Coming from this background, I started spot fx trading in GBPJPY a year ago. Employing no stoploss, for adverse positions, I averaged them by using constant lots at every 200 pips drawdown up to 5 times and made lucrative profits ultimately when the recovery of DD happened. But I recognised that unlike options, fx spot positions averaging was exerting pressure on the equity line, my psyche and now I am in a dilemma.
Is it worth doing it? Had I not made profits in the first few trades, would I have allowed a 25% drawdown in my equity? What kind of a psychological pressure it would have exerted on me had I faced the drawdown during the first trades itself? Some sort of unknown fear started haunting me.
By continuous adjustment of strangle options repeatedly for years, I have learned to balance the books without fear. With the one-year spot fx trading experience the lesson learned is: you have to give enough breathing space for the positions to work. But at the same time exercise prudent margin control if fear is to be overcome.
Or else, you have to have an extra-ordinary trading sense of judging peak and bottoms to employ stop loss efficiently. I have come across such traders but the performance is not more than 15% annually. If I have to do this way, then I am better off with low-stress options trading.
15% Annually is not something to look down at! If that’s roughly how much you are making with the low stress options trading strategy you mentioned earlier, then my opinion is to stick to it. If you’ve been doing that kind of performance consistently for few years, then capital shouldn’t be an issue.
Having tasted 20% monthly performance in spot fx during the first few trades, I am keen to learn from traders, like you, who don't frown upon big drawdowns and employ ways to tame them. Hence, the request was made to you.
I don’t want to let you down, but I actually do ‘frown upon big drawdowns’. I do believe that having some DD is healthy & is definitely part of the game, but if you want to be in this business in the long run & consistently make money you should keep your DD in check and try to aim for a sharp ratio that is > 1. The reason you see a high DD in my shared live test account is because this is a test of a medium term trend trading strategy, and the aim of the test is adjust the parameters of a winning strategy into a system that is profitable, not too risky, and consistent in the long run. That’s the reason you see my max DD gradually decreasing each and every month since I’m adjusting the trading parameters accordingly based on live real time trading.
If you’re looking for 20%+ monthly performances, I can assure you that it is very easily achievable, just as much as I can assure you that it is extremely difficult to sustain. Try to focus on your sharp ratio. If you can make 20%+ per month with a sharp ratio >1, then you are doing something right & may be sustainable in the long run.
Is it worth doing it? Had I not made profits in the first few trades, would I have allowed a 25% drawdown in my equity? What kind of a psychological pressure it would have exerted on me had I faced the drawdown during the first trades itself? Some sort of unknown fear started haunting me.
By continuous adjustment of strangle options repeatedly for years, I have learned to balance the books without fear. With the one-year spot fx trading experience the lesson learned is: you have to give enough breathing space for the positions to work. But at the same time exercise prudent margin control if fear is to be overcome.
Or else, you have to have an extra-ordinary trading sense of judging peak and bottoms to employ stop loss efficiently. I have come across such traders but the performance is not more than 15% annually. If I have to do this way, then I am better off with low-stress options trading.
15% Annually is not something to look down at! If that’s roughly how much you are making with the low stress options trading strategy you mentioned earlier, then my opinion is to stick to it. If you’ve been doing that kind of performance consistently for few years, then capital shouldn’t be an issue.
Having tasted 20% monthly performance in spot fx during the first few trades, I am keen to learn from traders, like you, who don't frown upon big drawdowns and employ ways to tame them. Hence, the request was made to you.
I don’t want to let you down, but I actually do ‘frown upon big drawdowns’. I do believe that having some DD is healthy & is definitely part of the game, but if you want to be in this business in the long run & consistently make money you should keep your DD in check and try to aim for a sharp ratio that is > 1. The reason you see a high DD in my shared live test account is because this is a test of a medium term trend trading strategy, and the aim of the test is adjust the parameters of a winning strategy into a system that is profitable, not too risky, and consistent in the long run. That’s the reason you see my max DD gradually decreasing each and every month since I’m adjusting the trading parameters accordingly based on live real time trading.
If you’re looking for 20%+ monthly performances, I can assure you that it is very easily achievable, just as much as I can assure you that it is extremely difficult to sustain. Try to focus on your sharp ratio. If you can make 20%+ per month with a sharp ratio >1, then you are doing something right & may be sustainable in the long run.
Not calling myself a "professional trader" does not mean I look for signals and forecast. So don't ya worry child.
