- do not have a good understanding of any high win-rate strategy
- do not know scalping and are slow in making decisions (esp. when you have small sized accounts)
- think that no account will every be lost, while you start to convert a Wanna-Be-Free-Account.
3) Money Management has different methods. Withdrawals is the major MM in this concept ( esp. "Regulated" pre-decided withdrawals depending upon initial account size and present equity)
4) This concept in above explained form, starts in Low Risk-High Gain category. As the initial account size increases, it shifts over to HighRisk-High Gain category.
5) A "Wanna-Be-Free-Account" (WFA) is a new small sized account, you want to covert into a "Free" Account.
6) A "Busted Wanna-Be-Free-Account" (BWFA) is an account which gets wiped off before it is made "Free" . Loss = Account size + Time spent(usually small)
7) A "Free-Account" (FA) is an account which has been made "Free" by withdrawing the deposit amount. Loss Possible= Only Time spent
8) A "Break-even-Free Account" (BEFA) is one which gets wiped off after making it "Free" before "milking". Loss = Only Time spent.
9) A "Profitable Free Account" (PFA) is one which gets wiped off after making it "Free". Profit = cumulated withdrawals from "milking"
10) A "Successful Free Account" (SFA) is one which reaches the threshold equity level and is closed successfully. Profit = 'Milked' withdrawals +Threshold Equity
11) This strategy is very good for generating capital in short term, if you understand all above properly. I am still not sure in long term , but plan to test the same (say 3 year Period). I will surely update the thread in next 2 years to share my results, be it Profits, Loss or Breaking-even
-------------------------------------------------------------------------------------
My Experience:
I have been trading this concept from past 12 months+, along with 2 of my other non-scalp strategies(Automated & Non-automated; which are on different accounts)
I traded some 10 Accounts in this period (Barring the 10$ account, as mentioned above)
Following is the breakup/results :
4 Accounts of size 500$ (Threshold Equity was 4000$; PFA accounts have approx. "milked" profit in brackets)
1) BEFA
2) PFA (400$)
3) BWFA
4) SFA
Then 6 Accounts of size 300$ (Threshold Equity was 3000$; PFA accounts have approx. "milked" profit in brackets)
1) SFA
2) BWFA
3) SFA
4) SFA
5) PFA (1100$)
6) SFA
My Strategy (for these accounts) is mainly based on:
- PA in M5, H1 & H4 (A lot of screen time has no replacement)
- Basic Pivots (In W1 and D1 TF) & PA based Support and Resistance (Mainly in D1 & H1 TF)
- Major Trendlines
- Basic patterns only mainly Triangles, H&S, Wedges and channels
- Entry and Exits are based on charts of M5 TF in direction of higher TF Trend (D1 & H1)
- I do Scalp & also let the trades run, based on higher TF Trend (if present). 75% Trades are in the direction of major trend. 25 % Trades are retracement trades with TIGHT BE Stoplosses.
- I do Scale in (frequently) and Scale out(rarely), based on "Ascertained" trend.
- I follow "Save your Ass First" rule the most. My Trading History has large number of BE trades, doing the same. After a BE trade, at the same time, i search for Entry at a better level and enter the same, if possible, till the trade works out. I do not follow the Price for a entry after entry level is breached.
- I usually try to make 120 pips out of a 100 pip move, by trying to cling onto last moment pushes/pulls of PA, timing on retracements. Consequently, duration of trades is small.
- Usually Trade Win-rate in such accounts varies from 70-95%. I often have 85%+ win rate in first 10 trades. Also %age Equity in Winners is usually 2-20times the %age equity in Losers.
- I Trade EURGBP(95% Trades) and EURUSD and GBPUSD (5% Trades). EURGBP is a great pair for its unlimited chop and strong trends(when present). More ->Here<-
I would try to post more about it, probably with screen-shots, in future (if time permits, at weekends)
-------------------------------------------------------------------------------------
PRESENT:
Presently, i am testing a lower risk account size (i.e. <300$) and will be posting a thread regarding the same.
It will be kind of a challenge thread for myself as its very difficult to generate good profit from a very small account. I plan to modify my threshold equity levels 10 times more and accordingly modify my withdrawal plan in a bit more aggressive way. Will update this thread about the same. Lets WnW.
UPDATE1 (24th Nov 2010): Thread named ->SAINT's FREE Account Concept- $100 to $10,000- Attempt Journal<- is live now.
UPDATE2 (11th Mar 2013): Thread named ->SAINT's Free Account Concept- $100 to $0.1 Million - Attempt Journal<- is live now
-------------------------------------------------------------------------------------
FUTURE:
I plan to evolve myself more in my entry & exits and small TF PA identification mainly for PAIR EURGBP only, and accordingly increase my WFA to SFA conversion ratio.
I plan to build approx 100K USD capital doing the same Thereafter, i do not have any plans yet.
(NOTE: This target is irrespective of my other trading strategies and style(Automated/Non-Automated) and time spent on them)
Update(11th Mar 2013): 100K USD net capital target is almost done.
My next & final target for this type of trading, is to generate me a net of $1 Million. That's all.
As they say it "The first million is the hardest" . Hope i am able to do the "hardest" & then i am sorted.
-------------------------------------------------------------------------------------
THREAD RULES:
1) No useless sarcasm/unrelated comments/your lost-shirt stories/ racial remarks will be allowed.
2) Constructive criticism allowed, with conditions in point (1)
3) All those still posting, can feed their online ego, before the post is reported & deleted.
4) Got an edge which can be applied to this? more than welcome!
5) Anything related which can't be posted can be PM'ed, except sarcasm-bubbles.
6) No requests of any sort, plz.
-------------------------------------------------------------------------------------
P.S.
NOTE: I will be adding/deleting/editing stuff in this first post, as and when required and as and when i want to share more related stuff/results
100 Fold Challenge->Interested? ->https://www.forexfactory.com/thread/32152
