What do you think of my current strategy?
I get buy/sell alerts for the EUR/USD pair, the only pair I trade. I set the TP at 10, and SL at 40, depending on what I’m willing to risk.
My goal is to make 6 or 10 pips, then close out. It was working. and I was making 25 to 35 per trade, then I got greedy and made a higher trade and lost what I had made.
Now I plan to make sure I stick with 6-10 pips and close.
I just want to supplement my income and make a $500-900 per month.
You haven’t said anything about what it is.
You’ve described some trade management (TP/SL etc.) but not what the strategy is.
Anyway, whatever it is, the answer to whether or not it’s profitable is essentially a factual, objective, statistical one. Either it wins more on the trades it wins than it loses on the trades it loses, or it doesn’t. (You might want to [U]know[/U] which, by extensive testing, before playing it with real money, I’d expect?).
And with a stop-loss at least four times the size of its targets, you’re going to need the results of a very large number of trades, to judge that with a high degree of statistical significance.
But nobody can realistically comment on whether your targets and stop-losses are sensible and appropriate without knowing what the strategy is, and with respect, I advise you to be very careful indeed about putting much credence into the comments of anyone who purports to!
Lexy is far more educated and diplomatic than myself. I’m a redneck bipolar Gemini so I’ll cut to the chase. You have the talk of a newbie and this plan s|u|x|s. Don’t do it. Your broker is going to put a new deposit on that boat he has being eyeing off.
Lets break it down a bit so hopefully you can learn from some of my mistakes. If using your plan of 10/40 TP/SL, your trade as a random event has an 80% chance of winning. Which leaves you at break-even. But the market is a *itch and you have to pay a little thing called spread. So with 1 pip spread as a random event your system will delivery a probability of 78%. So over 100 trades you’ll lose 100 pips. You need to somehow get an addition 2 wins just to break even. You need to filter you entries so they are no longer a random event. This is not an easy task. Chances are for every false signal you filter out, you probably filter out 1 good one as well. Leaving you no better off. That’s life.
So somehow you’ve found the holy grail and have managed to filter you entries to achieve a 85% win rate. And somehow, just somehow, you manage to get 5 trades off every day. Over a 4 week period you’ll make 150 pips. Without leverage this represents a gain of 1.5%. You will need an minimum of account size of $33 400 to make your $500 target.
But what’s the real cost to you. Well, by my own screen time experience, you’ll probably need to spend 5 hours a day to achieve this. That’s 100hr a month generating you a wage of just $5 bucks an hour. Now ask yourself this, whats simpler and less risky, trading or go get yourself a second job.
GET YOURSELF A SECOND JOB. THIS JUST ISN’T WORTH YOUR TIME.
Now, a little disclaimer. The formulas I have used in these calculations are my own from my historical testing. They are rule of thumb formula’s but I have found hold true. I have also presumed a USD account trading the EURUSD pair. There are many other factors that effect the final outcome. Experience, leverage used, commission costs, swap to name a few. Maybe in the hands of a skilled trader such as Lexy, she could generate 2% a month like this. I know I couldn’t.
I would suggest that the terminology you have used, your experience is very limited. If you have access to the funding required, give it to fund manager. They’ll generate a a far better return for you that speculating will. But, if you think you can commit, then go for it. It will take many years to master. Never deviate from your plan. And maybe in 5 years with the use of leverage, you’ll be generating 10%+ a month and give up your day job altogether. Dare to dream. It’s one thing to make pips, it’s another to convert them into a profit. Plenty will testify to having a positive pip return but still lose because of costs.
Best of luck bro whichever way you go
Bob
…I still made no progress after four years of trading, with ups and downs (and disasters), yet I remember like it was yesterday how convinced I was at the start that trading was easy or at least logical enough for me to understand.
Yet if the best money managers struggle to achieve consistent returns year after year, how can any of us plan to make compiled profits every month?
As Bob said: better save that money instead of blowing it on more trading…
Trading is like any other business: you need training, market research, and practice BEFORE investing real capital in it. Unfortunately a lot of us started too quickly as newbies, maybe putting in a few weeks or months on demo and then funding a real account, with insufficient training, insufficient practice, and insufficient funding…
We should go back to the pre-internet days, when the ‘home retail trader’ as exists today was an impossibility as you would rarely get access to the financial products offered to retail traders today, at least not with so little capital.
While it is all above board, it preys on the greed and inexperience of newbies and it is an easy game.of taking their money without risking any.comeback (because that is what those risk disclaimers are for)…
Just to add some more cold water, but also a note of encouragement I hope,
Firstly, if you’re trading off alerts, presumably these are wholly or mostly based on the TA of the pair’s chart. In which case, I would advise (like Warren Buffet) never invest in something you can’t understand. If you understand the TA behind the signals (and agree with it), that’s fine (though why are you buying a signal service?), but if it’s just a BUY NOW or SELL NOW email with no analysis you can even verify, forget this approach.
Secondly, an entry dictated by TA will have its own unique rational place to set TP and SL. You can’t use a fixed amount of pips for each and expect a consistent result. Because the rationale behind the SL is random, so will your outcomes be random, so will your income be random. Successful trading means having an edge, not taking random shots in the hope of hitting a target now and then. So, get to understand how your market works, understand the TA that can help you (and the TA that can’t) - this is all possible and will work, it just takes time.
Take a moment of meditation and reflect why you have chosen T/P 10 and S/L 40. Is it because of the high win rate? Because of the lower lose rate? Does the high win rate makes you feel better? Are there more moments of pleasure? The time you dream at driving a beautiful sport car, or riding that motorcycle or sailing a beautiful sailboat is bigger? and all those dreams and things you will buy when you will be millionaire? Cause that happens, your dreaming and pleasure time increases.
How have you reached that precise T/P 10 and S/L 40? Is there a rational reason or is an emotional one?
Risk/Reward should be at least 1:1 IMHO. Instead of counting pips, count %. How many % per month you aim to gain.
6-10 pips profit, probably scalping.