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05-03-04, 01:22 PM
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| mishak Whow, I thought that people using x100 were the greedy ones. I thought, well, why shouldn't I use x100 since I am having more profits than losses? Now, stop there, this is greed and on a grand scale! Since you are in profits, you should really reduce your leverage untill it is x1.  Yeah, yeah, problem is my account didn't start with 100,000.  So I'll indulge myself and stay "greedy" for a little longer. About that formula. It is a compound formula for an initial 100,000 with an average EURUSD buy 1.1900 and sell 1.1903 and therefore "getting" 3 pips profit, for 22 days and leverage x30. You can check that with Excel. The price has to be established because the "pip" value will depend on the size of one's trade and this may seem heretic! We disagree on one point though. Let's say that we start with 100,000 USD, with x30 leverage EURUSD = 1.1900 buy and 1.1903 sell (3 pips profit) Then 100,000 x 30 = 3,000,000 trading power 3,000,000 / 1.1900 = 2,521,008.403 EURs bought 2,521,008.403 x 1.1903 = 3,000,756.302 EUR sold and USD recoverd profit: 3,000,756.302 - 3,000,000.000 = 756.302 USD In this trade wannabe earned 756.302 USD Wannabe's pip profit is 3. For all practical purposes, 1 pip equals 756.302 / 3 = 252.10 per pip. Seems herectic that a pip in EURUSD is not always 1/10,000, but that's how it works for me and I am happy with it!  Cheers |
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05-03-04, 04:37 PM
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| Re: to wzrd101 Quote:
http://www.tsresearchgroup.com/en/public.php I would not recommend it for "average" traders. I am such an average trader and implementing it makes me feel sleepy! ). Cheers           |
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05-03-04, 11:18 PM
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| Risk control, feasablity etc. Hi Newbie: You were asking about a plan of 3 pips per day. Assuming you have a system that can get you 3 pips per day and have proven it to work then yes it is possible to make a living on that amount given enough leverage. Don't be fooled by arguements about borrowing money or using different degrees of leverage. Borrowed money IS leverage regardless of how you work it out. Borrowing 100k with 30x leverage is identical to borrowing 25k and using 120x leverage. It is all leverage. The only difference is that when you borrow with a forex account you just don't have to pay interest unless you hold overnight which should be unnecessary with a 3 pip goal. So for this type of system it is actually cheaper to use account leverage than it is to use loan leverage because with loan leverage you pay interest whether the money is active or not. There are many dangers with leverage of any kind so be careful and make sure you understand them. However newbie you were asking for comments about your plan. Someone commented that it didn't seem feasable. I think most successful traders would tend to think that the feasability of a 3 pip per day plan comes into question because of statistical issues and risk control which I'll cover for you newbie if you request it. If you already have a proven trading plan that will give you the 3 pips per day then it doesn't matter whether we give input or not about whether it will work -- it only matters that 3 pips a day -- if it is achieved -- is enough to live on assuming you have enough capital or enough leverage. I think warning somone who has declared that they are new to trading of the potential downside of any trading approach is a good idea. Anyone new to trading will probably have just as hard a time getting 3 pips per day as 30 for reasons that may not be obvious to them. You have to have a way to deal with volatility without getting stopped out too often to go for such a tiny scalp and retain a statistical edge. A system with negative expectancy cannot win regardless of how good the money management is. Someone said in an earlier post that it is important to examine a proposed trading plan in light of arithmetic. Perhaps there is some truth to that but I think it should also be examined in the light of probability. Statistically speaking it does not matter how good your money management is -- you have to have a winning system first. Perhaps it would have been more prudent to ask you newbie if have a system that they you are confident will provide the 3 pips consistently. Perhaps if you are still reading newbie you could let me know if you have such a plan or if your plan was to develop a system around that idea. That way it will be easier to know whether to advise you of potential pitfalls and provide any assistance you may need. DB Last edited by DB; 05-03-04 at 11:48 PM. |
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05-04-04, 12:43 AM
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 Trading for Living It seems that wzrd101 is speaking about borrowing in common sense (mortgaging his house to get $100,000 loan and use 1:30 leverage to trade 2.5M EUR/USD lots). And he proposed his "road map/system/strategy/whatever" for discussion. /btw I wonder why "Trading for Living" questions are asked in the Beginner section. Some experience is supposed before starting the trading for living. No offence intended. I guess it comes from "workshop marketing" sessions where salesmen pursuade newbies to buy smth and change their live forever  /Another thread on the same subject may be found here - it is the really interesting thread. {notes from moderator: "part-2" is added to the title of THIS thread } |
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05-04-04, 05:59 AM
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| Re: Trading for Living Quote:
Thanks for the clarification. However it was clear to me that was the kind of borrowing mentioned. That is why I mentioned interest when using conventional leverage (mortgage, personal loan etc.) as costing more than forex because you pay interest all the time. As I was reading the comments about leverage and borrowing it seemed that the point of borrowing money for trading to be mindful of is that it does not matter whether you borrow money conventionally or use high leverage with Forex markets your risk does not change because of how you borrow the money. Risk is based on how much money you bet. For Example: If you have one full size contract with no stops you have 100k at risk and each pip is worth 10.00. It would take a 10,000 pip move to wipe you out. That does not change regardless of the source of funds or how much is borrowed and/or how much is your own money. Suppose you own the 100k and your account leverage is non-existant at 1:1. You are still risking 10.00 per pip if risking 100k of US currency. If you borrow 50 of the 100k and put up 50k of your own money then your actual leverage is 2:1 if your account leverage remains at 1:1. Let's say you increase your account leverage to 2:1 then your total leverage is 4:1. What I was getting at was borrowing conventional money for Forex trading with a leveraged account is compound leverage. People often miscalculate leverage this way because they don't think of borrowed funds as leverage but that is all leverage is --"investing with borrowed funds". DB PS I agree that trading for a living means you are already trading profitably enough to at least pay your expenses or have enough money to live on for a few years while learning. I suppose you could say you are not really trading for a living until you are paying your bills with the profits but why split hairs? |
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05-04-04, 12:28 PM
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| Quote:
Quote:
Quote:
 PS There are successful traders, there are moaning traders, there are crazy traders...and I am...(yes, you got it right! , maybe that's why the market price loves me. ) Last edited by wzrd101; 05-04-04 at 01:07 PM. |
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05-05-04, 05:08 AM
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| HI Isamu Thats depends on how much of your account do you trade if you trade 5% then you can take out 16% of your growth while you then grow your account with 84% for exsample if you have 10 000$ account by trading 5% you can grow your account from 10 000$ to 200 000$ in a year and live of 77 000$ that you taked out monthly. |
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05-07-04, 02:51 AM
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| HI wzrd101 If you will visit this journal you'll fine a arithmetic table that wil explain the money manage plan http://www.tickertapepublishing.com/Journalv1i2-DkII4lho5Kdd.pdf |
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05-07-04, 07:41 PM
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| derigo Quote:
When it comes to downloading "something", I become completely paranoid. You know: virus, worms, trojans, spyware, ... Anyway, thanks. |
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05-07-04, 08:41 PM
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| It's a PDF, so no worries, wzrd101. But you aren't missing much. It basically says to risk no more than 5% per trade, then take money out of your account as it grows. |
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06-24-04, 03:45 AM
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| Re: Seminars and courses Quote:
your post implies you are a succesful trader. I asume you won"t mind me asking how much of your income is from trading and how much from your courses and advisory service? |
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08-14-04, 07:42 AM
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| Another issue with the numbers in the original post, is that you are risking all of your money every day to get 3 pips. Besides the obvious poor money management, there is a real reason this is not possible. As soon as you place an order, you are in the hole 3 to 5 pips depending on the currency pair. This would automatically be an impossible purchase because most platforms would kick you out right away - because you would immediately be in the hole - meaning not enough money to cover the purchase costs. A purchase with all 100000 at three pips would cost you 3000 dollars, hence you would actually need 103000 dollars. So at best you could use 97000 dollars total on a 3 pip spread that way you could cover the cost of your purchase. (This is on a 100 to 1 margin, 30:1 would be about 750 bucks, but same principle - could not use full amount.) In addition, for every pip that goes the wrong way for you, you have to have money in your account to cover it, otherwise you will get automatically kicked out losing your money - at least on some platforms. Others may give a margin call. In FX, things can easily go the other way, 10 to 20 pips in seconds. So If you bail out, then it would take you the next 3 days to 2 weeks of trading (depending on loss size and bid/ask spread) to make up that loss earning 3 pips a day, and then you still need to make up for the days that you were making up for your loss - so in essence you need to do 6 pips a day for 3 days to 2 weeks, to make up your loss (assuming no other losses during this period). And then all of the sudden your strategy goes from 3 pips a day to having to increase your goal by 100 percent for the next several days just to make up for your loss. And the question is, do you have a strategy to do that with. And if you do, why not trade for 6 pips all the time. Anyways, those are some thoughts on the issue. Many Experts like Alexander Elder in the classic "Trading for a Living" recommend a 5 percent position at most, with a 2 percent equity drawdown at most per trade. If that is the case then with 100000 dollars you would actually only be trading 5000 dollars, and then 3 pips at 30:1 leverage gives you 15 bucks a day. Just some thoughts. GL & GT |
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08-14-04, 03:27 PM
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| Quote:
Because most of all you need CONFIDENCE. CONFIDENCE in your system (if you use a system) - you can own the holy grail, but if you don't believe, it you can't make money with it, because you don't trade the signals or drop it with the first loss. CONFIDENCE in yourself, so you don't jump out of your winning trades, because you think the profit will soon disappear. CONFIDENCE in your ability as trader, so you don't care about taking your losses, because your know you will win the money back. To all newbies: Read the books about George Soros. He had lost more than all traders here in Moneytec ever will - 800 million on S&P futures and 600 million on JPY. But did he lose his CONFIDENCE in himself? No - and that's why he could make all the money back and a lot more. |
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