So I am doing very well in the stock market. Up 65% in 19 months, but I am very worried that peak oil could wipe out those gains as well as 90% of stocks. Forex seem like a good bet against that since currencies will always be traded and so one can limit their losses.
Does limiting one’s losses to 1% of account useing short term, 1 hour, trades and 10:1 leverage seem ok for that kind of goal?
It seems that the key to forex is to limit one’s losses and then a simple system should be able to offer good win/loss records.
For example I am playing around with Oanda’s game to try to acclimate myself to the system and just went Long Yen vs Dollar because fast stoch is 73 and MACD indicates that momentum of Dollar may be about to flip.
I used 10:1 leverage on $5k, so $50k short Dollar meaning each pip is worth $4.10.
I want to limit loss to $50, so placed stop loss at 12 pips above at 122.16, while I’m in at 122.04.
Now my only problem is when to exit?
Do I cover at some specific point? Say 2X or 3X my stop loss, for a profit of 24 or 36 pips?
I know one can look at the technical indicators for such things but I am afraid that by the time the stoch and MCAD tells me to exit any profits I have will be below the 1% threshold, meaning that my wins will be below theoretical losses. (If I always make profit of over 1% and always lose 1% then in long term I should come out ahead, or so I hope).
And advice for a newbie?