Great Expectations

Hello All,

I heard about the wonderful world of Forex from a skinny Swedish man on a plane to Europe. The notion that I, a young, riotous student, could make tons of money without ever going to work, or ever actually use my diploma intrigued me. So I opened an account…and then another account and here I am two weeks later sleep-deprived, overwhelmed with information, and most of all hungry.

It’s not all bad mind you, I’ve had some big wins…I’ve had some smaller wins, but one thing I can’t seem to do is keep those (and some of my own) pips inside the fences!

I’m fresh out of the “School of Pipsology” and there are more indicators on my charts than there are barnacles on a cruise ship!

If we are to become traders that can lift our hands off the handle bars and scream “LOOK! NO HANDS!” at the top of our lungs and not crash; how do we get that good?

I’m all about learning from other people so post your mistakes that you have made, or things that have made you successful in the past…

Now you’ll have to excuse me, it looks as though some of my bollinger bands are about to explode into all the things I ever wanted…

By setting [B]REALISTIC[/B] expectations

It really is that simple.

+1

If only more people would heed that sage advice…

But what are realistic expectations for a new trader?

Is it a winning percentage or profits?

For example; I’m winning just about 50% of my trades, but my losing trades are a larger value than my winning ones…

This is a difficult question to answer. Personally, I measure myself against both pips and percentage gain on my account. I know from experience I will average around 500 pips a week. However, I trade small percentage of account balance lot sizes… typically 0.1% and multiples thereof on a single trade. So although I average 500 pips a week my account will only show a 5% average gain week on week.

This week has been a good one so far… Monday through Thursdays total 948.2 pips for a 9.48% account balance gain. :slight_smile:

EDIT: For a newb, I would suggest looking to the pip count. If that in plus figures the profit factor will take care of itself. Keep your trade size small relative to your account balance… 1% and under and cut your loosing trades quickly!

How do you manage that?

This week has been a rough one. Timing is not my strong suit just yet.

Try measuring yourself against R multiples (your initial risk).

That is to say, if your initial risk is 50 pips, and you profit 50 pips on your trade, you have earned 1R.

If 1R is always 1% of your account, then for every R you profit in pips, you will add 1% total equity to your account.

This gives you an accurate way to gauge your progress with varying stop losses, as opposed to counting profit or loss solely in pips.

Yes, someone may earn 500 pips a week, but if 1R = 500 pips on that trade, it is essentially the same as someone whose 1R was 20 pips and profited 20 pips.

Rough is a relative term in FX. :smiley: I trade only EU and sometimes GU… there have been no high impact news events this week just price action within fairly pre defined parameters of hi and lo on the daily TF (currently ranging and as I write this (23:17 GMT) dead center of daily range pre Asian). If you know how the game is played out within those two extremes the rest will follow. :wink:

I don’t think so… 50 pips the wrong way and I’d already be out of the trade. :smiley: Almost all my trades are off the 1h & 4h, triggered off an enrty/ exit on the 15m. Some for a 20 pip move, some for perhaps a 50/75 pip move. All dependant on the set up on daily, 4h and 1h. Typical SL will refect this.

My R1 would be my stop loss correct?

I was just trying to exemplify that 1R will be different for each trader. Many people who trade off just daily time frames may have an initial stop much larger than 50 pips.

Obviously, you trading off the smaller time frames allows you to keep a tighter stop loss and look for higher probability entries.

In the end, 1R is 1R is 1R.

For example, Trader A is able to find an appropriate entry with a stop loss of 10 pips. Trader B finds an entry that requires a 30 pip stop loss. Both traders risk 1% of their account on the trade and they both take profit at 30 pips. Trader A has just earned 3R or 3% return on total equity while Trader B has earned 1R or 1% return on total equity.

If this trade occurs 5 times, Trader A will have grossed 15R or 15% while Trader B has grossed 5R or 5%.

They both earned the exact same amount of pips (150), but show a 10% difference in profit.

No not really. This is the typical guff you get peddled by your broker. Its more complicated than that. You will rarely get a 3:1 RR in the real world except perhaps a longer TF trade, where you will see your pip count go ±+ etc.

If you PM me and I’ll give you a few pointers of how PA really plays out. :wink: Will get back to you over the weekend… calendars pretty full. :slight_smile:

EDIT: Don’t play the Asian… but looks like EU is a break to the downside. Entry around 1.3465, TP1 1.3440 after that who knows? :smiley: I’ll wait till Frankfurt/London.

RC the man with a new plan every time he shares one:D

sounds like a good week.

To the OP keep the trade size real small try and get 1 or 2% a day if you trade every day. Remember that will [B]not[/B] be met every day. You may average .5% a day or just breakeven at the start thats not a bad place to start.If your plan is working keep it consistent through the bad spells. If your trades are sized right you will come out of a bad spell with a little lower balance but still in the game.

Another thing to think about and this is probably more important then your daily or weekly goal is what will you allow yourself to lose. How many trades can you lose and still trade before you take a break. Someone with a lot of experience might be able to keep trading a losing streak and stick to the rules. You might not find that so easy. Money management is what keeps you trading and its one of the few things you have control over.

Thought I was consistant? :smiley: Been banging on now about trading the longer TF’s across hi/lo for what is it now… 2 years?

This 1R stuff is nice. I’ve started trying to use Fib Ret. sometimes I’m bang on, and am not brave enough to see the trade through, and other times I’m way off and am smart to get out.

Sell GBP/USD @ 1.56000 TP?

I just took the semester off of school to trade! Got any tips…other than get back in school. Where should I spend my days learning? Any books? Any internships…

Learning Center

That’s the nature of forex, you WILL get different ratios each week, each day even, don’t force yourself to hit a certain %, just not feasible.

Thank you, I am a sponge for information :slight_smile:

You’re hilarious, and I’m in the same boat, but I’ve been working on the “no hands” thing for 5 years!

And would you consider yourself there…yet?