Does the "system" matter - money management is key

[cgrey]

Friday, 6-June

EUR/USD: No Trade
USD/JPY: No Trade
EUR/CHF: + $5.63
GBP/USD: + $5.80
EUR/JPY: + $5.46
USD/CHF: + $5.58
USD/CAD: + $5.69

Today's +/- : + $28.16
Today's ROI: 4.84%

Account Summary:
Starting Balance: $500
Current Balance: $609.70
Goal: $590.88
+/- vs. Goal: +$18.82
Winners: 21
Losers: 0

[cgrey]

Monday, 9-June

EUR/USD: + $6.10
USD/JPY: No Trade
EUR/CHF: No Trade
GBP/USD: No Trade
EUR/JPY: + $5.79
USD/CHF: No Trade
USD/CAD: + $5.99

Today's +/- : + $17.88
Today's ROI: 2.93%

Account Summary:
Starting Balance: $500
Current Balance: $627.58
Goal: $611.07
+/- vs. Goal: +$16.51
Winners: 24
Losers: 0

[cgrey]

At this point, we are caught up. From now forward, I will post once daily, with three "sections" to each post - Yesterday's results, today's orders and account summary, beginning with Wednesday, 11-June:

Yesterday's Results (Tuesday, 10-June):

EUR/USD: No Trade
USD/JPY: + $5.89
EUR/CHF: + $6.12
GBP/USD: No Trade
EUR/JPY: + $5.91
USD/CHF: + $6.11
USD/CAD: + $6.12

Today's +/- : + $30.15
Today's ROI: 4.80%


==============================
Today's Orders:

Pip Value ("Volume" field when placing trades in MT4): 1.32

EuR/USD: SELL STOP at 1.5410, TAKE PROFIT at 1.5405
USD/JPY: BUY STOP at 107.39, TAKE PROFIT at 107.44
EUR/CHF: SELL STOP at 1.6112, TAKE PROFIT at 1.6107
GBP/USD: SELL STOP at 1.9512, TAKE PROFIT at 1.9507
EUR/JPY: BUY STOP at 166.38, TAKE PROFIT at 1.6643
USD/CHF: BUY STOP at 1.0438, TAKE PROFIT at 1.0443
USD/CAD: BUY STOP at 1.0237, TAKE PROFIT at 1.0242

==============================

Account Summary:
Starting Balance: $500.00
Current Balance: $657.73
Goal: $631.85
+/- vs. Goal: +$25.88
Monthy ROI: 31.5%
Winners: 29
Losers: 0
Currently Open Trades: 0

[cgrey]

Notice a few interesting things... I'm "winning" only a few dollars at a time. Doesn't seem like much, but I've already increased the account balance by almost 34% (over $150) in only 7 days of trading so far this month. All on relatively safe trades. Of the 29 trades so far this month, there have only been two that didn't close (at TP) the same day they were opened, and both of those closed the next day. The longest any one trade has been open since I started this "strategy" in April has been 5-days.

Also, see how the same pairs, making the same 5-pips each day, are quicky increasing their daily wins (in dollars)? EUR/CHF, for example, was a $4.86 winner the first day of the month, and yesterday the same 5-pip win was worth $6.12.

As I said earlier, I really don't think my system for arriving at the specific price levels for when to enter and which direction have much to do with the success so far. Any system that will get you in to a trade in the direction of a major trend (this *IS* important, to increase the chances that those occasional trades that don't open and close the same day will eventually come back in the right direction) at a logical price level to enter at should prove equally successful if this money management plan is adhered to. It will be interesting to track the results of this experiment as it moves forward through June and in to future months. I intend to continue this thread at least through July or even August, after which if it proves to continue successful, I will open a live account to trade this system exclusively in (and maybe open a new/separate journal for it). I will, as I mentioned at the beginning of this thread, "withdraw" half of any profits made on the last day of the month, and start "day 1" of the next month with what is left as the "opening balance" for the month, on which all the calculations will be based (the "goal" each month will be to double the account).

