My strategy to become a full time forex trader

Hello again everyone. I've only commented here and there in the major currency threads but I decided to make myself more open and known on this forum. Undoubtedly most of the people here are simply rookies trying to squeeze any information they can out of the pros, and I'd be lying if I said I wasn't here too for self gain. So I decided to post my own personal strategy for making it to full time with 2 hopes; 1) That seasoned traders will critique my strategy and make me a better trader and 2) Rookie traders can learn something and maybe even make it big with the help of my experience.

I got started in the currency markets about a year ago. Luckily I started with small money because I was quickly losing a large percentage of my small account. I refused for months to apply a mathematical formula to success. Refused to make rules for myself. When I saw an opportunity (which as a naive rookie trader, all I saw was opportunity) I would try and take it for all it was worth. It was either slam dunk trades, or major losses. I grew out of that, and have been experimenting with disciplined trading plans ever since.

I don't think it would be too beneficial to dwell on my mistakes from the past, but rather focus on what's been working. Just recently I started keeping detailed information of my trades.

Attachment

This strategy is simple. Focused on maintaining a higher gain per win than loss per failed trade, while maintaining above 50% win ratio. I am considering trading less to improve my win percentage, however because of my tight stops it seems higher frequency might mean more gains.

Absolutely look forward to some feedback. As I have the time, I will get more detailed as far as how I trade. My next post will be about how I plan to take this full time.

Happy pippin'

As you can see in my last spreadsheet, I'm averaging almost 5 pips a day. I currently work full time so I am thrilled to have these relatively consistent gains trading between 2-4 hours a night. I know just over 1 month of record isn't enough to know I'll make it, but I have 1 year left in the military before I plan to go full time. I sincerely believe I'll have the skills required by that time.

My goal for start up capital is approximately $20,000. Here's how I came to this number:

I believe it is realistic to assume that trading full time I can earn an average of 10 pips per day. I have an initial goal of earning $400 a day, which will mean i need to be earning $40 a pip. This will cost me about $13,000 to achieve this type of profit per pip in the EUR/USD. So I will have a $7,000 float, which equates to a possible draw down of 175 pips. With my strategy, this would equal nearly 27 consecutive failed trades.

I currently feel comfortable trading at $15 a pip. I will be slowly increasing my stake over the next 10 months or so to get that comfort level at $40 a pip before I am relying on it for income.

As always, opinions and critiques are welcome.

I'm probably going to sound like a stick in the mud, but I think your goals are very bold.

Firstly, with your goal of $400 per day = $2,000 per week equates to a 10% return per week on your account.

Secondly, your trade leverage (i.e. position size @ $40 per pip) will be 20:1. You are going to have to be very disciplined in cutting those losses quick. And the market can do strange things sometimes. It just needs to hiccup or burp and your stop (if you have one in place) could get slipped by 30 pips (just as an example).

Don't get caught carrying a trade over the weekend either in case the market gaps up or down.

Hi,

Don't think too much about running before you can walk. Take it slow and steady and see if your expectations are realistic in 10 months time.
You already realise that one month of profitable trading is not enough to be overconfident.
I see this quite often when people say that it would require x amount of consecutive losing trades to use up the margin.
This is not true, if trading with a R:R of 1:1, it would require x amount more losers than winners.
You use the number 27, so out of 1000 trades 514 losers and 486 winners. You wouldn't need to lose much of your trading edge to make this possibility a reality. Obviously it would be different with a R:R better than 1:1
You want to earn $400 a day from a $20,000 account. That's 10% per week.
If you are able to earn 10% consistantly every week, believe me, you would be up there amongst the world's top traders. Forget $100,000 per year, you could probably name your salary and bonus deals in the millions per year.

I hope that things go well for you.
Happy New Year

Appreciate the feedback Gumrai. Point taken on the max draw down, thanks.

I'm glad you brought up that 10% per week because I have a question on it. Isn't it true that most big time traders are not doing anything similar to this trading style? What I mean is they are risking a much smaller percentage of their portfolio for a much larger currency move.

Just pulling random numbers out of my ass haha I admit, but if you manage say 25 Million. You invest 5 Million for a 75 pip move. Just made roughly $50,000, but that is merely a .2% portfolio gain. Again these numbers are made up, but wouldn't this be similar to what big time traders would be doing in regards to percent per day/month/year? I could also relate this to small time traders who risk less of their capital for larger moves.

I feel this is more of a scalping strategy where a much higher portfolio percentage is traditionally risked, with a higher percentage gain. The trade off of course being more spreads/commissions/screen time paid, as well as being susceptible to market noise rather than moves.

Yes, every trade I enter I have a stop loss automatically paired in (and a take profit shortly thereafter). If I get slipped by 30 pips I guess I'll have to go throw some iron around for a couple hours then come back with a fresh mind haha. Tough to plan for that one.

I always exit before the market closes for the weekend, and never pay currency swaps. Thanks for your input.

Happy new year forexfactory!

I'll be back trading on the 7th and look forward to sharing my trades with you.

Nice one. With that kind of leverage, I think it's only prudent. I was thinking that as you are in the military, discipline shouldn't be a problem with you anyway. None of this, I'll just move my stop back a bit etc etc. You've got some time to perfect your strategy too before the market becomes your employer.

All the best. Happy New Year

First Sunday trade.

USD/JPY; short from 88.34
TP: 88.21 (just missed 10min ago, still holding)
SL: 88.385

Closed out early for +9.27 pips. I didn't like the support it appears to be forming. On to the next one....

AUD/USD looks like it wants to try for 1.0510 again. Bit looser of a stop then I typically use, but this could be worth 15 pips.

Long AUD/USD: 1.04945
SL: 1.04885

Took profit for +7.6 pips. Back to cash waiting for the next one...

Man am I seeing lots of opportunities this session.

Short EUR/USD at 1.30755
SL: 1.3080

Out, +7.67 pips.

Great session so far. +24.47 pips in an hour and 15 minutes. I'm gonna take a break so the money and successful trades doesn't go to my head (hey, I'm still a rookie but at least I'm aware of it). This is definitely going to turn into gambling if I don't reset.

Cya in a bit.

Don't beat yourself up over mistakes, but do learn from them. It's 'market tuition' if a mistake costs you, but "dumb money" losing more to the same mistake.

But yes, I don't hear this coming from new traders enough: "focus on what's working". It sounds simple, but 'repeat what's working, cut out what's not' is a very effective way to improve yourself as a trader (actually it's effective in any business, including trading.)

Good luck.

Jack, truly appreciate your insight. Thanks.

I like AUD/USD for a short here as it appears to be doing a mini-backtest of 1.0490 before breaking to the downside. Ultra tight stop because I'll know if I'm wrong real quickly here.

Short AUD/USD: 1.0490
SL 1.0493

Successful plan, take profit for +7.27 pips.

I like your strategy. All the best

Thanks, good to know people are enjoying my thread.

Short EUR/USD: 1.30595
SL: 1.3065

SL moved to 1.3062