Is it a logical question?

Trading Discussion Risk Management Practices
10

I will share my personal experience, but if this works fine with me this doesn’t mean it will work with you.

My strategy generates around 2% to 5% every month based on the rules that I follow below, which can be applied to some strategies:

  1. Lets consider you have an account with 10,000$
  2. My risk reward ration is 1:2
  3. My risk percentage on every trade is 0.5% (half percent) of the total account. (example; I lose 50$ and win 100$)
  4. Use lot size calculator Position Size Calculator - BabyPips.com to make the calculation for each trade.
  5. Only discipline will make you profitable.
  6. If you want to gamble, open another account and leave this one :slight_smile:
3 Likes
11

Most of the newbies have this common question. But I think there is nothing wrong with it. Because if they have the answer they can go ahead with a goal. They can assist themselves. But my opinion is before targeting something they should learn and start with a small portion of trading. As the business is very tough and risky, rather than targeting something and run behind that newbies should run behind the trading knowledge and skills first.

12

the question in general is good and logic.

the creator is having a planing process right now.

he thinks:

i have “xyz” amount of money saved. its what i have. i need “x” for my living.

can i generate “x” every month with what i have?

“x” is “y%” of what i have.

is “y%” a realistic goal that can be achived by participating in the market?

thats a very logic and safe way to approach something new.

instead of giving the most stupid answares and lectures and phylosophies and standardized answarws (that all bucket brokers give exactly the same ones to scam you off) and thereby proving to everyone experienced observer that you actually have no idea what youre talking about… y dont you try to help him a bit?

13

When anyone gets involved with trading Stocks, Futures, Spot Currency, you are involving yourself with the smartest and well financed people in the world. These “Traders” “Make”, the market, financially they could buy and sell us. If you don’t like this estimation, tough. This isn’t a game to Professional Traders, this is serious business, livelihoods and reputations are on the line everyday, peoples retirements, children’s education funds, all of this is on the line.

You don’t walk into this environment and say, I will make 300k this year, are you crazy, that is an impossibility, do you know how many people blew up between last week and this week on this site alone? All because the market shifted and they were not ready for it, so what estimate did they have or were able to make about this? Yes I called the shift, but how many listened? So you think you can estimate how much Alpha you will pull, and also predict how much time it will take before you move you first Yard. Your ignorance is staggering.

So you want us to give an estimate to the OP, ok, here it is.

2015 Parametrica Management 30% average for 3 years

So OP if you can duplicate the returns of the #1 hedgefund for 2015, well all you have to is multiply however much you plan to put into your account by 30% and there you have it.

Oh yeah did I mention that the funds founder is a Phd, and has worked for Deephaven Capital, Nomura Securities International, Israel Englander’s $34 billion Millennium International Management, but I am sure that any one of use can beat that, in fact, MFB is full of 600% per month wonders, except, no one has ever shown an audited, certified statement. But of course if we read it on the internet it has to be true.

So, OP as new trader welcome, you have two jobs, defend your capital, and trade well, everything else is for Losers.

The Ever Feeling Better After That VIPER

1 Like
15

On the 4 hour charts, I find I have to trade at least 2% on each trade to make 10% for the month.

If you wish to make more than 20%, you would have to realistically trade 5% per trade.

This is assuming your win rate is above 50% and you can get at least a 1:2 R/R on the winners. The math works out, the problem is not falling apart psychologically when trading such a large amount.

My advice is to acquire a steady winning percentage first. Then slowly increase your trade risk each month until you are at the sweet-spot, 5%. Studies show this is the per-trade percentage you should be at to increase your account in the shortest amount of time. Again, you must be a winning trader in order to attempt it.

1 Like
16

Hi,
Being a newbie you must learn the trading terms and strategies at the prior concern and then you can go forward looking to profit . Initially you should look for low profit less risk and high learning , once you get some experience you can look towards gaining high profits taking much risk. Key to trading is Patience and experience .

1 Like
17

Sooo, which part is stupid ???

