Can somebody please point out to me the flaws in this trading example I found because I dont exactly understand it and would love some answers.
Borrow $100 and open a foreign exchange account.
On Monday at 8:01am buy �8718 Japanese Yen. At 8:14am sell �8728, give�4 to your friendly broker, leaving �6 profit. Your broker allows you to leverage the transaction 58 times by lending you A$5,700.Your net profit is therefore �348 Yen or 3.5%.
In the next fifteen minutes,with equity of A$103.48, sell at �8730 and buy at�8712, grossing 18 pips (14 after deduction of brokerage spread). Your equity is now A$111.88
Repeat this process every 15minutes, selling high and buying low until close of business on Saturday morning. Your average profit per transaction is 3.3%, yielding a final balance of $A 1,087,061,600.
C’mon fellas: help the guy out (unless of course it’s a joke in which case I’ve been ‘caught’)!!! LOL!!!
Borrow $100 and open a foreign exchange account.
So far: nothing wrong there. ONLY $100 borrowed from someone I don’t think will ‘ruin the friendship’ and I’m sure you wont land up ‘floating face down in the East River’ for such a small amount BUT ONCE you have lost the $100 using your ‘trading system’ DO NOT go back for more!!!
On Monday at 8:01am buy �8718 Japanese Yen. At 8:14am sell �8728, give�4 to your friendly broker, leaving �6 profit. Your broker allows you to leverage the transaction 58 times by lending you A$5,700.Your net profit is therefore �348 Yen or 3.5%.
Herein lies the problem: what if you BUY 8718 Japanese Yen and by 8:14am it’s gone DOWN and is now sitting at 8618??? It can happen you know!!!
In the next fifteen minutes,with equity of A$103.48, sell at �8730 and buy at�8712, grossing 18 pips (14 after deduction of brokerage spread). Your equity is now A$111.88
See my comment above!!! Remember that in MY scenario given above: you’ve now ALREADY lost money. So now you realise that loss and you sell at the current price but instead of the price now going DOWN it goes UP??? Another loss. It can happen you know!!!
Repeat this process every 15minutes, selling high and buying low until close of business on Saturday morning. Your average profit per transaction is 3.3%, yielding a final balance of $A 1,087,061,600.
OK now by THIS time: you could quite possibly have LOST most, if not all, of your $100!!!
Repay the $100.
OR come up with a GOOD excuse for your losing it which, in all probability, will be SOMETHING like ‘you cannot make money trading’ or ‘my broker messed with me’ or ‘the market didn’t move the way it should have’ or …
Sorry iudsis but that’s not a ‘trading system’ at ALL but at BEST it’s ‘wishful thinking’ and at WORST it’s ‘a recipe for disaster’ because believe me: once your first $100 is gone you WILL source some more from somewhere and the end result will be the same I assure you. It’s NOT as easy as you think!!!
What you need to do REALLY is to go through these forums and read through them. You’ll find that people that have been here for YEARS are MAYBE only NOW making money.
And to be quite ‘harsh’ about it: if you’re not willing or able to go through the learning process (at least the VERY basics) then you’d in all PROBABILITY (no pun intended) be better off opening an online gaming account!!! (AND NOOOOOOOOO: that’s not an invitation to start YET ANOTHER trading versus gambling discussion EVERYONE ELSE)!!! LOL!!!
Isn’t that true (about it working on a demo account)!!! LOL!!!
But I’ll tell you something else that may be very frightening:
I recall reading on Chuck Lebeau’s website (I think it was anyway) that some guy had actually tested simply taking random entries and apparantely as long as stops were used (ATR or volatility based stops) a profit was made. Go figure.
Brokers are friendly? My broker just likes my money, I guess, lol. I do not even get christmas cards as with all my other business partners. :rolleyes:
I’d not start with less than 1k in any account. But thats based on my preference. Exactly the risk I can manage with a good deal of chance while collecting experience …
