How much do you make on your trades? And how do you do it?

[akollen]

Hi everyone,
I started trading 4-5 months ago, using www,oanda,com. At first I had little/no idea what to do, but Babypips has been really helpful! At first I made some losses, but eventually understood the game and I started to make money instead (this is just a demo account).

I had to stop for a couple of months because I spent to much time on it and exams was coming up...

Two weeks ago I started trading again. I started fresh by depositing £10,000 to my demoaccount. After just a few days of trading I am up more than 33%. I traded 2-3 days last weeks and a couple of days this week. My leverage is 50:1, and I buy/sell 100,000 units at a time.

Is this good or bad? I'm thinking that if I keep this up I would make quite a lot over a whole year... But maybe you guys are making even more??

I would like you to comment on my strategy. Is this something that would work for long or am I just being lucky?
This is how I do it:

I look at pairs/crosses that have a defined price increase/decrease over the last couple of months. Then I look for the ones that are volatile. Like, if the price overall is falling, I sell when I think the current price is at the highest and about to fall again. Not very well explained, I know, but I hope you understand.... If the price is continuing to rise, I wait a bit before selling even more. I can do this 4-5 times before the price then falls. I can have large unrealised losses, but I keep selling because I know that it will soon fall again.

I haven't lost anything by doing this, I've made£3-400 on every trade, which isn't bad for a few hours work.
So what do you think? Am I just being lucky or do you recon I can continue like this?

I appreciate all kinds of comments!

Thanks!

[akollen]

Just want to add something... What I really like is sudden movements either up or down, because they are usually followed by an reversed movement to get back to normal. I try to trade before it really turns, and then just continue to buy/sell till it actually turns and I make money the whole way back to normal price

[MerryPipMess]

What if the price never reverses, do you have a concrete plan for when to pull out? What will your loses be? Are you measuring those statistics trade by trade? Or going with your gut?

Also, the emotional and psychological aspect of "real" money trading will probably destroy you, as it does to many many many traders when they make the leap.

Happy Trading

[jollygreenfello]

You should probably lower your leverage. Yea, 50:1 can make you alot of money, but you can also lose money even faster. If you have a significant drawdown with 50:1 could destroy your equity. It would probably be better to only risk 2% of your account per trade. You want slow steady growth, you don't want to gamble it all away.

Or you can stay overleveraged and go down the same path as the 95%.

[HyperScalper]

What if the price never reverses, do you have a concrete plan for when to pull out? What will your loses be? Are you measuring those statistics trade by trade? Or going with your gut?

Best approach is to take "staggered" Micro or Mini sized lot entries so that as price moves against you, you will not experience much in the way of adversity. Also, this will help you not to be too eager to Stop Out. Stop Outs, ironically, can be your worst enemy, since you must be willing to experience some price adversity or risk, until you can take profits. Unless you Stop Out, you haven't (yet) lost the money. In an ironic way, Stops can be Hazardous for your trading by encouraging you to "give up" too soon. In other words, don't get Over-Committed in a position too soon, but commit yourself with little "nibbles" and average both your entries and your profit takes. Hope this helps! HyperScalper.

[RainMan]

What you are doing is called scaling into a losing position. Price moves against you, and you add to the position, hoping the price will turn around. Done correctly, it can give you a nice overall averaged entry price. But, as MerryPipMess said, the problem with that is if the price doesn't turn around, you are screwed.

Rule #1 absolutely don't add to the losing position after price breaks a major S/R level.

Rule #2 set your absolute stop loss before entering. Don't move it.

Rule #3 the sum of all open trades should not be more than 1% or 2% of your account, or whatever % you are willing to risk at a time.

As an example of how bad it can get, look at the former #1 trader on Zulutrade, Forex Cruise Control. He messed up bad during the massive sell-off of the GBP/USD starting early May 2012. He has 6 losing open trades right now, totaling nearly 6000 pips in drawdown down.

How could a 6000 pip drawdown happen? May 17 GBP/USD broke down through 3 months support. FCC broke Rule #1, and kept adding to his losing long position all the way down to the next support level 200 pips below. Price broke that level and shot down further, over 300 pips in 3 days. If closing the position now, his drawdown of 6000 pips would wipe out 13 months of profits.

I'll say it again in bold, red text. It would wipe out 13 months of profits.

Today, June 2, price is near the 5 month support way at the bottom, over 600 pips from his original entry. Will it bounce back all the way up 600 pips and he can break even? Or maybe it will shoot down through support a few more hundreds of pips.

I'm assuming you're trades were long EUR/USD or GBP/USD so any losing trades eventually turned around for you in this massive sell-off. But what if this sell off turns around, prices shoot up for a couple months, and you keep opening short trades?

[HyperScalper]

What you are doing is called scaling into a losing position. Price moves against you, and you add to the position, hoping the price will turn around. Done correctly, it can give you a nice overall averaged entry price. But, as MerryPipMess said, the problem with that is if the price doesn't turn around, you are screwed.

You make some very good points. Lots of people call this "scaling into a losing position". But I'd like to clarify one thing: WHILE you are scaling in, as price moves against you, you have NOT YET acquired your full position. So, you are in the PROCESS of ACQUIRING your position until you achieve your Goal position size. Only AFTER that would you be scaling into a "losing" position. Until you have acquired your position, which you should do as part of a process, I'd suggest; not until you have acquired your Goal Position size could it be said that you're scaling into a losing position. Instead, that's just the process I use to acquire my initial position. If, after that, I decide to further "defend" my position as market is moving against me, only THEN can it be said that I am "throwing good money after bad" or defending a losing position. Not trying to split hairs here, just pointing out that acquiring a position should be a PROCESS and not a discrete EVENT. But all that you say about "over exposure" and potentially taking large losses, all of that is certainly something you should have a plan to cope with. Any strategy should have its hard limits, and sometimes it's necessary to Run Away from a position and take significant Losses, to prevent the ruination of your account. Thanks !

[akollen]

You should probably lower your leverage. Yea, 50:1 can make you alot of money, but you can also lose money even faster. If you have a significant drawdown with 50:1 could destroy your equity.

Hi, thanks for your reply
What leverage do you recommend? I believe 50:1 is the lowest offered at Oanda...(?)

akollen

[akollen]

Just want to say that you all make some good points here. I do not want to gamble (too much) with my money and suddenly loose it all. Of course, there is risk associated with trading, but I would like to minimize that risk...

I'm currently using fake money because I want to be a bit more familiar with all this before I start using my own money. I want to find a good strategy that works for me.

As a way of diversifying the risk, I can trade several pairs at the same time. Instead of one big win/loss, i can aim for several smaller wins and therefor also smaller losses. And the wins will hopefully cancel out any losses.

In a way I find it a bit difficult to set a stop loss on these trades, since I don't know how much they will move up before going back down or vice versa. I don't want to give up too soon and than miss out on the big profits. But at the same time I don't wan't to stay in for too long and potentially wipe out months of profits.

To go back to the title of this thread... How much do you usually make on your trades? In $ or %. What is normal profits on each trade or each trading day? What leverage do you use and how many units do you buy? Finally, how many different trades have you open at the same time? Do you prefer one or two specific pairs or do you like to trade on 4-5-6 different ones at the same time?

Thanks for all your comments, It is very helpful

[MoneyNVRSleeps]

With My system, and money management, I want spread + 2 pips, Im happy, NEXT

1 trade at a time,
My daily goal is 5%
5/1 leverage
I master one pair at a time, as EU offers what I need, I look no further.