10k to 1mil in one yr
10k to 1.2mil in 52 weeks of trading using a mini account.....it takes 20 pips a day, 5 days a week
your probably doing the math and coming up with $52k
so its week 1 and u nervously put 10k into your forex account...starting with 10mini lots....u make your 20 pips a day...that Friday u should have 11k....
week 2 comes around....u start trading with 11 mini lots...that Friday comes around and u should have 12,100...now week 3 comes around and u start trading with 12mini lots. that Friday u should have 13,310....and the cycle goes on....
i so far explained the first 3 weeks...now let skip ahead to week15 which is roughly about 3-4 months
week 15 u should be at $37,967...so how many mini lots will u be trading that week? 37 mini lots. now week 16 is here, there is 41,763 in Ur account and u start trading with 41mini lots.then at the start of week 17, theres should be $45,939.....if u continue this cycle till week 52...there will be 1,290,870 in the account...yes 1000%
caution....every trade will take up 10% of your account if using 100:1....or 5% if using 200:1....i personally will go with 200:1 because I'm not planning to have more that 2 positions open at any given time
there is a faster way of reaching that amount using the same concept....instead of changing the amount of lots u trade on every monday.....change your lot sizes every $1000 mark u pass up
I'm sorry if my examples suck....this is the 2nd time I'm attempting to post this tread....1st attempt was very detailed but someone exited the browser
so if anyone has comments or questions, don't matter if its smartass questions/comments or honest...please post
ps. i guess i left this out for the ppl that havent caught on....however many thousand dollars there is, that is the number of mini lots u open positions with.....lets say u have 56,700 in the account.....thatll be 55mini lots.....lets say u have 750,872 in the account...that be 750 mini lots
Last edited by escoe; 04-13-2008 at 02:17 PM.
Compounding 20 pips/day is great, but is that reasonable?
The idea of making 20 pips per day and compounding your money sounds deceptively simple. It might lead new traders into thinking that their profit targets for each of their trades should be 20 pips. (Actually 20 pips plus the spread.) From a Risk:Reward ratio, this type of thinking can be detrimental to your trading account.
Let's say that for every 25 pips you want to make, you are willing to risk 25 pips. You have a 1:1 risk:reward ratio. Now, since we all have losses, let's say that on your first trade you lose 25 pips. In order to realize a net 25 pips from where you started, you need each of your next two trades to net you 25 pips for a total of 50 pips. If you make only 1 trade per day, 3 days of you first week has elapsed. With only two days left there is no way that you will make the 100 pips per week following this trading plan.
However, if you change your risk:reward ratio from 1:1 to some higher ratio, let's say 1:5, then for every 25 pips you are willing to risk you will make 125 pips as a reward. Can you see the difference. If your first trade was a loss and you lost 25 pips, you have the same loss as the above example. If your next trade was a winner, and you made 125 pips, you are up 100 pips net and have made your weekly goal. As a matter of fact, you would no longer be tied to your computer for the rest of the week.
Compounding is great, but it has to be seasoned with the realities of trading.
I totally understand what you're saying and that is exactly what my money management strategy will be trying to accomplish. However, the only minor detail in all that is getting the 20 pips per day consistently which is not as easy as it seems it should be.
Why? Well from what I've experienced just in demo there's a lot of little psychologies going on in ones mind that need to be addressed first.
Even when you think an entry setup with it's confirmation is perfect, it can still go against. So then you try again but this time it's got a double motivation...make up the pips you lost and make the 20 pips you need...and that emotional factor seems to work against.
Then there's the "WOW...that win was great and I liked the feeling so let's do it again today instead of tomorrow"...and for some reason it goes against so then we gotta try and make it up or feel lousy until tomorrow.
Then there's the "I missed yesterday cause I was busy with life so I need to do 2 today" and, well, maybe it works, maybe it doesn't.
Not to mention there's the "I'm not sure this trade is going to reach 20 pips but it's at 10 so let's exit with some profit". Or "this looks like it could go more so let's wait" and then it reverses on you totally.
Finally there's the stoploss factor which says "the setup is perfect but maybe I need to give it just a little more room" and you blow your risk management.
There are more but that's a few.
What is working now is just to take it trade by trade, accept that there will be some losses, and not count the pip quota one needs per day, week etc. However, when my balance does reach those 1K milestones, then I do increase the lot size and I believe it will work out the same but in it's own good time.
Last edited by Sweet Pip; 04-13-2008 at 05:07 PM.
I was doing similar calculations yesterday, but I came up with something like this:
Start off with 10,000, make 10% per month. This seems more reasonable to me.
After 1 year you'll have $28,531.17
2 years - $89,543.02
3 years - $281,024.37
4 years - $881,974.85
5 years - $2,768,014.90
And so on. $100 million before you're halfway through year 8.
(Personally I'd split after my first few million, but hey.)
Of course the main problems are:
- You need consistent results over time for this to occur
- You are always reinvesting all of the money that you make and have 100% of your investment at risk.
