Yesterday, November 15, 2023, there was a 10% discount on newly purchased FTMO live challenge accounts. Seizing this opportunity, I bought two FTMO 200K swing challenge accounts, instead of waiting until December 18, 2023, when my year-end salary bonus is due.
I plan to start the challenge this coming Monday. Currently, I’m mentally reviewing the do’s and don’ts.
The first aspect on my mind is money management. From previous experiences, poor money management was the key reason for my setbacks. As a starting measure, I will set a maximum weekly loss of $2500 for each $200k account, which translates to an average permissible loss of about $500 per day. My strategy involves maintaining a risk-reward ratio of at least 1:1, aiming for a win rate over 60%. I plan to engage in intraday position trading, scalping, averaging, and hedging, depending on market dynamics and situations. I intend to allow considerable flexibility in execution, guided by my personal judgment.
Secondly, regarding trade execution, I will analyse a substantial number of similar setups to estimate the success probability before entering any trade. I will proceed with a trade only if the success likelihood is high. To gauge my profitability, I will use the expectation formula:
[ (probability of win) × (amount won) ] - [ (probability of loss) × (amount lost) ]
This will also serve as a reminder of the expected value per trade, keeping me focused on the end goal and not get distracted by short-term losses. My focus will be on minimizing the risk of ruin while maximizing ROI.
Another thought is to envision my trading as having 25 arrows. After taking 25 shots at a target, I will assess how many hit the bullseye. Ideally, more than 60% of my shots should hit the bullseye. Therefore, with a hit rate of 60% and a risk-reward ratio of at least 1:1, I should be able to comply with the trading objectives, especially since there is no 30-day time limit to pass the challenge.
Lastly, if I were managing a real FTMO account, the end goal would be to achieve at least a 10% gain in four months, qualifying for the 25% account balance upscale plan. This requires a monthly gain of 2.5%, equivalent to $5000. Therefore, setting a weekly target of $2500 would be relatively sound and reasonable.