# Second day of trading Forex - I love stop losses!



## NickF

Hi All,

It's my second day trading a $2000 Forex account. First day I gambled and I ended up $51 on plus. Today I decided to gamble more responsibly and I set stop losses around 1:2 for each trade. The day didn't start too well, out of seven trades, five closed quickly on negative. On one I feel I had bad luck, since it was just the end of the wick of a candle stick that triggered the sell response. On the other ones, I can only blame myself... Anyway, I was not too disappointed about five losses in a row, so I kept going. I decided I need to learn quickly a proven method to earn money and the introductory courses from Forex helped. I rediscovered the MACD indicators and I was able to recover from all my losses. The day has not ended yet, but so far I am pleased with how is going on. The part I enjoy the most is that I can trade to a level that I feel comfortable with - so what I define today as a good day is having any profit (ideally above $5), and a bad day, losing more than $5. Until recently, I was down to about -$6, while now I am above $8. I will leave a few trades overnight and I can't wait to check tomorrow morning to see how much money I made (or lost) overnight. Life is good!

Cheers,
Nick


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## NickF

NickF said:


> Hi All,
> 
> It's my second day trading a $2000 Forex account. First day I gambled and I ended up $51 on plus. Today I decided to gamble more responsibly and I set stop losses around 1:2 for each trade. The day didn't start too well, out of seven trades, five closed quickly on negative. On one I feel I had bad luck, since it was just the end of the wick of a candle stick that triggered the sell response. On the other ones, I can only blame myself... Anyway, I was not too disappointed about five losses in a row, so I kept going. I decided I need to learn quickly a proven method to earn money and the introductory courses from Forex helped. I rediscovered the MACD indicators and I was able to recover from all my losses. The day has not ended yet, but so far I am pleased with how is going on. The part I enjoy the most is that I can trade to a level that I feel comfortable with - so what I define today as a good day is having any profit (ideally above $5), and a bad day, losing more than $5. Until recently, I was down to about -$6, while now I am above $8. I will leave a few trades overnight and I can't wait to check tomorrow morning to see how much money I made (or lost) overnight. Life is good!
> 
> Cheers,
> Nick




I have to remember the critical times when markets open. The Japanese market took the EUR/USD to a sharp fall, and at 5pm our time, the UK markets opened, they brought it back where it started from. 

Out of my last 10 positions, 9 closed at a loss. Now I'm around -$10. I started gambling with more money, to recover my losses. After all, since I've been playing on Forex with real money, I never encountered a loss at the end of the day!
This is going to be long day... I'd be happy to end the day with $20 of profit

Nick


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## NickF

The blood bath is still going on. I am down to -$12.33 I was worried I lost my edge, but after that I chilled out when I remembered that I don't have an edge! Lesson number 3. A stop loss point can not get me out of **** all by itself. Time to apply the George Constanza tactic! I need to do the opposite of what I am tempted to do!

Nick


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## DeepState

NickF said:


> The blood bath is still going on. I am down to -$12.33 I was worried I lost my edge, but after that I chilled out when I remembered that I don't have an edge! Lesson number 3. A stop loss point can not get me out of **** all by itself. Time to apply the George Constanza tactic! I need to do the opposite of what I am tempted to do!
> 
> Nick




CDS spreads at major global banks have moved sharply to decade high wides upon the rumoured return of NickF who, from his house under the Heathrow flight path, sways the currency market with mega-billion dollar bids and offers, most of which never transact.  When "Nick the spoof" was questioned on his trading methods by the IMF after SDRs flash crashed last night by 6.7%, NickF responded "kiss my rhino a**e boys" via his publicist.  Monetary authorities tracking terrorism funding movements reported large transfers between Swiss Banks and Lichtenstein family accounts, one of which was called "NickF Milking Markets (Cayman)".

Emergency meetings are being convened in Washington at the request of US Treasury Secretary, Jack Lew, who has moved NickF to the top of the financial stability risk list, displacing Greece.  Christine Lagarde was unavailable for comment, returning to Washington from a recent meeting of European Finance Ministers in Latvia.  She appeared visibly distressed as she boarded AirForce 1 which had been dispatched urgently.

When questioned about these developments, George Soros fell silent and could be seen to mouth "Oh F**k, NickF is back."


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## NickF

Stupid AUS200, it was supposed to go down! Anyway, who is moving it, now after the Aussie markets are closed???... And how in the world did I set my stop loss so large, I would lose a fortune until it is met... Time to take another (well deserved ?) loss... Or maybe should I wait some more? Maybe a fortune it is to be made, if conditions come right?

PS - whenever I was looking at the chart, it was not moving at all! Later I discovered I was on an 1 hr timeframe. When I went to 5 mins, I could see some idiots keep raising the price of AUS200! I am quite angry on them!


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## NickF

DeepState said:


> CDS spreads at major global banks have moved sharply to decade high wides upon the rumoured return of NickF who, from his house under the Heathrow flight path, sways the currency market with mega-billion dollar bids and offers, most of which never transact.  When "Nick the spoof" was questioned on his trading methods by the IMF after SDRs flash crashed last night by 6.7%, NickF responded "kiss my rhino a**e boys" via his publicist.  Monetary authorities tracking terrorism funding movements reported large transfers between Swiss Banks and Lichtenstein family accounts, one of which was called "NickF Milking Markets (Cayman)".
> 
> Emergency meetings are being convened in Washington at the request of US Treasury Secretary, Jack Lew, who has moved NickF to the top of the financial stability risk list, displacing Greece.  Christine Lagarde was unavailable for comment, returning to Washington from a recent meeting of European Finance Ministers in Latvia.  She appeared visibly distressed as she boarded AirForce 1 which had been dispatched urgently.
> 
> When questioned about these developments, George Soros fell silent and could be seen to mouth "Oh F**k, NickF is back."




DS, I am glad at least one of us is having fun!


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## NickF

I have a plan... I will close all transactions and I will get out for a few minutes. Then, I will come back and pretend it is tomorrow! It's impossible I will have such a trail of bad luck tomorrow!?


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## NickF

NickF said:


> I have a plan... I will close all transactions and I will get out for a few minutes. Then, I will come back and pretend it is tomorrow! It's impossible I will have such a trail of bad luck tomorrow!?



I went outside and I fed one of the stray cats that learned there is free food at our place! It's the first time I convinced her/him to eat from the bowl in my hand. 
My luck is coming back. I recovered to -$15. Probably it has to do with feeding a hungry cat. Now all the trades look crystal clear. 
After all, all I want is just 0.0000000001% of the total volume of trades to be mine. This surely can't be so difficult as other people claim to be? I have a theory, that say the people who make a lot of money in Forex, try to scare away beginners like me, so that they get all the money just for themselves! Well, I have bad news for you, folks! I am here to stay!

Nick


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## Jens

NickF said:


> I started gambling with more money, to recover my losses.
> 
> Nick




It all sounds a bit too familiar. The best is to walk away for a bit and clear your head, before you "attack" the market again


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## NickF

Jens said:


> It all sounds a bit too familiar. The best is to walk away for a bit and clear your head, before you "attack" the market again




My head is totally empty, there is nothing to clear!


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## Jens

DeepState said:


> CDS spreads at major global banks have moved sharply to decade high wides upon the rumoured return of NickF who, from his house under the Heathrow flight path, sways the currency market with mega-billion dollar bids and offers, most of which never transact.  When "Nick the spoof" was questioned on his trading methods by the IMF after SDRs flash crashed last night by 6.7%, NickF responded "kiss my rhino a**e boys" via his publicist.  Monetary authorities tracking terrorism funding movements reported large transfers between Swiss Banks and Lichtenstein family accounts, one of which was called "NickF Milking Markets (Cayman)".
> 
> Emergency meetings are being convened in Washington at the request of US Treasury Secretary, Jack Lew, who has moved NickF to the top of the financial stability risk list, displacing Greece.  Christine Lagarde was unavailable for comment, returning to Washington from a recent meeting of European Finance Ministers in Latvia.  She appeared visibly distressed as she boarded AirForce 1 which had been dispatched urgently.
> 
> When questioned about these developments, George Soros fell silent and could be seen to mouth "Oh F**k, NickF is back."




   that is gold


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## Modest

Remember Nick... When in trouble.. Double!


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## NickF

Modest said:


> Remember Nick... When in trouble.. Double!




That HAS to be a good rule, because it rhymes! Why didn't anybody tell me about it before? Some people keep the best till last...


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## NickF

OK, time for a new rule for me. Today I lost about $22, which is significantly more than what I intended for one day. At some stage during the day I was in front with $10. In order to prevent the loss of funds too fast, I decided to  limit my gains or losses for the day to +$6 or -$3 (whichever comes first) and to invest only $1000 per transaction. After all, my intention is to keep myself involved and learning, not to earn a living (or lose a living  ) from it. As DS said, Forex may be not the best investment method out there, but there are plenty of rules and strategies that are common to investing (one of them being discipline).
If it happens I recover my loss of today in the next days, I will allow myself to increase the daily limit.
The rule remains valid until tomorrow morning.

Nick

Day 1 = +$51
Day 2 = -$22


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## evilk9

NickF said:


> OK, time for a new rule for me. Today I lost about $22, which is significantly more than what I intended for one day. At some stage during the day I was in front with $10. In order to prevent the loss of funds too fast, I decided to  limit my gains or losses for the day to +$6 or -$3 (whichever comes first) and to invest only $1000 per transaction. After all, my intention is to keep myself involved and learning, not to earn a living (or lose a living  ) from it. As DS said, Forex may be not the best investment method out there, but there are plenty of rules and strategies that are common to investing (one of them being discipline).
> If it happens I recover my loss of today in the next days, I will allow myself to increase the daily limit.
> The rule remains valid until tomorrow morning.
> 
> Nick




First off, I know text is pretty 2-dimensional but it seemed like you were slightly frustrated earlier. Remember don't chase your losses! If you have had a couple of trades in a row go bad, take a breather and come back later, the markets are always going to be there! whether that be two hours later, two days or even two weeks! Unfortunately your account won't be after irrational trading


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## NickF

evilk9 said:


> First off, I know text is pretty 2-dimensional but it seemed like you were slightly frustrated earlier. Remember don't chase your losses! If you have had a couple of trades in a row go bad, take a breather and come back later, the markets are always going to be there! whether that be two hours later, two days or even two weeks! Unfortunately your account won't be after irrational trading




Thanks k9, you don't sound so evil 
It is good advice. 

I was not that frustrated, this is a risk I am willing to take, as long as I end up with some useful knowledge at the end of it. Of course, it is more fulfilling when you end up the day on positive, but I usually learn more from mistakes. 

Today I learnt to treat trading more seriously and be more disciplined. Even if I don't play with big money, if I don't follow proper practice, it's not going to be very useful.

Nick


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## NickF

I came to my senses and I decided to do Forex trading on my demo account. Better to lose virtual money than real money  Modest gave me good advice (to try to double or triple my virtual money), thanks for that. I will get involved in some backtesting, to see if I can find a strategy that worked in the past, while learning some more technical analysis.

Nick


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## NickF

*1396 transactions and counting...*

Hi All,

Just an update about my Forex trading. I started on a $2000 real account in April 2015 and I completed so far 1396 transactions. I am pleased to inform that more of them were in the right direction. Only few of them went the wrong way. But I am not so pleased that the few ones had the most weight on my balance. At its lowest, the balance was under $1000, so I lost over half of my funds. At that stage I decided to add another $1000, because I felt I need to have enough funds not to get a margin call. In the meantime I try to be more conservative in my trades and typically I don't get above 40% margin used. Which is probably still far too high.

I consider my biggest weakness is not cutting the loss soon enough and in the beginning I was also adding more money when the loss was increasing. Now I don't do that often. I also long abandoned the stop losses and this could be a mistake. Another potential problem is leaving transactions overnight, without a stop loss, which could be really damaging.

