AI
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| Alias Born | 10/29/2007 |
Friday, December 18, 2009 6:51:27 PM
You may be young but you are wise beyond your years, Daiello. 
I have decided to change the way I've been doing things. Since the beginning, I've always entered on trades with more percentage of my account size than was recommended. For a good while, that worked out well and I was knocking down good money.
But when the market started getting weird recently, like with EU now, suddenly I found myself more red than was comfortable after a certain level.
So what I've decided to do is, instead of going in with 10% of my capital on a trade and then going in 5% or 10% on subsequent entries if needed to average down, I'm dropping back to only 2% max per trade. That's what I did with EU earlier after I closed out my long positions. I re-evaluated my strategy and made a decision that I feel comfortable with and I don't have to worry about taking a hit because I'll have tons of powder to average down if needed AND it still leaves me plenty to make trades on other pairs if I want to.
That drops my pip value quite a bit but any losses I incur will be minimal at worst. And, I won't have to sweat any large pip movements in the wrong direction. It will be extraordinarily easy to average down without any big risk to the account as a whole, even if it's several hundred pips in the wrong direction.
Of course, hopefully that won't happen very often as it has with EU acting crazy right now. Normally, our entries are timed pretty well I think.
1% a day is a very good goal to shoot for and it multiplies faster than most people think.
I set up a quick Excel spreadsheet to see how that would compound.
I assumed that each 1% gain is added back to the original $1000 and that each trade would gain 1% profit and so forth.
I also figured 5 trading days a week for only 50 weeks a year instead of 52 to account for holidays, etc.
That gives us 250 trading days a year. Using this formula, $1000 becomes $11,913.03 in one year.
And, in one more year, that turns into $143,339.38!
I'd say that's a pretty nice return.
I have decided to change the way I've been doing things. Since the beginning, I've always entered on trades with more percentage of my account size than was recommended. For a good while, that worked out well and I was knocking down good money.
But when the market started getting weird recently, like with EU now, suddenly I found myself more red than was comfortable after a certain level.
So what I've decided to do is, instead of going in with 10% of my capital on a trade and then going in 5% or 10% on subsequent entries if needed to average down, I'm dropping back to only 2% max per trade. That's what I did with EU earlier after I closed out my long positions. I re-evaluated my strategy and made a decision that I feel comfortable with and I don't have to worry about taking a hit because I'll have tons of powder to average down if needed AND it still leaves me plenty to make trades on other pairs if I want to.
That drops my pip value quite a bit but any losses I incur will be minimal at worst. And, I won't have to sweat any large pip movements in the wrong direction. It will be extraordinarily easy to average down without any big risk to the account as a whole, even if it's several hundred pips in the wrong direction.
Of course, hopefully that won't happen very often as it has with EU acting crazy right now. Normally, our entries are timed pretty well I think.
1% a day is a very good goal to shoot for and it multiplies faster than most people think.
I set up a quick Excel spreadsheet to see how that would compound.
I assumed that each 1% gain is added back to the original $1000 and that each trade would gain 1% profit and so forth.
I also figured 5 trading days a week for only 50 weeks a year instead of 52 to account for holidays, etc.
That gives us 250 trading days a year. Using this formula, $1000 becomes $11,913.03 in one year.
And, in one more year, that turns into $143,339.38!
I'd say that's a pretty nice return.
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