First of all apologies if the title is a little ambiguous, but I’m still learning the correct terminology.
I’m curious to know peoples opinions on their preference between high volumes of transactions (40-50) per day but with low yields, say 2-3 pips at a time vs low volume of transactions (5-10) but with high yields 15-20 pips at a time.
I am finding, probably because I am still very very new, I am not accurately predicting trades with large pip value. However I am finding more and more that I am accurately grabbing 2 pips per trade and am placing roughly 50-60 trades per day.
I know the high volume of trades means very high portion of fees (50%), however in my mind this simply means I am accurately grabbing 25-35 profitable pips per day.
To clarify, as I am still new to this, I have a very low value per pip and am more concerned about earning profitable pips consistently before upping the value.
Whatever turns your crank. Their are traders who make it work with a lot of transactions as well their are traders who trade less. Whatever you do, make sure your trading method on the balance of probabilities will give you more positive results than negative. Make absolutely sure your money management plan protects your account while at the same time adding to it. After that the big killer is being consistent, Be consistent by exercising patience and discipline when working your trade plan.
I’m a short to medium term trading mostly, when I first started I did something on the lines that you’re doing, I suspect a lot of newbies and traders who haven’t done well or don’t like the longer terms. One of the traders who’s been around for a while, told me after getting some experience and some more learning, you will drift to larger time frames, less trades and more pips as your confidence grows. I believe he was right, however for me I don’t set and forget my circumstances allow me to work full time at trading, having said that I very rarely hold on to trades for the longer terms. That’s what I do, doesn’t make it the absolute; there are tons of traders who trade the longer terms successfully as well. Trading is about building a trade plan and working the plan consistently around your life style, financial and support situations. Sorry I forgot to add that’s just my opinion. Good Luck
Gp
Larger timeframes also tie up your money more, so you can get stuck in a slow moving trade and feel you are missing out on other opportunities.
A lot depends on the person really. Do you have the time and energy to sit in front of your screen all day scalping or do you only have the odd half hour here and there when you can see whats available, make a trade, then leave it for the day with a TP and SL to do the rest?
I’m spending quite a lot of time in front of the screen but I’m intending for this to become my full time job, so I don’t mind spending long hours on it.
I don’t have the patience for longer trades and am finding the short wins very satisfying.
Right now, I just want to sit and trade all day long so this method suits me. I also like the low risk vs high volume as it give me more experience.
If you have the time then there is no better teacher. Trade and analyze, trade and analyize. After a while you start to see with a little change you could have a bigger reward. As your experience grows, so do your successes generally. When it comes to short term mechanical trading some traders tend to try and pick tops and bottoms. The real kit is to be able to spot area’s of profits, that’s how you turn 20 or 50 trades averaging a couple of pips per trade, into 1 or 2 trades averaging 10 to 20 pips per trade.
How do you cut your losses? i do something similar to you and have found knowing when to cut the loss is hard. When you increase your trade size the spread hurts you more when you lose and if you have a small account then this technique is kind of risky.
For me I don’t use one strategy. Stop loss depends on what pair I’m trading, how I’m trading it, what news has just passed and what’s coming up within the next day and how the pair is currently running.
When I first started my stop was fixed at a % of my account. So If my position size was 10% of my account, then my stop loss was placed at 10%. From their I went to a trailing stop and after that stop was place 10 pips above or below the last swing high or swing low depending on my trade.
When I started trading trends I used a a Fibonacci strategy stop loss is placed at 75% Fib level. Now I very seldom get into a trade when it’s trending. I look for pairs that are moving sideways where the high and low is around 10 pips. Depending on what’s happening I may look at a 20 pip spread between high and low but never more and never under 8 pip spread. I analyze applying VSA principles. So with that a sideways pair is either in the accumulating or distribution phases if pair breaks out above the range, then it’s going into the markup phase, if pair breaks down from the bottom of the range that signifies price is going to a mark down. My stop starts off at 50% of the high and low range.
Based on previous support and resistance I’m looking for pairs that will move 20-30 pips in either the markdown or markup phase. At 5% of the high and low of the current range, with profit set at 20 to 30 pips, It’s a nice risk vs reward. Since I’m in a position to keep an eye on the trade, if the pair moves beyond the 20-30 pip I let it run with a tight trailing stop.
Like everything sometimes it works soeme times it doesn’t. Normally I look for one trade a day. The week before I was 5 for 5, last week 1 win, 4 losses. Today I traded gpbcad, but I had to leave for a while so I set up the trade and it broke to the top of the range, so because I wasn’t there I set a take profit at 30 pips got back just after NY close pair moved over 100 pips but my take profit triggered and I ended up with 30. If I was here I would have taken my 30 pip profit and managed it after that.
You’ll find if you’re consistent in what you’re doing and tweak were things need to be tweaked and on the other hand if it isn’t broke to try to fix it, as your experience grows entries stop loss and profits will get more on target.
Well if you really have a knack for scalp the only thing which can improve your trading results is reducing trading costs. If you trade on a flat market then it is wise to stay on spread-charged account, but if you are trading on breakouts (abrupt market spikes) then I would suggest you to move on comission based account with fixed or very low spreads. Moreover comission based account will show you the fixed amount of your transaction charges which will additionally put things right in your money management. Personally I also never get out of 1 min chart, but as I trade mainly on news I am forced to use Hotforex commission based account. Saving on charges is a great thing, when it comes to effective rearrangement of your capital flow…
I have a strict 2pip stop/loss, I never go into a trade without it, so there is some piece of mind there. Also, this is going to sound very strange, but if you spend a lot of time just watching, you kind of get a feel for what’s going on, I’m still to new to describe it any better that that, but you can tell when a short of say 1.7 pips has run out of stream and is going to go the other way, either that or its just high levels of anxiety/ excitement over making some more profits, however small they might be.
My test account is commission based with a tiny spread for EURUSD which is all I trade in, so whatever I trade my first profitable pip is my cost. However you are right, if a trade goes against me, I don’t only lose the 2 pip stop/loss I also lose an extra pip in cost for the trade, so I need at least two profitable trades at the same parameters just to bring me back to zero.
Right now I am just trying to work a very very simple system to see if I can even work as a Forex trader.
I am not getting into very complicated techniques as I know I need time to grow and if I can work a decent profit from a simple system then I can have all the time I need as it will be my full time job.
I suppose in my mind, nothing comes easy, I can either spend time learning complicated strategies and trying to apply them or I can run a very simple strategy but then spend more time manually.
I have high hopes, but time will tell if this suits me.
I’ve never heard of VSA principles before. I also see reference on the forums by other members referring to different ‘principles’ but I have no idea on where to get quality material on them.
I would love to be able to spend and hour or two making analysis and the trade aiming for 20-30 pips at a time. But this is where I need to increase good quality of usable knowledge.
At the moment I am averaging about 10-15 trades an hour, so end up spending most of my day grabbing a few pips at a time.
This is a great video on VSA. I’m not vouching for the presenter or the site or any products or services they might be offering. Just the video, it’s a great explanation of VSA and how it applies to Forex trading. As well read the attachment
Hope that helps
Gp
Exactly. For newbie, who is yet not determined his typical times for entry and where dubious about average transaction charge (spread), commission account may lead to extra expenditures without reasonable benefit for his turn.
It is an option for seasoned traders who has already establish and thoroughly considered plan for market entries and exits, where they can face with extra charges without bringing fixed its fixed amount into play. Thorough testing is the only way to know what is the best fit for you, so don’t hesitate to stress on your demo trading