On average, I lost about $0.57 per transaction. Trading commission was -$317 plus another -$78 rollover fee. Profit/loss of trade was only -$347.68. Initially I was doing a lot of smaller transactions, up to around 15 pip. Now I try to get above 40...60 pip. I also discovered the contrarian indicator SSI, and I seem to have some success using it, although I am still not clear, since it doesn't match too well with the alligator indicator.

So, a highlight for me is not losing all my money in first few months of trading, although I lost significantly more than I intended. I hope that in the future I'll be able to limit my losses better. And perhaps setting a daily goal, such as making $5...$10 per day or losing no more than $4. I am aware this is very high for my available funds, but I feel it may be achievable.

In the meantime I started doing the online course Machine Learning, from Stanford university. I am on week 4 out of 11 and I am very pleased with the course so far. I also attempted starting a Python course, but I abandoned it after a week. I'll probably do that after ML course, I can't focus on two courses at the same time, having a full time job. Once I get the knowledge, I'll try to apply what I learnt.

Nick


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## minwa

NickF said:


> I came to my senses and I decided to do Forex trading on my demo account. Better to lose virtual money than real money
> 
> Nick






NickF said:


> Hi All,
> 
> Just an update about my Forex trading. I started on a $2000 real account in April 2015 and I completed so far 1396 transactions.




So very same time you said you will start demo, you started on a real instead ?

Winning trades more than losing trades means nothing, as you have found out your account is down. 

Did you back test like you said you would ? I'm guessing not as you went live straight away.

What commissions are you paying ? For a small $2k account it is cheaper to go for spreads based only, not commissions based FX trading.

If you executed the same strategy over 1k+ trades since April '15, then I am impressed at that part that you could stick to same method.


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## NickF

minwa said:


> So very same time you said you will start demo, you started on a real instead ?
> 
> Winning trades more than losing trades means nothing, as you have found out your account is down.
> 
> Did you back test like you said you would ? I'm guessing not as you went live straight away.
> 
> What commissions are you paying ? For a small $2k account it is cheaper to go for spreads based only, not commissions based FX trading.
> 
> If you executed the same strategy over 1k+ trades since April '15, then I am impressed at that part that you could stick to same method.




I started the demo, as I said. It was only much later (almost a week) when I moved to the real account  The thing is, if I had not worked with the real account, my interest in Forex would have probably lasted two weeks. If it's not real money, I get distracted and get into other things.

Yes, I totally agree that the percentage of winning trades has little to do with success. In fact, I would be in a better position to have lost almost all trades, as long as the balance was up... But probably, that would have been even worse for my moral, than losing money 

I did not use the same strategy over 1k+ transactions. I don't have a strategy yet. I am finely tuning my intuition  I've done a few tests, most of the time I tried going with some form of the alligator signals. But I was not always pleased with it. Sometimes, out of 10 opened transactions, about nine were on negative. At some stage, I tried going with the momentum, if some pair was going one direction for some time, I was going with the flow and that didn't end up too well. For about two months I've done something right and I increased the account almost $500. I think back then the main thing was to always go with the long term trend. Probably that is one thing I will pay attention to in the future. 

I am with FXCM Australia and I pay on spreads. I haven't paid too much attention to how many pips it costs me, I think at best times and for some pairs, it is one pip. But sometimes it costs me 3 or more pips, when I trade at market and there is a large difference between bids and offers. 

I have some plans with combined neural networks, once I put together a system for learning and testing and I hope that may work better than my own trading - I would trust it more than myself, but I would try to use a monitoring system that would get out of all trades if things go badly (like reaching a loss of $50). I haven't  progressed much in the last year, but now I understand better the sample C# code provided by FXCM and I can execute it and do small changes to it.

Nick


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## minwa

A week of demoing and going live is "much later" ?! This impatience is not a good sign for long term prospects in my opinion. 

Your last two months do look a bit more encouraging, but if you had no strategy then not sure how reliable that is. 

I don't get how you have a exact figure for commission, when you only pay spread ? Makes no sense to me, spread is factored into the entry/exit don't know how you (or the platform) calculated it. Just make sure it's not commissions on top of spread that you were not aware of. 

Well good luck.


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## NickF

minwa said:


> A week of demoing and going live is "much later" ?! This impatience is not a good sign for long term prospects in my opinion.
> 
> Your last two months do look a bit more encouraging, but if you had no strategy then not sure how reliable that is.
> 
> I don't get how you have a exact figure for commission, when you only pay spread ? Makes no sense to me, spread is factored into the entry/exit don't know how you (or the platform) calculated it. Just make sure it's not commissions on top of spread that you were not aware of.
> 
> Well good luck.




Hi Minwa,

It's not only that I'm very impatient, I change my mind quite frequently. 

I asked FXCM about the commission. When I opened the account it was a standard account and I was paying commission. In Sep 2015 they changed my account into a mini account (which is for beginners). Funny enough, they gave me now leverage of 1:400, while the standard account has 1:100. For a beginner, such a high leverage can be suicidal  Now I can only trade a limited number of pairs (19 instead of original 40) and I pay spreads. And I can not do automatic trading, which will interest me later. 

I am also not sure about long term reliability, considering the lack of a defined strategy. I guess the future will clarify this.

Thanks,
Nick


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## Jason Rogers

NickF said:


> I am with FXCM Australia and I pay on spreads. I haven't paid too much attention to how many pips it costs me, I think at best times and for some pairs, it is one pip. But sometimes it costs me 3 or more pips, when I trade at market and there is a large difference between bids and offers.




Hi Nick,

You may be interested in the 2015 spread data FXCM reported earlier this week. It gives a breakdown of the spreads for the top currency pairs during peak and off-peak hours: http://ir.fxcm.com/releasedetail.cfm?ReleaseID=958098

If you typically place market orders, you may want to use the Market Range feature on Trading Station. It will help you minimize negative slippage when prices are changing quickly, but still let you get the full benefits of any positive slippage that's available in the market: http://bit.ly/1QyB36A


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## myfxpt

NickF said:


> Stupid AUS200, it was supposed to go down! Anyway, who is moving it, now after the Aussie markets are closed???... And how in the world did I set my stop loss so large, I would lose a fortune until it is met... Time to take another (well deserved ?) loss... Or maybe should I wait some more? Maybe a fortune it is to be made, if conditions come right?
> 
> PS - whenever I was looking at the chart, it was not moving at all! Later I discovered I was on an 1 hr timeframe. When I went to 5 mins, I could see some idiots keep raising the price of AUS200! I am quite angry on them!




Would love to hear the live voice recording! Love your attitude towards the market. Try longer timeframes H4 upwards...far less noise! Good luck!


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## NickF

Jason Rogers said:


> Hi Nick,
> 
> You may be interested in the 2015 spread data FXCM reported earlier this week. It gives a breakdown of the spreads for the top currency pairs during peak and off-peak hours: http://ir.fxcm.com/releasedetail.cfm?ReleaseID=958098
> 
> If you typically place market orders, you may want to use the Market Range feature on Trading Station. It will help you minimize negative slippage when prices are changing quickly, but still let you get the full benefits of any positive slippage that's available in the market: http://bit.ly/1QyB36A




Thanks Jason, that's good to know. I do both types of transactions, I typically place market orders when I don't want to lose a fast trend. I would like to get some statistics on my trades, to see for example what percentage of market trades were losers and what percentage of limit trades were losers and so on. I am afraid that when I am impatient, I may be losing more often 

Nick


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## NickF

*Re: I sometimes love stop losses!*

Well, it's me again. I just celebrated one year of Forex trading on April 24, 2016. My initial deposit of $2000 got down to $1800 after about six months, then I topped it up with another $2000. After some ups and downs I am now left with about $1770. In fact, I just transferred $100 to a mini account, where I can use MT4, instead of TradingStation. I want to run some scripts, because when I sleep I don't seem to lose as much as when I'm awake, so why waste precious time...

Reflecting back, I am not sure I managed to learn too much in one year. A few things which got stacked in my head is that levels of resistance and support have to be considered and it's usually less risky to trade in the direction of the trend. And yesterday I just discovered that I may do better to enter a trade by only setting a dynamic trailing stop loss (without setting a take profit limit), which avoids cutting the winners short and also protects against change in trend. I also developed more accurate expectations about the size of my losses based on the size of my investment. And sometimes it seems to be a bad idea to add more when losing. And today I just realized that when RBA drops the interest rate, one can expect a short term raise in ASX200.

I thought I should share a screenshot from today, to prove what level of finesse I reached. Easy 71 pips in less than three hours. Looking at the screenshot, I wonder why I didn't care about the Doji star just before the bar I entered and the proximity of the SMA200, where the price could bounce back. Well, I know why - because I was looking at the daily chart 

Who said one can not pick bottoms and tops? Unfortunately I experienced plenty of such transactions...

Nick


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## Jason Rogers

NickF said:


> Thanks Jason, that's good to know.




It's my pleasure, Nick 



NickF said:


> I do both types of transactions, I typically place market orders when I don't want to lose a fast trend.




You mentioned using limit orders, but do you ever use stop orders to open new trades? I ask because limit orders can't have negative slippage, but stop orders can due to the momentum of price movement when such order types are triggered.



NickF said:


> I am afraid that when I am impatient, I may be losing more often




I know that's the case with me. That's why I now do automated trading exclusively. That and the fact that forex trades 24 hours a day.


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## Jason Rogers

NickF said:


> I would like to get some statistics on my trades, to see for example what percentage of market trades were losers and what percentage of limit trades were losers and so on.




While it doesn't include a comparison of your trades opened with market orders versus those opened with limit orders, you can get other statistics using our new Trading Analytics: https://taweb.fxcorporate.com/


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## NickF

Jason Rogers said:


> While it doesn't include a comparison of your trades opened with market orders versus those opened with limit orders, you can get other statistics using our new Trading Analytics: https://taweb.fxcorporate.com/




Wow Jason, thanks a lot for the link. I had no idea I can analyse my trades in there. 

Here are some of the statistics. I am not very proud of them. 

I will have to have a careful look at what is going on and alter my strategies. I think I should try again to play for a target profit/loss of $5 / -$5 per day. 


Nick


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## Jason Rogers

NickF said:


> Wow Jason, thanks a lot for the link. I had no idea I can analyse my trades in there.




It's my pleasure, Nick




NickF said:


> Here are some of the statistics. I am not very proud of them.




Your stats seem to be improving, particularly since you reduced your trade frequency in the middle of last year. November through February was especially good for you. What worked for you at that time?




NickF said:


> I will have to have a careful look at what is going on and alter my strategies. I think I should try again to play for a target profit/loss of $5 / -$5 per day.




I believe risk management is every bit as important as strategy. If I may ask, what percentage of your equity are you risking per trade? And what is your effective leverage?


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## NickF

Jason Rogers said:


> Your stats seem to be improving, particularly since you reduced your trade frequency in the middle of last year. November through February was especially good for you. What worked for you at that time?



I wish I knew the answer  I need to document more my trades, to see if there was something that caused me to become profitable. I know that in the past for a period of about a month, I set a daily target of $5. This target still seems very small (and very achievable) to me, but I am aware that if I could obtain this most days, I would probably have the best month. Back then, I had a lot of consecutive days where I was profitable, with small profits.


Jason Rogers said:


> I believe risk management is every bit as important as strategy. If I may ask, what percentage of your equity are you risking per trade? And what is your effective leverage?




Yes, and risk management is even more important when I use a strategy that keeps changing every day (which in fact is not a strategy - maybe just a recipe for disaster). I usually make trades in $1000 lots. I tend to stay between $1000 - $3000 (which I already is too high for my account and level of experience).

Now that I got aware that I am losing double than what I make, I decided to limit my losses to $5...$10. 
Yesterday I had a pretty good day. I made about $5 three times during the day and I lost it all. In the end I ended the day with $12 profit.
Today it started good. Based on the slight drop in US stock market, I expected AUS200 will also drop. My theory may be poor, but it worked in the morning.

Because I do trading while at work, I am able to check the evolution of Forex once in a while. I missed the opening and the price dropped quite a lot without me. However, I entered short and I made about $2.50 in less than half an hour. I was pleased with that, there would be plenty of time till tonight to make another $2.50 or even more. 
So when the price rose, I put some more short orders at various levels. Seeing how quickly AUS200 was dropping, I was anxious for missing the action, so I was chasing the price down. I already got aware I should not do that. I sold when the price was raising and it appeared to me it will never stop raising. I closed the three units I had un AUS200, and at the moment I am on a loss of -$20, which I should have never let is happen.

As I already learnt, as soon as I sold, the price went back down. Now I have no idea what it AUS200 will do for the rest of the day. The bitter lesson is that I can lose money even if I guess correctly the trend. My theory was good, my impatience and lack of discipline sucked. 

Anyway, the smartest thing I've done so far is to trade with a small account. Although losing $1200 is quite painful (even if it took me one year), it's not the end of the world. The smarter thing would be to trade with the demo account until I learn better what the heck I'm doing. But I'm not sure I'm smart enough to do that 

Nick


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## NickF

NickF said:


> Anyway, the smartest thing I've done so far is to trade with a small account. Although losing $1200 is quite painful (even if it took me one year), it's not the end of the world. The smarter thing would be to trade with the demo account until I learn better what the heck I'm doing. But I'm not sure I'm smart enough to do that
> Nick




OK, I switched to a brand new demo account, with $5000. I decided to do some crazy trade - on the daily chart of SPX500, I see a head and shoulders forming, so I placed the long trade at 23:26 on 2016/05/06. It is now 23:42 and I am up 92 pip - $12.57, in less than 30 minutes. I already closed the trade (put $1000 into it). On my Demo account! Oh boy, I hate simulated trading...
I feel it is such a wasted opportunity of making real money...

Nick


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## NickF

NickF said:


> OK, I switched to a brand new demo account, with $5000. I decided to do some crazy trade - on the daily chart of SPX500, I see a head and shoulders forming, so I placed the long trade at 23:26 on 2016/05/06. It is now 23:42 and I am up 92 pip - $12.57, in less than 30 minutes. I already closed the trade (put $1000 into it). On my Demo account! Oh boy, I hate simulated trading...
> I feel it is such a wasted opportunity of making real money...
> 
> Nick




I hated that much making virtual money on my account, I switched back to my real account. Got a nice change of 67.5 pips, only with the wrong sign (-$9.18). In total, a loss of -$30.8 for the day. Time to switch back to my demo account... Maybe I need to attend some tai-chi classes 

Nick


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## Jason Rogers

NickF said:


> I wish I knew the answer  I need to document more my trades, to see if there was something that caused me to become profitable. I know that in the past for a period of about a month, I set a daily target of $5. This target still seems very small (and very achievable) to me, but I am aware that if I could obtain this most days, I would probably have the best month. Back then, I had a lot of consecutive days where I was profitable, with small profits.
> 
> 
> Yes, and risk management is even more important when I use a strategy that keeps changing every day (which in fact is not a strategy - maybe just a recipe for disaster). I usually make trades in $1000 lots. I tend to stay between $1000 - $3000 (which I already is too high for my account and level of experience).
> 
> Now that I got aware that I am losing double than what I make, I decided to limit my losses to $5...$10.
> Yesterday I had a pretty good day. I made about $5 three times during the day and I lost it all. In the end I ended the day with $12 profit.
> Today it started good. Based on the slight drop in US stock market, I expected AUS200 will also drop. My theory may be poor, but it worked in the morning.
> 
> Because I do trading while at work, I am able to check the evolution of Forex once in a while. I missed the opening and the price dropped quite a lot without me. However, I entered short and I made about $2.50 in less than half an hour. I was pleased with that, there would be plenty of time till tonight to make another $2.50 or even more.
> So when the price rose, I put some more short orders at various levels. Seeing how quickly AUS200 was dropping, I was anxious for missing the action, so I was chasing the price down. I already got aware I should not do that. I sold when the price was raising and it appeared to me it will never stop raising. I closed the three units I had un AUS200, and at the moment I am on a loss of -$20, which I should have never let is happen.
> 
> As I already learnt, as soon as I sold, the price went back down. Now I have no idea what it AUS200 will do for the rest of the day. The bitter lesson is that I can lose money even if I guess correctly the trend. My theory was good, my impatience and lack of discipline sucked.
> 
> Anyway, the smartest thing I've done so far is to trade with a small account. Although losing $1200 is quite painful (even if it took me one year), it's not the end of the world. The smarter thing would be to trade with the demo account until I learn better what the heck I'm doing. But I'm not sure I'm smart enough to do that
> 
> Nick




You mentioned that during the time you were doing well, you set a target of making $5 per day. What happened if you reached that goal early in the day? Would you stop trading until the next day?

I ask because sometimes, the market conditions are just right for your strategy, and you might want to make the most of those opportunities. For example, I run automated strategies that perform best in volatile markets. I wouldn't think of turning these strategies off during times when market conditions suit them best.

Also, you said you trade 1k micro lots where you're risking about 10 cents per pip, but what is your effective leverage? You can determine this by adding up the total face value of all your open trades and dividing by your equity.

For example, if you have $2000 in your account and have a total of ten 1k micro lots open, then you have 10k in open positions with 2k in equity which means your effective leverage is 5:1. The DailyFX research team did a series of studies on trader profitability which showed that traders tend to do better when using 10:1 leverage or less.


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## NickF

Jason Rogers said:


> You mentioned that during the time you were doing well, you set a target of making $5 per day. What happened if you reached that goal early in the day? Would you stop trading until the next day?
> 
> I ask because sometimes, the market conditions are just right for your strategy, and you might want to make the most of those opportunities. For example, I run automated strategies that perform best in volatile markets. I wouldn't think of turning these strategies off during times when market conditions suit them best.
> 
> Also, you said you trade 1k micro lots where you're risking about 10 cents per pip, but what is your effective leverage? You can determine this by adding up the total face value of all your open trades and dividing by your equity.
> 
> For example, if you have $2000 in your account and have a total of ten 1k micro lots open, then you have 10k in open positions with 2k in equity which means your effective leverage is 5:1. The DailyFX research team did a series of studies on trader profitability which showed that traders tend to do better when using 10:1 leverage or less.




Hi Jason,

Thanks for asking me the right questions.
I can't remember what I was doing back then, if I stopped after making my target profit. I have the trading history and I could analyse the trades during my best period, to see what gains and losses I encountered back then and at what time I stopped trading.

I still don't have a rigid strategy - perhaps if I had one, I would rather make a software for it. I based my decisions mostly based on levels of resistance and support. I found (pretty late) how important the news are and I discovered the sessions indicator, which shows when each market operates. For some period of time, if the trades were going the wrong way, I used to buy more at better prices - this strategy would only work for a period of time and when it doesn't, the loss I encounter can be greater than all previous gains, so now I avoid it.

My target gain changed over time. Early, I was scalping. Later, I was risking too much money. Now I am more into making more pips with one to three micro-lots. If I can close a trade in less than one hour for a profit of about AU$2.50 (which means about 30 pip), I am quite happy. Of course, it depends on how easy I get to 30 pips. One of the big issues I discovered with me is over-trading and becoming careless when I am successful.
I sort of tend to get drunk on success and I imagine trading is in fact easy. I forget that is not often that I make a nice profit easily and then I am not patient enough on waiting for another good opportunity. After some good trades, I see opportunities everywhere 

I use low leverage. I experienced early some high volatility when I was trading at some stage up to around 20 x $1000 micro-lots (when I was adding to my losses) and that was my biggest loss - I lost in one day about $400. At some stage I gave my account to my wife and she traded a lot more aggressively for about two days than I usually do and she ended up with another $200 loss. In fact she lost around $230, then out of desperation she did some scalping and she brought the balance back to -$200, when she decided Forex is not for her  

During my riskiest period, I got some warnings about margin calls. Since then, I rarely go over $5000 and when I do, I get alarm bells in my head. For my account of $2000, I consider $2000 as appropriate and $5000 already very risky. That means, my leverage is under 5:1. Perhaps, if I hadn't done that, I would have not survived with 1600 trades and still have over half of my account.

A few weeks ago I started reading/modifying/writing/testing some expert advisers in MT4 and I enjoy this activity. Perhaps this should be my focus. There are many examples online, I find they tend to have a lot of bugs, but they contain a lot of interesting code. I tested some strategies that came to my mind, based on speed of trade and various periods. I run optimization on them for one or two years, then tested them out of sample. Sometimes they did remarkably well, the highest I had was like over 80% in the next year with 25% drawdown. For whatever reason, what seemed to work well for 2014-2015, didn't work at all in 2016. I made tests with optimization for shorter periods and running the EA for shorter periods of time (one week, one month), but the results are not consistent. Ideally, I would like to implement an idea and get good results without any optimization and on any currency pair. But I noticed that there are significant differences for different currency pairs. For the same strategy, each reacts its own way - so most likely it is not possible to make a universal EA with a good performance.

I have heaps of ideas and tests to do. Out of curiosity - you mentioned you are running some scripts when the market conditions are right. What kind of annual profit do you get from trading? I asked some people the same question and they said that having a consistent profit of 8% p.a. would be a lot better than having some years making a lot more, but being inconsistent. To me, for an account under $5000, a 25% would be an excellent result (expecting that some years I would get a small loss, of less than -10%). A 10% would be a good result. A 50% would be an amazing result. Perhaps I expect far too much.

Nick


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## Jason Rogers

NickF said:


> Hi Jason,
> 
> Thanks for asking me the right questions.




Thanks Nick, I try to ask useful questions.




NickF said:


> For some period of time, if the trades were going the wrong way, I used to buy more at better prices - this strategy would only work for a period of time and when it doesn't, the loss I encounter can be greater than all previous gains, so now I avoid it.




What you described is a Martingale betting system, and it's good you realize they don't work. I've tried explaining this to others, unfortunately some people insist on learn the hard way.


That said, with proper risk management, you can avoids the pitfalls of martingale betting by using stops as part of a range trading strategy.



NickF said:


> Now I am more into making more pips with one to three micro-lots. If I can close a trade in less than one hour for a profit of about AU$2.50 (which means about 30 pip), I am quite happy. Of course, it depends on how easy I get to 30 pips. One of the big issues I discovered with me is over-trading and becoming careless when I am successful.
> I sort of tend to get drunk on success and I imagine trading is in fact easy. I forget that is not often that I make a nice profit easily and then I am not patient enough on waiting for another good opportunity. After some good trades, I see opportunities everywhere




Do you trade full time? I imagine it would be hard to monitor such a strategy without automation otherwise. I'm not saying automation is necessary, but you have to find some way to avoid overtrading because that can be as costly as poor risk management, since it means you're compromising your strategy.




NickF said:


> I use low leverage.




That is good. As the article I mentioned in my previous post showed, successful traders tend to use less leverage.




NickF said:


> A few weeks ago I started reading/modifying/writing/testing some expert advisers in MT4 and I enjoy this activity. Perhaps this should be my focus. There are many examples online, I find they tend to have a lot of bugs, but they contain a lot of interesting code. I tested some strategies that came to my mind, based on speed of trade and various periods. I run optimization on them for one or two years, then tested them out of sample. Sometimes they did remarkably well, the highest I had was like over 80% in the next year with 25% drawdown. For whatever reason, what seemed to work well for 2014-2015, didn't work at all in 2016. I made tests with optimization for shorter periods and running the EA for shorter periods of time (one week, one month), but the results are not consistent. Ideally, I would like to implement an idea and get good results without any optimization and on any currency pair. But I noticed that there are significant differences for different currency pairs. For the same strategy, each reacts its own way - so most likely it is not possible to make a universal EA with a good performance.




Since you're interested in automation, you may want to consider Mirror Trader As an FXCM account holder, you already have login details that give you access to this platform which has hundreds of strategy/currency pair combinations you can choose. Once you add a strategy to your Mirror Trader portfolio, trades are automatically placed in your FXCM account. There is no cost to buying these strategies like there is with many EAs. You pay the same commissions and spreads in your FXCM account for running Mirror Trader strategies as you do for placing your own manual trades.




