What kind of trading is most profitable for ordinary people?

[TraderABC]

Thank you all for your replies.


Right now I am going crazy reading all the literature and articles I can find... This is ridiculous how much there is to learn about the technical aspect of the market that I am not even sure is predictable... Thank God I have some programming experience and so I am able backtest fully automated systems to find the validity/falsegood in some methods. Speaking about programming, this is ridiculous that people could code my charting software yet provide non-working code for stop-lossess.... I wasted so much time redoing the code due to their lack of knowledge....

From all my fully automated tests, they still show the advantage of shorter term but more frequent trades... But the problem with quick trades is that one big loss can set you back very far as it happened with my scalps on demo... I've heard that a good scalper can make 10% of deposit on a good day... Now that is awesome (but unfortunately dangerous). On the other hand trying to catch a trend may not be a profitable alternative either as trends happen 20-30% of the time while short term trading opportunites happen much more....

[Chris Hood]

There is no profitable trading "for ordinary people." The question is loaded. The ordinary people, plus some extradordinary people who make mistakes, comprise that 90% which is the losing group by percentage of all people who try fx trading.

[TraderABC]

Originally Posted by Chris Hood

There is no profitable trading "for ordinary people." The question is loaded. The ordinary people, plus some extradordinary people who make mistakes, comprise that 90% which is the losing group by percentage of all people who try fx trading.

Are you saying that only big banks are profitable when it comes to trading? By ordinary people I've meant those who do not possess super huge amounts of money like big banks with no reference to skill. So to make my question clearer can a person make a living from trading forex on a 20-50k account (assuming the person done the homework)? Or it is financially impossible? Thanks.

[Chris Hood]

Originally Posted by TraderABC

Are you saying that only big banks are profitable when it comes to trading? By ordinary people I've meant those who do not possess super huge amounts of money like big banks with no reference to skill. So to make my question clearer can a person make a living from trading forex on a 20-50k account (assuming the person done the homework)? Or it is financially impossible? Thanks.

I didn't mention "only big banks," or banks at all. Nor did I refer to a huge starting sum, or a starting sum at all. My answer is not meant to be cryptic.

[ampris2000]

hi mishak,
i do mainly the daily for the overall trend. my current goal is 20 pips per trade. You mentioned to shoot for 80. You also said to:

choose the moment to pick up at the top(sell) or bottom (buy)...

I wanted to ask how you personally do that if you don't mind. do you go to the one minute chart or use some indicator?

My strategy is mainly using wma's 5,10,20,40,50,200. When they are all layered I know it is trending. it is mainly if the 20,40,50,200 are layered. (i got this from a daytrading stock book). I added the 5,10 to use as "early indicators" as what may be happening as well as you can see what is being used as support/resistance. because the 5,10 will bounce off one of the 20-200's ma's.
The book mentioned to use sma's but i noticed those are too slow and the wmas get you in good . it's been working great.
thanks for any advice.

[foamgod]

Originally Posted by Chris Hood

There is no profitable trading "for ordinary people." The question is loaded. The ordinary people, plus some extradordinary people who make mistakes, comprise that 90% which is the losing group by percentage of all people who try fx trading.

So are you extraordinary then?

I don't know why, but seeing too many of such comments just serves to irk me.

[mishak]

Originally Posted by ampris2000

hi mishak,
i do mainly the daily for the overall trend. my current goal is 20 pips per trade. You mentioned to shoot for 80. You also said to:

choose the moment to pick up at the top(sell) or bottom (buy)...

I wanted to ask how you personally do that if you don't mind. do you go to the one minute chart or use some indicator?

Hello ampris2000
My reply was intended to particular situation of TraderABC
I recommended swing for him. And it is really important for a swinger to look for supports and resistances (on the longer time frame chart) as they mark lows and tops. Oscillators are used for the same purpose to show overbought/oversold conditions.

Time scale you use depends on the personal situation and depends on various factors (a bit out of topic of this thread).
Swingers do not look at 1-minute chart - it is for scalpers

[TraderABC]

More thoughts to add:

Market is not fully predictable and chances of things going wrong increase with time increased.

Longer term trades require larger stop lossess while profit accumulated over time is smaller.


Lets say that we have a system whose win loss is - N (60/40, N=1.5) but using it on different time intervals Intraday and long term. Then on an assumption that we are risking no more than X%, with Deposit $D with profit Y%, each trade will bring either D*X loss or D*Y profit. Average profit per deal will be D*(N*Y-X)/(N+1) .

Sum gain as you see is dependant on number of deal made. Conclussion, the more trades while following the system you make per time period , the more profit you get with SAME risk.


To put it in other words. If you are doing a swing strategy with 500 pip goal using a 100 SL, you will do much better if you go down the chart timeframes put a 20*(5 lots) Stop loss and 100*5(lots) gain. Same risk much more profit per month or so. And remember you can still use trendlines from bigger time frames.... This begs the question

Which time frame is best in this case considering the spread? Anyone knows the golden ratio?