Is making 3% of your total investment on some days considered good?

[beginner2e1]

Hello everyone, I have a question and that is:
Is making 3%-4% for 3 consequtive days in forex trading considered a good week when losing only 6% on one day the day after? I have taken more larger losses but I would like to understand if my learning is progressing. is it possible to make this consistently? Has anybody done is before? And could you tell me the most you have made in a day and the most you have lost in a day in percentages and what you did wrong or what went wrong? Thank you very much everyone for helping out a newbie like me. It is much appreciated.

Beginner2e1

[rhodytrader]

If you can have three days of 3%-4% gains for each day of 6% losses, then in the long run you’ll do OK. I suspect you won’t like the ride, though. Three steps forward, two steps back.

More worrying is the prospect of it not just being a single day of 6% loss (or larger), but having that happen multiple days in a row. That could do some serious damage to your account.

At this point you shouldn’t be thinking about what other people do. It’s not really relevant. You should be thinking in terms of developing a habit of making good trades and losing at little as possible on the inevitable bad trades you’re going to make during the learning process. As things progress you’ll be able to figure out what daily returns makes sense for you.

[beginner2e1]

Thank you very much. Your reply is appreciated. I will focus on losing as little as possible.

[lexys]

I will focus on losing as little as possible.

An excellent approach!

Is making 3%-4% for 3 consequtive days in forex trading considered a good week when losing only 6% on one day the day after?

It depends to some extent on your perspective, your degree of risk-aversion, the amounts of money involved and what proportion of your assets they are, and other subjective things, I suppose?

When I first started on demo trading, I had one or two weeks like that, and they felt quite good to me, really: I was well ahead at the end of the week, after all.

It didn’t take long to realise that this was really “gambling” rather than “trading”, though.

If you can lose 6% of your account in a single day, at some point that’s going to happen on each of four or five consecutive days - without your doing anything “wrong” at all and just by sticking to your profitable system - and that’s going to blow a massive hole in your account.

So my instinctive answer now tends to be “No: that isn’t a good week [I][U]really[/U][/I], because it indicates that the position-sizing is far, far too high, and it’s living too dangerously”.

is it possible to make this consistently?

Yes - it’s [I]possible[/I], but with overall figures like that, [U]it’s also possible to have disasters[/U], and the longer you trade with that kind of position-sizing, the more likely they are to arise.

Has anybody done is before?

Yes, they have … but most people who have done that and eventually maintained steadily successful trading have done so by reducing their position-sizing significantly from that, and by learning to look at everything they’re doing primarily in terms of risk-management.

And could you tell me the most you have made in a day

I can’t even remember. Even for a full-time, active, trader like myself, taking over 100 trades per month, only a [I]monthly[/I] figure is really worth looking at in that way (not so much a daily figure), it seems to me.

I have [B][U]once[/U][/B] (about three years ago) had a single month in which I made 20% profit, through a combination of working very hard, finding all the right opportunities and being phenomenally lucky as well. It’s probably not something I’ll ever repeat again, and that doesn’t matter.

When I sit down every morning to start the day’s trading, my primary objective isn’t to make a profit on the day: it’s to be able to sit down again at the same time the next morning and start trading again. Knowing that I’m trading with a genuine edge and am statistically far more likely to make money than to lose money, collectively, [B]being able to do that reliably is all that matters[/B].

As long as I don’t make any significant losses through excess risk/position-sizing, I shouldn’t ever come to any harm.

and the most you have lost in a day in percentages

I had a day in 2016 when I lost 2.5% of what was in my trading account, and it made my blood run cold, because I understood enough about statistics to appreciate instinctively that if I ever had a whole week like that, it would blow a 12.5% hole in my account - and since I do this for a living, I obviously can’t afford to lose 12.5% of my account in a week! :o

and what you did wrong or what went wrong?

I did nothing wrong. It was just very unlucky: one of those days when everything I did seemed to go wrong. Even if you have a win-rate of about 70%, you’re still going to have times when you lose 7 or 8 trades in a row. Maybe even more. It’s foreseeable. It [B][U]will[/U][/B] happen.