NickF said:


> I have heaps of ideas and tests to do. Out of curiosity - you mentioned you are running some scripts when the market conditions are right. What kind of annual profit do you get from trading? I asked some people the same question and they said that having a consistent profit of 8% p.a. would be a lot better than having some years making a lot more, but being inconsistent. To me, for an account under $5000, a 25% would be an excellent result (expecting that some years I would get a small loss, of less than -10%). A 10% would be a good result. A 50% would be an amazing result. Perhaps I expect far too much.
> 
> Nick




For compliance reasons, I'm not allowed to discuss my personal trading performance, since it could be interpreted as me giving a recommendation for my own trading strategies. That said, I believe it's best not to start out with a percentage target in mind, because it may lead you to taking unnecessary risks trying to achieve it. Instead, try to identify trading strategies that give you a genuine edge in the market. Once you have confidence in a strategy, you can modify your leverage and investment size to go after targets with a clearer understanding of the risks.


----------



## NickF

Jason Rogers said:


> What you described is a Martingale betting system, and it's good you realize they don't work. I've tried explaining this to others, unfortunately some people insist on learn the hard way.
> That said, with proper risk management, you can avoids the pitfalls of martingale betting by using stops as part of a range trading strategy.



Yes, I read about Martingale systems. I tried a "soft" version of it, where I was adding the same amount every time I was losing some money. Most of the time it worked. When it didn't, the loss was too high. Jesse Livermore was recommending to only add money to winning positions. I was unable to do that, but I will try to do it in the future.


Jason Rogers said:


> Do you trade full time? I imagine it would be hard to monitor such a strategy without automation otherwise. I'm not saying automation is necessary, but you have to find some way to avoid overtrading because that can be as costly as poor risk management, since it means you're compromising your strategy.



Some of my biggest wins and losses happened when I left trades overnight. I still do it, but with small positions.


Jason Rogers said:


> Since you're interested in automation, you may want to consider Mirror Trader As an FXCM account holder, you already have login details that give you access to this platform which has hundreds of strategy/currency pair combinations you can choose. Once you add a strategy to your Mirror Trader portfolio, trades are automatically placed in your FXCM account. There is no cost to buying these strategies like there is with many EAs. You pay the same commissions and spreads in your FXCM account for running Mirror Trader strategies as you do for placing your own manual trades.



Thanks for the tip. I noticed the Mirror Trader and I had a quick look at it before, but I was under impression it costs to join it. I looked at it last evening and I found quite a few strategies that worked quite well for one or two years. I seriously consider copying them. If I choose about 5 strategies of the better ones out there and invest $1000 in each for one year, I am quite confident they could make more money than myself 


Jason Rogers said:


> For compliance reasons, I'm not allowed to discuss my personal trading performance, since it could be interpreted as me giving a recommendation for my own trading strategies. That said, I believe it's best not to start out with a percentage target in mind, because it may lead you to taking unnecessary risks trying to achieve it. Instead, try to identify trading strategies that give you a genuine edge in the market. Once you have confidence in a strategy, you can modify your leverage and investment size to go after targets with a clearer understanding of the risks.



I understand that. At the moment I still lack discipline and my nature is to change my mind frequently, which may not be good. My last trades were quite bad. Two days ago I exceeded the maximum drawdown, which I had a while ago. Now I am on around -52%.  I noticed that in some cases I've chosen correctly the trend, but I still managed to lose money, but the stop losses I set were too close to price and I got cut out very close to the desired reversal. I find it very difficult to choose a good stop loss point - set too far apart, I loose too much money, set to close, I lose money despite being right. Probably the better way is to have a vision for longer term and set larger stop loss point and chase larger profits - this way I can avoid the noise. I still haven't learnt my lesson not to jump in into fast moving prices. Just this morning I thought I will take advantage of a quick reversal in EURNZD (which I picked up too late anyway). I could have made a $1.75 in minutes (my target was $2), I chose instead to get out with -$4.42 loss. If I was wrong to be long, once I exited, I went short. Now I added a loss of another -$3.24 to the day's transaction. However, I put my full trust into the gravestone doji from the day before and the resistance level of around 1.68 and I bet it will go down, maybe to $1.64. That would cover my losses into EUR/NZD.
Luckily I covered some of my last losses with a $30 gain overnight in S&P500. 

I want to check on all my 1600 trades, to get a screenshot view of where I entered, where I exited and what happened in the next two weeks after I closed my trades. Then to put all these into a short movie. Does anybody know if there is a software where I could feed a list of trades (currency pair, entry date and time, exit date and time) and show candlebars on screen, together with a straight line indicating the trade?

Nick


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## Jason Rogers

NickF said:


> Jesse Livermore was recommending to only add money to winning positions.




His life came to a tragic end but before that he amassed one of the greatest fortunes in history from trading. His advice about adding to winning positions and not to losing positions is sound. One of many problems with Martingale betting systems is they add to losing positions instead of winning positions.




NickF said:


> I noticed the Mirror Trader and I had a quick look at it before, but I was under impression it costs to join it. I looked at it last evening and I found quite a few strategies that worked quite well for one or two years. I seriously consider copying them. If I choose about 5 strategies of the better ones out there and invest $1000 in each for one year, I am quite confident they could make more money than myself




Past performance is not necessarily indicative of future results. Keep in mind that one or two years is not a lot of time. Market conditions can change dramatically when you look at longer periods of time. That's why when I'm evaluating strategies on Mirror Trader (or anywhere else), I look at the total history. The longer the history, the better for me.

Unfortunately, Mirror Trader's search option only lets you look at the last 24 months of data. When I find a strategy that catches my eye over that time frame, I click on the strategy name in the search results. The window that pops up in the Mirror Trader platform will let you view more trading history for the strategy. I use that information to make my final decision on a strategy.

Also, I prefer strategies that perform pretty well on multiple currency pairs over strategies that did extremely well on just a few currency pairs. Call it a personal preference, but my rationale is that if a strategy only did well on one currency pair, it could have been down to luck.



NickF said:


> Probably the better way is to have a vision for longer term and set larger stop loss point and chase larger profits - this way I can avoid the noise.




While I know some successful short term traders, I know more people who have found success trading on longer time frames.

Below is an excerpt from an article by currency analyst James Stanley on What is the ’Best’ Time Frame to Trade?

_*"All new traders should begin with a long-term approach; only getting shorter-term as they see success with a longer-term strategy. This way, as the margin of error increases with shorter-term charts and more volatile information, the trader can dynamically make adjustments to risk and trade management.

Traders utilizing a longer-term approach can look to use the weekly chart to grade trends, and the daily chart to enter into positions."*_​
In my experience, too often new traders are reluctant to try a long-term approach, because they equate longer-term trading with bigger losses. While you generally have to risk more pips on a long-term trade, that doesn't necessarily mean risking more dollars.

Consider that when you trade one micro lot (1000 units of base currency) you are risking only 10 cents per pip. That means you could risk risk 100 pips, and that would equate to $10.



NickF said:


> I want to check on all my 1600 trades, to get a screenshot view of where I entered, where I exited and what happened in the next two weeks after I closed my trades. Then to put all these into a short movie. Does anybody know if there is a software where I could feed a list of trades (currency pair, entry date and time, exit date and time) and show candlebars on screen, together with a straight line indicating the trade?
> 
> Nick




NinjaTrader has a feature called Market Replay. It allows you to go back to a certain time in the past and play the charts forward from that point. However, I'm not sure if it will automatically reload your past trades. You can run a report from Trading Station and save it in Excel format to have a record of your trades.


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## NickF

Jason Rogers said:


> Past performance is not necessarily indicative of future results. Keep in mind that one or two years is not a lot of time. Market conditions can change dramatically when you look at longer periods of time. That's why when I'm evaluating strategies on Mirror Trader (or anywhere else), I look at the total history. The longer the history, the better for me.
> 
> Unfortunately, Mirror Trader's search option only lets you look at the last 24 months of data. When I find a strategy that catches my eye over that time frame, I click on the strategy name in the search results. The window that pops up in the Mirror Trader platform will let you view more trading history for the strategy. I use that information to make my final decision on a strategy.
> 
> Also, I prefer strategies that perform pretty well on multiple currency pairs over strategies that did extremely well on just a few currency pairs. Call it a personal preference, but my rationale is that if a strategy only did well on one currency pair, it could have been down to luck.




I checked some of the most popular strategies in MirrorTrader (PMInvestmentCapital, ThirdBrainFx, Taiyo, Sphynx)and although long term they look very good, I noticed that few of them made any money in the last year or two. It sometimes takes them more than 12 months to exceed the previous highs. The guys who created these strategies are very experienced, most have over five years of experience and none of them can say they were profitable for any selected 12 months period. This shows me the game is a lot tougher than what I was expecting. 

On the other hand, looking at my performance (account opened on 24/04/2015, on 28/06/2015 - about two months after opening my account I was already down to -49.62%). After over 10 months and many hundreds of transactions, I am now on -50.14%, so in the last 10 months I lost less than 1% of my funds. And even if I don't feel like I learnt a lot in this one year of trading, I am aware that I know a lot more than a year ago. 

Besides, I've done countless beginner mistakes which are avoidable. Only two days ago I lost over $8 when I took a nap in the afternoon (I took some days off work). I had open trades and I did not check when the major news concerning the my currency pairs were due. The news arrived and there was a very fast change which completely wiped off my morning profit. I made the money back, then I chased some fast movement and I lost it all again. My lesson is that if I see any fast movement, I would have more luck to trade in the opposite direction (at least for short term, like next 30 mins).



Jason Rogers said:


> While I know some successful short term traders, I know more people who have found success trading on longer time frames.
> 
> Consider that when you trade one micro lot (1000 units of base currency) you are risking only 10 cents per pip. That means you could risk risk 100 pips, and that would equate to $10.




Thanks for pointing that out. You are right, I am also afraid of longer time frames because of risk of losing too many pips. But I also closed short term trades at the worst moments because I panicked and I thought there is no end to a fast move, only to find out I closed it on the very top or the bottom.

For now, my personal challenge is to get a better month by month performance compared with last year (i.e April 2015 (last week only) = -2.5%, April 2016 = -14.05%, May 2015 = -23.97%, May 2016  = +1.66% (at the moment). I will also try to stay on the positive side, no matter how small the profit. A +1% for the month is a lot better than anything negative.


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## NickF

Yesterday I had a memorable day. I played on S&P500. My belief is that it should go down in the future. So, I went short on it. I lost some money. So, I went long on it. I lost some more money. So I went short on it. I start losing serious money. There is only one way I know to fix this. Add another short position. Immediately lost money on it as well. Hmm, something must be wrong in my strategy. But I know the solution! I added another short position. Lost money on it as well. In total, I am down about $64. But now I realized my mistake! I was not stubborn enough. So, I made a magnificent plan. No matter what, I will keep these three positions until they become profitable again. Sounds like a good plan to me...


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## Jason Rogers

NickF said:


> I checked some of the most popular strategies in MirrorTrader (PMInvestmentCapital, ThirdBrainFx, Taiyo, Sphynx)and although long term they look very good, I noticed that few of them made any money in the last year or two. It sometimes takes them more than 12 months to exceed the previous highs. The guys who created these strategies are very experienced, most have over five years of experience and none of them can say they were profitable for any selected 12 months period. This shows me the game is a lot tougher than what I was expecting.




You make a great observation.

One thing to keep in mind with automated strategies is they tend to focus on a particular type of trading (eg. range or trend). Range trading strategies may struggle if there is a long term trend, and trend trading strategies may struggle in ranging markets.

Mirror Trader has a feature that lets you view the combined equity curve of several strategies you are considering. It's possible that the combination of two or more strategies could result in a smoother equity curve overall due some strategies doing better and times when others do worse.

