DislikedI'm not sure where the notion came from that a business caps it's profits. I'm new to trading but have owned my own business for seven years. Some people prefer to cap at 10%. This is a personal preference that I respect. However it does nothing to grow or kill a business. I guess I could be wrong about this but I don't see any companies around me that shut the doors when they hit their profit goal for the month.Ignored
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- Edited 11:17am Mar 9, 2011 10:42am | Edited 11:17am
What I am presenting however is that the 10% cap is an arbitrary number that you have because that is what you are comfortable with. The cap doesn't save us from any risk. We will be risking the same money, with the same system, to the same risk whenever we trade.
Of course, this is all "what if". Firstly, this is not the only system I'm generating income from, but it is exactly the concept that governs my "quit at a target" philosophy across all my trading. Second, would this be the exact outcome of the final six trades of the month? Of course not, but it could be, or any combination of things that could result in the same ending. Sure, it could go the other way, and you'd close out much higher than 10% if 4 of those last six trades were winners. But, my approach guaranteed I couldn't lose anything, thus I preserved my capital and not only minimized, but ELIMINATED the risk that I'd end up with less than my target. If I kept trading, whether or not the odds are the system is profitable, there is no guarantee it would have ended higher than +10%.
So, these are the reasons why my personal preference is to stop at goal. Yes, the extra time with the family is great, but it is just as much about having a preference for $$...
Set 10% TP. On those months when I hit 10% I would take a set amount draw.
If I am dragging this discussion off topic please let me know. I have really enjoyed this thread. Even more than the system I have learned from the discussions on MM.
). The discussion over whether to quit or go on is entirely relevant.
Have a great weekend everyone.
I've got family visiting, so I probably won't have much time to dig too deep, but I spotted another pattern the other day that I need to put some MM around.... Maybe another thread if I can find some time to apply some math magic and see how it works out....
Very Interesting week for me, had already made my 10% for the month, but decided to carry on anyway to see...
This system isn't (and will never be) my main earner. At most, it may someday represent about 2-3% of my income and pay for a few dinners out each month or a weekend away now and then. But, even in what I call my "real" trading - you'll never see an "indicator" in my charts, other than some support/resistance lines and trend lines that I use to target specific entry and exit points. This is not rocket science, yet so many people fail at it. I "cut the cord" from having charts that looked like Christmas trees a while ago - and it was from that point that I actually started realizing success in this business.
So, yes, hurry and send me $97. I should probably make it clear I'm joking before we get moved to the commercial forum.....
Very Interesting week for me, had already made my 10% for the month, but decided to carry on anyway to see if the dreaded greed in me would bite me in the bum and decimate my account, but so far up about 18.5% for the month on opening balance and not looking too bad. I think if I hit 20% for month will call it a day, Geoff
.I am not so brave as you and only risk 1.5% per trade. I don't trade every day either which means I have some more to go before I can reach my target. However, thanks to cgrey I have been able study the London opening (I manually trade) more closely and profit from it. In the past I always stayed clear of the open but I do not fear it anymore (still nervous though when I am in a trade!).
Hopefully, we will all have interesting journeys with this strategy before reaching our intended destinations.
Hi all, good to see there is still lots of good stuff still on this thread.
As you know I've departed a little from the system, (see my other posts for details if you are interested) But I have done a little bit of playing with this years figures on the standard system (OandA prices) and found that a 3% risk per trade has been working better and given less drawdown. It's only a little increase in risk but seems to have made a difference.
Second thing I have noticed is the 9pip gap doesn't appear to have helped us out this year.
And finally I found what seems to be a good way to see if price is taking off our way, and that's to enter at 8.00:30 eg 8am + 30 seconds. (I use an EA so don't watch the chart) the thinking being that if price is going hard against us at the open we get a little more breathing space without extending our stoploss.
Account growth from Jan 1st 2011 @3% risk.
9pip gap 5%
no gap 14.7%
+ 30sec entry 33% (eg made target each month so far)
Take these for what they are - only 2 and a half months data, but still interesting!
dave.
As you know I've departed a little from the system, (see my other posts for details if you are interested) But I have done a little bit of playing with this years figures on the standard system (OandA prices) and found that a 3% risk per trade has been working better and given less drawdown. It's only a little increase in risk but seems to have made a difference.
Second thing I have noticed is the 9pip gap doesn't appear to have helped us out this year.
And finally I found what seems to be a good way to see if price is taking off our way, and that's to enter at 8.00:30 eg 8am + 30 seconds. (I use an EA so don't watch the chart) the thinking being that if price is going hard against us at the open we get a little more breathing space without extending our stoploss.
Account growth from Jan 1st 2011 @3% risk.
9pip gap 5%
no gap 14.7%
+ 30sec entry 33% (eg made target each month so far)
Take these for what they are - only 2 and a half months data, but still interesting!
dave.
Hi Rasi,
I have tried lots of ways of reducing risk, but you have to remember if we follow this system we are accepting a fixed % of our account at 20pips. Reducing risk directly just proportionally cuts profits. eg if we trade at 2.5% and and aim for 10% or trade at 1.25% and aim for 5% we are still risking 'the same' because the market still needs to move 80pips for us to make target for the month.
However if we enter for example at 5% risk, still aiming for 10% month then the market will only need to move 40pips for us to make target. If I understand rightly this is what Geoff has done.
Just so it's clear this isn't what I am doing or advising anyone to do I'm just pointing out the difference in thinking. As I mentioned 3% risk for 10% gain seems to put us (this year) in the sweetspot for how far the market can move in the first hour.
Having said all that I've gone completely the other way in managing risk!
I have fixed my DD for the month at 10% - so no more trades get opened after that, historically some months could have seen you well over 20% down if we had continued trading - 10% seems a good compromise.
all the best.
dave.
I have tried lots of ways of reducing risk, but you have to remember if we follow this system we are accepting a fixed % of our account at 20pips. Reducing risk directly just proportionally cuts profits. eg if we trade at 2.5% and and aim for 10% or trade at 1.25% and aim for 5% we are still risking 'the same' because the market still needs to move 80pips for us to make target for the month.
However if we enter for example at 5% risk, still aiming for 10% month then the market will only need to move 40pips for us to make target. If I understand rightly this is what Geoff has done.
Just so it's clear this isn't what I am doing or advising anyone to do I'm just pointing out the difference in thinking. As I mentioned 3% risk for 10% gain seems to put us (this year) in the sweetspot for how far the market can move in the first hour.
Having said all that I've gone completely the other way in managing risk!
I have fixed my DD for the month at 10% - so no more trades get opened after that, historically some months could have seen you well over 20% down if we had continued trading - 10% seems a good compromise.all the best.
dave.