GBP/JPY Equity Building Profitable trading strategies

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2501

I was doing about 10% a week…a bit more at times…without really TRYING to make a lot of pips…it just worked out that way. What I do that is probably wrong is I have a lot of positions open at once and I do trade a large % of my account. But I calculate the “worst case” all of the time and it is within a comfort zone (it is a lot, but still doable.) My system utilizes a series of breakevens, trailing stops etc. I never have more than one “losing” trade on one pair open at a time. I set steep stops, but they are firm (100 to 150 pips) and I never trade against the day trend. I was pulling it in.

Now I have cold feet…wondering if I was not doing right and should be more conservative. And yes…I would not be as risky if I had a huge balance…no need to make $100,000 a week!!!

2502

1:1 true leverage just means you are not using any margin, you can only buy to the limit in your account.

Huh??

You will always put up margin. If your account leverage is 100:1 you will put up 1/100th of the contract size as margin every time.

“You can only buy to the limit of your account”???

I don’t follow.:confused:

If you run them spread sheet figures, that would be interesting.:slight_smile:

2503

I doubled my micro account twice. I averaged a double a month.

My mini account is on record for a double every two months.

But the market is and was “going my way”. I don’t expect that kind of performance to hold up. It’s just too good.

I’m more concerned with annual performance. I think that will be a true test of the really good times vs. the drawdown periods. Then compare two years, year over year.

So in my opinion you will have to be a trader for at least two years before you have any clue of what you are capable of doing on a consistent curve.

2504

When I stated to keep your account always funded to a true of 1:1, that’s just an idea, not any type of requirement.

You will still be very safe having it only funded to a true of 2:1 or whatever you are comfortable with.

And when I state a true of 1:1, I am talking about [B]true leverage[/B], not [B]account leverage[/B]. Please don’t go call your broker and ask them to change your account leverage to 1:1. That would be stupid. Keep it as high as they allow.

2505

Thanks…good stuff…yes, the market fluctuates and what works for 6 months may lose you money for the next six months…that is a sad fact, but seems to be true from what I hear.

I heard someone say once that anyone that told you they were making more than 30% A YEAR in the forex was lying. I find that hard to believe. Maybe I have just been starry eyed but like I said, I have done very well …or did very well…and I can’t imagine that turning on me THAT MUCH. However, I CAN see suddenly not doing AS WELL. And even having losing long periods…and maybe those long periods would make a 10% a week streak turn into 30% a year…but I find that hard to swallow.

I don’t think of this as investing…it is working…it is hard and constant work…not like putting your money in a mutual fund and looking at your statement at the end of the year and being happy you pulled in more than 10%…being happy these days with 8%!!! This isn’t the same…because it is a job, not investing. I get ticked when people say “you would only expect 10% from any investment”…right. I could get a job at McDonalds and do better than that with my time.

2506

I don’t buy that 30% is the best to hope for stuff either. There are some mutual funds out there that have done better. With all the sec rules and prospectus limitations placed on the fund managers, that is pretty good.

You also have to realize that mutual funds only care about money in. And to be impressive, all they have to do is beat the s&p. Even if the s&p is down and the fund is down, as long as they beat it, they consider it a success.

Private retail traders don’t have to worry about that stuff and have full freedom to exercise how they want to trade.

I think writers who write that kind of crap are only good at one thing, writing.

2507

I have also read ( probably from washed up greedy traders that found jobs writing articles ) that all day traders have no true edge and all lose all of their money right away.

Thats BS! It’s only as risky as you allow it to be. With today’s information age and sec rules, the only legal edge left for a large firm is order flow. Yes order flow is all they have left that we can’t see. But guessing order flow just by using price action on the charts isn’t that hard.

A benefit with forex is even if a house did want to do some shady things on the other side of the law, they are going to have a hard time walking price up on a market that trades 3-4 trillion a day.

2508

If you only buy 1 mini lot for every $10k in your account, you are not using margin. You’re the one who keeps talking about 1:1 true leverage and when I asked elsewhere what that meant, that was the explanation … you always have enough money in your account to cover what you buy.

2509

That’s the main reason I switched from the stock market to forex.

Instead of thinking in terms of % increase or how often you double an account, I would focus on finding a consistent strategy to gain x number of pips per week. That could be 100 pips or 500 or even more. As long as it is consistent.
Once you are consistently making say 200 pips per week in a micro account ($20 per week) you go to a mini, $200 per week. Your strategy still working well? Go to 5 mini lots at a time, $1000 per week. Then 1 standard lot, $2k per week. Then 5 standard lots $10k per week.
You can go on forever but the point is, you are still doing exactly what you did back in your micro account days to earn your 300 pips a week.
Find what works and just keep doing it (allowing for market fluctuations, this would be an average of course).

That’s my plan :slight_smile:

2510

If you only buy 1 mini lot for every $10k in your account, you are not using margin

If you only buy 1 mini lot for every $10k in your account, you are not using [B]leverage[/B]:slight_smile:

Someone else told you wrong.:eek:;):stuck_out_tongue:

2511

I’ve just read the first 30 pages or so of posts here, and am somewhat interested in this technique.