If you can recognize that current market conditions are bad for a particular strategy, you can even turn it off altogether and swap it for a strategy better suited to current conditions.




NickF said:


> Thanks for pointing that out. You are right, I am also afraid of longer time frames because of risk of losing too many pips. But I also closed short term trades at the worst moments because I panicked and I thought there is no end to a fast move, only to find out I closed it on the very top or the bottom.




What trade size are you using? As I mentioned, with a micro lot, you can risk as little as 10 cents per pip. If you keep your risk to 2% of your equity per trade, that will reduce the chances that you will panic and make emotional decisions.




NickF said:


> For now, my personal challenge is to get a better month by month performance compared with last year (i.e April 2015 (last week only) = -2.5%, April 2016 = -14.05%, May 2015 = -23.97%, May 2016  = +1.66% (at the moment). I will also try to stay on the positive side, no matter how small the profit. A +1% for the month is a lot better than anything negative.




Reducing your trade size and keep your risk per trade to 2% of your equity should also help you with that goal.


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## ukulele

Let me preface this by saying I am also a newbie trader. But I see you making the same mistakes I made/make.

To put it slightly bluntly; I think you are going about this the wrong way. From your posts you don't seem to have a defined strategy.   

An example: You said you saw a head and shoulders pattern on the SPX500 on the daily timeframe. You went short and closed out your position less than half an hour later! Why would you make a judgement on the daily timeframe and then take profits only half an hour later; this doesn't make sense. Before going into this trade you have to ask yourself a few questions like 
a) did the neckline get broken, if so how convincingly?
b) what were your targets and stop loss levels. Do they provide a good enough risk:reward ratio?
c) did you adjust your position size so if you are stopped out you are only risking 1 or 2 or xx percent?

Another mistake you make is revenge trading. Go short, stopout, go long stopout, go short again, stopout. I have done this and its not a good feeling. You will blow up your account trading this way. 

Honestly I think you should go back to the drawing board. Perhaps start with seeing what type of trader you are, trend follower, range trader, mean reversion, dividend stripper whatever... Decide what timeframe suits you. Develop a hypothesis. Develop rules around that hypothesis and test them. If you find an edge then focus on the process. Be process orientated, I can't stress that enough. 

Have a listen to chat with traders podcast and better system trader for more in depth analysis into trader psychology and ideas for trading strategies. As a fellow newbie Good luck champ! We both need it...


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## NickF

ukulele said:


> Let me preface this by saying I am also a newbie trader. But I see you making the same mistakes I made/make.
> 
> To put it slightly bluntly; I think you are going about this the wrong way. From your posts you don't seem to have a defined strategy.
> 
> An example: You said you saw a head and shoulders pattern on the SPX500 on the daily timeframe. You went short and closed out your position less than half an hour later! Why would you make a judgement on the daily timeframe and then take profits only half an hour later; this doesn't make sense. Before going into this trade you have to ask yourself a few questions like
> a) did the neckline get broken, if so how convincingly?
> b) what were your targets and stop loss levels. Do they provide a good enough risk:reward ratio?
> c) did you adjust your position size so if you are stopped out you are only risking 1 or 2 or xx percent?



Hi Ukulele,
You may also be beginner trader, but it seems your mind frame is years ahead of mine. From what you say, your approach to the market is much closer to what it should be. Your observations are correct and although I know a bit about all what you mentioned, I didn't apply any of it. I stopped using Stop-Losses because it seemed to me that always the price reached my set stop losses before going the other way around. Possibly, my stop losses are set too close to the noise level, so any fluctuation will take me out. But even when I set my stop losses larger, I still seem to first reach the stop loss before seeing the profit.

One way I dealt with this problem is setting my take profit point lower than my stop loss. It makes me feel good for more small successes and I also don't feel that bad about taking only one large loss once in a while. Definitely not going to work long time.


ukulele said:


> Another mistake you make is revenge trading. Go short, stopout, go long stopout, go short again, stopout. I have done this and its not a good feeling. You will blow up your account trading this way.



What a proper name for this method of trading! I could not find a better name for it. That's exactly what I was doing, without being aware other people are doing it as well and there's even a name for it. I expect that my wins come as easily and naturally as my losses. But that's rarely the case and I am still not sure why  After all, I choose to be lazy and I deserve to win!


ukulele said:


> Honestly I think you should go back to the drawing board. Perhaps start with seeing what type of trader you are, trend follower, range trader, mean reversion, dividend stripper whatever... Decide what timeframe suits you. Develop a hypothesis. Develop rules around that hypothesis and test them. If you find an edge then focus on the process. Be process orientated, I can't stress that enough.
> 
> Have a listen to chat with traders podcast and better system trader for more in depth analysis into trader psychology and ideas for trading strategies. As a fellow newbie Good luck champ! We both need it...



Great advice. I should not need such advice when trading with real money, but I do. I sort of think of doing all these every day, but I have a very chaotic approach. And when I trade, I approach it from a practical point of view, not a theoretical (or philosophical) point of view. I feel like I am on the battle field. I take decisions in seconds, I rarely check more than one timeframe, I often forget to check indicators such as RSI, Alligator, SSI or MACD (not that I care too much about them anyway). And what's the point, because I already know where the price will go! When I see a very predictable pattern, such a channel, I disregard it. It would be too easy and I won't fell for it! To my surprise, I found I would have made some money on a few occasions if I had done it.

I am listening to the podcasts once in a while and I find them interesting and informative. 
May I ask how long since you started and if you are on positive or negative? Best of luck to you too.

Nick


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## NickF

Oh boy, I am getting scared now. It looks like I lost almost 4% of my funds in one day, betting the S&P500 will go down "soon". But is soon, soon enough? What if the stock market will raise another day? Or if, god forbid, it will raise for the entire week, instead of crashing down? I know I am good and I know that I don't make mistakes. But am I perfect to the required level of accuracy?

Should I consider setting a stop loss point? Is there a light at the end of the tunnel? It seems that I am carried away from that light by a train that goes in the reverse direction! I was so proud when I discovered I became a sucker of level 2 (as Jesse Livermore described, suckers of level 1 lose all their funds in 3 to 6 months; suckers of level 2 usually last up to 3.5 years before losing everything).

I'm just wondering, did anybody analyze the statistical chance of success for praying in cases like these?

Nick


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## ukulele

There is another thread which I reckon is a good read: Canoz's "Transitioning to markets available in Australia's time zone". Some gems in there in regards to planning, but nothing really on strategy specifically.

My results are nothing to write home about!!!
Start 13/11/14, 137 trades, +3.8% on a 10k account. I trade FOREX through CFDs and also in shares (both CFD and actual). At the moment I have one strategy for each but it is not yielding enough trades.  

I am always on the lookout for another strategy but I find it hard to back test because I don't have amibroker or similar. For shares I have done manual backtesting with yahoo data and excel. It's so cumbersome. I guess I am proving to myself that my original 2 strategies work before going down the automation route. 

I take solace in the fact that I revenge traded twice and lost 10% and 5%, I have now grinded back to break even and now I'm a bit up. I will never ever revenge trade. If I didn't do those trades and just stuck to my plan I would've been a lot better off; I'm a newb, I make newb mistakes. 

I am still making mistakes. I often exit too early; I did so even today, I didn't know what effect the RBA minutes would have on the stock market. Each time I take a trade its uncomfortable, it will take time to get used to it.


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## NickF

ukulele said:


> There is another thread which I reckon is a good read: Canoz's "Transitioning to markets available in Australia's time zone". Some gems in there in regards to planning, but nothing really on strategy specifically.
> 
> My results are nothing to write home about!!!
> Start 13/11/14, 137 trades, +3.8% on a 10k account. I trade FOREX through CFDs and also in shares (both CFD and actual). At the moment I have one strategy for each but it is not yielding enough trades.
> 
> I am always on the lookout for another strategy but I find it hard to back test because I don't have amibroker or similar. For shares I have done manual backtesting with yahoo data and excel. It's so cumbersome. I guess I am proving to myself that my original 2 strategies work before going down the automation route.
> 
> I take solace in the fact that I revenge traded twice and lost 10% and 5%, I have now grinded back to break even and now I'm a bit up. I will never ever revenge trade. If I didn't do those trades and just stuck to my plan I would've been a lot better off; I'm a newb, I make newb mistakes.
> 
> I am still making mistakes. I often exit too early; I did so even today, I didn't know what effect the RBA minutes would have on the stock market. Each time I take a trade its uncomfortable, it will take time to get used to it.




You are on positive 3.8%? Who do I have to kill to get back on positive (other than myself)?
I tried some strategies with Amibroker a few years ago. I remember I was able to download in a few minutes all the ASX market (just the bigger stocks) and then I could run backtests on it, without having to purchase the full program. I remember it was nice and easy to run, modify and optimize strategies.

I wish I could say I will never ever revenge trade again. But I guess it only depends on me if I'll do it again or not. Revenge is so sweet, but the taste of defeat is so bitter!  

I was reading today in the newspaper that due to the interest rate drop in Australia, the AUD has fallen a lot since then. I trade (only) Forex daily and I had to read in the newspaper about the long term impact in the currency market of this rate change! I felt that if I miss the first few seconds of trading after the announcement, there is no profit to be made. Sometimes I get flashbacks about how monumentally stupid I can be 

Nick


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## Jason Rogers

NickF said:


> Oh boy, I am getting scared now. It looks like I lost almost 4% of my funds in one day




It seems like your trade sizes are way too big for your comfort relative to your equity. You can trade micro lots on CFDs like SPX500 just like you can with forex trades.


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## CanOz

Jason Rogers said:


> It seems like your trade sizes are way too big for your comfort relative to your equity. You can trade micro lots on CFDs like SPX500 just like you can with forex trades.




Yeah. i'm using FXCM at the moment and i've got total flexibility in position sizing, which is critical in the preservation of captial


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## NickF

Jason Rogers said:


> It seems like your trade sizes are way too big for your comfort relative to your equity. You can trade micro lots on CFDs like SPX500 just like you can with forex trades.




Yes, that is correct, I went too far, purchasing three units (one "unit" as I call it is the minimum I can select) of S&P500. In the future I should keep it to 1. I was lucky and yesterday I recovered all my loss. This morning I was even ahead $20 and I didn't close my positions. I try to listen to the Old Turkey that Jesse Livermore mentioned. about keeping one's position in a trending market (which I hope it is).

I don't know anything about CFDs. I am also with FXCM and I am on a mini account. I don't pay commission, but I am limited to 19 currency pairs and I don't know if I can trade these CFD's - I will have to look. I don't think I need to go under 1 micro-lot, all I need is to be more considerate while trading.

Also, I suspect that George Soros overheard I am shorting the S&P500 and he decided to double his position as well. Great minds think alike!

Nick


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## Jason Rogers

NickF said:


> I don't know anything about CFDs. I am also with FXCM and I am on a mini account.




CFDs are contracts for difference. The SPX500 contract you trade in your FXCM account is a CFD. You can also trade CFDs for other stock indices, metals, energy products and international shares.



NickF said:


> I don't think I need to go under 1 micro-lot




Probably not, but if you had traded only one micro lot instead of three, you most likely would stayed under the 2% risk limit I mentioned previously.



NickF said:


> Also, I suspect that George Soros overheard I am shorting the S&P500 and he decided to double his position as well. Great minds think alike!




I agree with you both that stocks seem long overdue for a correction. Don't be surprised, however, if the S&P 500 hits further highs in the short term. The latest data from the Speculative Sentiment Index (SSI) show the overwhelming majority of retail traders are short SPX500. SSI is a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that SPX500 may continue higher.


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## NickF

Jason Rogers said:


> CFDs are contracts for difference. The SPX500 contract you trade in your FXCM account is a CFD. You can also trade CFDs for other stock indices, metals, energy products and international shares.
> Probably not, but if you had traded only one micro lot instead of three, you most likely would stayed under the 2% risk limit I mentioned previously.



