Making a living from forex only?

[bazooko]

I find this post to be vary depressing. Why are so many people out there learning how to invest in the forex if they don't think they can make a living out of it? When I am coaching my son's soccer team I always hear "I can't do that!" Well I am saying the samething to everyone here. "The human brain can only do what you tell it to do. If you think you can do it then you can, if you think you can't do it then there is nothing anyone can do for you. Except yourself!" And that is "Change your thinking!" People make a living off of Stocks, Bonds, Real estate and some even start a business making shoes. The fx is just like any other business, except that you don't have to go and find a buyer for your product. Do you think that the shoe maker sits in his office worried that he didn't sell 100 pairs of shoes today. Or does he think this is a slow month I will make it op later in the year. If you don't want to make a full time living off of the market, what ever it is, then that is your choice. But if you think that you can't make a living off of the market then do yourself and us a favor and get out now befor you lose everything and then complain to your friends that you blew all of your money on some stupid dream.

[RoddyPipper]

Originally Posted by PipVentures

Im not understanding why everyone is talking about pips/day. You can bet a larger amount of lots and make a living on 1 pip/day.

Keyword there is "bet". Betting is gambling not trading. There's another thread here comparing forex to poker. Personally I see it more like blackjack. When I play blackjack I'm counting cards. Card counting doesn't help me win more hands but it helps me judge when the deck is in my favor. This lets me decide whether I should bet high or bet low. It's risk management. Forex is the same. Professional traders lose 50-60% of their trades but still manage to come out ahead because they take profits greater then their losses.

Originally Posted by PipVentures

If you trade 10 standard lots/trade then you are at $100/pip. Now if you make 3 trades during the day which leave you with 1-2 pips then you can be making a living off of 1-2 pips.

You also start the trade at -$300 on a small 3 pip spread. You start every trade minus the spread and some can be a big spread so how far negative do you allow it to go before you cut your losses? A profit target of only 2 pips with a 20 pip stop is dangerous especially considering the odds. This is just my opinion but i would much rather manage the risk and trade when the risk:reward ratio was in my favour at least 1:2 instead of against me 10:1. Take a look at Elang's 6 day trading report. He's got 52% losing trades but still made $2680 in those 6 days. If the average trader is losing more often than winning they need to make alot more than 2 pips per trade to stay ahead of their losses. This is the second time i've pointed out Elang's losses. Hehe, sorry Elang.

Originally Posted by PipVentures

On the other hand, if you are trading mini lots and only trade one mini lot/trade then you are at $1/pip. You can make 18-20 pips and only have $20 a day.

So why ask, "how many positive pips each day do you really need to average in a week?" You dont need alot of pips, just the right trades with just a couple pips can make a lot?

While finding the right trades you'll still find bad trades. If you pass on a trade because it doesn't look right then goes good you've missed it. If it looks perfect then goes against you you've lost. There's no such thing as a perfect trade setup. If you keep looking for one you're already doomed to fail. If there was perfect trades no one would ever lose a trade. It's easy to say "just the right trades" but until you've completed the trade from entry to exit you can't honestly know if it's "just the right trade" or not unless you have a crystal ball of forex predictions and if you do ... I want it.

Scale up the position size as your account grows just don't risk more than 1% or 2% depending on your trading plan. Start with one lot until you can increase to two, then three, then four, etc. I prefer to go up in multiples of two and have multiple profit targets and trail the stop but that's me. We all have to have our own trading plans. Increasing the position size while staying within the risk boundry of your plan allows you to do what you're suggesting without the dangers of scalping and make more money for fewer pips while still keeping the risk manageable. It just takes time, practice and patience to get there.

Originally Posted by PipVentures

P.S. I understand that Roddy did say that this was based on "1 standard lot" which of course bring in 180-200 dollars per day. What I am wondering is where all the 100 pips per day, or 5-10 pips per day systems come into play.

