I’ve been learning how to backtest over at prorealtime.com on their free program. This means I can only do daily (or weekly, monthly). I’ve been working a simple strategy that involves a ma crossover. I’m starting with $10,000. One pip=.10 (micro trading). Trading the eur/usd. I’ve made some progress. I started out making @$1000 over 14 years (not reinvesting profits). I’m now at making $20,000 (loose optimization of ma parameters and stops, reinvesting profits). However, I’m putting in 10% of my capital with every trade, which is kind of high. ‘Most people’ recommend 1-2%.
If I were trading stocks, I would put in all my capital in a mutual fund, and, let’s say I’m a good mutual fund picker, and I made 10% a year (that’s higher than average, but not unreasonable). According to the rule of 72, I would double my money every 7.2 years. So in 14 years I would almost double my money twice and make @$30,000 plus avoid taxes
I really like my little system. I like the simplicity. It catches most of the big swings. It takes me out when it’s wrong. But the trouble of watching signals for less than 10% a year doesn’t seem worth it. I’ll keep trying for something better, but does anyone see a flaw in my reasoning? Or maybe a different direction I should go? Thanks.
I was informed, when I started 4x:: 2.2 years ago, that it is learning a new language, and from my point of view, without an instructor . . just what I can grasp from picking it up online.
Some places I’ve read say from 2-5 yrs full time study - A masters degree if you will.
I also believe that your 10% per year number, is doable every month in forex - with that belief alone - I am in for at least another full year of study.
I do have a small live account that I fund and I call it tuition.
I have to say, I agree with your opinion. I’ve been really getting into trading the last couple months, and I’ve found with my small live account, that each week I find my self getting better and better. Although I’ve lost some in the past, but without the losses I would have never learned how to make gains.
I feel that with forex, the potential for making gains goes beyond that 10%. I think depending on how much you’re willing to risk each trade would also play a role in that percentage.
I also believe that your 10% per year number, is doable every month in forex - with that belief alone - I am in for at least another full year of study. I do have a small live account that I fund and I call it tuition.
Good luck with your decisions.
Yes I’m really hoping for higher returns. 10%/month would certainly be better than what I’ve done so far. I wonder if being limited to trading the daily time frame limits my profits.
Also, I think you’re right in that patience and practice are key.
Thanks for your thoughts.
10% a month is certainly realistic if you know what you are doing. You can achieve this on the Daily timeframe, sure, you will probably find over time that you end up placing fewer trades but with higher pip targets and longer Stops. For every person who swears by the lower timeframes you will find one who swears by the higher timeframes and another who swears by a combination. As long as you have a strategy that suits the timeframe you trade, my own opinion is that you can make money with all the approaches, and that 10% is a perfectly reasonable ambition once you have put the learning time in.