How long does it take to double your $

[R_Carter]

Wrtm, Spot on. I fancy youre comment is worth rather more than 2 cents>

[wrtm_19]

Wrtm, Spot on. I fancy youre comment is worth rather more than 2 cents>

Thanks R Carter!

[phil838]

Phil youre dealing in symantics… but I take youre point. The point I was making given the space available is, if AT THE END OF THE DAY the questioner has a 20 pip positive balance then his account is up peroid and he can count himself a successful trader for that day.

Theres alot of hype out there, its not about 600 pips a day (I wish), its about methodical and considered trading. As a pro you will know this. Even 20 pips positive balance a day will compound up a $1k account to a yearly income (not account size) of over $1m in a year and a half.

I don’t believe I’m dealing in symatics at all. I respect your many years in the forex business, but I stand by what I say. When I started out I had many weeks when I was up pips but down dollars, and it was all caused by improper money management.

When you say “Even 20 pips positive balance a day will compound up a $1k account to a yearly income…” you are using the word “pip” as a measure of increasing wealth. It is not! A pip can be worth anywhere from a penny to thousands of dollars, and if newbies think that all there is to it is “making 20 pips a day” then they will probably fail as traders.

Don’t get me wrong, I agree with 99% of your advice. I just think telling people to shoot for a certain number of pips per day is bad advice. Some days the pips just aren’t there, and if you try to squeeze 20 pips out of a trade when they aren’t there you’ll end up losing every time!

[mystreetwallstreet]

This is a very good discussion and “one for the ages”. I think the best way to look at this question (and most as we deal with money) is always from a psychological standpoint:

How comfortable are you with the numbers on your screen? When the trade is moving against you and your profit is in red, where/what is your risk and are you ok with your decision as it’s moving against you?

What does this have to do with doubling your account? Everything.

Traders behave differently depending on what’s at stake. I know I do. Using 2minilots in an attempt to double a $1000 account may not produce the loss of bowel function as would 2 standard lots in a $10,000 practice.

Trading for a living, you’ll find that technicals, fundamentals and mostly everything you ever learned about trading (outside of the psych stuff) amounts to less than 10% of you job. It’s those wacky mind games that are the biggest challenge.

Cheers, good luck, and good trading.

David

[TalonD]

I was a little confused by the pips issue but now I think I’ve got it. Can you be up in pips but down in money? yes but only if you are foolishly increasing your lot size to try and recoup losses. If you stick to one lot size the all pips are equal and being up in pips necessarily means being up in $. or vice versa.

When you say don’t risk more than 1% of your account. Does that mean that if you loose a trade by hitting it’s stop loss, then that loss should be no more than 1% of your account? So if you have more than one trade open, if you add up the stop loss amounts of all your open trades then that should be no more than 1% of your account?

I’m glad I started this thread, it’s very enlightening.

[phil838]

I was a little confused by the pips issue but now I think I’ve got it. Can you be up in pips but down in money? yes but only if you are foolishly increasing your lot size to try and recoup losses. If you stick to one lot size the all pips are equal and being up in pips necessarily means being up in $. or vice versa.

This is exactly why I’m respectfully disagreeing with R Carter on the “pips as a measure of success” issue. It’s misleading to newbies. You CAN be up in pips and down in money without doing anything I’d necessarily call foolish.

For example… Say your trades all have a 1:1 risk/reward ratio. You risk 100 pips on a trade and you win, so you are now up 100 pips. But your next trade only has a 50 pip stoploss and you end up losing. You are now +50 pips but you’ve made no money, because you gained 1% on one trade and lost 1% on another trade!! You didn’t do any foolish lot size increasing, you simply traded two normal, everyday trades.

The reason I’m trying to point this out is to combat people you say “all you need is x number of pips per day to get rich,” or “my system makes 1000 pips a day!” That information is meaningless…

When you say don’t risk more than 1% of your account. Does that mean that if you loose a trade by hitting it’s stop loss, then that loss should be no more than 1% of your account?

Absolutely correct!!

So if you have more than one trade open, if you add up the stop loss amounts of all your open trades then that should be no more than 1% of your account?

Nope, 1% per trade. I personally don’t ever have more than 2 trades open at a time, but that’s my trading style, not some money management rule. I don’t have many trades open at once so I’m never really been concerned with the issue. Someone else would be better suited to advise on that issue.

On a side note, 1% is just the number we’ve been using here for discussion. I personally risk 2% of my account per trade, and I know other people that risk 3%. I’d never go higher than that though.

[phil838]

If a trader has a $1K balance and risks 1% i.e. 1% of a $1K balance = $10 a lot size. Then a 20 pip move in the direction of the trade placed will = $20 or in the case I’m trying to put a 20 pip profit. If the trader sticks to the 1% rule, it doesn’t matter if they win some and loose some as long as at the end of the day, week or month they have won more pips than they have lost. Their account will be up.

You are flat out wrong about this. You’re not stating your RR ratio or your stoploss on these trades, and THAT is misleading to newbies.

