Currently I use my mini $300 account to play with and I seem to be making 10 pips easily in a matter of a few seconds using just trend lines and s/r values…
It’s overall for the month, can be 5 days of -10 pips, and 1 good trade of +60, which equals to 10 a day…
end of the month you want 200 pips, if you can make it in 2 days, call it a month
The goal seems to be reasonable, But the risk you talking about is 10% of the capital. A streak of 5 losses will wipe out 50% of the account which changes the whole excel calculations there.
Unless we are very sure of taking 10 pips a day from the market, i dun think risking 10% is good. Just my opinion
With time and practice playing and mastering one pairyou can get 60%-80% win rate
While minimizing losses through stop losses
Let winners ride with trail stop, while let losers die quickly with stop loss
Why do people say this? Why is it a given that emotional instability will destroy one’s ability to follow a system? Isn’t there someone out there that follows their own system without tearing off on a bender of revenge trading or desperation trading? Gotta be.
Take every trade when the signal for your system presents itself. Don’t skip any signals. Don’t place a trade when no signal is present. Same for exits. It’s not like someone has a gun to all of our heads and is commanding us to take random trades or anything.
There are measures that you can take to avoid instability, such as:
thoroughly backtesting to get an idea of drawdowns and losing streaks you can expect
designing and using a system that suits your personality
Without full confidence in your system, you’ll be prone to rash and emotional decisions. This happened to me earlier this year when I tried to trade with “price action” and lost 4 or 5 trades in a row. It seems to be the rage amongst newbies. But it’s such a subjective and arbitrary trading system so it’s difficult to backtest accurately, and I found myself throwing it away. It didn’t suit my personality.
Once we gain confidence on our trading method. We can really go ahead and risk high and compound the profit’s. I suppose if anyone had done that before successfully. ?
Someone had touched on this previously but I tend to look less at the amount of pips I need/want to gain and focus more on percentages. For example, depending on the market I may use a 1%/2% risk reward ratio. I want to gain 2% so I am willing to lose 1%. You can adjust the numbers accordingly, but the percentages are always based on what I have in my account.
it is not necessarily the ‘rage’ or trend with the newbies. generally, PA trading should help them get acquainted with trading before venturing into indicators, as opposed to going the ‘indicator-first-then-naked/PA trading’ route which costs a lot of time.
it is interesting that price action trading did not suit you. (are you sure you did not quit trading and learning about PA prematurely?) how do you trade then?
just to back what other have said or alluded to - your leverage ‘theory’ is far too high to be sustainable. it makes the math look juicy and pretty, but you’re expecting perfection from a million irrational humans. this would be like herding cats. i can’t even herd ONE cat, let alone several hundred cats!
so here’s a question - for how many consecutive weeks / months have you been doing this on a live account? no demo accounts, please. and on this live account, you always use a 100:1 leverage? have you had to dump in additional funds to bring the account up to a workable / decent level? or was it a one-time deposit only?
Once you start looking for 1-5 risk2reward setups, and actually have better win ratio of 50% such as 80% It’s not improbable to risk 10% on each trade if the return is high enough for your account to survive losing streaks. It’s just not smart to a lot of people because mostly everyone takes on losing streaks. Losing streaks that take 10% a trade hurts badly.
i think the more valid explanation/issue is if a lot of people can trade well enough to achieve 1:5 risk:reward. i don’t think there are that many who have such competence. i think the ratio is heavily skewed towards those who struggle in trading than those traders who achieve 1:5 R:R.
I’d like to point out that there is another issue here as well. That is trade frequency. People like to talk about Risk/Reward ratio and it’s attached win ratio, but I hardly ever hear anyone talking about trade frequency…and this system design factor is just as important as Risk/Reward and Win Ratio.
For example, you could have a very high Risk/Reward (like 1:8 R:R) and have a VERY high success rate (Like 80%) but if the signal for this system only comes along every 50 years…well, it’s going to do very much to help you achieve your monetary goals.
High trade frequency can make up for a lot of ills. A system with at 1:5 RR and a 45% win rate but only gets 4 signals p/month is not going to do anywhere NEAR as well as a system with a 1:2 RR and a 38% win rate and throws 300 signals p/month.
In trying to design an R:R based system I noticed that in searching for a higher R:R, you typically find yourself stuck with both a lower success rate AND a low frequency of entry signals.