Making a Living from FX Trading, Realistically

What limits hedge funds is the notional size of the trade that they are placing, and the low leverage that they use. They are also using clients funds, or a combination of, and so typically risk less than 0.5% of the total account balance per trade. They may have liquidity issues due to the high volume of the trade in question, and typically hold trades for longer time periods than retail traders - more of a ‘safe’ approach which is aided by the low leverage used (meaning they can afford to hold trades for longer periods of time when price move against their position - retail traders as we know have tighter stops when regarding day traders etc)

Just like we can trade a $50k account and risk perhaps 3% on a trade, we would not do the same with a $5M account and risk less than 3%.

Because hedge funds have a large account balance there is more at risk in terms of money, so less is risked, resulting in lower yearly gains. Trade the same method/approach on a retail account with increased risk (as we retail traders tend to) and you will see inflated gains. It’s all about finding the balance between how high you are willing to build an account and at what stage you will have to reduce the risk, aka emotional trading aspects.

What is the average and max percentage capital you risk per trade? Do you do mostly day trading or swing trading?

Also, I was going to mention this in a separate thread, but I’ll mention it here as well. I’m a big believer in having a mentor…someone who can help guide a person through something and provide advice, answers, opinions, etc.

If anyone has any advice on how to find a mentor in the area of FX trading, that would be much appreciated. Or if you feel like you’d be interested in something like that, I’d appreciate any feedback.

I’m open to all types of trading…day, swing, etc. Outside of my full-time job, I spend about 2 hours/day demo trading, reading charts, and performing research. I trade on FXCM and follow research on DailyFX and BK Forex.

Funny.

If you have $150,00 to spare, use it wisely. You are new? Dont start with $150,00 capital investment. Coming off from demo does not mean you are good at trading just yet. Demo only shows what kind of person you can be. When you are on a real account, this market will have you are your knees the first few months. You will lose sleep or even worse, lose yourself. Those who are successful MUST LOSE. Why? To understand your wrongs from your rights. Best to trade will a very small capital in order to understand how you will operate on a losing steak. Are you really going to follow “trade under X% rule?” Most traders dont know how to act when they are on a losing streak. They keep leveraging or risking more to make up the lost dough. Be smart. Unless you are a trillionaire who just wants to throw money around…

Typically up to 3.0% of my account balance per trade, with average monthly gains of between 12%-15%. I’m a day trader, however I usually place around 10 trades a month, with over half resulting in break-even status due to tight risk managment once in the trade in question.

[QUOTE=“Jezzode;563804”] Typically up to 3.0% of my account balance per trade, with average monthly gains of between 12%-15%. I’m a day trader, however I usually place around 10 trades a month, with over half resulting in break-even status due to tight risk managment once in the trade in question.[/QUOTE]

On average, how many pips do you try to capture per trade? Do you have a particular reward to risk ratio?

Given the current volatility of the pair that I trade I am for an average of 60 pipsTP - every trade has a fixed 1:2 risk to reward ratio. All about keeping it simple and repeatable once the hard grafting has been completed.

"Your primary goal as a trader.

  1. Develop a systematic trading approach in terms of strategy.
  2. Develop a systematic money management scheme.
    3.Spend time in “Forex Tester” gathering data analytics. Like winning percentage, losing percentage, mean R multiples, peak to trough drawdowns.
  3. Forget about goals of “X” pips per day, ect…
    5.Put all your focus and energy into executing your system without fail."

I saw this on a vidio at UrbanForex.com or search youtube for annual performance objectives & postion sizing.

After you demo trade your stratagy and make it mechanical as possible and can follow your rules of the trade set ups.
then open a small account, for you like 10k or 1k. trade that for 3 months to verify your system results with your backtesting results and your demo trading results. Then start adding to your account till your upto your 150k funding.