Yes, that would have been the best option in my case. Now I have only two microlots of S&P500. At some point I sold all three microlots for a nice profit. I thought I will let it raise a bit and do short it again. It didn't work the way I expected. Although it raised a bit since I sold it, later I watched it dropping heaps (without me). I remembered again that I didn't want to lose my position (which I did), so I repurchased two lots close to the minimum. I was aware that I could be buying them at the wrong time, but I didn't want to risk losing more potential profit. In total I think I made about $40 and lost about $60, so I am down. But I will keep them for longer time. I've seen some statistics on https://www.youtube.com/watch?v=b7exn88S3mU that more often than not the market will drop in June.



Jason Rogers said:


> I agree with you both that stocks seem long overdue for a correction. Don't be surprised, however, if the S&P 500 hits further highs in the short term. The latest data from the Speculative Sentiment Index (SSI) show the overwhelming majority of retail traders are short SPX500. SSI is a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that SPX500 may continue higher.




Yes, there is always such a risk and I dislike that I am trading against the SSI indicator. But I traded based exclusively based on SSI indicator (in fact, I should have used another strategy and the SSI just to complement it) and sometimes I made money, sometimes I lost.

I spent the last days, including the weekend running countless optimizations on some personal strategies. They are very simple but the results are quite spectacular sometimes. Occasionally after performing optimizations for a year (Jan 2015-Jan 2016), I was obtaining profits of 70% and drawdown of 33% in out of sample tests from Jan 2016 - May 2016. Sometimes the account drops to zero and that's a bit of a disappointment.

I will soon trade the strategy with real money, but I will obviously reduce the lot size (simulation is done with $10000 and 1 lot). In order to improve the chances (I hope), I will use a few different strategies simultaneously and I will re-optimize them every week or so. I find it encouraging that pretty often the first four-five transactions seem to go up. Of course, simulations are different than real trading, but I'll see how I'll go. Probably I would not do much worse than April, when I lost 14%.


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## NickF

I decided to play smarter. So, I checked what are the spreads for various currencies pairs, so I will limit myself to EURUSD (0.4 pip), USDJPY (0.4 pip), AUDUSD (0.5 pip), EURGBP (0.7 pip), USDCAD (0.7 pip), AUDJPY (0.8 pip), GBPUSD (0.8 pip), EURJPY (0.9 pip), NZDUSD (0.9 pip), CADJPY (1 pip), USDCHF (1 pip). A few days ago I've done a trade where I was down almost 5 pips just for entering the trade and it felt a hard fight only to cover the transaction price. 

This morning I also enabled one of my strategies on a demo account. Around 5:30 pm it performed the first transaction (using 1 lot) and in about two hours, it reached $130, then it dropped to zero. My Take Profit point was set higher, but when I checked the statistics, it showed that the Expected Payoff was around $58. So, next time the profit got above $58, I closed the transaction. It's a pretty good feeling, even if it's just paper money.

I am running optimizations for the above currency pairs and I will enable the strategy on each of them. At the moment I am not sure if it is better to optimize a longer period (such as last two years or the last year only). I suspect that the parameters change smoothly in time and perhaps a longer period of time would be safer, while a shorter period could be more rewarding but also riskier.


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## cynic

In addition to spread size, the impact of egative slippage ideally needs to be taken into account. 

(Even moreso if one happens to be unfortunate enough to be trading  "off exchange" products via a broker/provider that has chosen to take an additional point and a half profit from each side of the trade.)


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## Jason Rogers

NickF said:


> in fact, I should have used another strategy and the SSI just to complement it




I agree with you that SSI seems to work best as a complement to other non-sentiment-based signals such as technical indicators and/or fundamental analysis.



NickF said:


> Sometimes the account drops to zero and that's a bit of a disappointment.




What percentage of your equity were you risking per trade in these tests? If you limit your risk to 2% of your equity per trade, it will give you more ability to sustain draw downs in your strategy.



NickF said:


> In order to improve the chances (I hope), I will use a few different strategies simultaneously and I will re-optimize them every week or so. I find it encouraging that pretty often the first four-five transactions seem to go up. Of course, simulations are different than real trading, but I'll see how I'll go.




It's good you're already aware past performance is not necessarily indicative of future results. In addition, beware of curve fitting: http://www.jarrattdavis.com/what-is...ting-and-back-testing-a-forex-trading-system/


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## Jason Rogers

cynic said:


> In addition to spread size, the impact of egative slippage ideally needs to be taken into account.




Great point, Cynic 

We discussed this earlier in the thread: https://www.aussiestockforums.com/f...t=29809&page=2&p=905235&viewfull=1#post905235

Since Nick is using Trading Station, he can take advantage of the Market Range and Range Entry features of the platform to limit his negative slippage (but not positive slippage) on Market Orders and Entry Orders respectively.


----------



## cynic

Jason Rogers said:


> Great point, Cynic
> 
> We discussed this earlier in the thread: https://www.aussiestockforums.com/f...t=29809&page=2&p=905235&viewfull=1#post905235
> 
> Since Nick is using Trading Station, he can take advantage of the Market Range and Range Entry features of the platform to limit his negative slippage (but not positive slippage) on Market Orders and Entry Orders respectively.




Thanks for that Jason, however, it only partially addresses the issue to which I was referring.

Several wÃ¨eks ago, I had an experience that led me to suspect a certain FX provider of implementing the practice of taking an additional 1.5 points from each trade execution. Isn't it curious how that same provider is advertising "New Low Spreads"?


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## Jason Rogers

cynic said:


> Thanks for that Jason, however, it only partially addresses the issue to which I was referring.
> 
> Several wÃ¨eks ago, I had an experience that led me to suspect a certain FX provider of implementing the practice of taking an additional 1.5 points from each trade execution. Isn't it curious how that same provider is advertising "New Low Spreads"?




Hi Cynic,

Your mention of "New Low Spreads" seems to be a reference to my forum signature. I don't want to take Nick's discussion thread off topic and would appreciate if you can tell me more about your concerns in the FXCM discussion thread: https://www.aussiestockforums.com/forums/showthread.php?t=14878&page=5&p=722251#post722251


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## NickF

Jason Rogers said:


> Great point, Cynic
> 
> We discussed this earlier in the thread: https://www.aussiestockforums.com/f...t=29809&page=2&p=905235&viewfull=1#post905235
> 
> Since Nick is using Trading Station, he can take advantage of the Market Range and Range Entry features of the platform to limit his negative slippage (but not positive slippage) on Market Orders and Entry Orders respectively.




Hi Jason,

I read that Trading Station has some advantages on providing a better slippage than what's typical. 
For my automatic system I am working on some Expert Advisors in MT4 (it's easier for me to work with C code than LUA code, plus there is heaps of MT4 code available). Is there any information about average slippage for FXCM? I need to make sure I use the right value. The original code suggested a slippage of 4 pips and I will need to check if I inadvertently didn't remove or disable that part of code, because it could make a big difference to the end result.


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## Jason Rogers

NickF said:


> Hi Jason,
> 
> I read that Trading Station has some advantages on providing a better slippage than what's typical.
> For my automatic system I am working on some Expert Advisors in MT4 (it's easier for me to work with C code than LUA code, plus there is heaps of MT4 code available). Is there any information about average slippage for FXCM? I need to make sure I use the right value. The original code suggested a slippage of 4 pips and I will need to check if I inadvertently didn't remove or disable that part of code, because it could make a big difference to the end result.




Trading Station has Market Range and Range Entry functions that limit your negative slippage (but not your positive slippage) on Market Orders and Entry (Stop and Limit) Orders respectively.

FXCM's MT4 platform has a Maximum Deviation function that works similarly to Market Range to limit your negative slippage on Market Orders. However, MT4 has no function like Range Entry to limit negative slippage on Entry Orders.

The stats for orders executed through FXCM over a 12-month period from September 2013 through August 2014 show our clients received positive slippage as frequently as negative slippage overall: http://bit.ly/1qLierb

76.2% of all orders had NO SLIPPAGE.
13.5% of all orders received positive slippage.
10.2% of all orders received negative slippage.
Over 58% of all limit and limit entry orders received positive slippage.
52% of all stop and stop entry orders received negative slippage.


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## NickF

Jason Rogers said:


> Trading Station has Market Range and Range Entry functions that limit your negative slippage (but not your positive slippage) on Market Orders and Entry (Stop and Limit) Orders respectively.
> 
> FXCM's MT4 platform has a Maximum Deviation function that works similarly to Market Range to limit your negative slippage on Market Orders. However, MT4 has no function like Range Entry to limit negative slippage on Entry Orders.
> 
> The stats for orders executed through FXCM over a 12-month period from September 2013 through August 2014 show our clients received positive slippage as frequently as negative slippage overall: http://bit.ly/1qLierb
> 
> 76.2% of all orders had NO SLIPPAGE.
> 13.5% of all orders received positive slippage.
> 10.2% of all orders received negative slippage.
> Over 58% of all limit and limit entry orders received positive slippage.
> 52% of all stop and stop entry orders received negative slippage.




Thanks Jason for these details, it sounds good.
I am running my own EA with different parameters on various instruments and this morning I received two emails informing me that Sell trades were executed for USDJPY (Sell 109.743) and EURJPY (122.502). 

About half an hour later, I received an email from DailyFX Trading Signal Alert, about sell trade opportunity for EURJPY, USDJPY, AUSJPY. 
Unfortunately I can't see from DailyFX's email what were the prices where they sell - would have been interesting to see if they picked up better entry points than my system. It would also be nice that when a trade is closed (at a profit or at a loss) to see the profit/loss made, in pips.

I still have a lot of improvements to do in my system, since I just started working on it, but I am pleased with its progress. On my $5000 virtual account, I reduced the lot size to 0.1, because 1 lot is too much (just lost over $200 in a trade overnight and that's too much to swallow, even in a virtual account).

My real account is not doing too well, I am down to $1710. Jason, you were right about possibility of S&P500 to target a new high considering the SSI was strongly expecting a drop. However, now I train my patience and although I am about $160 down from a few days ago, I am not selling (but I'm not buying either). If the index will not go through the roof, I could keep my two positions for a few months (that would be a first for me). After all, all we're talking here is just money - easy come, easy go. Well, maybe not so easy come, but you get the point


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## cynic

Jason Rogers said:


> Trading Station has Market Range and Range Entry functions that limit your negative slippage (but not your positive slippage) on Market Orders and Entry (Stop and Limit) Orders respectively.
> 
> FXCM's MT4 platform has a Maximum Deviation function that works similarly to Market Range to limit your negative slippage on Market Orders. However, MT4 has no function like Range Entry to limit negative slippage on Entry Orders.
> 
> The stats for orders executed through FXCM over a 12-month period from September 2013 through August 2014 show our clients received positive slippage as frequently as negative slippage overall: http://bit.ly/1qLierb
> 
> 76.2% of all orders had NO SLIPPAGE.
> 13.5% of all orders received positive slippage.
> 10.2% of all orders received negative slippage.
> Over 58% of all limit and limit entry orders received positive slippage.
> 52% of all stop and stop entry orders received negative slippage.



That's great for those people trading two to three years ago. It happens to be May 2016 at present. Is there any chance of something more recent than a report covering a period ending August 2014?


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## NickF

Jason,
I thought I will ask you another question, as you may have access to the statistics data from FXCM.
I understand that the accounts at FXCM were profitable in 2010 as follows:

Equity Range	% Profitable
$0 – $999	        27.89%
$1,000 – $4,999	40.52%
$5,000 – $9,999	42.36%
$10,000+	        47.74%

Did this profitability change in the last years? As the machines get smarter, maybe people get dumber? 

Is it possible to provide the average annual profit of the top 10% most profitable accounts in each category? I am curious if the profits of the most profitable traders are like 2-3%, or they are like 20-30% per annum

Nick


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## Jason Rogers

NickF said:


> About half an hour later, I received an email from DailyFX Trading Signal Alert, about sell trade opportunity for EURJPY, USDJPY, AUSJPY.
> Unfortunately I can't see from DailyFX's email what were the prices where they sell - would have been interesting to see if they picked up better entry points than my system. It would also be nice that when a trade is closed (at a profit or at a loss) to see the profit/loss made, in pips.




