Read market wizards by Jack D Schwager and come to your own conclusion.
Success is relative. Most traders manage millions of Dollars, others multi-million accounts others thousands. Only 1% will manage millions and rise to success, majority will manage a few thousand but still live a good life. The truth is if you can raise 100k to trade you will have to be an absolute mule to not make money.
You however have to treat it as a business not a muse or habit. Those are expensive…
The truth is if you can raise 100k to trade you will have to be an absolute mule to not make money.
There is little connection between the ability to raise money to trade with and the ability to produce consistent results.
Or, are you implying growing your balance to 100k and continuing from that point onward?
You can make money regardless the market or instrument.
It doesn’t matter if you have 1k or 100k. The journey time will differ. The principles are the same however if you have funds of that magnitude you can have a sustained income stream. To turn 1k to a 100 will take time and discipline but possible as proven in Market Wizards after all no one will give you managed funds if you can’t turn a 4 digit balance into a 5 digit balance. Do that you will have a job next week in the square mile.
the truth is: 99% of them arent successful traders. they’re liars.
I wouldn’t go as far as 99%, but traders on these forums are quick to believe any and every success story that is posted. Unless someone has a verified track record on Myfxbook or a similar website, they might as well be lying. Funny how all the threads on here where posters claim to make absurd annual returns (saw one for 14,000% the other week) never seem to have any sort of proof…
as regards result claims: anybody can post a copy of account reports. thats it. game over. if they dont then theyre lying. fact. no long discussion needed.
I assume success means different things to different people. One person may define success as turning 1k to 1.5k in a year, to some it may be turning 30k to 100k.
Your starting endowment will determine your perception of success. Most people simple tire of the slow growth and give up after 5 years of turning 1k to 5k close their accounts, get new jobs, buy houses or have babies. However, some trade their accounts, make money, raise more funds and open bigger accounts and consider it a business and seek to make profits and head for global domination. Warren Buffett, Michael Marcus, Max Koevner etc. All these guys started with our equivalent of 1 and 2k but had no other options but to become mavericks of their time.
Obviously these are the minority, the 10% of serious traders. The rest are musers, quitters, jobbers, etc. Can’t blame them for being in the 90% who will become dependent on state pensions, pension plans that don’t pay out or the plain blank moan at the bank crowd…
Either way success is relative in trading and with all the fake opportunities out there not many people will stick with trading and juggling greed and fear for a living. THAT’S YOUR 90%…
wow. agreed.
Indeed.
They [I]could[/I] be.
But … !
Most traders trade with a [I]tight stop loss [/I]- one tighter than their take-profit level.
[I]That’s their mistake.[/I]
A tight stop-loss and a less-than-tight take-profit level [I]doesn’t [B]necessarily [/B]equate to a good risk:reward ratio.[/I]
Let’s put it mathematically:
SL < TP
… does not necessarily equate to a good risk:reward ratio.
It’s a simple mathematical calculation, which any undergraduate mathematician can do for you.
(If you don’t know at least THAT much mathematics, and also don’t want to ask your buddy who DOES know it, you shouldn’t be trading, IMHO.)
What DOES equate to a good risk:reward ratio is the following formula:
(P[SL] x SL) < (P[TP] x TP)
… where P[SL] is the percentage of times the stop loss is hit, averaged over a long period, and P[TP] is the percentage of times the take-profit level is hit, also averaged over that same long period.
(Try it out in a demo account for a year, mate.)
So even if your SL is 10 times [I]larger [/I]than your TP, if your P[SL] is 100 times [I]smaller[/I] than your P[TP], you have a risk reward ratio of 1:9 in favour of REWARD!
So the answer to winning is: set your stop loss at a level which WON’T be hit except once in 150 trades or more, and a take-profit level which WILL be hit with 99.33% frequency (that’s every 149 trades out of 150), or even more often: say, 99.67% (that’s - to put it in layman’s terms - even MORE frequently).
And always trade [I]with the LONG term trend.[/I]
Look at the [I]daily[/I], [I]weekly[/I], or even the [I]monthly[/I], charts to determine your long-term trend.
And don’t forget to read what traders much more expert than yourself - like those working at Bloomberg, Goldman Sachs, TD Securities, Credit Suisse, etc. - are saying about a possible continuation or reversal of the trend.
Don’t worry about mere [I]retracements[/I]. Those will be short-lived.
If you set your trade in the direction of the [I]long term[/I] trend, as gauged by you AND [I]confirmed by the best analysts out there[/I], then you can be damn [I]sure[/I] of hitting your TP, as long as you [I]don’t[/I] let your SL be hit if there is a retracement!
So calculate (using the ATR indicator, set to 1) the width of the CHANNEL of the daily or weekly trend, with its highs and lows, and set your stop loss WIDER than the channel.
That could be anything from 300 to 500 pips.
Maybe even more, in volatile circumstances.
Such an SL will be hit once every 150 trades, or even less frequently.
And take small profits - say, 30 pips or even smaller, like 20 pips, which WILL be hit with virtually every trade you make … eventually.
That’s it!
