When do you let go?

[spookie94]

I have been demoing a scalping system for over 2 months now and just broke even. Most of the time was spent in the red. I have been corresponding through email with the developer the whole time trying to turn it around. My loss/win ratio is about 55%loser & 45% winner. Should I look for a new system?

[mp6140]

“when do you let go ??”

whenever she threatens you with police action !!

mp

[ThePhoenix]

I have been demoing a scalping system for over 2 months now and just broke even. Most of the time was spent in the red. I have been corresponding through email with the developer the whole time trying to turn it around. My loss/win ratio is about 55%loser & 45% winner. Should I look for a new system?

Actually that’s not a bad ratio. There is only two possibilites of trading not going the way you would like (barring a rip off broker or mechanical malfunction) It’s either the system or the trader. You already have a ratio that is close to 50/50. Unless the winners are very small and the loser are very big, I’d say you have a tweakable system.

Your title question, “when do you let go.” Can be very meaningful in relation to bad trades. I’ve found that you can turn a losing system into a winning one just by learning when trades are likely to not go your way and getting out before the loss gets larger. I’m at the point now, where with many of my losses I’ve learned to cut them before it hits my full stop loss. Even a few saved pips over multiple losing trades can magnify the effectiveness of the winners.

So, it may be time to consider examining yourself as a trader. Make sure you are not impeding the execution of the system, examine what you are doing first and see if you deviated from your trading plan or did bad executions. Or, is your money/risk management killing your account.

[ezinvestor]

You could use this strategy which is a name hijack of the 2nd highest viewed thread on this forum, TRO’s “Never Lose Again”.

1. Use a broker that allows multiple sub-accounts, Very Important!

2. Take a position in the market based upon your market analysis, trade signals, fundamentals, indicators, ouija board, dart board, etc.

3. Trust that all the above was correct and that the trade goes in your direction for a TP.

4. If point 3 does not materialize see point 5.

5. Add this position to your swing trade portfolio using the tools listed in point 2 to determine new TP.

6. If point 5 does not materialize move this trade into your long term trade portfolio and wait with single minded patience to take your well deserved profits on another brilliant trade. (This is why you need a broker as described in point 1)

Now you have to ask yourself is this guy serious or just crappin’ on my thread.
To tell you the truth I kind of lost track myself. But I really do have a point!

Consider this…

Unlike stocks or futures, fortunes can be made in forex by people with moderate risk capital, guts, determination and the lack of fear of a margin call. No matter what system, robot, or trade method used it is impossible to have success without the proper understanding and respect for leverage and trade management. IMHO, every trader needs to spend more time understanding leverage and trade management and less time on indicators and systems.

ChitownKid

[spookie94]

Risk management is the main focus with this system. Never risk more than 2% per trade and stop for the day if you lose 10%. Ive never reached the 10%. I usually stop before I reach 5%. I trade about 3-4 hours a day and place about 8-15 trades in that time. I only use the Eur/Usd and trade only during low spreads and during week days.

My goal is 25-50 pips per day depending on how much I risk. Im trying to gain 5% per day (which I believe now is a little high). So as my account grows so will my risk.

It seems like I gain 2, then 3 pips only to lose 5. So I’m playing catch up all day. Ive only reached my goal 2 times in 30 days. And only 12 of those days have been on the plus side.

[spookie94]

You could use this strategy which is a name hijack of the 2nd highest viewed thread on this forum, TRO’s “Never Lose Again”.

1. Use a broker that allows multiple sub-accounts, Very Important!

2. Take a position in the market based upon your market analysis, trade signals, fundamentals, indicators, ouija board, dart board, etc.

3. Trust that all the above was correct and that the trade goes in your direction for a TP.

4. If point 3 does not materialize see point 5.

5. Add this position to your swing trade portfolio using the tools listed in point 2 to determine new TP.

6. If point 5 does not materialize move this trade into your long term trade portfolio and wait with single minded patience to take your well deserved profits on another brilliant trade. (This is why you need a broker as described in point 1)

Now you have to ask yourself is this guy serious or just crappin’ on my thread.
To tell you the truth I kind of lost track myself. But I really do have a point!