That was just an example. The 100 pips per day and other systems are all part of specific strategies other people have devised as part of their trading plan. For example, I introduced a friend to James' 40-100 per day IB system last week. She's made some alterations to work within her trading plan and comfort zones. She's used it for 3 days so far. The first one she made some mistakes getting used to it and took some loses. The next day 96 pips for the day from 3 trades. All the previous days losses were covered and then some. On the third day over 130 pips from I think she said 4 trades. She's trading on the 15 minute chart and making a few small trades to build up the 40-100 pip average of James' system. I'm pretty sure that's how everyone in his trading group is doing it also. Then there's the EMA Step system also on the forums here where they're making a couple hundred pips from single trades off a daily chart. In both, the profit targets are always greater than the risk(entry-stop).

Originally Posted by PipVentures

It seems that what matters is that you come out more often then you come out below. If you can do this then trade off more capital and you will make more money regardless of how many pips you make.

I don't scalp so maybe I have no idea what I'm talking about but it seems to me that scalping is dangerous because your risk is always greater than your reward. If you can get good at it so it works for you then great but I'd prefer to have the odds in my favour. Scalping 1-2 pips is really 5 pips or more when you factor in the spread and I've seen trades never go positive before especially with the larger spreads. When do you cut the bad trade off and how many 1-2 pip trades after that do you have to win without losing again to recover the lose of that one bad trade?

When people talk about risking 1% or 2% of their capital they're referring to the difference between their entry and thier stop. Trading multiple lots you can take profit early and move your stop reducing that difference until it becomes 0 or even a positive value and let the remaining part of the trade go as far as it can. If it doesn't go anywhere you take a 0 because the risk and the spread have both been covered already when you moved the stop. If you haven't moved the stop you take a small loss. The next good trade with a profit target twice the risk means you recover the whole lose of the one bad trade and then some with the one good trade. This is what seperates forex traders from forex gamblers. The traders look at the big picture, assess the risk vs the reward, set preestablished entry, stop and exit points before entering the trade. Check out Pipcrawlers Pick's of the Day. He always knows entry, stop, target 1 and target 2 before entering. He knows exactly what he's risking before opening the trade. The gamblers bet it all and pray they don't lose it and we've probably all heard how 90% of people that try this lose and give up.

[PipVentures]

Originally Posted by RoddyPipper

Keyword there is "bet". Betting is gambling not trading. There's another thread here comparing forex to poker.

OOp's I used that word again

You also start the trade at -$300 on a small 3 pip spread. You start every trade minus the spread and some can be a big spread so how far negative do you allow it to go before you cut your losses? A profit target of only 2 pips with a 20 pip stop is dangerous especially considering the odds. This is just my opinion but i would much rather manage the risk and trade when the risk:reward ratio was in my favour at least 1:2 instead of against me 10:1.

Thank you Roddy. THis is what I was getting at. Now I understand. What I am talking about is probably defined as scalping and very risky.


She's trading on the 15 minute chart and making a few small trades to build up the 40-100 pip average of James' system. I'm pretty sure that's how everyone in his trading group is doing it also. Then there's the EMA Step system also on the forums here where they're making a couple hundred pips from single trades off a daily chart. In both, the profit targets are always greater than the risk(entry-stop).

Now here though I will say that this is incredible! Even if you were to follow Rob Grespi you would only average about 10 pips per day (if not Im sure Im close) which I would say is a very safe number. Then you just increase the trade amount as your account increases.

I don't scalp so maybe I have no idea what I'm talking about but it seems to me that scalping is dangerous because your risk is always greater than your reward. If you can get good at it so it works for you then great but I'd prefer to have the odds in my favour. Scalping 1-2 pips is really 5 pips or more when you factor in the spread and I've seen trades never go positive before especially with the larger spreads. When do you cut the bad trade off and how many 1-2 pip trades after that do you have to win without losing again to recover the lose of that one bad trade?

Again, I think maybe this is what I was talking about and I now see that this would be very dangerous because if you are only trying to make 3-5 pips on a trade, then your stop should be no more then what you are trying to profit. If you calculate the spread, you only have room to go down 1-2 pips before you are stopped out. There does not seem to be enough room to play.