- Not taking margin into consideration at all.
You could also be really pessimistic. Say you only expect to make a 1% return per month (12% per year, that's about what the stock market does).... suddenly instead of 5 years to make your first million, it will take you 58 years . Bit of a difference
Last edited by Yarcofin; 04-13-2008 at 06:16 PM.
yall are right.....but i wasnt telling yall how to make ur 20pips a day...
i may sound a bit crazy....but i think 20 pips is the easiest when ur only going for 5-10, maybe 20 on pairs like the gpyjpy using the 1hr charts...especially when u wait for the right candle........which throws risk/ratio out the window dont have to explain why....and i like to go for 30pips using dailys.....and I DO NOT USE STOP LOSS....STOP LOSS IS MAKE LOSS be confident about ur ****...but thats just me....ur wondering ''this guy is going to have -100pips when he was only going for 20''....come back the next day , positon doesnt look as appetizing, close it a take ur losses...52 weeks was jus an example....but then who cares
i read somewhere that says im not taking margin into consideration? elaborate cuz there is no way u can get margin called with one to 2 positions open when its5-10% of ur account...unless i die and nobody closes a bad position for me....but then who cares
and somewhere else i read something about bad days....remember this was all a big example....it may take alittle more time than exactly 52 weeks....and the key to this concept is to WALK AWAY AND DONT COME BACK TILL THE NEXT DAY...but then who cares
Last edited by escoe; 04-13-2008 at 07:41 PM.
Statistically, what is the difference if you notice a lot of great trends in a day and make 7 times more trades per day than usual, and make 140 pips in a day? I mean, as long as you aren't getting fatigued and making bad descisions, and as long as you are waiting for your current trades to close and keeping the same margin ratio, if the system just applies the same ideas to the same charts over and over, you should theoretically be able to go nonstop and speed up the process so that you make $1 million in far less than a year, if you really work your *** off.
Originally Posted by escoe
Unless I'm misunderstanding, and the point of walking away is to just set your "take profit" and "stop loss" and then let it do it's thing, to keep emotion out of the picture.
Last edited by Yarcofin; 04-13-2008 at 07:53 PM.
The problem with your strategy is simple. Its possible to lose 10, 15, 20 trades in a row. Its called tail risk. (normal curve)
Lets say week 10, you lose 20 trades in a row. Your account is now down 15 to 20%. Now you have to make up 30% or more to break even (back to week 10).
I'm not saying its not possible, but it will be very difficult.
That is assuming that your trades are normally distributed. Even so, you'd have to be SO unlucky to hit 20 bad trades in a row... like 3 standard deviations or more from the norm.
Originally Posted by Gavinstreet
Example: Flipping a coin 20 times and having it land tails 20 times, the probability is 1.2^20, or 0.00000095367431640625%
I realize that forex trading is not binomially distributed.. I don't know how it is, if at all.
"If if if". It's possible to do everything perfectly right and hit 50 or even 100 losing trades in a row. The chances may be a million to 1, but it's still there. It's equally as possible to win 20 trades as lose 20 trades, if all you are considering is chance and not the trading system itself.
The whole point of the normal distribution is that over time, your system should expect to perform as expected ______ amount of the time. Yes, you will have anomolies where sometimes you will win more than expected in a day or week, other times you will lose more than expected. But unless a statistical miracle occurs, you don't really have to worry about making 20 bad trades in a row.
But I'm no statistical expert so I could be wrong on this.
It's a good idea to keep a higher bankroll than you expect to need, maybe twice or three times as much, but having 20x seems quite excessive.
....I'm in no way claiming that making an average of 20 pips a day for 365 days in a row is any easier though.
Last edited by Yarcofin; 04-13-2008 at 10:02 PM.
FX trading is not random as your coin flip (or should not be just luck that you win and lose - Hopefully you have a better strategy), but that still doesn't mean your win and loses will not follow a normal distribution curve. Look at your trades over time. Go back back 200 to 300 trades and tell me it does not follow (very closly) to to normally distributed bell curve.
In the history of my trading, I've had 19 winners in a row and 14 losses in a row. 19 and 14 are on the tail end (3 std). I have had only one occurrence of this, but I've had several 7,8,9 and 10 losses / wins in row.
According to your math (0.00000095367431640625%), my 19 in a row doesn't statistically have a chance.
Remember, I didn't say your strategy didn't have a chance, i"m just saying its going to be very hard. I hope you losses come at the beginning and not the end.
Right now my record shows to be on a winning strategy like that to produce those results. Do I expect it to play out in the end... hell no! I think traders are more math and science guys (and gals). We look at short term numbers and predict a long term result by keeping with the same consistent level of performance. In the real world of trading, it just won't work out because of to many unforeseen variables that throw a wrench in the system. Oh well, big profit or little profit, being in the black at the end of the year is all I care about.
"Do what you can, with what you have, where you are!"