Is it possible?

Trading Discussion
1

Here is what I don’t understand.
People say it’s hard to make 20-30% a month even for pros.

Okay so here me out. I’m still a newbie but i’ve gained a good amount of knowledge in this market.

Say you have a $2000 dollar account. Every day you go for one trade. After the trade you close the charts because you’re a disciplined person

Leverage is about 1:40
4 mini lots.
And you aim for 10 pips. Every day when you hit the 10 pip mark on a trade you exit out
Cashing in about $40.
$40/$2000= 2% of your account.

And you should also only be risking about 2% of your account on every trade. But once you get 1 trade with 10 pips you’re done for the day. If you repeat this process everyday( ONLY ON TRADES THAT THERE IS A VERY HIGH PROBABILITY OF WINNING), can’t you simply make %90 of your account value in a month?

And once you double the account value you simply double the amount of lots. This keeps the risk at %2 and the profits at %2.

Please tell me if there is anywhere where i’m messing up on this!

2

Its sounds good right? but no its not that easy. Your numbers are off say like you said you make 2% per trade and make one trade per day. Well on average you have about 20 trading days a month 2%X20 days=40% monthly. Now that also does not take into account losing trades that you will have and often. So now lets say you have a win ratio of 75% (which is aiming high) and you also risk 2% on a trade for a 1:1 risk to reward. That means out of those 20 days you had 15 winning days and 5 losing days. Now all of a sudden your profits have dropped to 20% monthly and good luck winning 75% of your trades consistently month to month. Not saying it cant be done but it is not an easy thing to do. I can honestly say I cant do it.

3

They do say that, yes. And for good reasons.

I’ll level with you: I’ve been doing this for a living for years, now, and I admit that I [I]have[/I] [B][U]once[/U][/B] made 20% in a month (actually 21%). With the most extraordinary run of good luck that I’ve ever seen, and by working very hard and very long hours and having nothing else to do all month. (I shudder to remember how many hours I worked, that month, and I’m amazed what a lucky run I had.) I honestly won’t be surprised - or concerned - if I never manage that again. And I’m certainly not aiming to.

And if the best and safest and highest-probability trades of the month happen to be the ones that come along an hour or two later, then you’ve chosen to miss them “because you’re a disciplined person”?

Here’s a different perspective for you: either your trades collectively have an edge (net positive expectancy) or they don’t. If they don’t, you’re not going to make money, whatever you do. If they do, then surely it makes sense to take as many of your discplined set-ups (because you’re a disciplined person :wink: ) as arise during the day?

To say the same thing in slightly different words: you have your proven edge (because without it, you have nothing), so it’s logical to apply it as often as is possible and safe, within whatever parameters define that proven edge.

You’re not allowing for losers.

Not even for losing [I]trades[/I], apparently, let alone for the losing [I]days[/I] which you [U][I]will[/I][/U] encounter.

Edited to add: this book would help you [B]hugely[/B] (and you might find a PDF copy of it online, too): “[I]Profitability and Systematic Trading[/I]” by Michael Harris (Wiley, 2007).

4

Another thing you have to take into account with a 10 pip strategy is spreads will factor hugely. With EUR/USD you have a typical 2 pip spread sometimes lower sometime higher but figure 2 pips. That means when you enter a trade you are already behind 2 pips not your stop also has a 2 pip spread so technically a 10 pip stop is actually 6 pips. To make your 10 pip price has to move 14 to cover the entry spread and the exit spread. All of a sudden that 10 pip concept dont seem so great anymore.

5

Thanks for that recommendation, Dr. Lexy, you are so knowledgeable and a huge help to us all.

I started looking at that book right now and it is exactly what I need at this point in my journey…

Here is a .pdf version :

https://www.google.co.uk/url?sa=t&source=web&rct=j&url=https://forex-pdf.com/pdf/p/54652--pro-tability-and-systematic-trading.pdf&ved=0ahUKEwjG9Nb1zffPAhWHKMAKHUsJCLEQFghaMAk&usg=AFQjCNFBYq4jTTcBvPN0kAHl-zrWH4_XzQ&sig2=sv4I4YbhtfY7Mv6JGenaVQ

Click on the link and the download will initiate on your machine.