Consider this…

Unlike stocks or futures, fortunes can be made in forex by people with moderate risk capital, guts, determination and the lack of fear of a margin call. No matter what system, robot, or trade method used it is impossible to have success without the proper understanding and respect for leverage and trade management. IMHO, every trader needs to spend more time understanding leverage and trade management and less time on indicators and systems.

ChitownKid

A little crap never hurt anyone, like crops, maybe we can grow from it.

I learned my lesson on risk managment trading opions (the hard way).

I only have 50:1 leverage on this system.

[profitmaker]

“when do you let go ??”

whenever she threatens you with police action !!

mp

hahahaha… That’s right my friend
hahahaha

[ThePhoenix]

A little crap never hurt anyone, like crops, maybe we can grow from it.

I learned my lesson on risk managment trading opions (the hard way).

I only have 50:1 leverage on this system.

I see two problems spookie.

1. Risk managment/moneymanagment shouldn’t be the primary focus of your edge. Risk managment/moneymanagment won’t create a winning edge in and of themselves. While they can atribute to it greatly, mostly by finding where the point of no return is for the stop loss and finding where take profit points are usually at… Having good money management without an edge that has a higher probability of the trade going in your favor will only make you lose your account at a slower rate.

2. I don’t think you understand leverage. You keep saying that you are using only 50:1 and infering because of that you are at, “only 50:1,” that the lack of leverage is keeping your risk down.

This is not how leverage works, I thought the same thing, at first, and another member helped me and explained it.

All a 50:1 leverate ratio says is that for every fifty dollars you trade you have to have one in your account. So, all you are really doing by turning down your leverage is turning up the money required in your account to hold a position.

Lets say you are trading at $1.00 a pip. Wether you are at 400:1 leverage or 1:1 leverage you still lose or win $1.00 for every pip a trade goes with you or against you.

The danger of leverage is when you use both: a high ratio & trade the biggest lots (and thus the biggest pip value) you can.

So, as long as you trade according to your risk % you can tottally disregard your leverage ratio. It only comes into the risk calculation if you abuse it and use it foolishly.

To put it another way, lets say you’ve found that your typical stop loss & take profit point is 30 pips. So, on any one trade you’ve determined you will either get 30 pips or lose thirty pips. A 1:1 risk/reward. Then you would determine how much % of your account you want to risk on any one trade. Lets say you have 1k account and only want to risk 1% on any one trade.

1k * 1% =$10.00

Then you would take your pre determined SL/TP and divide your risk among it by that.

$10 / 30 pips = .33 cents a pip.

If you trade at .33 cents a pip and take profit or stop out at 30 pips, your risk reward will be the same regardless of your leverage ratio. Of course you would need a broker that allows you to fractionalize pip values to do this exactly, but you get the idea I hope.

Again, leverage is only dangerous if you abuse it and use it foolishly. The term, “over leveraged,” doesn’t mean that a trader has I high leverage ratio it means that they are trading a rediculous lot size in relation to their actual account size. This causes a high pip value, which on small account will quickly cause a margin call.

[OneTexan]

If I was you I will never let go. However if I was with her (as M Pointed) I will let go when she will get a restraining order-no joke, she actually threatened me once and I let go then.

But talking of the forex- I will never let go-I wasted 3 demo account in 3 months-but I never let go- today on 15 th of this month I have crossed a milestone-I have a full month today of not blowing my account AND I have earned 500 PIPS this month following my system The Texas Forex System (An MA over x method)

I hope it helps!

[OneTexan]

I have a a very high win/loss ratio. In fact I have not lost a trade in last week and I have made 100 Pips

Do not let that smirk come on your face- my daily goal is 20-30 pips.

[spookie94]

I have a a very high win/loss ratio. In fact I have not lost a trade in last week and I have made 100 Pips

Do not let that smirk come on your face- my daily goal is 20-30 pips.

Do you happen to have your “Texas Sytem” posted in this forum? Wouldn’t mind taking a look at it.

