Comment by Peter jcp on July 16, 2011 at 11:06am

Cheers - Sir Gissa - got a long way to go to get to your knowledge though - but hopefully learning more every month and every year

Comment by Bassam A. Muhammad on July 16, 2011 at 12:54pm

i find it much easier to target 50-100 pips than 12 pips initial target with 10 pips stop ! , how can you make only 10 pips stop ? it can touch it in a second, i wonder

 

what is your entry rules ? and is this 10 lots example for real ? i mean 10.0 lots STANDRAD ?! , to open that big lot , account size should be at least 250K or else u r not following money management rules as of my knowledge.

 

can you reveal entry rule + your MM rule , if you are willing to share.

 

Thanks

 

Comment by Peter jcp on July 16, 2011 at 2:41pm

Hi Bassam - I dont mind sharing some facts with you - but the real knowledge that takes years to accumulate needs to be earned- ie in any profession whether its a Lawyer, an Electrician, or a Doctor - you need to spend time learning and qualifying in your profession.

 

In the UK to trade approx 10 lots or similar cash amount you would need a minimum $50k capital account and then with 10 pip stops ( including a 1 or 2 pip spread) you would be within your 2% MM rule - if thats the one you use. Cautious trader might want to trade at 1% or less and experienced traders might use up to 4% of the account. I have not been fortunate enought to have ever traded over 20 lots a trade ( yes with a 10 pip stop on eu)- but the rules apply even with a smaller account and 2 lots.

I would not use a 10 pips stop on pairs with more than 2 pip spread - but any stop over about 18 pips to me on a target of 25 -50 pips means you are not really understanding the market. All expert scalpers can work on under 10 pip stops - and there are a few in the chat room who can confirm that. They are not using black boxes etc etc - they are using knowledge and skill.

 

So a question back to you Bassam - have you ever really studied your charts ?? Not just a daily and a 4 hr etc - but a one minute and a five minute and studied what happens?/

 

Forex predictions can be compared to weather forecasting. If we are in the middle of the summer and its a nice hot day and the sun is out - what are the odds that it will snow within an hour ??

 

Similarly I am no weather expert - but i can predict the weather for the next 10 minutes better than I can for tomorrow - or next week. So if you can target and predict 50-100pips that might take 1- 2 hrs plus to achieve then you are good - but I know you would not really want to predict 500 - or  1000 +pips as your first target - because thats like predicting the weather in the UK on a Tuesday afternoon in the middle of April.

 

I am a intraday trader - but when i have taken a weekly or monthly trade - I have tried to start it off from a 10 pip stop  if it falls within the Europeon or US session with high stakes - and then got down to low stakes and have manged to grow my stop from my profits to 50 pips and then if i do leave it to manage it with a larger stops of  100pips plus - looking for 200 - 500 pips results.

Similar to hedging - but I think this method is safer. My big pip profits are rare and can be locked away and forgotten about - because the end profit result will still not be as high as i can achieve on just making 40 pips per day in a controlled manner 

Finally - think about it - its easier to make 10 pips a day than 100 pips a day - so get compounding out of your monthly profits and then at one stage you will be there- and then you might look at the whole forex market in a different way - cheers

 

Comment by Bassam A. Muhammad on July 16, 2011 at 3:24pm

Thank you Peter for reply , well i never look into less than H1 , i follow h1,h4,d1 , but with your post i will give it a try , previsouly i was thinking 30min or less is very volatile and not stable for a serious trade, but with your post seems im wrong , even so you did not say how you choose to enter , i will think about it maybe i can figure out :) , i have 1.5 years of experience in Forex .