Thanks for the help Roddney. Have a great day. Ill have to check out James system also.

Mike Lewthwaite


P.S> It just hit me, About the 100pips per day system. I think I understand now. If you want to make a 100 pips per day and you are making 1-3 trades, then you have to have larger stops and therefore larger risks to make these pips. Therefore if you have a 10,000 account using standard lots with stop losses at 50 pips your risk/trade would be 5% (on the high side for money management). Now if you had 50,000 in your account you would be at 1% risk which is much more comfortable.

This money management in limitting your risk also limits your profit/pip so that you can either make alot of pips or less pips, but using the same risk/trade you will make the same amount of profit per trade regardless of the number of pips.

Is this correct??

Thanks Again

[pipo]

Well, I don't know how everybody did perform lately but I have to say that I have some answers regarding either it is possible to make a living from FX or not.
I did open a new demo account last week on monday (this is my 2nd month training)
As I am based in Japan I opened the account in Yen and with a 2 Millions account (Which would correspond to a 20,000 USD account if I did open it in USD, not calculating the exchange rate)
I followed my "own" way of trading I developped during the previous 4 weeks and ended the week with a over 12 millions Yens account!
This is insane!!
Although I am aware I could have made much more if I simply stayed front of the PC during the night (which correspond to USA trading time for us here)
I simply cannot still believe how quick and big the money it produced (I am aware it can goes the same way negative of course)
Now I am on my 10th day after opening the account (only a demo ) and it got over 15 millions yens.
I would love to share the number of pips I made for each day but simply cannot understand the way to read the GFT report (if someone knows how to read it?)
My previous pratice was pretty positive but certainly not as current one since the market is very volatile currently.
To confirm my trading strategy I did open a new account with similar value (2 million yens) and did manage to raise equivalent of a japanese monthly salary within 1 hour.
I start to love FX for sure!

[Moni-Q]

Originally Posted by bazooko

I find this post to be vary depressing. Why are so many people out there learning how to invest in the forex if they don't think they can make a living out of it? When I am coaching my son's soccer team I always hear "I can't do that!" Well I am saying the samething to everyone here. "The human brain can only do what you tell it to do. If you think you can do it then you can, if you think you can't do it then there is nothing anyone can do for you. Except yourself!" And that is "Change your thinking!" People make a living off of Stocks, Bonds, Real estate and some even start a business making shoes. The fx is just like any other business, except that you don't have to go and find a buyer for your product. Do you think that the shoe maker sits in his office worried that he didn't sell 100 pairs of shoes today. Or does he think this is a slow month I will make it op later in the year. If you don't want to make a full time living off of the market, what ever it is, then that is your choice. But if you think that you can't make a living off of the market then do yourself and us a favor and get out now befor you lose everything and then complain to your friends that you blew all of your money on some stupid dream.

Good post. What you just said really put things into perspective. Once you're in business for yourself there is ALWAYS going to be pressure to perform at a certain level in order to sustain your income. If you don't have the mindset to handle that kind of pressure (and to know when to not let it get to you), then youre probably better off sticking to a 9-5 job where you are sure of a paycheck whether rain or shine. The same is true of any business, though the risks may be greater in fx trading. Business Owners/Entrepreneurs by their very nature usually have a strong appetite for risk. One needs to evalute one's own appetite for risk in deciding whether or not this field is for them.

[topgun]

Excellent post. It almost sounds like you wrote the current book that I'm reading which is "Think & Grow Rich by Napolean Hill ". If you think you can't than you have already failed.