If you make 100 pips a day, that equates to three or more winning trades a day, while your loss will be relegated to once every 150 trades, or even less frequently.
Yes, a single SL hit could wipe out the profits from 10 to 20 winning trades.
But what does that matter, when you win anything from 150 to 500 trades - or more - for every one losing trade … on the average?
If you risk 20% of your account per trade, one lost trade over 150 trades in total will mean 20% of your account wiped out.
Of course, that also means that you’ll still have 80% of your account left to trade with.
(Yay.)
But in that same amount of time you would have WON 150 to 500 trades!
And although each winning trade is only one-tenth of the amount you would lose if the SL were to get hit - which is to say, 2% of your account - if you win 150 or them you would multiply your account [I]20 times[/I], and if you win 500, you would multiply your account [B][I]20,000 times!!![/I][/B]
(Check it out using a compound interest calculator. There’s lots of them on the internet.)
So starting with just $10,000, you COULD become a multimillionaire even BEFORE your SL gets hit, and then stop trading and live your dream life.
It’s all in the mathematics!
Do you know why in Vegas they say “The house always wins”?
[B][I]Because they do the f&$%ing maths![/I][/B]
…
PS.
There’s a bit more.
Fudge with the figures given above for a bit.
Make your risk 10% of your account and 30% of your account; make the frequency of hitting your SL be 100, or make it 250; make your TP 15 pips, or 45.
Work out the best figures for YOUR trading strategy, with different levels of the above parameters, and see which suits you best.
Indeed, do some demo trading with the figures.
You can fine-tune the above strategy to YOUR trading style.
[B][I]But you should always do the maths properly, and make SURE you come out ahead.[/I][/B]
In the LONG run.
Like the house does in Vegas.
…
That’s all f-f-f-f-folks!
…
Uh - no, sorry, that’s not all.
One serious problem people talk about is DRAWDOWNS.
What if, they say, you hit your stop loss twice or three times in a row?
If you risk 20% of your account per trade, then if you hit your stop loss three times in a row your account shrinks to just a bit more than half of what it was previously.
(You don’t lose 60% of your account, but less, because every time your account shrinks, 20% of your account also shrinks. Got it?)
But do you know how many trades you’d have to enter to hit your stop loss just three times in a row, if your SL is going to be hit, on an average, once in 150 trades or more?
The maths is complex, with Fibonacci numbers entering into it and all - Google “Dobbs coin toss ten times in a row”, and check out what Dr. Dobbs says - but to put it in layman’s terms, it comes to over 6 MILLION trades!
There are not enough days in your entire LIFE to make that many trades, even if you make ten trades a day, and even if you live to be a hundred.
So forget about it mate - it’s never going to happen!
I repeat, again and again: [B]IT’S ALL IN THE MATHEMATICS![/B]
If you earning a few hundred a week then you probably will spend a lot of it in bills and living. So not likely you will be a millionaire unless you can save or you had a million to start with.
Hence you will see a lot of people aim for for say a certain amount of ticks a day and limit trading to those ticks and no more. Any excess will be capitalized, the rest has been budgeted for.
You have to kill the idea of fast cars, beautiful estates and percentage profits and all that fanciful stuff out of the fund world or the Manhattan club. Real traders are aware profits are a gift and not the stuff of Hollywood. Remember fund managers get paid, win or loose. Traders get paid when they win. So you need a plan and you have to look after your trades. You can’t just set and go to work or make 55% on a demo.
That’s just my take and I am not a millionaire. I don’t think I will be until I have enough money under management. Then I can charge everyone 2% on capital and a 20% performance fee on gains. That’s how you become a millionaire trader… Sorry to bust the idea.
I too have a net worth of (almost) half a million dollars, and I too have children to look after (my wife, sadly, passed away a few years ago).
But I not use half a million dollars of net worth in my TRADING account.
Most of my equity is in [I]safe[/I] investments, with banks and insurance companies. Some of it is in real estate.
I use less than 10% of my net worth to do forex trading. MUCH less.
That way I can risk 20%, 30% or more of my TRADING account every day. It comes to [I]much[/I] less than my total net worth. A tiny percentage only.
But by risking a high amount of my TRADING account, coupled with a strong trend-following strategy, I can make much more than 1% a week.
At times I have made 20% a week, even more.
Average is well above 10% a week.
And I withdraw 1/4 of my profits every month, to keep in my bank as a “cushion” in case my forex trading goes badly.
Over time this “cushion” approaches half my trading account.
So even if I lose my [I]entire[/I] trading account, I have enough of a “cushion” to bring it back to the level I lost it in seven weeks of trading or less.
I have, by the way, [I]never[I] lost my entire trading account. The worst loss has been 30% of it. And even that is very, very rare.
The way I trade is, therefore, virtually risk free.
I will NEVER lose all my net worth trading. [I]It just cannot happen[/I], with my method.
Just my 2 cents.
Deleted all my previous posts and this will be the last one, why? Because of the above response from an idiot that wants to puff himself up by putting down other commentators.
Yes, my FX account is a little over $500,000, that is nothing close to my net worth and that is all I will say about my total net worth.