The Ever Questioning VIPER

18

I’m only a year or two ahead of you. Not a newbie, but I’ve been profitable for under 6 months.

In spite of the hostility, arguments, criticisms and contradictions in this thread, I’ll share my answers to your questions with you, and I don’t actually care much what anyone else thinks of them.

2.5%

The proportion of newbie forex traders who ever get as far as averaging out at 5% per month is too tiny to take it seriously, but I think half of that is a good and realistic target for someone who’s eventually turned the corner into steady profit. There’s no point in aiming for a higher average monthly figure. That’s just a way to get frustrated and upset. If you can outperform 2.5% per month, then great, obviously.

That 2.5% monthly average profit, if you reach it, is going to include some losing months, too. It’s important to make them very small losses. That’s more important than the profits, really.

Depends what “logical” means to you. :wink:

It’s a common and reasonable and most understandable question, obviously.

I don’t think it is actually “logical”, though. That’s because it arises from an outlook of “how much profit can I make”, and honestly “how can I avoid making any losses” is a much better and more realistic way to look at it.

I know it sounds an odd thing to say, but I believe it’s true.

Profitable trading has more to do with avoiding losses than making profits.

It took me a long time to learn this. A long time and plenty of experience.

Two things.

“How can I manage my risk to avoid losses?” and “How can I learn what an ‘edge’ is and how to tell confidently whether or not I honestly have one, before I put any money on the line at all?” Without good, confident answers to those two (three?) question, you have nothing.

1 Like
19

everything.

you cant compare a fund or management company trading for clients with multi billion $ assets to the gains of a newbie or retail trader- why?- cause it takes much more effort, preicition, planing and information to dig in 30 billion dollars into something. you cant go out and bet 30 billions that gold will rise tomorrow and then exit the trade 3 days later. you need a counterpart who would hold that bet.

so sinking in 30 billions is more work of “where” to put the money in for long term results rather than “what to trade” with it or to guess where something will go within the next couple of days. 30% of 30 billion would be enough for me for living :wink:

For living you may ask? yes oh what a wonder (sarcasm) somebody wants to trade (work) to make a living from it? oh my god what a unusual concept, how dares anyone thinking that way?! (now really: sarcasm- off)

LEts put it this way. The OP has asked aquestion which is part of any planing process. He has X amount of money, with that money he can buy himself a business in the real economy, a proven business which has a 10 years reckord of generating 6000$/month, or he can go out trading and now he wants to know the opportunity costs (a economical term reffering to where its beter to put the money in, or in other words: what will give more return for the invested cpaital).

So he may has 150.000 and can afford a business to generage €6000/month or he can go out trading, so he has to calculate how much % he needs from his 150.000 to generate exactly the same 6000 which is guaranteed on the purchased, reckorded and safetly running profitable and sucessfull business. so his number is 4% a month to compete with safety reckord and steady profits. he now wants to find out before he invest money into trading if this is a realistic goal.

instead of giving him any number so far, or any safe and sound reason why he should or should not invest into trating- everyone here only gave the standard google answares of “if you belive you will suceed”.

business doesnt work on believes and even less so in trading.

my advice to the op:

realistic numbers:
trader with 10+ years experience: 5-20% monthly is very possible
trader with less than 5 years experience: 0-5% monthly
trader with less than 5 years experience: 0 to -(minus) x% monthly

take into account that you have to make great efforts to learn how to and take into account that if you do not have a strong, very strong economical or/and mathematical background you will most probably never generate profits even after the hard work of learning.

so my advice: do not engage with trading if you dont have the following (standard for western countries, countries with a lower GDP/per capita other numbers apply):

if you have 200.000 saved, a strong economical or/and mathematical background- try it.
if you have 200.000 saved, no strong mathematical and/or economical background- better invest your money into a real life/real economy business

if you have no 200.000 and a strong economical/mathematical background- try it.
if you have no 200.000 and no strong economical/mathematical background- better invest your time and money into something else.

