money management HELP!

[Revsly]

I know from your perspective, 15% on a $1000 account is not very good, but you're thinking in direct terms of dollars and cents and not ROI. Yes, 15% right now is not a hell of dollars in profit terms, but remember that if you do that with 1000, you can probably do it with 100,000 and more (until the point where liquidity is an issue). Also that was my return as of midway through the month, so 1/2 a month return.

As a follow up to that point, could I make 300% a month? I think that I could. If I make some good trades and put in heavy positions and am leveraged well, but also understand that the higher you set your target, the larger the risk becomes. You make a few bad trades and you are out of the game. Remember that every time you make a trade, there is some guy (or gal) on the other side that thinks your an idiot for making it. There is always a chance you are wrong, or maybe even that you are right, but your timing was too soon or too late. When you're risking 10,20,30,50% of your equity on one trade, you better know what you're doing (and the thing is, I think a lot of people think they know what they are doing, but really don't)

Anyway, could I put my savings into my trading account? Sure, but I don't want to. This is more of an experiment in being able to monitor the markets and enter successful trades while managing my risk. The markets are fascinating to me, and I wanted to get exposure that went beyond academia. I am currently a Sophomore in college, and for the record I'm actually most interested in Sell-Side Trading (most likely in some sort of quantitative product), which is a different beast, but some of the core competencies are the same.

I know that I don't know nearly everything about price action and different types of analyses, I'm here to experiment, learn and do something I enjoy. Trading is thrilling and the analytical stimulation is unparalleled. I trade because I enjoy it, and I want to develop into a successful trader and manage risk. And right now, I don't care too much about making tons of money in my personal account. Feel free to critique, you're not going to hurt my feelings. I'm genuinely happy with the progress I am making, particularly with understanding and limiting risk.

[barrooo]

Hi all,

Felt I needed to ad to this thread as I've just stopped being one of the 95% who loose money.

I started trading at the end of october after a month I was £1700 up on an £8000 pound account. Cue the feelings of 'this is easy money' and 'I've got a real handle on the markets'

Roll forward to the end of november and I'm down to about £6700 so a total loss for the month of about £3000, looking back this mainly happened by a refusal to accept I was wrong and a thought that the markets would turn around eventually.

Today I have an account balance just in excess of £8000 again and feel like I may be able to make a go of this.

The time inbetween has been spent doing lots of study especially in terms of being really selective in the trades I enter, and also trade management once in those trades. Oh and fair amount of pulling my 'head out my ass' along the way has also helped.

So I have no doubt you can turn it around and be a successful trader but, as many have said before me, you need to keep learning, and be realistic about you goals especially short term.

Hope this helps

[theunder18kid]

if ur gona experiment then use a demo account? or something like that?? nvm dont answer my question I;m just saying that u seem to have a lot of patience at this and plz dont gime stupid answers ffs god help me!

[theunder18kid]

baroo thanks for that point but isn't that GENERAL TOO??????? OMG GIME SOMETHING THAT U CAN"T GET FROM UR OWN COMMON SENSE OMG!!!

[Revsly]

I'm not saying I don't want to make returns, I figure its better to start with a little bit of money and build it up then add more when I'm more comfortable with the markets. Honestly though, I don't have time to be a full time trader while being a student. Besides, I don't think a game account will really represent well the same patterns and behaviors of a real account. There just aren't the same things at stake. Psychology, risk-taking and judgments under pressure are different when your money is on the line.

I'd really recommend just setting a limit on yourself, some guideline, like "won't risk more than (insert number here) % on one trade." Sounds stupid but it really may work. Give it a shot, try different things out. If what you're doing isn't working, something needs to change.

[theunder18kid]

omg I know what ur trying to do thats y I said u were a patience guy..... look I know wats right but I just ermmm read my posts ey lol

[Black Knight]

Hi Under18,

I don't risk 3%, my maximum is 2% (meaning if I'm iffy on a position I often put on 1% or 0.5%). Yes, $30 on a $1000 account doesn't sound like much - but $1000 is not a whole lot to be working with to begin with (good enough for practice, but it is not realistic to expect to live from it). If you need more lots, you can always use a tighter stop, by the way - the system is adjustable from both ends.

But the real danger (and why 95% of traders bust out in their first 6 months) is if you put on a large position and lose, you'll spend the rest of your (short) forex career trying to get back to even (very few do, without additional deposits). Your broker won't throw slippage or bad fills at you until they see that you've bet the "big one".

My trading system may not be "sexy" or "exciting", but it is safe, consistent, and profitable - I trade with a bit more than $1000.

I am not in any way involved with knightsfx.com - that's another company, nor with BK Trading, which is run by Boris and Kathy from FXCM. BabyPips does not allow people to post links to their own sites, so you'll just have to Google "black knight forex".

Wish you good trading,

-=BK

[Black Knight]

Some good points in that article. However I would caution against putting too much weight in back-testing. Back-testing is useful in weeding out systems that have flaws. But, when it comes to consistent results in trading, the only sort that really matters is forward testing. This is the slow, boring, time-consuming sort, which is why most people try to avoid it. Once you have a system which fits your psychology, and wins more than it loses, try putting on about 4,000 trades with it. After that, I promise you'll be much more solid in you trading. You'll develop confidence both in yourself and in your system. Back-testing just won't do that.

[rhodytrader]

Originally Posted by Black Knight

If you need more lots, you can always use a tighter stop...

I'm sorry, but that's a horrible idea. Tight stops do not decrease risk, especially if you trade bigger.

Tight Stops Make Me Nervous

[Black Knight]

Originally Posted by rhodytrader

I'm sorry, but that's a horrible idea. Tight stops do not decrease risk, especially if you trade bigger.

Tight Stops Make Me Nervous

You're misunderstanding what I said. Obviously you cannot just arbitrarily bring stops in tighter - the stop has to be proportionate to your time frame and to your particular trading system in order to be effective.

I'm simply saying money management can be approached from 2 different angles... position sizing and stop distance. Strategies relating to stop placement, and management of positions once you're in them, is an entirely different conversation.

Apologies for any confusion.