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jtb790 · 27-12-2004, 19:55

Dear Bernadette,

Being that it is a bit slow right now in the markets I have a little extra time to post therefore wanted to add an additional comment.

In your thread you wrote:

"What I am trying to do ... is establish an equally profitable shortterm day trading strategy where I can scalp at least 10 pips per day from the EUR/USD pair ... at 10USD per pip, I can bag $500 per week... if I can find such a profitable strategy. And if I add "multiple lots" ...like maybe 5 or 6, then the profits will also multiply."

To this a member replied indicating that all is rarely gravy in forex.

This is true. I'd even say that it is the nature of the forex market to prevent you from "bagging $500 per week" at $10 per pip. But to the contrary will see to it that you lose that same amount. So it is in currency trading.

Therefore, please let me introduce you to two ways of thinking since you probably do NOT want to lose $500 per week.

System one deals with stop losses, in brief, it means that if a trade you enter begins floating away from you contrary to your plan you pull your own cork, so to speak, killing the trade and willfully lose your drawdown amount. Then, in theory, you go back to square one and start over again, entering a new trade hopefully with a happier ending.

As you can imagine losses can stack up quickly. I'd even venture to say that most who lose their entire account do so using this method of getting sliced and diced to pieces over a longer term period while waiting for the one big trades to give them back all their losses plus profit - that rarely happens.

The main thing with system one is that you lose. Many see this as stopping larger losses thus actually benefitting yourself.

System two does not enter a trade with a SL attached. What?? Correct. Imagine entering a trade having no stop loss in mind. Seems suicidal? Most think so. But then again most die in the forex arena.

The second system then makes use of a sub-structure of money, trade and risk management techniques that by opening and closing additional positions throughout the trade gets them to the other side where they can A). Close the trade that went astray at break even, losing no money, or, B). Manipulate positions to adjust their average price (different from original entry price) so that when (IF) the rate turns into their favor they can then close the trade with profit - sometimes, in my experience, huge.

Ultimately it will be up to you on how you decide to handle drawdowns, but be assured, trading forex, there is no way to avoid a drawdown, it is just up to you on how you deal with them.

Best regards,

jtb

27-12-2004, 19:55	#3 (permalink)
jtb790 Banned Join Date: Nov 2004 Posts: 335 Rep Power: 0	Dear Bernadette, Being that it is a bit slow right now in the markets I have a little extra time to post therefore wanted to add an additional comment. In your thread you wrote: "What I am trying to do ... is establish an equally profitable shortterm day trading strategy where I can scalp at least 10 pips per day from the EUR/USD pair ... at 10USD per pip, I can bag $500 per week... if I can find such a profitable strategy. And if I add "multiple lots" ...like maybe 5 or 6, then the profits will also multiply." To this a member replied indicating that all is rarely gravy in forex. This is true. I'd even say that it is the nature of the forex market to prevent you from "bagging $500 per week" at $10 per pip. But to the contrary will see to it that you lose that same amount. So it is in currency trading. Therefore, please let me introduce you to two ways of thinking since you probably do NOT want to lose $500 per week. System one deals with stop losses, in brief, it means that if a trade you enter begins floating away from you contrary to your plan you pull your own cork, so to speak, killing the trade and willfully lose your drawdown amount. Then, in theory, you go back to square one and start over again, entering a new trade hopefully with a happier ending. As you can imagine losses can stack up quickly. I'd even venture to say that most who lose their entire account do so using this method of getting sliced and diced to pieces over a longer term period while waiting for the one big trades to give them back all their losses plus profit - that rarely happens. The main thing with system one is that you lose. Many see this as stopping larger losses thus actually benefitting yourself. System two does not enter a trade with a SL attached. What?? Correct. Imagine entering a trade having no stop loss in mind. Seems suicidal? Most think so. But then again most die in the forex arena. The second system then makes use of a sub-structure of money, trade and risk management techniques that by opening and closing additional positions throughout the trade gets them to the other side where they can A). Close the trade that went astray at break even, losing no money, or, B). Manipulate positions to adjust their average price (different from original entry price) so that when (IF) the rate turns into their favor they can then close the trade with profit - sometimes, in my experience, huge. Ultimately it will be up to you on how you decide to handle drawdowns, but be assured, trading forex, there is no way to avoid a drawdown, it is just up to you on how you deal with them. Best regards, jtb Last edited by jtb790; 27-12-2004 at 20:01.