Thank you, Dr. Lexy…

6

Here is an excerpt from the book’s preface:

Screenshot_2016-10-26-05-29-31.jpg700×394 69.7 KB

Discuss :slight_smile:

7

I have to say, PMH, I am exceedingly disappointed by your choice of extract here. As someone who has never traded TA or indicators, and has a published trading record that no one would envy, how comes you are now taking the position of condemning TA as “fancy charts” which only “impose illusions on the human mind”. Hardly creates a level playing field for “discussion”.

There seems to be a trend that the more one loses the more one becomes an expert that should be listened to.

Having quietly got on with my indicator-based trading for many years, both as an institutional trader and subsequently as a retail trader, there is clearly nothing here for me to discuss. So i’ll leave the discussing to you and just get on with my trading. Good luck to you Frances, I think you are really going to need it!

Trading is not some kind of kid’s “game”, it is a serious business that involves huge amounts of peoples’ personal funds. It is real, it is dangerous, it ruins real peoples’ real lives if they do not treat it as serious. But, that is not what people want to hear and so I’m done here and I’ll leave you all to your dream…

8

Hi Keith, perhaps you are right.

I probably chose the wrong quote from the book to do it justice…

I was only doing so for the simple reason that of the (few) books on trading

that I have read, physical or virtual, this is the only one that says it will not

post pictures of past charts.

This is why I just said ‘discuss’, because I do not have an opinion: how could I have an opinion

for or against? There are, like you, and Lexy, lots of traders who use TA the ‘right’ way, meaning,

who do so professionally… It was not a way of saying ‘it is bad’…

The other comments are all valid, and, as ever, you are far ahead than most of us will ever be.

But the book looks good because it does deal with the issue of common misconceptions, so perhaps

I/others will find it helpful. Indeed, it does talk about traders blowing money after chasing a dream,

or treating it like a hobby.

I will post less on BP because I have nothing new to offer to the general public, since all my previous

threads have led to the realisation that I have a lot of learning to do, and that will be done away from

BP.

:slight_smile:

9

  1. there is no such thing as a high probability winning trade. nobody knows ANY probability. it’s not quantifyable.

  2. 10 pip profit? where’s your stop loss? THAT’s the crucial question. if you lose 80 pips you’ll need 8!!! profitable trades to get even again.

coclusion: it’s NEVER EVER gonna work. trading is a lot more complicated. trust me on this one.

10

Dont forget the negative lot effect too! Its a killer!

When you have a loss (or 2,3,4… in a row) You have to trade with a reduced lot size! (or take more risk). So you now have to make a lot more winning trades to catch up!

This is where money management is very important. There are different strategies to use, but in the end its all about risk.

So if you are scalping, you have to have a very high win-loss ratio.

11

What is the probability that you will win everytime? and it’s sometimes very hard to find that one trade that will give you 10 pips. Moreover there are major news impacting the market on the opposite direction also. So in that case closing the charts after you put the trade is not a very good option.

12

The strategy that can SURELY profit 10 pips EVERYDAY is a Holy Grail. Why people so obsess with 10 pips strategies?

13

Cause it’s easy to calculate. :slight_smile: Everyone dreaming about 10 100%sure-noloss-pips. You can then increase your lot size and buy new iphone, increase once again and get a car. Sadly the reality is almost always different.

14

Because it’s enough of a modest-sounding aim to get past the credibility gap, and to encourage people to feel that they’re not living in dreamland or chasing get-rich-quick schemes, if they aspire to it. So it has “plausibility” (to some people - these are typically people who imagine (a) that very high win-rates are achievable with small targets, and (b) that their own success-prospects are roughly in proportion to the win-rates they can achieve; they’re numerate enough to understand the power of compounding profits, but they’re often not experienced enough to understand anything at all about risk management :o ).

15

Maybe in theory. But I would put money that you wont be winning with anywhere near that level of consistency. That is the problem.

16

Ouch that hurt me and all I did was read it.

17

They just want to be at forex charts all day long, they are too attached to trading.

18

…
…
…

19

There are lots of strategies in Forex Trading, we need to check that which strategy will work in which condition.

20

What strategy works and in which conditions it will tell you your practice. It will make you skilled how to deal with different situations. In forex nothing is final you may earn 100% inone trade or have to wait for days even for some pips of profit.