Regards

 

Comment by Peter jcp on July 16, 2011 at 6:52pm

Hi Janos - yes some very good points you have mentioned. I have had to use my entry for scalp trades from the tick chart on my brokers trading station simply through experiences I have learnt in the last few years. For example I did run for a short time 3 different broker platforms simultanously along with my intellicharts and found my entry points at exactly the same instance could vary by up to 8 pips according to which ever station I chose to use. So now I just go with my brokers tick charts for scalp entries when every pip counts. For more normal trading were the stop might be 15 or 18 or even 22 pips ( according to PA and other factors) - 1-3 pip difference is not so essential ( although if its $500 and we have 5 digit entry point to chose - you let your broker know!)

You may have more broker and chart system experience than me - as I have only ever used 4 different brokers and the last one I have been with for over a year. Through experience - they know me and I have regular contact with them - as I am a customer and want to be treated like a King  !. On my second month with them I paid out over £6000 is commissions etc and was able to prove how much was negative slippage and how little was positive slippage. If they wanted to keep me they needed to play ball and since then we have more of an understanding- lol. Part of the understanding is that  I will scalp and stay in a trade for longer than 2 minutes and my entries I want under 5 seconds and I wont do anything silly - so the entrance time as reduced considerably. With fibre optic broadband with just a few lots you can get entry time under a second - but with 15 lots plus - its a different ball game!!

 

So keep a note on your negative slippage  and see how it compares with your postive slippage. Only this last week I gained 3 pips due to a delay on coming out of  a trade but if you are losing pips 90% of the time on what you exited at and you trade more than 100 times a month with multiple lot sizes have a word with your friendly broker.

 

PS - Basil wants his picture back up when he bigger - but meanwhile he says - "WOOF WOOF"

Comment by Nikkon on July 17, 2011 at 2:30am

I guess I'll comment since you posted on mine :)

 

I'm a longer term trader as people might know and even though I make very good money I consider this part time along side my other investments. I don't want this to become a job and for only really spending about 1-3hrs/day looking at charts for setups I'm happy making 1k-2k pips a month consistently. Typically I trade much smaller lots than most scalpers as mine are typically 1-5 full lots and larger ones of 10-20 picked up progressively throughout a trade or direction confirmation. Never put 10-20 full's at one time and I have a system where I manage risk extensively... some of them are in the blog i posted.

 

I've been trading for about 5 years now and started with a $500 dollar account back then. Hey, I was 18 and broke :)  But I've built up the account over the years and slowly transitioned to the larger lot sizes which can make profits grow a whole lot faster but i only did so after it kept working for my micro lots and had enough capital to be able to handle the risk of loss.

 

I don't really have daily pip targets or anything like that mostly what I'm looking for is my trade to hit its intended take profit target which is typically 100-300 pips out. Most of what i do is simple price action patterns and the only indicators i use is 2 sma's with standard macd and rsi and I look for clusters of signals/patterns that keep appearing/have worked over time. As you can tell I use the 4hr and daily charts for most everything and only use smaller time frame to see if there will be a short term move up/down so i can have a better entry point since i want the best possible entry for any given trade.

 

For what I do it really doesn't take very long to learn though I'd admit I'm the rare type when it comes to learning this kind of stuff. Became profitable after i learned about managing my risk and learning from every single trade i did and updating my trading journal as i went along and picked up "tricks of the trade" so to speak.

 

Personally I've used MetaTrader 4 directly from forex.com since the very beginning since I didn't know there was anybody else nor did I trust them and I like their charts a lot more then other platforms I've tried. Don't really have to deal with very much slippage and its mostly irrelevant for my intended pip per trade is and my broker costs are minimal so I don't have any complaints.

 

I don't trade with anything fancy, have standard dsl speed internet that likes to go out randomly :) but I do use a dual monitor setup for ease of viewing. I don't trade off of news or events unless they are truly epic disasters nor do I pay attention to calendars or what other traders/guru's/anybody is doing. I simply do what a casino does and put the odds in my favor and generally come out ahead in the long term. I plan on losing 19/20 times and still being profitable. I have never actually lost that many times but no trade is more important than any other and pretty much keep risk the same on every trade.