[cgrey]

The attached file (ZIP format, unzip it to use) is the spreadsheet I use for this strategy.

There are a number of fields that are calculated automatically, such as daily totals, balances, pip value, ROI, etc. It also shows the results through today (including for Wednesday, 11-June) which I will post as part of my daily update later tonight.

[cgrey]

While I am focusing this topic mostly on the specific money-management plan I am using in a current demo account, I have some random thoughts about personal trading styles.

The strategy that I am using here works very well for me, because of my personal trading style. This strategy isn't likely to work for someone who has a vastly different style than mine, or has a different long-term goal in Forex.

Someone, for example, that craves the "action" of being in a dozen trades a day and has the time to constantly watch his/her trades will probably not be interested in a style like this. It works for me because:

1) I have a full-time job, and don't have a lot of time to sit and watch the market all day. I spend a total of 15-20 minutes each day determining my trades, a few minutes placing my orders, and a few more updating my results. In total, I invest about 30-minutes per day in my trading.

2) My goal is slow, steady growth. I don't need a strategy that has an occasional "big trade" that can earn several hundred pips. I realize, and accept that with this strategy, I will never have a win of more than 5-pips on any one trade.

3) I treat my strategy as the "big picture". Individual trades aren't thought about. What matters to me is where am I at the end of the day/week/month. And that sort of relates to my "no stop loss" approach. I am using a small account by most standards. If I blow up a $500 account, that was my investment, my "risk" on the way to hopefully a greater reward. I don't see this differently from someone who is trading a much larger account and has a $500 loss one day. It is the cost of doing business - the risk associated with Forex. I'm confident enough in my strategy that while this account may have been wiped out, my overall "bank" hasn't. There is a difference, and to me, one of the biggest steps forward that I've taken over the past year or so is getting past the "stigma" of blowing up an account. Just don't let it be an amount of money that you can't afford to lose. It's an investment, just like any other that carries no guarantee that it won't lose some, or all, of what is put in to it.

4) It doesn't take long to be using someone else's money to make me money - isn't that one of the keys to being successful in any venture? After just a couple of months (one, if I'm REALLY lucky), I will have been able to withdraw my initial investment, and have every cent back that I started with, and still have an account to place trades against. Over time (I'm patient), this account can grow to the level that 0.2% of my account may be $100/pip instead of $1/pip. As long as I'm taking some small profits every month, once my initial investment has come back out, it's a free ride. If I have three more months of profits and blow up the account on the fourth month, I've still gotten more out than went in.

[cgrey]

Yesterday's Results (Wednesday, 11-June):

EUR/USD: Canceled - daily goal was hit at morning check-in
USD/JPY: + $6.14
EUR/CHF: - $7.62 ***
GBP/USD: + $6.60
EUR/JPY: + $6.14
USD/CHF: + $6.32
USD/CAD: + $6.44

*** At the morning check-in, the sum of all the winning trades that had closed overnight had made my goal for the day. EUR/CHF was open and showing a small loss. Subtracting the current loss from the total winnings still had me above goal, so it was closed for the loss. Had I left it open, it would have gone on to reach TP a few hours later, but the rules are the rules...)

Today's +/- : + $24.02
Today's ROI: 3.65%

==============================

Today's Orders:

Pip Value ("Volume" field when placing trades in MT4): 1.36

EuR/USD: No Trade
USD/JPY: BUY STOP at 106.89, TAKE PROFIT at 106.94
EUR/CHF: SELL STOP at 1.6012, TAKE PROFIT at 1.6007
GBP/USD: SELL STOP at 1.9612, TAKE PROFIT at 1.9607
EUR/JPY: BUY STOP at 166.38, TAKE PROFIT at 1.6643
USD/CHF: No Trade
USD/CAD: BUY STOP at 1.0237, TAKE PROFIT at 1.0242

