After this run I decided to try and increase my return. I changed absolutely nothing except I spent more time in front of the computer and took more trades. This did not work out I was once again I started losing money. How many trades per month does an average trader place? It seems to me that the best trades are low risk trades and these are few in the month. As I try to increase the number of trades I am taking higher risk trades which turn into losers.
Presently I look for a 1. For a successful trader what is the average win to lose ratio? I find it decreases as I try and place more trades. Hedge funds are known for aggressive portfolios and high results. Other funds and investments vehicles available to an ordinary break eater would produce much lower results, especially in the era of global depression and zero bound interest rates. There is no easy way to make money since housing bubble has burst.
See the sample of popular Mutual Funds below. Full data can be accessed here. You see how these funds achieve only single digits returns and some of them were negative last year. Anything beyond that is bonus or come with increased risk.
Portfolio theory clearly states, the higher the return the higher the risk. There are no two ways about it. Not too bad I think! Surely people who run those funds are probably the most intelligent human beings on this planet.
They came from families who could afford to send them to best schools. They are ambitious, hardworking executives with an excellent understanding of economics and finance. They often have influential friends in many sectors they invest in. Those accounts might have produced 3 digits returns for few weeks but this is only possible by taking enormous risk which results in margin calls sooner or later. Most of those people will never see the money they deposited with the broker again!
The TRUE average return would have to be calculated over long period of time on accounts of traders who survived and are still in money today.
I can see your gut tells you: The market will tell you how often you should trade. I base my trades mostly on Commitments of Traders analysis. This allows me to spot high probability market reversals and position my trades accordingly. This kind of strategy also allows me to cash in the carry trade interest on leverage positions. Take only low risk positions in accordance with your tested trading technique.
Keep your risk as low as you can and you will succeed. Do not trade more often because you believe your strategy is sound. The FX market will always be there, there should be no rush. The price will always print no matter what, even years from now. Patience is one of the great qualities of a successful investor. The least often you trade as better it is for your account. Every time you see that in stats, it means the trader stays in winning positions as long as possible, instead jumping in and out.
Once you recognise a trend — get in, sit back and ride it. Thinking you can get more is statistically incorrect. If you can, look for 2: Increasing ratio means increasing take profit levels. This will result in more breakeven trades as you will hit profit target less often. You might end up worse off in terms of a total profit. I find it much more effective. Let the price fill your order at the better price and keep your profit targets unchanged. This way you will improve your ratio over time.
It will depend on your time horizon as well. A good trading strategy will produce most profits out of the least winning positions. This means, you stay in winning trades longer but cut losing position quickly. This will decrease your odds again.
It will show fewer trades with huge winnings and many small losers. As I understood, your return was made in demo account? Once you put your own money on the table, your heart starts to beat differently and your mind plays tricks on you. You need to account for this. Many will tell you, this is BS, but it worked for me. Another thing to remember, the real account will have totally different spreads. The broker does not hunt your stop in demo account or increase the spread during volatility.
It might seem little but It makes a difference. The broker will hunt your stops in real account and widen spread during news releases. Now you will need to do it over and over again for the rest of your professional career.
Do you think you can do it? Do you think your strategy is resistant to ever changing market conditions? What is bullish for dollar today, might be totally bearish in 5 years from now. You will need to update your strategy with new variables to adjust to ever changing markets. The LTCM story has proven this is some challenge indeed! I guess over the long run; you will place thousands of trades. Statistically, it is likely you will have more than 10 losers in the row.
You need to be ready for this. As you probably now imagine, triple digit returns promised by internet marketers would translate into s of millions of dollars over time from trading forex. This is just not adding up. I truly believe the journey to profitability and freedom is a function of hard work, commitment, persistence and boring routines There is no magic to trading. I believe in making calm rational decisions what, when and how to trade based on a decade of intense learning.
Thanks for all the great information. Thanks for the great site. I assume, you orders will e filled quicker? Orders should be instant on any modern online trading platform. There might not be any tangible difference to you and lots of risk by going from demo to real account. I would ask what exactly am I getting for this service and is it going to be beneficial to me.
No dealing desk just gives you access to better pricing. With the dealing desk it looks like they will be betting against my trades. Either way is there any brokers you would recommend for me as a US customer? I assume, lower spread. Unless you scalp many times a day, half pip or less per order wont make much difference. You must be logged in to post a comment. Forex Blog 6 Comments.
These techniques tend to produce fairy tales around very logical concepts. Below is the email from John. I hope I can provide valuable and logical advise. I want to make two points: How many of us think, we can outsmart these guys with Stochastic crossover strategy? Please feel free to challenge me on this as I have no hard evidence.
There should be no benchmark for how often you trade. Take only high probability, low risk positions. Volume does not matter. You need to be taking only low risk positions every time you press the button.
My feedback I want to make two points: Psychology in this game is tricky, you need to expose it as early as possible.More...