Topgun

Originally Posted by bazooko

I find this post to be vary depressing. Why are so many people out there learning how to invest in the forex if they don't think they can make a living out of it? When I am coaching my son's soccer team I always hear "I can't do that!" Well I am saying the samething to everyone here. "The human brain can only do what you tell it to do. If you think you can do it then you can, if you think you can't do it then there is nothing anyone can do for you. Except yourself!" And that is "Change your thinking!" People make a living off of Stocks, Bonds, Real estate and some even start a business making shoes. The fx is just like any other business, except that you don't have to go and find a buyer for your product. Do you think that the shoe maker sits in his office worried that he didn't sell 100 pairs of shoes today. Or does he think this is a slow month I will make it op later in the year. If you don't want to make a full time living off of the market, what ever it is, then that is your choice. But if you think that you can't make a living off of the market then do yourself and us a favor and get out now befor you lose everything and then complain to your friends that you blew all of your money on some stupid dream.

[pimpinpips]

I've done the same thought process for the past couple of months, just like everyone else on this forum. Do I want to live off of fx trading alone? No. Not now. I don't feel comfortable with the thought of if I have a bad trading day/week/month/etc. that I can lose my house/car/or even my marriage (god forbid.) ) because I am still learning the market.

I don't mind risk. If you don't risk something, you can't gain anything. Life is full of risk, the variables are how much risk you take and how you manage it. I love this quote from Warren Buffet, he says, “Risk comes from not knowing what you're doing. “ Now, ain't that the truth. Why do we stare at our computer screens, do our homework on our favorite currency pairs, and study babypips.com school? It's so we know what we are doing and lowering our risk for when we pull the trigger for that trade.

I have goals, and I have them written down. I make it a point to look at them every day. Just to remind me of what I want to do with my life. I want to be my own boss/own my own company. I do want to eventually become an investment trader. I have always wanted to do it, but hated trading the stock market because the gains just didn't seem enough. I was getting sick and tired of a stock only gaining $.10 a day a share. I always keep it positive. Instead of saying "if I do this," I say "when I do this." Because I know that I am going to obtain my goals.

However, what I think would help put these things in perspective is this. If your dream is to be a millionaire (which is mine) you need to clear $83,333 per month for 12 months. For a four week month, that works out to $20,833.25 a week. If you can make 2100 pips profit at $10 a pip (rounded) weekly, you are a millionaire in forex. Of course, all these numbers are rounded to a point, but I think you guys get my drift.

So now, please take a moment from your trading and go on a little mental vacation with me. Let's go down to the beach in Tahiti, all the members of Babypips.com are at a bar. I say, "Babypips.com millionaires club please raise your glasses for a toast; to good trading in the past, good trading in the future, and to lower spreads!"

Cheers!

Viva Babypips.

Pimpinpips

[pimpinpips]

Originally Posted by topgun

Excellent post. It almost sounds like you wrote the current book that I'm reading which is "Think & Grow Rich by Napolean Hill ". If you think you can't than you have already failed.

Topgun

Topgun, That is an excellent book. I've read it as well. However, do read it a couple of times.

[topgun]

Same goals here but I don't mind if it takes 5+ years which takes the pressure off of needing to make that amount of pips per week . Just keep trading your plan and it will accumulate in time. The monthly interest alone on a million bucks is more than I make at my current job in a year which is a joke.

Save me a stool at the bar

Topgun

Originally Posted by pimpinpips

However, what I think would help put these things in perspective is this. If your dream is to be a millionaire (which is mine) you need to clear $83,333 per month for 12 months. For a four week month, that works out to $20,833.25 a week. If you can make 2100 pips profit at $10 a pip (rounded) weekly, you are a millionaire in forex. Of course, all these numbers are rounded to a point, but I think you guys get my drift.

So now, please take a moment from your trading and go on a little mental vacation with me. Let's go down to the beach in Tahiti, all the members of Babypips.com are at a bar. I say, "Babypips.com millionaires club please raise your glasses for a toast; to good trading in the past, good trading in the future, and to lower spreads!"

Cheers!

Viva Babypips.

Pimpinpips

[pimpinpips]

I thought you were already at the bar! ;-) Anyway, I figure you deserve more than a stool. I'll save you a seat at the VIP table.

Cheers.