==============================

Account Summary:
Starting Balance: $500.00
Current Balance: $681.75
Goal: $653.33
+/- vs. Goal: +$28.42
Monthy ROI: 36.35%
Winners: 34
Losers: 1
Win%: 97.06
Currently Open Trades: 0

[Sweet Pip]

Hi cgrey,

Yes I totally agree with the money mgt side of things...I too have the same sort of goal and a spreadsheet to tell me when it's time to increase the "volume", trying to achieve a 4% increase every trading day. Only I don't plan on taking any out for a year or 2...wonder how the broker (IBFX) will react should we reach those "hundreds of mini lot" positions

I too have been in the process of finding that "system", that will tell me where that "logical" place is to pull the trigger, and after trying many different systems, I believe I have found it ...just testing the limits of the rules to analyze the weaker & stronger signals and plan to go live at the end of the month.

(Meanwhile, I'm on the "Post OZ support group" thread.)

[cgrey]

Originally Posted by Sweet Pip

Hi cgrey,

Yes I totally agree with the money mgt side of things...I too have the same sort of goal and a spreadsheet to tell me when it's time to increase the "volume", trying to achieve a 4% increase every trading day. Only I don't plan on taking any out for a year or 2...wonder how the broker (IBFX) will react should we reach those "hundreds of mini lot" positions

I too have been in the process of finding that "system", that will tell me where that "logical" place is to pull the trigger, and after trying many different systems, I believe I have found it ...just testing the limits of the rules to analyze the weaker & stronger signals and plan to go live at the end of the month.

(Meanwhile, I'm on the "Post OZ support group" thread.)

Hi SweetPip...

I've thought about just letting it ride/compound month after month. Mostly, I came up with my plan to take some out for two reasons. First, as a small reward for myself, to help keep me motivated , and second, because my "no stop loss" strategy is risky, if I do blow up the account, at least I'll have taken some of it out (maybe even ended up with a profit) if/when that should happen.

Hundreds of micro lots.... hehehe.... By then, I'd switch to "mini", and maybe even a full account someday

I followed the OZ thread for a while - shame what happened there. I don't think I've read the "support group" - I'll have to check it out tomorrow. I demo'd OZ for a while, but the style didn't quite suit me. Mostly, I don't want to be up in the middle of the night to move stops and close positions, and I've heard the couple of different EAs there were didn't have a whole lot of success. My 30-minutes-a-day strategy has really been working with my schedule and lifestyle - hopefully the flow of pips, however slow it is, will continue...

Thanks for your comments - good luck in your quest...

[cgrey]

Yesterday's Results (Thursday, 12-June):

EUR/USD: No Trade
USD/JPY: + $6.36
EUR/CHF: Canceled - daily goal was hit while this trade was still pending
GBP/USD: + $6.80
EUR/JPY: + $6.29
USD/CHF: No Trade
USD/CAD: + $6.64

Today's +/- : + $26.09
Today's ROI: 3.83%

==============================

Today's Orders:

Pip Value ("Volume" field when placing trades in MT4): 1.42

EUR/USD: SELL STOP at 1.5410, TAKE PROFIT at 1.5405
USD/JPY: BUY STOP at 108.39, TAKE PROFIT at 108.44
EUR/CHF: NO TRADE
GBP/USD: SELL STOP at 1.9412, TAKE PROFIT at 1.9407
EUR/JPY: BUY STOP at 166.88, TAKE PROFIT at 166.93
USD/CHF: NO TRADE
USD/CAD: BUY STOP at 1.0238, TAKE PROFIT at 1.0243

==============================

Account Summary:
Starting Balance: $500.00
Current Balance: $707.84
Goal: $675.55
+/- vs. Goal: +$32.29
Monthy ROI: 41.57%
Winners: 37
Losers: 1
Win%: 97.37
Currently Open Trades: 0