I’m not trying to be rude, but I don’t understand how you can be a 30+ year veteran trader and not understand that all trades don’t have a 1:1 RR ratio and the same stoploss every time? Maybe all yours do, there’s nothing wrong with that, but most people RRRs and stoplosses vary from trade to trade.

How many pips did you risk in your example to get those 20 pips?? If you risked 20 to gain 20 that’s fine, you just need to say so. Otherwise newbies will be risking 100 pips to gain the 20 they need to “compound up a $1k account to a yearly income (not account size) of over $1m in a year and a half.”

[TalonD]

For example… Say your trades all have a 1:1 risk/reward ratio. You risk 100 pips on a trade and you win, so you are now up 100 pips. But your next trade only has a 50 pip stoploss and you end up losing. You are now +50 pips but you’ve made no money, because you gained 1% on one trade and lost 1% on another trade!! You didn’t do any foolish lot size increasing, you simply traded two normal, everyday trades.
.

maybe foolish was the wrong word to use. sorry, no offence intended. but increasing lot size to try to recover a loss sounds kind of like the old Martingale betting system.
But anyway… I thought I understood but now I’m confused again.
lets say I have a lot size where a pip is worth one dollar. so in your example if I win that 100 pip trade then I am up 100 dollars. then I loose the 50 pip stoploss so that makes me go down $50, but I still have a $50 gain from the 100 pips right? How do you get that it is a 1% gain on the 100 pip win and also a 1% loss on the 50 pip loss? is it because of a bigger lot size on the 50 pip trade?

[phil838]

maybe foolish was the wrong word to use. sorry, no offence intended. but increasing lot size to try to recover a loss sounds kind of like the old Martingale betting system.
But anyway… I thought I understood but now I’m confused again.
lets say I have a lot size where a pip is worth one dollar. so in your example if I win that 100 pip trade then I am up 100 dollars. then I loose the 50 pip stoploss so that makes me go down $50, but I still have a $50 gain from the 100 pips right? How do you get that it is a 1% gain on the 100 pip win and also a 1% loss on the 50 pip loss? is it because of a bigger lot size on the 50 pip trade?

No offence taken. Let me make a more detailed example that might help…

Say your account is $1000, and you want to risk 1% per trade.

Your first trade has a 100 pip stoploss and a 100 pip takeprofit. 1% of your account is $10, and $10 divided by the stoploss (100 in this case) is .10, so you want to risk 10 cents per pip on this trade. That’s 1 micro lot.

You win the trade and your account is now $1010.

You see your next trade coming, and it’s going to be for a stoploss and takeprofit of 50. So you find 1% of your $1010 balance, which is $10.10. You divide the amount to wish to risk ($10.10) by the stoploss (50), and see that on this trade you should be risking 20.2 cents per pip. The .2 is insignificant so you round it down to 20 cents per pip, which is 2 micro lots.

You lose that trade, reducing your balance from $1010 to $1000.

Your balance is now the same as when you started, but you’ve gained 50 pips!

This is a perfectly acceptable trading strategy. As long as it wins more than 50% of the time you will make money in the long run, but you may or may not make “pips.” All I’m trying to point out is that you shouldn’t think of a certain number of pips per day/week/month as the way to double an account.

Another example, this time with negative pips that make money… All trades are at 1% risk.

Account Balance = $1000
Trade #1: 100 pip stoploss, 100 pip takeprofit. You lose for -100 pips ($10).

Account Balance = $990
Trade #2: 10 pip stoploss, 10 pip takeprofit. You win for +10pips ($9.90).

Account Balance = $999.90
Trade #3: 10 pip stoploss, 20 pip takeprofit. You win for +20 pips ($20).

Account Balance = [B]$1019.90[/B]
Total pips = [B]negative 70.[/B]

You made money but lost pips!!

[TalonD]

aha! now that makes sense! I wasn’t thinking of it that way, I was thinking 0.01 microlot for each trade until the account balance is high enough to move up to 0.02 and so on. You’ve given me a whole new way of looking at it.

[Sweet_Pip]

No offence taken. Let me make a more detailed example that might help…

Say your account is $1000, and you want to risk 1% per trade.

Your first trade has a 100 pip stoploss and a 100 pip takeprofit. 1% of your account is $10, and $10 divided by the stoploss (100 in this case) is .10, so you want to risk 10 cents per pip on this trade. That’s 1 micro lot.

You win the trade and your account is now $1010.

You see your next trade coming, and it’s going to be for a stoploss and takeprofit of 50. So you find 1% of your $1010 balance, which is $10.10. You divide the amount to wish to risk ($10.10) by the stoploss (50), and see that on this trade you should be risking 20.2 cents per pip. The .2 is insignificant so you round it down to 20 cents per pip, which is 2 micro lots.

You lose that trade, reducing your balance from $1010 to $1000.

Your balance is now the same as when you started, but you’ve gained 50 pips!

Hi Phil,
Yes I can understand your point when you work it out like that. However…lol…that’s not what I do. I don’t increase my lot size based on my risk, I [B]only[/B] increase it based on my account balance. When my account balance is, for example, $2K, then I will increase to 2 micro lots, 3K = 3 micro lots, and so on. That way, if you are pip positive, you are also dollar positive.

