You all know how it goes, new trader, new live account every thing is going great and some thing happens and in a matter of days weeks of work are erased.
I am not completely drawn down (70%)I have enough left in my account to trade with. I am asking for advise now about my strategy.
Some background I have been demo about a year. Live a few weeks. I like to scalp eur/jpy during the Asian session. I have been watching this pair during this time of day for a long time. I am good at this. I am not questioning my trades. But my MM and some personal issues. My money management is this.
2% total loss per day is the maximum risk ( this varies a little due to small account size, minimum stop loss allowed by my broker, and minimum lot size.)
I set my stop as tight as I can, set my lot size to make this value equal as close to 2% as I can I figure the spread in to this also. Most of my trades get closed by me well before stoploss. As my account balance grows or shrinks throughout the night I adjust my lot size to keep the total risk of each trade to put my balance at a level that would represent a 2% loss from my nightly starting balance. This my sound complicated but its not in practice and it allows for some very good trades on good nights.
What went wrong? Me of course, I moved stops had large losses revenge traded my self to where I am now. This all happened very fast.
Does my MM sound reasonable? Does any one have tricks they use to detach themselves emotionally from trading.
I’m not a scalper, so I can’t speak to the specifics of how best to manage your risk from that perspective. My initial thought is that 2% risk per day seems high, but that depends a great deal on the type of loosing streaks you could have.
My suggestion, though, is that you risk as little as you can reasonably do so until such time as you sort out your other issues. It sounds like they are much more problematic than where you set your risk threshold.
Well it’s definately not your money managment if you admit to moving stops, had larger losses because of that, and then lost more because of revenge trading. That means at that point you had 0 money managment and began trading out of emotion rather than your scalping plan. And you tottally ignored your 2% loss from current balance as well.
If you are set on being a scalper then you have to follow your rules no matter what. Longer term traders that trade on the higher time frames can at least justify a small change if they see a candle formation happening or a long term trend breaking.
You’ve probably heard this before, but scalping HIGHLY stacks the odds against you ever making trading into a profitable long term venture.
IMO, once you’ve learned all can from it start looking for a longer term trading method. There are more pips with less effort and far easier to get in the right direction. And if you aren’t in the right direction it’s easier to get out with less damage or get out with a smaller profit.
I truly believe that to be a successful scalper it goes beyond just trying. It’s literally something you have to master to succeed. I can’t imagine standard money management would come into play when you’re scalping.
My advise. Scale back to 4HR or higher. You probably think I’m talking right out of my ass by just suggesting that, but I truly think it’s the best thing for you.
Yes I would agree, when you scalp, your just giving other people your money… 4H, 1H … just get away from these 1M, 5M charts…
trading should not be exciting, it should be boring… by scalping, you are trying to create excitement … for that… well, there is always other things in life that dont cost as much …
I know scalping is work and is hard and you pay your broker well. I enjoy it.I have tried longer time frames and have had success and losses. I keep coming back to scalping this pair and have been consistently in profit. That is if I follow my MM plan. I wanted to know if my plan sounded flawed. I know my execution of it was. To that end I have recruited my wife to watch me trade, and check out my daily totals. She can reach over my shoulder and close any loosing trade.
Tonight I am 4% up and I am done for the night.
18 min
6 trades
1 looser
10.4 pips gain.
I stuck with the plan.
The smallest stop I can set is 6 pips plus 1.2 (spread) so 7.2 pips risk.
2% of account balance divided by 7.2 to get lot size.
leverage really has nothing to do with this as I am miles away from a margin call.
I dont set a TP so I just wait for price to stall out and I close as soon as it turns. tonight my average win was 2.1 pips.
How many lots do you trade?
Are they micros? Mini’s? Standard?
How much money is in your account?
This will tell me your leverage. Your margin leverage is just an advertising ploy from your broker Lets work this out…
And just so i understand this, tonight, when you entered, price moved in your favor to cover your spread and 2.1 pips on avg before moving 6 pips to your stop?