1 Like
20

Well done W, except, I have never seen and independently verified account of one of the 600% per month traders or even a 4% per month traders, so all of these claims are unverified and fall into the realm of "if You Believe you will Succeed’ Mantra that you so eloquently pointed out.

As far as hedge funds, I have heard the claim of “too big to make more” for years, but it really does not hold up to scrutiny. What “empirical” proof is there that an individual, trading at home, can beat the major trading houses, let alone make 5 - 20%, per month, and I’ll tell you what, if someone would put up a verifiable Blotter,(certified by a Licensed broker, located in either Great Britain, Australia, Canada, USA, Japan, Germany, France, Switzerland, or other jurisdiction that has a law or two) and audited by a reputable/recognized accounting firm, that shows 10% per month, for a three year period of time, I will leave all message boards and never upset you again.

But this will never happen, so as far as your claim of me saying [quote=“WestBam, post:19, topic:115797”]
“if you belive you will suceed”.sp
[/quote]

I am saying the exact opposite, and perhaps there is a language difference, so allow me to elucidate. You cannot predict with any certainty that anyone one will make any money trading, let alone set goals, or estimate income. These concepts may work in standard business models, where selling a product or service can be quantified by empirical evidence, perhaps focus groups, marketing gurus and such. In trading there is none of that, the amount one makes is dependent on the trader and market conditions, to encourage anyone, by saying well in x amount of years you should be able to make x amount etc, is in my opinion, irresponsible. You, me, _bob, whomever, cannot tell if an individual will be able to trade, most folks cannot, so if they may not be able to trade, how can one estimate how much bank they can make.

Which is why I prefer to be cautious, no one should ever give up the only revenue stream they have, for example quitting a job, or using all of their retirement money, to take up trading, is dangerous. It is not like going from one job to another, where you contract for a specific salary, in trading you cannot know how much you will make per year. This is also why my viewpoint is Trade Well, if you do the money will come naturally, you don’t limit yourself, or push yourself, you just take trades according to your trading plan for each trade.

W, I agree that trading, OPM as I do, or trading your own account, if you have a big enough nut, is, in one word “freedom”. It is an enjoyable and engaging, sometimes boring endeavor, that is never static. But with that said I strongly disagree with any statement that tries to put a fixed number on how much one can make, and don’t get me wrong, it’s not just you, but anyone. We disagree, and that’s all, no worries.

But again, if the OP wants to start trading I urge, caution, patience, and discernment, this will keep you from wasting time and money.

The Ever Traders Life VIPER

3 Likes
21

seem to me, strong economical background maybe not so helpful

strong mathetical background is definitely helpful

23

if you think so… :slight_smile:

25

i think so, yes, but i mean “mathematical”, not “mathetical”

my english is no better than yours, Bogdan

30

i don’t understand your comment, Bogdan, please tell me what you mean.

31

200.000 chickens, sheep, camels, Faberge’ eggs. Here in the south 200.000 looks like 200 bucks, so could you clarify???

The Ever Quizzical VIPER

1 Like
41
42

For newbie there is no such thing as how much % I should profit per month. For newbie it’s about survival. Whatever % you make, make it consistently. Even 1% is very big for newbie. Don’t fell prey into the greediness of making double or as much as possible. Learn to survive the market. Remember one this most people take exit from the market within one or two years.

43

I agree in general with the sentiments in this thread. However, it is also useful to know what the realistic range of outcomes includes. Stephen Bigalow wrote in one of his books that a full-time trader will average about 10% per month.

That does not mean that he makes 10% every month. Some months may be much higher than that, and some months may be losses. And as Stephen trades stocks rather than forex, I assume his experience relates to stock trading.

I am not a full-time trader, and I therefore cannot comment on Stephen’s numbers. However, as a sense of what is happening out there in the world, I have found that quite useful.

44

I think the question you should ask and try to find the answer to the question is: how can you manage the money and risks in this forex market. Like any other financial market forex market requires proper risks management and money management so that you can better be able to avoid unwanted losses, thereby earning good profit also.

47

There was no logic, how much a newbie can win in the market. You should worry about how you are going save your capital while trading.