First let me say how i think this is supposed to be done and the anticipated results:
General idea is to make tonnes of pips with very small lot sizes. As rram stated in his intial post (now this is where i’m not sure) 1-3% used margin (i assume this to be in total for all positions open).

i.e. $10k account (would have to be a micro account), i would have upto $300.00 of margin to be used?? The remaining useable margin $9.7k is there to cover the drawdown.

So ideally without considering any profit from pips as yet, we would expect to make around 30% of the margin used in interest, so for this example about $90.00 a month (30% of $300).

Now as far as actually trading, if I considered using 1 micro lot at 400:1 leverage that would mean it would take roughly $2.50 in margin per trade (for ease of numbers 10 cents a pip though its really closer to 9c/pip). Enter your loss-leader then another order every 10 Pips.

So this would let me open 120 positions on the way down (assuming it just goes straight down). This gives a trading range of approx 1200 pips. For most currenct pairs, i’d say that leaves alot of room, but on the guppy, that could happen pretty easy. At todays valve, under this senario I’g get a MC around 191.00 area (from 205.82).

As things dont tend to normally go straight down, but you never know.

So a couple of questions, for a 10k micro account, what lot size would you recommend? I used the example of 1 micro for 10c a pip, but of course you could use 1c a pip (0.1 lot).

Secondly what do you do when the market price exceeds your loss-leader? continue adding longs every 10 pips on the way up?

Thirdly, as price tends to retrace and drop all the time, when your orders get TP do you automatically reset the buy order where it was intially? this could be very time consuming, i mean the price tends to bounce around 50-60 pips in a blink, so under that 2 or 3 positions would close at their TP level, and that could go on all day.

forth, instead of a 30-50 pip TP range, has anyone experimented with a 50-100 pip range, or no TP and a TS of like 55pips or something?

It is a very interesting concept here to be sure.

2512

You are absolutely right, IMHO…counting pips and working toward pip increases is the best way to develop skill. I am not saying that I gauge my success with % earnings etc. I do not focus on that…my question was not asking “what are the best goals to set, etc.” I was merely asking if anyone thought it was unrealistic to think it possible to double an account every several months. Obviously if you learned to consistently make 10 pips a day (or a week for that matter) you could do just about anything depending on your risk factor and how many lots you were willing to trade. My goal has always been to increase pips rather than increase lots…I gave up long ago 10 pip a day strategies…I work to lessen the amount of lots I have to put up to make a monetary gain.

Again, my question mainly lays in the area of risk and reasonable money management. Of course your success in doubling and account while lowering risk is directly related to the number of pips you can consistently reel in. So I can re-frame the question and ask how many pips do you think you can reasonably, and consistently, make in a week?

2513

Again, my question mainly lays in the area of risk and reasonable money management. Of course your success in doubling and account while lowering risk is directly related to the number of pips you can consistently reel in. So I can re-frame the question and ask how many pips do you think you can reasonably, and consistently, make in a week?

Personally, i aim for 300 pips a week just off the GBP/USD, and then 150 pips off the EUR/USD. So weeks i get more others less, only 1 week in the last 6 months a real net loss.

I typically dont trade anything else, execpt the last few weeks I’ve been looking at the GBP/JPY, I shorted the heckout of it, picked up +800 pips last week alone.

2514

Right now I would say 200, I usually make more than that but I still have a problem controlling losing trades. Once I get that fixed, the average should be more like 300-400.

2515

Yes I meant to say leverage, not margin.

However if you explained 1:1 true leverage once (and I think you did), it did not sink in. I don’t think many are clear what you mean by that so maybe you could explain with examples.

2516

So getting back to this technique, I have two thoughs:

  1. you need to realise where you are trading and what your trading range is. So IMO adding longs in the 214 range of last week, is something i probably wouldn’t have done as it is much more likey for it to hit 200 than to keep moving up. You still need to trade the trend.

  2. Your account should be able to handle a dip down to the 190.00s area at least with out adding funds. So if you have defined your range of available trading ie 1200 pips, than you should be able to figure out where your start point is and if the current market price is above that, than just trade it as you normally would.

2517

Good Idea…

I once stated that I would and my lazy butt never got around to it.

So I think I will post it on newbie island where all can benefit.

Give me some time to think of a way to teach it that is not confusing and clear as possible.

That sounds like a nice project for me.

2518

As long as it keeps you off the streets & out of trouble … :cool:

2519

only a grave will be able to accomplish that:D

2520

Yes, cdawg as I now keep repeating ad infinitum, the only way IMO to play this strategy and profit is to buy right in the first place. Wait
for the guppy to make a significant bottom on a weekly chart, like last March, buy your [I]first[/I] position down there with a firm stop … and then you can play to your heart’s content as she heads back up, buying retracements, taking profits etc etc. But buying a ‘loss leader’ up high on a pair that can easily drop 1000 pips in 2 days is not for those without endless cash reserves to top up their accounts and decades of time to wait for profit.

I have neither, so I’d rather trade :cool: