Dear Visitors and FF Moderators: THIS THREAD IS VERY MUCH A TRADING SYSTEM, KINDLY READ MY POSTS IF YOU HAVE ANY DOUBTS.
Here is the link to first few pages of this thread:
http://www.forexfactory.com/showthread.php?t=403635
Quick Recap/Summary:
1. There are many Trading Methods that provide high probability of achieving more than 50% winning ratio with Risk/Reward equal to or better than 1:1. However, a good Trading Method alone is not enough. Certain other integral elements are also required to develop a method into a reasonably sound Trading System. One such element is money management.
2. If one's trading is based on number of positive and negative trades, risk and reward should also remain consistent. It should not happen that one generates 5% in five trades and losses all of it in only one trade (or vice-versa).
3. One should be able to sustain reasonably possible drawdown. For example, if one is skilled enough to generate 60 winners in a block of 100 trades, should have the capacity of absorbing 40 lossers. You never know if your first 40 trades turn out to be losers in a block of 100 trades. Accept that it's possible. I once exeperienced 52 consecutive losers. Rely on maths and logic ..............and not hope.
4. Based on the logic mentioned in 3 above, 1% or little less risk per trade is considered reasonable............ not too high and not too low. One can also reduce the risk/reward to less than 1% but increase the trade turn-over, that is, enter and exit more frequently. This high trade turnover will help making smaller but quick profits. However, that will require taking trades for few pip profit or loss. The disadvantage of few pip trades are great, including, high spread cost, market noise, etc. Therefore few trades for reasonable number of pips with 1% risk and equal reward seems more appropriate.
5. I am trying to show application of this money management method. THIS THREAD IS NOT A BLOODY JOURNAL BUT DEMONSTRATION SHOWING APPLICATION OF THE MONEY MANGEMENT METHOD MENTIONED ABOVE.
6. Here is a log of 29 trades taken with 1% risk and 1% reward method. If you study this chart you will notice losers are more than winners, about 6 more than the winners and therefore loss of 6%. At one point loss was about 8% or 9% because of several consecutive losses.
7. I took very few risky trades, maybe 3 of them. Even after that this shows a loss. Do you know why? if you don't know the answer, re-read the method above and guess.
http://www.forexfactory.com/attachme...1&d=1362581722
Here is the link to first few pages of this thread:
http://www.forexfactory.com/showthread.php?t=403635
Quick Recap/Summary:
1. There are many Trading Methods that provide high probability of achieving more than 50% winning ratio with Risk/Reward equal to or better than 1:1. However, a good Trading Method alone is not enough. Certain other integral elements are also required to develop a method into a reasonably sound Trading System. One such element is money management.
2. If one's trading is based on number of positive and negative trades, risk and reward should also remain consistent. It should not happen that one generates 5% in five trades and losses all of it in only one trade (or vice-versa).
3. One should be able to sustain reasonably possible drawdown. For example, if one is skilled enough to generate 60 winners in a block of 100 trades, should have the capacity of absorbing 40 lossers. You never know if your first 40 trades turn out to be losers in a block of 100 trades. Accept that it's possible. I once exeperienced 52 consecutive losers. Rely on maths and logic ..............and not hope.
4. Based on the logic mentioned in 3 above, 1% or little less risk per trade is considered reasonable............ not too high and not too low. One can also reduce the risk/reward to less than 1% but increase the trade turn-over, that is, enter and exit more frequently. This high trade turnover will help making smaller but quick profits. However, that will require taking trades for few pip profit or loss. The disadvantage of few pip trades are great, including, high spread cost, market noise, etc. Therefore few trades for reasonable number of pips with 1% risk and equal reward seems more appropriate.
5. I am trying to show application of this money management method. THIS THREAD IS NOT A BLOODY JOURNAL BUT DEMONSTRATION SHOWING APPLICATION OF THE MONEY MANGEMENT METHOD MENTIONED ABOVE.
6. Here is a log of 29 trades taken with 1% risk and 1% reward method. If you study this chart you will notice losers are more than winners, about 6 more than the winners and therefore loss of 6%. At one point loss was about 8% or 9% because of several consecutive losses.
7. I took very few risky trades, maybe 3 of them. Even after that this shows a loss. Do you know why? if you don't know the answer, re-read the method above and guess.
http://www.forexfactory.com/attachme...1&d=1362581722
The Thief of Wall Street