So you would be risking 6 pips + spread (say 3) 9 pips total, to make 2.1? So your risk vs reward is 4.5pips risk to 1 … So basically, your willing to risk on mini’s 4.5 dollars just to make 1?
I close most trades out short of my stop.
Ok I will give you the numbers 99.15 to start 103.38 when I stoped.
3 micro lots for the first 4 trades 5 for the last 2
spread is 1.2
5X.11 = .55 per pip
7.2 (stop and spread)x.55 = 3.96 maximum risk per trade tonight
I understand by using a 2% total daily loss as a maximum risk I am risking more than 2% per trade. how is this different than people that use 2% risk per trade and may not even place a trade every day?
If you are going to risk more then you have potential to gain, then you have to have a HUGE … HUGE win vs reward problem.
I know you might not like what I’m saying, but all of my trading, 100% of it is based on probability. And the probability of success for you with an inverted risk vs reward where your avg loser is 5x that of your avg winner, you won’t be around here for long, and that includes your wife…
Its not easy to hear, I get that… but its better then some trader who isn’t profitable telling you what to do … I will never tell you what to do, except for two things… control your risk, and your leverage…
To calculate your leverage, do this:
Leverage = <Account Size> / <Contract Size>
Eg. Trading account with $5,624 trading 1 mini lot is leveraged:
leverage = 5,624 / 10 000
= 1 to 1.77
Any number OVER 1:5 is crazy … keep it between -5 and 5 …
How do you get negative 5?
trading account with 2,000 / 1,000 (1 mini lot) = -2 to 1
Oh further, 2% a day is a lot … my hard stop is 5% a month … and then, i’ll stop trading…
for you … your monthly draw down is 40% … ouch… thats a lot… that means if you had 3 bad months, your account is gone …
Its all about survival, I hope that it helps… and that you will survive longer for it… if you need help buddy, ask, i’m totally open to helping where I can … but please, if we base this on probability, you will end up with the 98% who don’t make it … its tough, its hard, and its a rough journey… be strong, sit back, think it through… and then lets grab a beer We can talk about the worst trade we ever made… LMAO … I have a great one from my early days
We don’t have enough data to say what an average winner and looser are. As I said most of my losers are closed out short of my stop. I will look back over the past few weeks and try to get some better data.
2% a day is to high you say I will look at number some more. I use it as it is the “acceptable” risk per trade thats posted here all the time and used in the school examples. I just chose to look at each days trading as one trade.
If you’re daily loss cut-off is 2% you can’t set your stop at 2% for each trade. That would basically mean that you’d be done for the day if your first trade got stopped out. As a scalper that’s not a situation you want to be in. I’d be thinking something more like 0.5% as the per trade stop to give you some room to recover if the first couple of trades don’t work out.
Here are my numbers from the last 2 1/2 weeks, the only thing I left out was the blow up at the end.
140 trades
91 wins
49 lose
avg win 2.43
avg loss -2.28
total gain 109.67
The longest losing streak was 6 trades
the longest winning streak was 12 trades
My risk to reward ratio does not seem to be as upside down as my stop suggests, as I do close most losers before they hit the stop.
I will look at reducing my 2% daily loss figure.
If my first few trades go bad It does mean I stop for the day. If that happens it happens fast and I go do something else.
Does any one have any ideas on preventing another blow up. My thoughts are by reducing my daily loss limit and trade risk a little I wont get as emotionally involved in a trade. In realty if I stick to my plan I am only talking about a few bucks one way or the other(right now). It does seem foolish to overreact and get reckless. But I did, I learned something about myself now I just put what I learned into practice.
And to clarify back, the term “negative leverage” is not used in a trading context. You may trade with leverage or “unleveraged” (position size smaller or equal to account value).
Unleveraged, negative leverage… we could debate that forever, but for the sake of all the users here, I don’t really care what you call it … but the fact remains that most traders are not even doing this … although I would make a strong case as to why the 98% do fail … Its all about survival … I wish more people would see it this way, they might have a better fighting chance…
Lets work this out…