 

- Nikkon

 

ps. If you want more answers to more specific stuff feel free to ask, though you'd be surprised how simple I keep things.

 

Comment by Bassam A. Muhammad on July 17, 2011 at 8:36am

Hello Nikkon, your post is a success story and very encourging and interesting , thank you for sharing , 100-300 pips target , that's my preferred style !

i have a 27K account but i do not dare to open more than 0.5 standrad lot per trade and total 1.2 lots (dont open more than 5 time the account size rule) , i dont use stops i use hedge or averging with multiple levels , it works but sometimes im in a trap

 

you did not say how you manage risk , do you use stops everytime? or hedge? and what is your preferred pairs

 

Thanks

Comment by Peter jcp on July 17, 2011 at 8:55am

Nikkon - thanks for sharing - I think we can all learn more by sharing our experiences and our thoughts and views and if we all help each other to improve by 10 or 20% plus - its all been worthwhile. The most important part is becoming profitable - and then becoming consistently profitable - whether its measured over a day or a week/ month or even quarter. The fact that you are still trading forex after 5 years shows you have a successful method - and I think you must have been very fortunate to have not gone through many of the pains, frustrations and losses that generally lead to guys giving up.

 

I think we probably agree with each other on many points - the strict MM - facing the fact that we are going to lose and that we will be wrong and trying to trade with the odds in our favour

 

Keeping it simple is also very important  - or is it ???. I have read many forex books and seen many many systems - and they all like to use the K I S S principle.

 

`However - I am confused with this concept - because in forex trading if you want  to end up only trading with as many odds as possible in your favour - there are just so many factors that have to be taken into consideration - ie the fundamentals of the pair - the world news - the announcements for that day or week, the session you are trading in, the chart technicals, the big players plan, the past history, the rumours of the day, the influence of other currency pairs, the stock market, is it the beginning or the end of the month? etc etc etc - Also am I as the trader in the "zone" - not stressed, no real bad personal issues affecting my decision making etc etc

 -

So in my own case - to keep it simple - I have a method to try and put more and more odds in my favour. I also actually grade and rate the types of  trades i will be attempting - with a very high probability one being like AAA+++ grade  and many of them only falling into a AA rating that must have at least a 70% probabability of the trade being successful.

 

So - I do miss good scalping trades - but I also stay out of loads that do not have an high probability factor - due to circumstance built into my trading equation.

 

In this high tech world we live in ( which will be outdated in 20 yrs time) we need the help of computer wizardry - to help us make decisons we would not be able to work out so easily or so quickly so even though I dont use an EA or a "black box" - I do have equivalent stuff that can give you an edge

 

Look forward to all live traders inputs and thanks Nikkon



 

Comment by GeniusFX on July 17, 2011 at 9:12am

In trading the only thing that matters is the TRUTH. Your P/L tells the truth over time. I hate spread brokers what you describe is negotiating to let them let you keep more of the profits petey. That is sad. GO TO AN ECN!!! or at least test out a small 50k-100k account with one to see the difference. You are being robbed spread brokers are criminals worse then these paper trading gurus lol. Just test one out and see the difference in your P/L to where the tax advantages do not out weigh the profit advantages.

Comment by GeniusFX on July 17, 2011 at 9:23am

As a scalper we don't care about 4H or predicting the future that is a joke to us. Since most of our profits come from short term price action/technical setups all of that goes out the window. We know it takes discipline and experience to learn to trade this way and we know that most will never have what it takes to do so :) What we care about are execution latency good data and the averages we produce on a daily basis. If we make 40-100 pips per lot a day we want to do it consistently. I had two 100 pip days in a row per lot that is rare and increases my averages to the upside. Those averages are what keeps us in business, not our method what the market is doing or any number of reasons we can make up in our head that has nothing to do with trading. Its our P/L that tells the truth of how we are doing and we just want to keep it pointed in the right direction so we can buy houses for our wives/kids to keep them away from us while we trade ;)

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