[phil838]

Hi Phil,
Yes I can understand your point when you work it out like that. However…lol…that’s not what I do. I don’t increase my lot size based on my risk, I [B]only[/B] increase it based on my account balance. When my account balance is, for example, $2K, then I will increase to 2 micro lots, 3K = 3 micro lots, and so on. That way, if you are pip positive, you are also dollar positive.

I can see how this would work if all your trades have the same stop loss, but what do you do if you see a trade opportunity where the stoploss would be too risky for your current lot size? Say a trade has a 100 pip SL, but a potential profit for 500 pips. If that 100 pips, at your current lot size, comes to 15% of your account to you simply skip the trade since you don’t reduce lot sizes, or take it and risk that much of your account?

I think part of the problem may be that everyone (myself included) assumes all other people trade the same way they do. I think it confuses new traders when we say things that hold true for one way of trading, but not for others, especially when we don’t know how that newbie is trading. So I’ll reword my thoughts, and hope that others do the same…
[I]
If you are trading a set percentage of your account per trade[/I], as I do, then pips are meaningless as a measure of success.

[Sweet_Pip]

I can see how this would work if all your trades have the same stop loss, but what do you do if you see a trade opportunity where the stoploss would be too risky for your current lot size? Say a trade has a 100 pip SL, but a potential profit for 500 pips. If that 100 pips, at your current lot size, comes to 15% of your account to you simply skip the trade since you don’t reduce lot sizes, or take it and risk that much of your account?

I think part of the problem may be that everyone (myself included) assumes all other people trade the same way they do. I think it confuses new traders when we say things that hold true for one way of trading, but not for others, especially when we don’t know how that newbie is trading. So I’ll reword my thoughts, and hope that others do the same…
[I]
If you are trading a set percentage of your account per trade[/I], as I do, then pips are meaningless as a measure of success.

Depending on the setup and type of trade, i.e. range or trend, if I can’t find a re-entry place where I could move my s/l to my risk, then yes I’d skip the trade. If I did find a re-entry, then I’d probably not make the “500” pips, but I could possibly still take a portion of that.

Yes, there are all sorts of money management methods…as long as you’re profiting, that’s all that matters.

[s050399b]

I agree, Pete’s a great guy, he sent me the PDF also. Thanks for all your input on my original question everyone, I’m starting to get some perspective on what to expect from real trading.

I found 2 copies in the emule network; is it the 5MB or the 12MB one?

[TalonD]

I found 2 copies in the emule network; is it the 5MB or the 12MB one?

The pdf I have is mtmv3.pdf in a zip file of the same name. The actual title is Master the Markets, published by trade guider systems. It’s 14meg zipped and 18meg unzipped. If you go to trade guide systems website, google to find it. they have a free download of part of the book, not the whole thing.

It’s a long book and I’ve only gotten part way through it so far.

Be careful downloading from emule or similar things like limewire, make sure you scan any downloads with an antivirus program before opening the download. I use AVG antivirus, it’s free and works good.

[TalonD]

I am currently going through a training course from FXCM. It seems like a good course for a beginner. It covers the basics. As a beginner, that’s the sort of thing that’s good to do. Once I’m done with that I’ll do the babypips school. This seems ‘mostly’ to be a good thread for beginners. maybe a good sticky.

[SlikRick]

I am currently going through a training course from FXCM. It seems like a good course for a beginner. It covers the basics. As a beginner, that’s the sort of thing that’s good to do. Once I’m done with that I’ll do the babypips school. This seems ‘mostly’ to be a good thread for beginners. maybe a good sticky.

FXCM Power Course? Its a great course, well worth the $20, make sure to ask the instructors as many questions as possible, get the most out of your course.

Thanks for starting this thread Talon, its given me a much better understanding of the money management aspect of trading. Never realizied there were mutliple money management methods, which makes me question what the best possible money management system is. Say I’m a scalper who makes maybe 1-10 trades per day, am I better off using Phil’s strategy, where you trade a set percentage of your account per each trade (e.g. 1%-2% of total account per trade) or Sweet Pip’s method (trading lot sizes in proportion to your account size, and using equal stop loss and take profit levels)?

[tymen1]

Yes, there are all sorts of money management methods…as long as you’re profiting, that’s all that matters.

Considering what the thread was originally about, and we have digressed, this above statement just about says it all.

The winner here is R Carter - he is on a holiday in the sunshine!!

He should come to Perth - we have plenty of that here!!

[thelearner]

Some of us newbies have the idea of forex being a get rich quick thing. So reality check time.
For an experienced trader who know’s what he’s doing, How long would it take to double the money in your account? What’s a reasonable length of time? A month? six months? a year?

I"m a noob…started my account on May 18th (so technically its been about 10 days) and I’ve more then doubled my money.

[lavaman]

I"m a noob…started my account on May 18th (so technically its been about 10 days) and I’ve more then doubled my money.

Get ready for the crash!