Hello everyone,
I am studying forex since 3 or 4 months now and i am making consistent profits on my demo account, now i want to start trading with real money. I want to start by 100$. My plan is that when ever i open a position in the market i am not going to set any stop loss or take profit order and i am just going to observe my trade until i think it has reached a good level for me to close it. And even if i am going in loss i am sure that there will be a rebound someday…in a few days or in a few weeks…I made successful trades in my demo account with this plan but i need people to tell me if i am wrong or something…i need criticism. Thanx
Sorry, but without going into detail, it just won’t work long term, been there, done that!
You need a proper laid out trading plan.
can u explain a bit about this
You need to learn about the market, chart patterns, price action, support and resistance, Fibonacci levels, trends and more.
So, you are going to enter a trade, and then leave it for however long it takes until it becomes profitable again?
you would need really small lots to be able to stand up to the potential that the market might move against you for hundreds of pips before coming back your way. It seems you are lining yourself up for a margin call.
There are many very simple trading systems, even on this site’s school section, that can be profitable and will be more accurate in terms of entry and exits.
I agree with previous posters, but also: even if with monitoring you could make it work over time (and personally I don’t think that you could, one bad spike against you could do irreparable damage to your account and you just couldn’t predict them all), what happens if you ever need to be away from your screen unexpectedly? You might miss whatever exit criteria you are looking for and suffer a massive swing against you. Even trading full time, one can’t be there all the time. Stop orders protect an account, and since even a basic understanding of Support and Resistance could give you a solid knowledge of some safe places to place wide Stops, why not use them? You mention that Price should come back to you at some point, even if it takes weeks, but that is just not always the case. Just look at the charts for USD/CHF, SGD/USD, USD/CAD and others - sustained downtrends that your account just would not have survived had you been Long, and there have been valid Long trade opportunities within those downtrends.
I don’t see this approach working without more luck than anyone can reasonably expect to receive.
So you have no objective risk control at all. [B]Bad idea![/B]
And this will probably become the most expensive sentence of your trading career. Ask yourself that question: What if the price doesn’t come back? There is no sure thing in trading.
Not using stop loss is a very bad idea, you could do it in a demo but life is very diferent, asume you open a buy on eurusd today and tomorrow maybe some fascist like Gaddaffi, Chavez, Morales o the very Castro dies, it will blow off your account, belive me, anything can happen and it will, a flood in Austrralia added to an earthquake in New Zeland blew off my account once. Be humble with the market or the market will humble you.
Regards.
In your example, your maximum loss will be $100 but what are you trying to gain … $50? Thats a poor risk to reward ratio. You might as well go to the casino and gamble the $100
That highly increases your win ratio…
But only provided if you are willing to wait for 10 or even more years… lol
lol. It could even take centuries. 
… and after decades of waiting, finally your account goes into profit, but the world ends …
Hi SidB,
I feel for you (with all the negative reviews on your ‘trading plan’). Unfortunately: they’re all accurate and in all cases based on (sometimes bitter) experience.
A ‘trading plan’ such as yours breaks THE GOLDEN RULE in this business: no risk management (as a result of not using stops). No risk management: 100% guaranteed failure. There is not one successful and profitable trader on this planet that does not implement risk management. Proof of this exists. An experiment was done by some professional traders that simply took trades at random i.e. no trading stem, no applying of fundamentals, simply random entries. The ONLY thing that was implemented was risk management and the correct placement of stops. Now while they didn’t make a fortune in the experiment: overall they were profitable (and of course it’s not really any way to trade i.e. without a good trading system).
Two or three months with consistent profits on a demo account??? Give yourself more time and you’ll soon find out that your ‘trading plan’ is not a ‘trading plan’ at all I’m afraid. If NOTHING else: at what point would you take profit??? Human nature will have you hold on to that profitable position ‘just that little bit longer’ and then ‘maybe just a little bit longer’ and then ‘maybe one more hour or day’ and when you look again those profits are gone and the position is a loser which, based on your ‘trading plan’, you’d now have to wait, who knows how long, for that same position to return to profit which could take days, months, years, and EVEN decades (by which time, unless you kept topping up the account, if your were not already margin called, the interest would ‘kill’ you anyway).
And if you doubt any of this then take a GOOD look at some charts. A ‘classic’ example that I could give you (if you have access to a chart for the pair) is to look at something like TRY/RON. A long position taken somewhere around December 2010 has not ONCE since then shown a profit. The swap on a pair like that is ‘astronomical’ and so is the $ value per pip movement EVEN on a micro (or nano) lot. There are other examples. Take a look at something more common like GBP/AUD right now. Today the GBP reached a 26-year low against the AUD.
