Trading for a living :)
Sep 1, 2017 at 2:20 pm #725DBGuest
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”.
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?00Sep 1, 2017 at 2:20 pm #726derigoGuest
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.00Sep 1, 2017 at 2:20 pm #727wzrd101Guest
If you don’t mind, could you please “break down” your calculations into simple arithmetics?
Thanks00Sep 1, 2017 at 2:20 pm #728MGGuest
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 & GT00Sep 1, 2017 at 2:21 pm #729BaruchGuest
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.00Nov 20, 2017 at 1:50 am #1355Peter ParkerParticipant
I am sorry but confidence is not about being foolish and continues to act like fools. It is to understand that foolish is not good and correcting yourself instead of getting into arrogant or overconfidence mode.
We do need confidence, but we must not bring overconfidence. It is very much possible to do trading for a living but got to move step by step and never fear things too much.00Nov 28, 2017 at 2:26 am #1490Peter ParkerParticipant
I don’t think a newcomer should be thinking like that. It should all be about trading through proper plan and method. If we get that in place then we will be able to do pretty well and then we can obviously move towards trading for a living.
However, if we directly look for earning for the living then I believe that is just too much pressure and we won’t be able to handle it at all.00Nov 28, 2017 at 3:45 pm #1493OctaFX_FaridParticipant
I am currently doing Forex alone only. I mostly put my time into learning. Although, I won’t say I am doing it for a living since I am not having any major responsibility at this stage of my life. Once things get serious then I will think about whether I could actually go towards complete living from it or not. But right now too early to take a call.00Dec 5, 2017 at 5:29 am #1574ColeenMember
Too risky for me preference. I at this stage of my career won’t take such dramatic decision of depending on trading alone for a living. You need to be professional to do this or else, it will be a really difficult move. It is a really bold move to make, and at least I am not ready for it.
Once I get settled into my life then I can explore option like this, as it is making more sense and is a safer choice.00Dec 11, 2017 at 9:27 am #1659AlexMember
Right now, I am not looking that far. I am just trading without any targets. I don’t want to put unnecessary pressure on myself, as I know how much it can damage a person, so got to be very wise.
I in my back head know and want to make it as a full time work, but it is not the easiest thing to do and that’s why I am not thinking too much about it.00Dec 21, 2017 at 10:40 am #1772varapauParticipant
I think it is a good business to do full-time and for the living, but that is only IF we have no pressure from our family. But if there is a lot of pressure and we also need money, then I believe something else needs to be done. I am currently focusing on my trading career only, as I don’t have too much pressure, so I have 2-3 years to get myself into the scheme of things, then I believe I can make full-time earnings!00Dec 31, 2018 at 3:21 am #2085FXGuruParticipant
I do it for living only. I believe it can be easily done on full-time basis, but we just need to ensure we have things planned well, IF we are able to do that then we will find everything else a lot easier and simpler.
It’s so cool for me with FreshForex, given their conditions are top notch having small spreads, huge leverages, bonus that goes up to 200%, but the best part is their Market Analysis, which helps one trade confidently.00
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