Hi Nick,

You can see the entry and exit price for DailyFX Trading Signals on Mirror Trader. For example, below is the Mirror Trader strategy card for the Range1 signal from DailyFX PLUS.

​
You can see the strategy opened a short position in AUD/JPY at 78.712 on May 23rd.




NickF said:


> Jason, you were right about possibility of S&P500 to target a new high considering the SSI was strongly expecting a drop.




SSI isn't always right, but I find it can be a great filter to help me decide when to act on my trade ideas. The fact that so many retail traders have already shorted the US stock indices in anticipation of a drop told me the market might not be ready to oblige.

​
I want there to be fundamental, technical and sentiment-based (SSI) reasons for entering a trade before I pull the trigger. It's not necessary for me that retail traders flip from being net short to being net long the S&P 500, but I would like to see some reduction in the current extreme level of shorts.


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## Jason Rogers

cynic said:


> That's great for those people trading two to three years ago. It happens to be May 2016 at present. Is there any chance of something more recent than a report covering a period ending August 2014?




Hi Cynic,

Thank you for your interest. We are in the process of compiling the latest stats for an updated execution study. I can let you know when the data are released. 

In the meantime, it's worth noting FXCM is one of the only forex brokers to provide our clients with tools like Market Range and Range Entry to limit their negative slippage, and to publish execution stats proving our clients receive positive slippage as often as negative slippage.


----------



## Jason Rogers

NickF said:


> Jason,
> I thought I will ask you another question, as you may have access to the statistics data from FXCM.
> I understand that the accounts at FXCM were profitable in 2010 as follows:
> 
> Equity Range	% Profitable
> $0 – $999	        27.89%
> $1,000 – $4,999	40.52%
> $5,000 – $9,999	42.36%
> $10,000+	        47.74%




Hi Nick,

Below are the data from a DailyFX report in 2011.






NickF said:


> Did this profitability change in the last years?




Below are the data from a similar DailyFX report in 2015.




While the percentages changed a bit over the years, the main takeaway point remains the same: It's always a good idea to use leverage judiciously, and stats show 10:1 leverage or less tends to work better.



NickF said:


> As the machines get smarter, maybe people get dumber?




You're assuming these stats only include non-automated trading which is not the case. Automated trading strategies are becoming more sophisticated, but since they are trading against each other in the market, this would not result in an increase in average profitability percentages. Remember that 50% is the theoretical upper limit on the profitability of the average trader, since for every winning trader, there is a losing trader on the other side. The theoretical limit is actually slightly below 50% when you take into account transaction costs.



NickF said:


> Is it possible to provide the average annual profit of the top 10% most profitable accounts in each category? I am curious if the profits of the most profitable traders are like 2-3%, or they are like 20-30% per annum
> 
> Nick




While I don't have access to such stats over the course of a full year, you can see the performance of the top 10 traders each month in FXCM's $10,000 Monthly Challenge.


----------



## Jason Rogers

Jason Rogers said:


> You can see the strategy opened a short position in AUD/JPY at 78.712 on May 23rd.




CORRECTION: It was a long position as shown in the image.


----------



## NickF

Jason Rogers said:


> Hi Nick,
> You're assuming these stats only include non-automated trading which is not the case. Automated trading strategies are becoming more sophisticated, but since they are trading against each other in the market, this would not result in an increase in average profitability percentages. Remember that 50% is the theoretical upper limit on the profitability of the average trader, since for every winning trader, there is a losing trader on the other side. The theoretical limit is actually slightly below 50% when you take into account transaction costs.



I was joking about that. Of course the stats include the automated trading. I said what I said based on the common knowledge that generally rich people get richer. So, whoever is already successful in Forex (especially in automated trading), they would put more effort to improve their already good performance (and they may often succeed), at the expense of the others. 

The risk is that although nowadays is very easy for most people to open a trading account, the poor performance discourages people to continue trading. I understand a lot of Forex brokers lost customers in the last years. This is a bit of a conflict considering that more and more people now have access to internet and could open Forex accounts.



Jason Rogers said:


> While I don't have access to such stats over the course of a full year, you can see the performance of the top 10 traders each month in FXCM's $10,000 Monthly Challenge.



Unfortunately that performance doesn't impress me. It may be good to attract naive people to Forex  It is to me much like a monthly record of top ten Lotto winners all over the world. If such a list was made, it would show that number 10 on the list earned perhaps a few million dollars dollars. Would I start playing lotto? No, I still prefer to lose my money in Forex 

The major problem with the results of the contest is that the account size can be as low as $50. A lot of people would happily create a few accounts of $50 and gamble like crazy with the hope they will win the big prize. As with Lotto, very few will succeed.

It would be more interesting to see a top ranking list for the people with accounts over $10000. While perhaps some of them may show monthly profits of 100%, I don't think there would be too many people with large accounts  targeting a 100% monthly profit.

Nick


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## Jason Rogers

NickF said:


> It would be more interesting to see a top ranking list for the people with accounts over $10000. While perhaps some of them may show monthly profits of 100%, I don't think there would be too many people with large accounts  targeting a 100% monthly profit.
> 
> Nick




You make good points. While I don't have access to such stats at this time, perhaps they can be included in a future study by the DailyFX research team as a follow up to their series on the Traits of Successful Traders.


----------



## NickF

Jason Rogers said:


> You make good points. While I don't have access to such stats at this time, perhaps they can be included in a future study by the DailyFX research team as a follow up to their series on the Traits of Successful Traders.




Thanks Jason for all links provided. There are many interesting and useful articles written by DailyFX research team. Such as the best hours for trading for retail traders (we should avoid high volatility), the best currency pairs, etc. I will try to include some of these in my expert adviser programs, but later. 

So far I am running optimizations and out of sample testing and for some of the past years (such as 2010), I get hard to believe good results. Such as, optimizing EURUSD for three months (2010.01.02 - 2010.03.01), then testing on the next one to three months. Out of the thousands of optimized parameter sets, I selected 5 points and run out of sample testing. The worst result I got for the first month was +18% and the worst result for 3 months was +24%. I am playing with $10000 and 1 lot, which is a risk too great, so in real life I would scale down, perhaps to 0.01 lots or even 0.1 if I get confident in the code.

It takes me a long time to run even three to twelve months of optimization with 4 parameters. Usually over 24 hours. I am running on three computers. I am somewhat messy in recording the results (but I'm improving). For EURUSD, optimizing on 2015.01.02 - 2016.01.01 and testing on 2016.01.02 - 2016.05.28, I get a 52% profit, with a max drawdown of $2887. I don't suspect any fishy mistakes in my code, such as including future data (which should not be available when placing a trade or closing the trade) in my code. Anyway, I will run the expert advisers on my demo accounts and see if I get positive results - so far they look too good to be true.

Warren Buffet, here I come!


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## Jason Rogers

NickF said:


> Anyway, I will run the expert advisers on my demo accounts and see if I get positive results - so far they look too good to be true.




I'm a big fan of automated strategies myself. As you know, past performance is not necessarily indicative of future results. That said, do you know if the results you have seen are for the account balance or the account equity? I try to watch out for automated strategies that only close the profitable trades to boost the account balance, all the while keeping open large losing trades that deplete the equity.

Equity and equity draw downs are what concern me more than the balance.

Also, keep in mind that 3 to 12 months is not a lot of time. I know it's more time consuming but try to get data going back as many years as possible. Market conditions change and the most robust strategies have proven themselves over the long run.

Another factor to consider is the rationale a particular strategy uses. Does it make sense to you when the trader/strategy creator explains it? Do you have reason to believe past success was based on more than luck? Do you believe the strategy remains relevant in current market conditions with a good chance to succeed going forward?


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## NickF

Jason Rogers said:


> I'm a big fan of automated strategies myself. As you know, past performance is not necessarily indicative of future results. That said, do you know if the results you have seen are for the account balance or the account equity? I try to watch out for automated strategies that only close the profitable trades to boost the account balance, all the while keeping open large losing trades that deplete the equity.
> 
> Equity and equity draw downs are what concern me more than the balance.
> 
> Also, keep in mind that 3 to 12 months is not a lot of time. I know it's more time consuming but try to get data going back as many years as possible. Market conditions change and the most robust strategies have proven themselves over the long run.
> 
> Another factor to consider is the rationale a particular strategy uses. Does it make sense to you when the trader/strategy creator explains it? Do you have reason to believe past success was based on more than luck? Do you believe the strategy remains relevant in current market conditions with a good chance to succeed going forward?




Hi Jason,

At the moment I make and test my own strategies. The holding period is short, usually under one day. The account balance and account equity are close, because I only allow one transaction on one currency pair at a time. 

The implementation at the moment is very rudimentary, I have a long way in front of me to bring them to a level that I consider acceptable. Your concerns about strategies keeping the losers in a hope they will eventually recover are valid, the end result could be very unpredictable. 

At the moment I set Stop Loss and Take Profit, although I consider replacing them with a Trailing Stop Loss. I'm already running a strategy for a few days on a few currency pairs and I seem to get positive results - the problem is that I am doing the development of other strategies on the same computer and the balance is tampered by my testing. But I already moved the strategy on a separate computer and I'll see how it performs.

You are right that 3 to 12 months is not a lot of time. But I have this theory that a strategy may not work for too long without optimization. For this reason I will change the parameters every few weeks (and they are a bit different for different currency pairs), and I expect a profit  at the end of every month. That's wishful thinking 

Once I complete the first strategy, I will use it on a real account, trading in lots of 0.01 and hopefully the loss will be less than what I am able to accomplish manually. The month of May was not my best, I ended up on -5.5% - I am still holding two positions in SP500). I was able to hold them during the best week for SP500 (which was the worst week for me). I am 

Your questions are to be considered and time will say if I will be able to end up with some profitable strategy for the long term. 

Nick


----------



## Jason Rogers

NickF said:


> Hi Jason,
> 
> At the moment I make and test my own strategies. The holding period is short, usually under one day. The account balance and account equity are close, because I only allow one transaction on one currency pair at a time.
> 
> The implementation at the moment is very rudimentary, I have a long way in front of me to bring them to a level that I consider acceptable. Your concerns about strategies keeping the losers in a hope they will eventually recover are valid, the end result could be very unpredictable.
> 
> At the moment I set Stop Loss and Take Profit, although I consider replacing them with a Trailing Stop Loss. I'm already running a strategy for a few days on a few currency pairs and I seem to get positive results - the problem is that I am doing the development of other strategies on the same computer and the balance is tampered by my testing. But I already moved the strategy on a separate computer and I'll see how it performs.
> 
> You are right that 3 to 12 months is not a lot of time. But I have this theory that a strategy may not work for too long without optimization. For this reason I will change the parameters every few weeks (and they are a bit different for different currency pairs), and I expect a profit  at the end of every month. That's wishful thinking
> 
> Once I complete the first strategy, I will use it on a real account, trading in lots of 0.01 and hopefully the loss will be less than what I am able to accomplish manually. The month of May was not my best, I ended up on -5.5% - I am still holding two positions in SP500). I was able to hold them during the best week for SP500 (which was the worst week for me). I am
> 
> Your questions are to be considered and time will say if I will be able to end up with some profitable strategy for the long term.
> 
> Nick




It sounds like you are being very methodical with your approach which is good.


----------



## NickF

Jason Rogers said:


> It sounds like you are being very methodical with your approach which is good.




In the last few days I left two strategies I am working on to run by themselves, on two computers. 
On one computer, I had the strategy running on a few currency pairs including all major currencies. On Friday (Jun 3, 2016), when USA published the unemployment rate, the strategy started buying and selling and I was curiously watching the action. After it made a virtual profit of about $100 (with 0.1 lots), I realized I could trade in the same direction on my real account. I didn't know how far was will go, so I only traded 0.01 lots. In the end, I made about $10 or so using a trailing SL. Next day, I had on my $5000 virtual account a profit of $483 (almost 10% in one day, trading 0.1 lots). I discovered a bug in my strategy, which traded on the same bar after it closed the trade, so I am fixing the code. I left the transactions that were still open until Monday (wanted to see what the strategy can do), when the profit dropped to about $180 or so. Today there was some activity (probably the RBA deciding the rate) and now I have a few open trades. The demo account is at $5270.

