Not really, Norman, it was just a loose chain of logical deduction as an example of how one can relate position size with risk and expectations. It’s just a bit of a juggling process to find the right balance between acceptable (and survivable) risk and a reward that will make the risk worthwhile and achieve the desired objectives.
[quote=“LaughingCharlie, post:15, topic:109014”]
Not criticizing your vision at all, and hoping for your great success, but do you know what proportion of retail forex traders ever achieves 24% per month growth steadily?
Do you know what proportion ever achieves 5% per month?
Do you know what proportion ever achieves any steady monthly profit at all?
Do you know what proportion ever achieves profit by copying an unbacktested, unforward-tested “system” from a site like Forex Strategies Revealed where the people submitting their systems are other random, unknown, untested, unproven amateurs and there’s no editorial selection-process at all before they’re published there?
With respect, Norman, your current expectations are unreasonable ones.[/quote]
Yes, I do fully agree with LC here - concerning both the “Forex Strategies Revealed” strategy and the likelihood of achieving a consistent average 24% growth per month:
Forex Strategies Revealed “Trend Line Trading Strategy”
This strategy was posted there in 2008 and the thread continued for a little over a year. It is based on very sound principles of identifying trendlines and entering positions on reversals off these lines. It uses multiple timeframes and is easy to execute and to apply a sensible risk/reward control - all good stuff.
However, that is all it is as far as I can see. And its effectiveness relies on skilled recognition and application of trendlines and S/R levels. This is really just normal application of basic PA techniques. One can, of course, develop skills in this but I don’t see this as any more effective than any other PA-based method?
I have not read through the entire thread but I noticed one comment that does indicate there are tangible risks with this method:
“…in my trading business plan I have added a provision where I will stop trading if at any week losses exceed 20% of account equity”…"I will not trade any currency pair or closely correlated pair,especially the more volatile ones,for at least a week after 2 consecutive losses within a week. This will help you avoid revenge trading witch was also a factor in blowing up my demo account."
In addition, this particular method requires constant screen monitoring to catch the candle that creates the trade opportunity before placing the order:
“I place a sell stop order, at least 5pips below the LOW of the candle that touches or intersects the trendline…You must place your order when that candle closes.”
Personally, I do not hold out much hope for gaining consistent and regular profits from this type of mechanised approach to trade entry. I would personally prefer to evaluate each and every bounce individually. If it was really working well then that thread would probably still be going today some 9 years later? But, of course, I may well be totally wrong here!
24% monthly growth
I am not a great fan of these kinds of projections because markets do not perform in the uniform, cyclical fashion that that would be necessary for this to be achieved on a regular basis.
Although 20 pips per day may sound easy, it is not quite so simple as it sounds. If the first trade of the day is stopped out then you will need a least two more trades to get your 20 pips - and that is only if your stoploss is also 20 pips. And if you are looking for 20 pips from an hourly or 4H chart then 20 pips as a stoploss is not much at all…and then there are always those days when just nothing goes right and you end up with 60 pips loss as the starting point for the next day’s trading?
Also, this is based on 20+ trading days per month. Personally, I think that is a lot! Many traders ignore Mondays totally and some also Fridays. Then there are national holidays, quiet days before data releases, etc. and then one’s own days when normal life obligations get in the way! Personally, I work my own trading plan on about only 10-12 selected trading days per month.
In addition, as with the strategy comments above, these trade opportunities for a possible 20 pip gain do not conveniently always line up at , say, 9 o’clock in the morning before going off to work for the day. They can, and do, turn up at almost any time and it is extremely stressful and tiring to sit around waiting for the right moment - and this doesn’t always fit well with other commitments. Although this can be mitigated by setting specific trading hours when trades are most likely to occur such as the first 2-3 hours of the London and/or NY sessions.
It is certainly possible to gain 20 pips on a particular day, but can one realistically (there’s that word again! ) hope to gain it on average every single trading day? I doubt that somehow.
I am not any kind of authority on trader expectations or verified results but I get the impression that 3-5% annually is generally considered a good result?