Doc I dont know your account size. ‘Just above minum to prevent margin call’? How do you quantify that? Leverage seems conservative for a retail trader but so many pairs? Broadly speaking anything with USD/ XXX will behave in the same way to news. So you could be hit for a big up/ down?
Hmm… if I may ask… what strat are you using?
Isn’t leverage determined by the broker? Are there brokers who allow the trader to set leverage?
Percentage value is determined by the capital base you trade off.
6% from a million dollar capital base has a different value as 6% from 100.000 or 1000 dollars capital base.
Percentages are misleading if seen separate from the capital base you trade off.
Not sure I understand what you mean by “misleading” in this case?
If somebody says he is using 6% risk but makes no mention of his available capital base it can be misleading.
People tend to do that in here. They mention percentages but leave the factor capital base out.
The capital base I am trading off using 6% risk is a killer. I would be put away for insanity if I attempt to do it.
If $1000 that would be $60
If $10,000 that would be $600
If $100,000 that would be $6,000
If $1,000,000 that would be $60,000
If $10,000,000 that would be $600,000
“Killer” is relative.
Next week I plan to start trading the following real money system on Oanda, beginning with $10, (since most traders wipe out their starting capital let my loss be small, I plan to add more each month I am profitable, starting with $25 after 1 month’s success, then $50, $100 and so on).
I will be trading an Ichimoku Position trader system, 3% capital risk/trade, setting stop loss 20 pips above or below Kumo cloud and entering when 5 signals occur.
I exit when the signals 1-4 reverse.
I calculated the 15 max pairs based on this:
With 3% capital risk and stops of about 350 pips, average margin/trade is $.34/trade, max loss is $.30, so worse case scenario margin requirement/trade is $.64.
This means that I could hold 15.625 open trades, or 15 full trades and a smaller trade, (half as big) for a total of 16. If every trade moved against me by the maximum amount, 3% loss, then my available margin would remain above 0 and I would not get a margin call.
If I risked 2% then I could have 23 open trades and never risk a margin call.
I am still pondering what the parameters of the my systems should be, 3% risk, 2% 1%?
Should I use a TS to exit my trades and lock in profits, (thus guaranteeing higher % of winning trades? But then your profits will be smaller since you will be stopped out earlier than if you waited for the full trend to finish.
And what about the SL? Using the Kumo cloud is great in that it results in less SLs due to daily volatility or news but it results in large stops that result in smaller profits.
San Miguel has recommended I use the Kijun-sen as my SL, which makes them smaller by about 1/3 and use a TS to exit. I set the TS when the size of the profit is equal to the size of the SL, but 10 pips above or below my entry price, thus guaranteeing a winning trade.
I am running his system alongside the one described above in demo trading at 1% and 2% capital risk.
I will run all 3 systems in my Oanda FXgame account while I trade my $10 real money account with the above described system.
Should the 3% capital risk prove to high, I will have 2 other systems with smaller capital risk, (1 and 2%) to compare my results to, (as well as how a TS effects one’s overall performance).
Sounds incredibly confusing. It seems your goal is to open as many trades as possable for some reason. If your new it might be better to find a much simpler system to use.
In all honesty I think this is doomed to fail but if you go ahead with this, update us how it goes. I’d be interested to see if it lasts more than a week
Your position size isn’t simply a matter of how many pips away from entry you set your stop-loss. It’s also a matter of how many units you’re trading. You can optimize for that using backtesting. I show how in my thread (hint: it involves doing math, not using intuition).
I am trading on Oanda, so I set the number of units/trade based on the size SL and my capital risk.
For example, I know I can only risk 3%, so I calculate this amount, enter where my SL will be, then start plugging in numbers until the size of my SL is 3% of capital.
As for it being a confusing system, not really. Due to the glorious nature of the Ichimoky Kinko Hyo, It takes me 15 seconds to look at a chart and know if I need to enter, close or adjust a trade.
For those that want to know if the system works, I am keeping a daily log on the Ichimoku thread over on the “Free Forex Systems” forum.
So far, after 2 weeks, all 3 systems are incredibly succesful, but we’ll see how they do in the long term.