If you want more proof: take a look at some VERY long term charts. You can find some here: Interbank Spot Rates | Currency Rate | Spot Exchange Rate | Oz Forex (and I’m talking about monthly, annual, and 10-year charts). You’d be SURPRISED to see how some currencies have been in a ‘straight line’ either downward or upward trend for a decade!!! And I know what you’re thinking: this won’t or cannot happen on short timeframes. Not so my friend.
The ONLY ‘OUTSIDE CHANCE’ that a ‘trading plan’ such as yours would stand MAY be with something like commodities or metals. Given enough money for example: you could simply buy Gold or Oil or Silver (or Corn or Wheat i.e. you name it). It’s simply a ‘given’ that over time the prices of these instruments will rise in spite of some (in some cases very serious) corrections along the way. I say ‘given enough money’ because you’d have to make sure that your account could withstand the prices of such instruments going to ZERO and while that will probably never happen you’re at least ‘playing it as safe as is humanly and mathematically possible’ and, of course, you’d have to cover the swap (interest). The worst case scenario is that price could drop after entry and / or stay trading in a range for YEARS before the price goes up and THEN of course you’d be faced with the same problem: do I take profit NOW even although I’ve had this position open for five years or wait ‘just a little bit longer’.
Nah. Sorry to ‘burst your bubble’ but your ‘trading plan’ simply is a ‘non starter’ no matter how well you THINK you’ve been doing for the past few months. But keep at it for the sake of argument. The day WILL come when ONE TRADE WILL take out your ENTIRE account. It’s not a question of ‘if’ but rather a question of ‘when’.
Regards,
Dale.
LOL! Conventional wisdom v. outside the box rational.
There ARE ways of making a strategy such as yours profitable. Money management, as well as understanding and identifying market momentum, and the sudden shifts are key.
Price itself is an oscillator. Look long term, and bias trades back towards historical middle and most likely you will be fine.
My advice would be to find trades that have LOW swap rates, and positive room to move.
A strategy like this needs to be well thought out, and done with reverse leverage.
I play TINY lot sizes on a small live account, and have done nothing but short the pound since January with no stops.
I have banked well over 5000 pips, and added 18% to the account.
It’s all about the lot sizes, using pending not market orderd, and rebalancing occasionally.
Somebody around here (years ago) used to have a ‘signature’ that went along the lines of ‘you will always find somebody that will try to skate uphill’!!! It took me a long time and cost me (an a few others) a lot of money to understand what that meant!!!
You Master Tang have just a ‘tad’ more than two or three months experience so don’t forget that. Personally: I’d never trade like that not even if you paid me but you’ve obviously done alright THUS far. My only (pertinent) question to you would be: OK so you’ve done nothing other than shorting the GBP since January. So at what point do you decide to only long the GBP??? That’s certainly not a ‘judgement call’ that a new trader with a few months worth of experience is going to be able to make!!!
Regards,
Dale.
MT, that’s gambling. If there is a major event, like say a really ugly bombing in London or something like that, say good bye to your account. Or if it’s going not in your way your capital is locked up in something what brings just losses. I thought about that also and I do not find any advantages in it. I though about that regarding carry trades.
To have a good system with a proper risk control makes more money, is safer and gives you more flexibility while not locking in your capital long term. And if you trade with higher leverage and no stops as well you just wait for the moment happen when the connection breaks and the price goes off against you.
I do also think no stops have to do with a weak style of trading. It just shows that you did not make your homework. Even if you use very tiny lot sizes, why would you have locked up your capital in a loser for months or years if you could just jump off the sinking ship and store your value elsewhere and make money with it?
The really dangerous thing also develops, if you become profitable at first. That can go for months and years. You then might believe stops are not needed. Until the very sure moment (Dale wrote it already with that not if but when) when things go against you.
Just to explain that a little more. If anybodies money is in a trade it is exposure. Not only can everybody see that your money is on the table. They can also use it for their advantage. Sure, you might think, if you use no stop loss setting, that the broker doesn’t know where you would want your exposure to close. But here comes in another skill: To place your stop there where this risk to get hit by the market or any other event is the lowest, while still keeping the highest chance. It is essentially a high skill to determine that stop level, but if you do that, you have way more control over your risk and your exposure. There is no “if” anymore then. You just risk a given amount and that’s it. That’s also part of my thinking to look down first before looking up. If I place a trade, I have no emotions, because I see the maximum risk is already set. I can’t lose more than that. Okay, in a major event the price could shot through for some good pips, but there is still an advantage that it will be closed as soon as possible. No stop at all would probably just run you straight into a margin call.
At least, it doesn’t need ugly bombings. Once or twice in a decade you have such things like black Fridays at the financial markets. Prices could jump around wildly. Can you imagine what happens, if gpbusd just for a second jumps from from 1.60 via 1.55 etc. to 0.10 and back because of a algo chain reaction? If you have a stop set, your exposure will be closed at 1.55 and that’s it. If you don’t have a stop in place, your account will be ashes.