New to forex and been following baby pips forum since 1 year ago…
I have a question which just pop up on my mind and i hope to have all your wonderful opinions regarding the above question…
Always love to hear from others because we are alwaysssssssss learning everyday…
Recently i just read upon jonathon fox thread and he mentioned whether u are a high win % trader with low risk-reward or low win % trader with high risk-reward really depends on individual…(agree)
I more biased towards one. Pardon me for my poor written english as i more chinese spoken…
This is really a psychology area, for me. Some people like the exciting, big-return trades that come around from time to time, and are happy to sit through some losses to get there. Others hate losses, so would prefer to have a great win percentage and are happy to have a lower reward per trade to pay for that. It’s a very personal thing - indeed, it is right at the heart of a successful approach to trading - and both approaches work as long as they are consistently executed off a sound strategy. So you might get a list of votes on here for one approach or the other, but really you just need to decide for yourself which you prefer - there is no ‘right’ answer.
But for what it is worth, I hate losing, so prefer a higher win rate and lower percentage return on each trade. But that does not mean a low return per trade, I just tend not to hold out for the big 15:1.
Lol I don’t mind the question at all. Yes, I am in my third year of full time trading. Although one of the many benefits of trading is that it does not require full time hours, so my wife and I have a business on the side, and I also spend a good chunk of my time on childcare, as the kids are only young once and trading gives us the opportunity not to need professional childcare as we both work largely from home. But yes, I’m a full time currency trader. It is a second career, I did ten years working for the UK Civil Service, but when kids started turning up we made some changes, among them being that we both moved our work focus to home rather than commuting.
I also been working for my government under the civil service sector…
Can’t manage the politics and i myself probably more of a loner…
Trying to go full time into currency trading.
Understand from some traders and also from books that don’t go into full time trading at the initial stage till u make consistent profits then convert to full time…
The reason may be due to psychology factor and monetary factor so will not stress myself into making income every month in the end will lead to stupid trades and emotional trading…( what do you think)
Actually sounds ideal ST, time for trading, partner, children and additional work on the side…(I didn’t put trading first in the list for any particular reason lol)…
I’m also of the same and don’t like to take losses, so a high win rate at nothing less than 1:2 risk:reward is what I use. I guess the term ‘High Win Rate’ is down to personal opinion, and thinking about it, my win rate is not particularly high, but to a degree its stable and constant, which is what matters more to me. Even a 50% win rate, which can’t be considered as a high win rate I would assume, at 1:2 risk:reward would yield phenomenal results.
I don’t know if you have just exaggerated you example to make more of a point, but at face value of what you said your risking 45 pips as your maximum potential loss, to make 5 pips as your maximum potential gain. That’s 9:1 Risk:Reward….your risking 9 times as much as your aiming to make in profit. Even if your win rate is 90% you will be at a loss due to spread, I’d make an educated guess and say that a win rate of 95% would finally yield you some sort of profit!
One important factor to look at with Risk: Reward, which I believe has not been mentioned, is diminishing returns. As you increase the potential RR in any trade set-up, you are (from a stats point of view) reducing the likelihood that your trade will reach your desired profit level. We can all find trades that have a potential pay out of 1:1000….but what’s the likelihood that it will hit the profit target to give that RR ratio, well the odds are most probably equal to, or less than the RR itself.
So finding that ‘sweet spot’, that threshold where you are maximising your potential profit while staying within the common parameters of the market itself is also very important. If you keep looking for those huge RR set-ups, which are beyond the realm likeliness, then at some point you may as well stop with the trading, and go buy lottery tickets.
Well I was a slightly odd case so my example is, perhaps, not the best model in terms of helping others plan a route. I put a potted bio on here a few months back in another thread - indeed, I have recently been wondering about starting a thread with a few of my longer posts grouped together, as I get a fair few requests for follow ups, reminders etc - but for what it is worth:
I left the Civil Service on a Special Leave (as my wife had had a baby, we get to have time off to help with childcare, up to 14 months per child with frozen benefits etc.), meaning that 14 months later I could go back in at my old grade/salary etc, which gave me a great safety net. We also sold a house (an investment property) at around the same time I left, and got a little more than we expected from the sale, so that gave us some funds to seed my trading account.
Plus I am lucky enough to have a very understanding Mrs Templar, who has a proper career job in the private sector, and agreed to support us for up to two years without me putting any bread on the table (other than helping to run our other (unrelated)) business, which meant that I could focus completely on my trading (I come from a defence/security/law enforcement/international politics background, so no finance and no forex experience!). So I went full time from the outset, but I did not have to make any money, so there was far less pressure on me than there would have been had I had to live on my trading income.
