My goal is to trade within my system and respond to the signals as accurately (and as often) as possible. Then the pips and the percentages tend to work themselves out....
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Quoting aparsaiDislikedHow many hours per day do you work on Forex?Ignored
Quoting mmaassDislikedWhen someone states that they are capturing 800-1000 pips per month, is that actually chart movement (1 lot and they catch 800-1000 pips) or is that 100 lots and they are actually only capturing the market moving 8 - 10 pips? Or 10 lots and they are capturing 80 - 100 pips? Understand what I am asking?Ignored
Quoting ItalianSharpDislikedRusty
you seem to be doing fairly well. Where in Australia are you from? I have a girl-friend from Brisbane, good waves there as well.
If you dont mind answering, I have a couple of questions for you:
- whats your frequency? how many trades per day, week, month, etc...
- % of equity at stake per trade
- R/R ratio
- winning %
- how many and what pairs do you trade?
Thanks.Ignored
Quoting Rusty_forexmanDislikedI trade full time - My hours can be from 8 - 16 hours a day.
It all depends if there is enough movement during Asia, or movement at all.
How much research i need to do to continually have a feel for where the market is going...
And if there are any decent sized waves down the beach to go for a surf....Ignored
Quoting Rusty_forexmanDislikedhey italiansharp
Im in Sydney.
This month (May) i processed 78 trades.
I risk 2% of overall capital from the beginning of the month - meaning i stick with the same amount of lots for an entire month, that i started with. For example, i might have $1000 bucks in the account, so i would risk roughly 40 lots. I will stick with 40 lots for the entire month, no matter how low or high my month gets. Then i review my account and the risk capital at the start of the next month.
I dont really focus on my winning % - However, i can tell you last time i checked it was roughly 78%.
The risk/return ratio - well i aim for 1000 pips a month, this gives me about 25% a month in return. The risk is 2% of my account on 100:1.
I only trade 3 pairs - Eur, Cable and Eur/yen
Cheers
RustyIgnored
Quoting ItalianSharpDislikedWow, 78% winning rate over 70+ trades per month done consistently is something I have never heard of before. You must be onto something very special.
Usually a high winning percentage can be obtained by using many filters, thus trading strategies that are right 70+% of the time lack frequency.
My winning % swings between 52% and 54% with a frequency of 20 trades per month. I do trade only 1 currency pair, so my frequency would probably be a little lower than yours if I traded 3 pairs.
I tried to use more filters to increase winning % yet I noticed that the higher the winning % the lower the frequency. Less frequency means lower expectation % to be profitable in the short term as sample size is small thus standard deviation can be pretty wide.
A system that can produce high frequency and high winning % is every traders' dream. High frequency and high winning % mathematically allow you to use high leverage. Forget about 2% per trade, I would be using 5% at the least. Drawdown should be small and should not occur often.
According to the numbers, your system produces 3+ trades per day and wins 2+ on average.
With proper money management you should be millionaire in no time.
As to unit size adjustment, I used to adjust my size just like you do until I figured that its better to build a solid cushion before increasing size.
For instance, if you have a very good month and adjust your unit size accordingly, the following month you could find yourself using a considerably higher number of contracts. This is good if the first trades of the following month are profitable. What if you happen to have a drawdown right after you have increased your unit size? The impact of such a drawdown is gonna hurt pretty bad simply because you are using more contracts.
So here is how I increase my unit size today. Lets say my max acceptable drawdown is 10%. Before I increase # of contracts I want to make sure that my equity has built a cushion that can bear 2 times as much as my max drawdown, thus 20%.
As soon as I increase my equity by 20%, thats when I make adjustments to my unit size.
I know this may sound too conservative and if you run your results on excel using this method you'll notice capital growth isnt as good as if you adopt a more frequent adjustment.
However, drawdowns do exist and we all are going to go thru a few of them during our trading careers. By using a solid cushion I make sure I NEVER REDUCE MY CONTRACT SIZE DUE TO A DRAWDOWN. This guarantees my equity curve to be stable over the long run.
You see, I am trying to do this for a living and although I am attracted by all the money that can be made in this trillion dollar market, I figured I must keep my feet on the ground and be conservative. If I want to be able to make this the job of my life I must make sure that trading guarantees me the consistency and reliability of any other job where I would be employed.
One question: do you trade EURJPY for hedging purposes?
I have been considering adding another pair but I hardly find uncorrelated pairs. Trading EURUSD and GBPUSD at the same time doesnt hedge me because most of the times I have the same setups. Cable and Euro are tightly correlated so trading both of them only adds frequency and pips but it also increases my risk exposure.Ignored
Quoting stockwetDislikedHere's a question for everyone targeting pips. How are you calculating pips when trading multi-unit positions?
If I trade with 4 lots, and I take profit at 10, 20, 30, and 40 pips, what's my pip count? Is it 100 pips total, or is it the average of 20 pips?
When someone says they are targeting 1000 pips out of the market, how they account for those pips makes a big difference. I'd love to hear how people are accounting for pip counts.Ignored
Quoting stockwetDislikedHere's a question for everyone targeting pips. How are you calculating pips when trading multi-unit positions?
If I trade with 4 lots, and I take profit at 10, 20, 30, and 40 pips, what's my pip count? Is it 100 pips total, or is it the average of 20 pips?
When someone says they are targeting 1000 pips out of the market, how they account for those pips makes a big difference. I'd love to hear how people are accounting for pip counts.Ignored
Quoting Rusty_forexmanDislikedPOST #87Ignored
Quoting stockwetDislikedHey Rusty,
I'm not entirely following your pip counting method. Could you clarify? It sounds interesting.
For sake of clarification, I have a few questions:
1. Are you taking your whole position out at once, or, do you take parts of the position out throughout the trade?
2. If you take parts out, how would you calculate pips on a standard lot allocation (using your terms), where your final exit is 100 pips, but, you take profit at 25, 50 and 75? Do you average out the pips gained given the number of lots taken out or do you just count 100 pips as the number of pips gained? Would 2x the lot allocation then yield you 200 pips even if you take portions out along the way?
Thanks.
stockwetIgnored
Quoting ItalianSharpDislikedThere are some traders who claim to have a 80-90% winning rate so they probably wouldnt agree with me on this, however the AVERAGE TRADER with a 50% winning rate must keep in mind that only a few of his winners will build up his bankroll.Ignored
Quoting HollisDislikedNot to be a dick, but that's what keeps the average trader as an average trader, and the more serious folks rising above. It is is good that at least your capital is growing, but it should be faster than that. The guys who take it more seriously are the ones that treat every upswelling of equity as growth, and not neccessarily just trying to cover their losses. If you look at the situation as just "I've covered my losses! I'm ok now!", you'll never get anywhere as you let yourself get bitten by the fear. You've set predetermined targets that dominate your trading.
My personal thoughts are that you should trade like this is your starting account balance, as fractured and "odd" as it might seem (I mean you have an account that's like $75.46, or $1479, or even $57,234, it's all off from our lovely rounded numbers). Go into your next trade as if it's your first and you're looking for nothing but gains to grow your account. If you treat every winner as a gain in your net capital, you tend to be more cautious and caring from the outset in my experience, and it helps to minimalise the damage a loss will do to your psyche as well.
That being said, I must say that I agree with the ideas of your tiered exit system, as it accomplishes just what I was talking about, minimizing your damage and maximizing your gains.
Now back to the birthday!Ignored
Quoting HollisDislikedIt is is good that at least your capital is growing, but it should be faster than that. The guys who take it more seriously are the ones that treat every upswelling of equity as growth, and not neccessarily just trying to cover their losses.Ignored
Quoting ItalianSharpDislikedI think I can answer your question.
If you use 4 lots and take profits gradually at 4 different points - thus closing each lot at a different price - you have to sum up all pips generated by each lot and divide by # of lots.
Example:
You enter a position using 4 lots.
Your targets are set at +25, +50, +75, and +100.
25+50+75+100 = 250
250/4 = 62.5 -----> this is the net pips you made on your trade
Scaling out of positions is very useful to quickly reduce your risk exposure.
Let me give you another example that can show you how:
Lets say your hard stop is 50 pips and your targets are the same as the example above.
If you use 4 lots, your initial net risk exposure is -50 pips.
-50-50-50-50 = -200/4 = -50
Lets say after you've hit target #1 @ +25 suddenly the market turns against you and stops you out.
Lets do the math:
+25-50-50-50 = -125/4 = -31.25 ----> this represent your net loss for the trade, 19 pips less than your initial hard stop.
Lets change scenario and pretend both target 1 and 2 are hit and then you are stopped out.
+25+50-50-50 = -25/4 = -6.25 ----> this would be your net loss for the trade, almost insignificant compared to your initial hard stop.
As you can see, scaling out of positions is pretty helpful to reduce size of losses when things dont go your way, or actually go your way initially but not enough to give you the amount of profits you would like.
The downside of scaling out is, of course, when things go your way. Your net profits will be much less than closing out all of your contracts at the desired target.
Its up to you to find good balance between your targets and your stops.
I personally prefer to keep losers small and whenever I get the opportunity to take some profits home I do not hesitate to close out 1 or 2 contracts.
I cant remember where I read this, but its been statistically proven that only 20% of your winners contribute to your capital growth. The remaining 80% are small winners that should even out all of the losers.
I did some reasearch into this and found out that only 18% of my winners are actually making me money, so I find it pretty reliable.
There are some traders who claim to have a 80-90% winning rate so they probably wouldnt agree with me on this, however the AVERAGE TRADER with a 50% winning rate must keep in mind that only a few of his winners will build up his bankroll.Ignored