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Originally Posted by ajhardesty
I'm definitely a scalper, looking 20-50 quick pips, then I am gone. I hate to have money on the line when I'm not watching it.
But I can turn into a day-trader if a trade goes against me. I don't mind holding a position for several hours, or even overnight if I am convinced it will come back in my favor. I learned early on that most of the swings will come back to you if you can handle the dips.
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Your handle seems familar.....one that was flaming me on an opinion. However...in high frequency trading you have to go into a substanital leverage beginning at 7X. That is in making a small account into a big account to become wealthy. If you're referring to investing then it would be 1x to 3x. From 3 to 6 we are about to speculate. Unless you have something that we don't have, your claim in getting 20 to 50 pips has to be damn good. Remember we all take losses...as small as possible. Most professinals that I know go for low pips and high leverage....gunning for pips in the 6 to 12 range....from 7X and then rev-ing up to 20X....even up to 100X. First of
all to get those kinds pips one has to have a market that is volatile, liquid
with a very high average daily range....which we refer to as the "hook"...
a hook to hang your hat on. You can have your own version of an average
daily range....with something like 30 or 40 days. This can be programed into
your chart. The hook=ADR/bid-offer spread. So you can see that the spread
has a tremenously effect on the hook. EUR/USD is the only one that would
give you at least a better chance than any of the others. I saw an explan-
ation of an average daily range(50 days) of 108 pips. I didn't have any such
figures in tables. Mine were 90 being the highest...and then I think that was
in the USD/CHF...maybe again closer to 100. But it's the spread that is the
demon in this whole setup. Many newer traders don't realize how this can
help blow the can up. You have to have a high hook to ensure sufficient
time/price opportunities in order to minimize the trading cost relative to the
magnitude of an average trade. So one would look to make profits in the
5% to 10% of the average daily range...which means you are shooting for
a 6-12 pips a day on EUR/USD, on average. If you can make 6 EUR/USD
pips a day on 20X leverage, in one year you will make a 1000% yield. I
would doubt that you are using a 20 times leverage with your trades.
Why?......because that kind of inefficiencies would be discovered and
exploited by the market faster than you could blink your eye. Just remember
the market is smarter than any one of us. Someone said....Is the market
fooling you,....or are you fooling yourself. There's other factors not
mentioned such as shortening the TP level skews the odds against you
exponentially....the spreads chews up the small edge any short term strategy
you may have. Your claim is interesting....to say the least.
ciao
Tony