I would advocate anyone only to go full time when they are consistently profitable, for at least six months, preferably over a year. I was just lucky enough to get to go pro without having direct pressure to make any money, as it struck us as the fastest way for me to either realize that this is not for me or to get to a position where I could make some proper money. We have an unofficial deal whereby Mrs Templar gets some time off down the track funded by my trading adventure.
Anyway, apologies for sidetracking the thread… but I guess as it is your thread it’s kind of okay lol.
Lol yes indeed, that was the principal driver behind getting into trading, work-life balance; I was a colonel-equivalent in my old career, now I make more money from trading than I did then, yet I also do all the school runs for our three boys (they’re three, five and seven years old now), and have time to take them to football, cubs, cricket, swimming, see Mrs Templar for lunch each day (Mrs T works largely from home, otherwise London or overseas for the odd couple of days only) and get my weekends free, when I used to work them virtually every week. I occasionally have to pinch myself that my income and control have gone up while my hours have reduced by an equally amazing amount. I’d recommend anyone to try trading - if one discovers an aptitude, then there is little to match it, imho, as it leaves plenty of time to pursue other things in parallel.
I loved the old career job, but it came with downsides, all of which have been addressed by trading, which I also love. The original no-brainer!
Obviously the perfect scenario would be both, high win % and high risk:reward ratio but the reality is it’s very difficult to maintain this. I also like a few others here prefer a high win %, keep morale high but I also dip and dive into the occassional 1:10+ trades (on average once every few months).
Like your sonic the hedgehog… hehe
You are right in mentioning the <profit reward , the lower chance of achieving it.
I think maybe is how each one of us capture the strategy…
Its always the trader that makes the difference…
Everything in moderation…
Thanks everyone for replying and the wonderful feedback u all gave.
Its not my thread, really hope we can share and everyone thread.
ST,
I am also from the defense side, just a sergeant on the military side…
No experience, like numbers and probability and most important freedommmmmmmm… haha x10000000
So judging from what you say, you must be trading from higher time frame levels???
Jezzode,
You are also quite active in baby pips as i been seeing you around…
Full time trader tooooooo???
There’s no ‘just’ when you’re serving your country, imho.
In terms of my trading, I trade a mix of end of day and intraday. I trade off the higher timeframes every evening (except Friday and Saturday!), entering trades through orders.
I also intraday trade, but only when the market looks pretty clean and when it works around other stuff. I am basically not touching intraday at the moment until the Greek mess sorts itself out. Generally I work three hours in the morning, 0530-0830 (UK), then do the school run. I would then look in again late morning, so I hit the closes of the 0400 and 0800 four hourly bars, and a decent number of Hourly bar closes. But as I say, I am not bothering with that at the moment as end of day is giving me what I want and enabling me to tune out the current noise.
I suppose you could call me a full time trader in the sense that I do it five days a week, but I don’t think I’m quite at the pro-full time status yet! I’m approaching my third and final year at University in the UK, and started studying trading concepts near to four years ago.
I’ve been trading live for just over 12 months (in a serious fashion), after two years of demo trading a strategy that I wanted to fully understand. I guess the demo period was rather extended, but I’m a statistics kind of guy, so by the time I had enough data and had carried out enough tests (by hand, no EA) and got a nice sample of results; only then did I decide to move into a Live account.
Now, three years later, I’m using the same underlying strategy I was working on at the start of my learning curve, but with a few adjustments that vary with the market behaviour etc. I’m not drawing an income from my trading account as of yet, mainly because I want it to, or rather need it to accumulate to a sufficient amount to so that in a years’ time I can trade full time whilst drawing an income and still have enough in the trading account so that the gains can be compounded out.
So, am I full time, very much so, but not at the stage of drawing an income as of yet. I’ll let my student loan cover my expenses!
I also trade the 15M charts, currently in:
GBP/USD
EUR/USD
USD/CHF
EUR/JPY
GBP/JPY
I use Fibs and Oscillator Divergence only, along with Price. Average number of trades per month in each pair is about five, with about a 60% hit rate with all trades risking a fixed 1:2.
I been learning that most of traders earning and trading full time do so on higher time frames…
So seems to me any time frame also can make profit as long as you do a proper analysis???
There is no right or wrong way to trade the markets in terms of being profitable, its all down to what suits you and what you are personally more successful at.