I have been trading for over 40 years in equities, options, currencies and have consistently made over 30% a year over that time (including 1987 and 2008), some years much more. I thought I could share on this forum some of the bitterly hard lessons I have learned. But I have no interest in entering into debate about personal issues and I certainly do not have the time to post into the thousands to gain some internet street-cred.
The comments in the newbie section are actually frightful and many of the replies are simply mean-spirited. Life is too short and I have too much to do, so enjoy your forum, enjoy each other’s company, and continue the circle-jerk with people like the above poster.
Final observations:
Stop looking for a magic technical analysis system, they are all snake oil. Plan a trading system and paper trade it for months to test it. Learn fundamental analysis as well it is vital to understanding where things are going.
Back-testing is useless, be a trader not a programmer. Live trade to test.
Study statistical analysis. For example to test your system your would need 95 completed trades to get a 95% confidence level plus or minus 10%. The testing people use is almost always total inadequate and tells you nothing about your system. Inadequate testing tells you that you are not prepared to put in the work.
Read some of Nick Radge’s basics on expectancy curves and strings of losses. For example with a 50% winning strategy you will definitely get 16 consecutive losses, probably more, but 16 for sure at some point. If your trading system, money management, risk management cannot handle that, then you have lost your account before you even make your first trade and you didn’t even see it coming.
If you do not love trading and have a desire for it everyday so that you are continuously learning and reviewing then it is just gambling, you are having a lark. That’s fine, but at least be honest that it will not be your business. It will be your hobby and all hobbies are money pits.
Trading as a business model for an individual can be extremely lucrative, but it is very hard work and you have to first give up your ego, give up the preconceptions about risk and odds that in the beginning you don’t even realize that you have. You need to re-wire your brain to think as a trader not a normal human.
Losers average losers.
You see forex is never easy and for us to make good money here requires a great amount of time. If forex was that easy, many of us would have become a millionaire by now. It is a process and I believe that nothing is impossible once we are very ready to learn.
This thread found new life.
Let’s face it…The above gentleman has been trading for 40 years so he should have done quite well, if not he needs another line of work.
How many people here are actual traders? Very few, most I already know. How many people are able trade full lots? Most people are still trading a Dollar per pip.
I started trading full time and it mean’t given up my job in real estate. I had a 5 figure a/c. I had a few good friends who chanced capital for me to manage. So far so good. I was soon head hunted by a brokerage that was starting up and wanted a full time trader to manage their client education, I was small enough to oblige them. This took me 6-7 years most of that journey was shared on babypips.
Do I just trade currency? No.
Am I millionaire? Hardly. Trading makes no one a millionaire until you manage money. My goal is to have at least 500m under management. Then I would have arrived. Maybe I’ll buy babypips to keep inspiring novice traders.
No more fighting please…Let’s just enjoy the space.
[B]Thank you, Emeraldorc, for talking some sense back into this thread, and showing anyone who doubts the realities of trading that there are solutions to suit individual circumstances, including fitting small, retail trading around family life and other commitments… It is all too easy to dream up millions while jumping on that ‘fool-proof’ trend, but, in truth, trading your way up with small money is a long and painfully slow process, which may take years and it is far from glamorous… Just like people with modelling dreams may only see Naomi Campbell, forgetting that when you start it is at the bottom, for most models, doing crappy catalogue shoots, at anti-social hours, with a lot of standing around, waiting… And you get sh+t money for the time you give… But if you are determined, you will go for it…
Trouble is, models start young… If you, like me, start in your late thirties, then you do not have the luxury of a decade to ‘find your way’ in the trading environment, so you try to shorten the journey, perhaps getting burned… I now accept that I cannot ‘push’ the market into giving me back the years that I lost when I was not even aware of what Forex or trading were, and I will have to just wait for the right time period to give me what I want from the market…
Thank you, Emerald: you are a true asset to these forums… [/B]
Traders who are not millionaires (even those who are not yet profitable) have only time and toil between them and a million dollars in equity.
Plus, the beer budget and the income tax lengthens the time needed to arrive at the million dollar mark but we can’t do without those mandatory expenses each year.
-Adrian
I had that dream too once.
-Adrian
For becoming millionaire just by trading, you need to stay in the business for many years. A very high percentage of traders go away in first 2 to 3 years. This is why the traders that have gone millionaires from trading is very very low, but they exist.
Even if you saw the BBC documentary on retail traders, they covered hedge funds, prop funds, copy traders and finally stay at home retail traders. There was one guy who was obviously successful because he was offered a fund to manage, he started with 40k made 260k in 6 months,lost it all and started again, he gained experience and now he manages 50m. That’s the key… Sticking with it. He had been a trader for I thing 17 years. How many people would have continued trading after blowing 240k? I see traders blow 1k 2k and run to mummy cursing the markets. Come on!
Anyway, like I said no point arguing it out. We all know trading is still one of the most profitable industries in the world you just have to be good at it…
Should I post the Earl nightingale clip again Pip? Maybe not… Off to do my 7pm webinar see ya’ll