One has to be able to work out, statistically, [I]how likely[/I] that is to happen - how many days of the year it’s reasonably foreseeable, [I]allowing for bad luck[/I], might turn out to be like that, and to use position-sizing on [U]every[/U] day of the year to minimize its impact when that happens.

Just my perspective (and I mention it knowing that it’s different from the perspectives of many other members here, who will doubtless make other, different points and have other, different reasons for them.)

[beginner2e1]

An excellent approach!

It depends to some extent on your perspective, your degree of risk-aversion, the amounts of money involved and what proportion of your assets they are, and other subjective things, I suppose?

When I first started on demo trading, I had one or two weeks like that, and they felt quite good to me, really: I was well ahead at the end of the week, after all.

It didn’t take long to realise that this was really “gambling” rather than “trading”, though.

If you can lose 6% of your account in a single day, at some point that’s going to happen on each of four or five consecutive days - without your doing anything “wrong” at all and just by sticking to your profitable system - and that’s going to blow a massive hole in your account.

So my instinctive answer now tends to be “No: that isn’t a good week [I][U]really[/U][/I], because it indicates that the position-sizing is far, far too high, and it’s living too dangerously”.

Yes - it’s [I]possible[/I], but with overall figures like that, [U]it’s also possible to have disasters[/U], and the longer you trade with that kind of position-sizing, the more likely they are to arise.

Yes, they have … but most people who have done that and eventually maintained steadily successful trading have done so by reducing their position-sizing significantly from that, and by learning to look at everything they’re doing primarily in terms of risk-management.

I can’t even remember. Even for a full-time, active, trader like myself, taking over 100 trades per month, only a [I]monthly[/I] figure is really worth looking at in that way (not so much a daily figure), it seems to me.

I have [B][U]once[/U][/B] (about three years ago) had a single month in which I made 20% profit, through a combination of working very hard, finding all the right opportunities and being phenomenally lucky as well. It’s probably not something I’ll ever repeat again, and that doesn’t matter.

When I sit down every morning to start the day’s trading, my primary objective isn’t to make a profit on the day: it’s to be able to sit down again at the same time the next morning and start trading again. Knowing that I’m trading with a genuine edge and am statistically far more likely to make money than to lose money, collectively, [B]being able to do that reliably is all that matters[/B].

As long as I don’t make any significant losses through excess risk/position-sizing, I shouldn’t ever come to any harm.

I had a day in 2016 when I lost 2.5% of what was in my trading account, and it made my blood run cold, because I understood enough about statistics to appreciate instinctively that if I ever had a whole week like that, it would blow a 12.5% hole in my account - and since I do this for a living, I obviously can’t afford to lose 12.5% of my account in a week! :o

I did nothing wrong. It was just very unlucky: one of those days when everything I did seemed to go wrong. Even if you have a win-rate of about 70%, you’re still going to have times when you lose 7 or 8 trades in a row. Maybe even more. It’s foreseeable. It [B][U]will[/U][/B] happen.

One has to be able to work out, statistically, [I]how likely[/I] that is to happen - how many days of the year it’s reasonably foreseeable, [I]allowing for bad luck[/I], might turn out to be like that, and to use position-sizing on [U]every[/U] day of the year to minimize its impact when that happens.

Just my perspective (and I mention it knowing that it’s different from the perspectives of many other members here, who will doubtless make other, different points and have other, different reasons for them.)

First and foremost, thank you for an in-depth answer to my situation as it gave me the understanding of what I was doing wrong, secondly, thank you for taking the time to reply at all to a newbie like me pestering people about his win/loss

I understand clearly what had gone wrong, and your advice only further proves the advice that you should not front more than 2% of your account size as position-sizes.

My problem was that I had gotten greedy and shot myself in the foot. this made me reflect and understand that my account could be half depleted by only 8 days more like this one. Lesson learnt. I also think I should become less aggressive in my trading methods because this could have been a factor of this but the main thing I have learnt here is that I need to work on my trading psychology. I think I need to tweak my strategy to something milder and less aggressive as well.

just when I thought I may have found what works for me…

Thank you very, very much for your in-depth feedback