[spookie94]

I see two problems spookie.

1. Risk managment/moneymanagment shouldn’t be the primary focus of your edge. Risk managment/moneymanagment won’t create a winning edge in and of themselves. While they can atribute to it greatly, mostly by finding where the point of no return is for the stop loss and finding where take profit points are usually at… Having good money management without an edge that has a higher probability of the trade going in your favor will only make you lose your account at a slower rate.

2. I don’t think you understand leverage. You keep saying that you are using only 50:1 and infering because of that you are at, “only 50:1,” that the lack of leverage is keeping your risk down.

This is not how leverage works, I thought the same thing, at first, and another member helped me and explained it.

All a 50:1 leverate ratio says is that for every fifty dollars you trade you have to have one in your account. So, all you are really doing by turning down your leverage is turning up the money required in your account to hold a position.

Lets say you are trading at $1.00 a pip. Wether you are at 400:1 leverage or 1:1 leverage you still lose or win $1.00 for every pip a trade goes with you or against you.

The danger of leverage is when you use both: a high ratio & trade the biggest lots (and thus the biggest pip value) you can.

So, as long as you trade according to your risk % you can tottally disregard your leverage ratio. It only comes into the risk calculation if you abuse it and use it foolishly.

To put it another way, lets say you’ve found that your typical stop loss & take profit point is 30 pips. So, on any one trade you’ve determined you will either get 30 pips or lose thirty pips. A 1:1 risk/reward. Then you would determine how much % of your account you want to risk on any one trade. Lets say you have 1k account and only want to risk 1% on any one trade.

1k * 1% =$10.00

Then you would take your pre determined SL/TP and divide your risk among it by that.

$10 / 30 pips = .33 cents a pip.

If you trade at .33 cents a pip and take profit or stop out at 30 pips, your risk reward will be the same regardless of your leverage ratio. Of course you would need a broker that allows you to fractionalize pip values to do this exactly, but you get the idea I hope.

Again, leverage is only dangerous if you abuse it and use it foolishly. The term, “over leveraged,” doesn’t mean that a trader has I high leverage ratio it means that they are trading a rediculous lot size in relation to their actual account size. This causes a high pip value, which on small account will quickly cause a margin call.

So if I have a $1000 acct and only risk $20 per trade (2%) I don’t really have to worry about leverage correct? Im just risking my own money? What is an example of how to use leverage to our benefit? Thanks for your input.

[spookie94]

I may have forgot to mention that this system only uses the EUR/USD pair.
What are your feeling about a system that limits to 1 pair? I feel that most of my time is wasted on a setup.

[OneTexan]

Sure My Spookie Friend,I be obliged. Here is the link to it- Before you look and be disappointed here is the thimgs or two to know about the sys:

1. This is to get only modest gains in terms of pips and trades. I do not trade more than 4-5 times a day (in a 2-3 hour period) and I am done for the day when I get my 20 or so pips. Now it is whole another story that there are days when this fetches me 50-70 pips and on those days I have an extra drink of whiskey And and and this has not made me lose a trade now in consecutive 5-7 days
2. Usually it is very helpful to use an LRC with this system. It generally tells you the probability of your trade being in your favor!

http://forums.babypips.com/newbie-island/18697-texas-forex-system-tfs.html

I hope it helps!

1Texan

[spookie94]

Thanks Tex,
20 + pips is all Im looking for and 2-3 hours is about all the time I have. What pairs do you use? Im pretty new whats an LRC?

[OneTexan]

Since I am trading after 6-7 PM EST, my bets are on the european pairs. I like Eur/USD, GBP/USD, EUR/JPY and USD/CHF.

An LRC is a Linear Regression Channel. You should also read Some of My non secret secrets by MP on this forum. They are informational and inspiring-

hOPE IT HELPS

[ThePhoenix]

So if I have a $1000 acct and only risk $20 per trade (2%) I don’t really have to worry about leverage correct? Im just risking my own money? What is an example of how to use leverage to our benefit? Thanks for your input.

The benefit of leverage is that you don’t have to have $1000 in your account to trade $1000 Lot.