My second strategy tries to catch quicker the significant moves in the market and needs many improvements, mainly a trailing stop-loss (I am struggling to write code for it). However, today it managed to bring my other demo account from $4935 to $5015 (just closed manually, because I need to continue coding). 

So, both my systems performed better than my manual trading (in my real account I still hang on two positions on SPX500, which stubbornly continue to rise - from my total deposited funds of $3000, I am now down to the lowest ever of $1666). I bought the two positions on 19/05/2016 at 2027 (could not get too much worse than that!) and the other one at 2036 - I was desperate not to lose the big down-trend and I was very convinced there was only one way to go from there and that was down  Well. I'll just sell them at 1950, if I can survive that long


----------



## NickF

Just an update for the people who wonder if I'm still alive. This month so far I managed to recover some of the big losses from the previous three months. I am up about 9.5% for the month (of course, who knows what will happen till the end of the month). 
	

		
			
		

		
	



I'm also working intensely on my Metatrader 4 scripts. I am pretty pleased with the last results of the simulation and I fantasize about the millionaire life. Which, according to the tests results, is just around the corner! After fixing quite a few bugs in my latest script and implementing the trailing stop loss strategy, now I have to figure out what's causing these too_good_to_be_true results. No doubt, I will be a bit sad to fix a script that works so well! After all, how many people get their scripts to generate $240000 of pure profit from $10000 in a year? Or maybe I should sell the script before I fix it 

Nick, trying to keep himself sane...


----------



## cogs

Hi Nickf,

Do live trades using the script match the simulation trades?

I have coded plenty of EA's that work well on simulation but only three so far match live trades placed.

Any EA using a MA is a good example.


----------



## NickF

cogs said:


> Hi Nickf,
> 
> Do live trades using the script match the simulation trades?
> 
> I have coded plenty of EA's that work well on simulation but only three so far match live trades placed.
> 
> Any EA using a MA is a good example.




Hi Cogs,

I just completed this script after Forex market has closed, so I'm waiting for tomorrow to check what's going on. Even so, it will only be with a demo account. 

I made another script that I run for a while and that one is on positive balance (the balance is now $5542 from $5000, still on a demo account). For a few days I had the program closed on that computer and I didn't notice. It doesn't do many trades and it is triggered by major price and volume changes. It is quite primitive. I started the script on 03.06.2016. I am trading with 0.1 lots.

The version I am working now on is more dynamic and more customable. The odd thing is that the maximum profit in simulation comes for the highest number of trades and that can't be right. Plus, the success rate is ridiculously high and that again is a question mark. Plus, once I optimize over a period, I go out of sample and I still get excellent results - too good to be true. Anyway, if the demo account will show positive results, I could run it on a real account, trading 0.01 lots. Can't do a lot worse than me, manually trading 

So, are you running any of the three scripts on a real account? If yes, do you prefer to manually trade, or let the system trade?

Nick


----------



## cogs

> So, are you running any of the three scripts on a real account? If yes, do you prefer to manually trade, or let the system trade?



Yes two of them, but on and off when finances permit. I, like many, lack capital due to external reasons, I also think this is what generates creativity and good ideas.

I enjoy manual trading, and have for many years, but find these days manually trading against big dollar algos is mostly a lost cause, so my EA out performs me in a win/loss ratio. What used to apply manually is now long gone. Retail traders have such limited information to make decisions with, leaving us with longer time frames, patience and large capital.


----------



## NickF

cogs said:


> Yes two of them, but on and off when finances permit. I, like many, lack capital due to external reasons, I also think this is what generates creativity and good ideas.
> 
> I enjoy manual trading, and have for many years, but find these days manually trading against big dollar algos is mostly a lost cause, so my EA out performs me in a win/loss ratio. What used to apply manually is now long gone. Retail traders have such limited information to make decisions with, leaving us with longer time frames, patience and large capital.




Hi Cogs, 

Thanks for sharing your experience. In my case, I didn't trade long, so I have no idea if I would have been more successful before the proliferation of the algos. Probably not, at least in the beginning. In my case, I can leave my funds ($1737 at the moment) in Forex, I don't need to take them out. But despite they are not big, I still fight quite strongly to bring the balance back to initial $3000.

Today I lost in my manual trading over $130. I am a bit pissed off, not for the actual loss, but for my ignorance and inaction. The biggest issue was that I forgot the Forex market opens on Monday around 7:55. I had 3 S&P500  positions and some others left over the weekend, in a belief they will keep going down. So, I checked the markets around 7:15, nothing bad was happening, did my morning schedule and when I checked again around 8:30 it was already pretty bad. Had to leave for work and left my transactions open, thinking it will go down again later. Over the weekend I was checking the news and found out that the bookies are betting quite strongly in favour of a UK stay in EU (around 70:30), while some other news were saying the opinion polls show the odds for a Brexit are increasing. Quite contradictory information, so I didn't know which one to trust. Apparently people trust more the betting odds than opinion polls, although it may be just a myth they are more accurate. 

Anyway, I tend to believe now that UK will remain in EU. What I think is that over the weekend a lot of people came to be of a similar opinion and as a result the markets are going up quite strongly. So, I had the knowledge (as little as it was), but I didn't evaluate if there is any significant risk in losing money on my trades - and I paid the price. At lunch (around 1:45 pm) I came across an article from AFR saying that after that PM was killed in UK, the last polls show a strong increase in favour of stay. If I had read that article earlier in the day, I would have not waited so long to close my positions...

I will probably move the real money into my FXCM account where I can run MT4 scripts. And probably I will slow down with the manual trading. I should give a chance to my scripts to prove me they are worthwhile of my time and effort 

My scripts which I left running at home didn't send me any emails, so most likely they are not doing any trades. I'll check tonight what's going on.

Nick


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## cogs

I discovered some time ago news events are simply a catalyst to move the market for orders to be filled. I think this is a common mistake many make in trying to work out the direction of a market based on good or bad news, when markets actually move to the point of least resistance, or 'order flow' as some like to put it, and using the pump and dump method.

Market open today was a good example squeeze the price in one direction, get everyone suckered in, then blast it back the opposite direction. Always market movements are justified in media and such, after the fact, you see that this morning with Bloomberg and such talking about safe havens, but who would have predicted the opening gap direction this morning? Crazy at the mo.

I spent so much time on news proofing my EA, as such I am quite confident it would survive another SNB event. I am going to run all my EA's all this week on demo to just see how they handle the Brexit noise, and switch the live ones off Wednesday which are currently only trading Aussie pairs.

I opened a trade left it open once, then drove to work, twenty minutes later I was $2740 up. Closed it out and yep you guessed it, traded it all away the following week. Same old sucker move.

If these opening gaps don't get filled in the short term, we will have some gift horses coming up once things settle then price turns around to fill them. 

What language are you using for your scripts Nickf?


----------



## NickF

cogs said:


> I discovered some time ago news events are simply a catalyst to move the market for orders to be filled. I think this is a common mistake many make in trying to work out the direction of a market based on good or bad news, when markets actually move to the point of least resistance, or 'order flow' as some like to put it, and using the pump and dump method.
> 
> Market open today was a good example squeeze the price in one direction, get everyone suckered in, then blast it back the opposite direction. Always market movements are justified in media and such, after the fact, you see that this morning with Bloomberg and such talking about safe havens, but who would have predicted the opening gap direction this morning? Crazy at the mo.
> 
> I spent so much time on news proofing my EA, as such I am quite confident it would survive another SNB event. I am going to run all my EA's all this week on demo to just see how they handle the Brexit noise, and switch the live ones off Wednesday which are currently only trading Aussie pairs.
> 
> I opened a trade left it open once, then drove to work, twenty minutes later I was $2740 up. Closed it out and yep you guessed it, traded it all away the following week. Same old sucker move.
> 
> If these opening gaps don't get filled in the short term, we will have some gift horses coming up once things settle then price turns around to fill them.
> 
> What language are you using for your scripts Nickf?




I am also laughing at how at the end of the day the news explain why the market went up or down but don't have much to say about what will happen tomorrow. If today was a bad day, the news are grim. If it was a good day, they are full of hope for the future. 

I've seen somewhere some indicator which places horizontla bars on the vertical axis and it shows the price points where most of the trading takes place. There could be a few price points that act like magnets. I could not find such an indicator available for free for Forex.

At the moment I use MQL from Metatrader. It is close to C/C++/C# and I know a bit of all of them, so I find simple to make the scripts the way I want. There are nice functions available and I can develop quite fast. Nothing too fancy, not reading external websites, files or other things. Most of the time I get caught in bad logic or get tricked by my own tricks. The step by step debugging is not available (or at least I'm not aware of it) and this makes it harder for me, since I have to enter additional lines to print variable values, then delete them afterwards.

I also compiled two sample C# projects from FXCM, they are written by professionals and the code is of excellent quality (at least it looks like that for me, a beginner). In the future I may change one of the projects to do what I want, but it's a bigger learning curve for me. I already had a go at it and found it was not so easy as I imagined 

Nick


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## cogs

Nickf, 

Did you run your scripts through the last couple days? The best days for testing in my opinion.

I had a few EA's running with a loose and overleveraged setting on EURUSD so expected some damage, but otherwise they survived well. I see some brokers even stopped new demo accounts from being opened, whether it was too much server load or just a great time for extreme testing.


----------



## NickF

cogs said:


> Nickf,
> 
> Did you run your scripts through the last couple days? The best days for testing in my opinion.
> 
> I had a few EA's running with a loose and overleveraged setting on EURUSD so expected some damage, but otherwise they survived well. I see some brokers even stopped new demo accounts from being opened, whether it was too much server load or just a great time for extreme testing.



Hi Cogs,
I actually run three scripts on three demo accounts. Two of them overall made some money, although they've been losing a lot as well - I didn't even realize they were ahead. I will show the transaction curve for the winning ones. All scripts are working on about eight instruments each on every account. Unfortunately I didn't have time to optimize the parameters for every instrument and in fact I've done some partial optimization for a few instruments and applied it to all the others. 

I am not particularly happy with either script, but they've done better than me (on Friday I lost $440 and so far I recovered it all today and I am a bit ahead at the moment). I also added another $800 to my account, now the total deposit is $3800 and I have equity of $2517 (could be very different story tomorrow, as it varies quite widely).

But I think there is room for improvement in my scripts - I will have to check if the moment they entered a trade was any good and if it was, I will see if I can improve the exit. One script is definitely making far too many trades, while the other one, not enough... I was hoping if I set the parameters to find trades quite rarely, the success rate would be high (but it didn't seem to be that way). In one script, I am using a trailing stop loss and I am not very happy about it. Maybe I need to give it more room to breath, I think by setting the SL too close to price, I kill it too soon.

The first screenshot I show may not be too informative - since I work on scripts and coefficients quite often, the result may not indicate a long term trend. This screenshot shows all trades from 03.06.2016 - 27.06.2016 and in this period I made some changes to both the script and coefficients. 




The second script runs too many trades and it has a poor success rate. I selected only the trades between 24.06.2016 and 27.06.2016, because this is my main development computer and I lose a lot of money during testing (especially when I play with 1 lot).




Anyway, after checking these two graphs, I see that I should not complain too much - it could be better, but it's not too bad either.

Nick


----------



## cogs

Looks like you may be on the way.

After seeing many manual pros and algos running it appears that a win percentage up to approx 66-67% seems to be a ceiling, and about as best as most can reach, there may be higher than that,  but it does not seem to be sustained. If there are, I am sure there are but they would be big dollar setups.

Your max drawdowns look a little high, having said that anyone who trades FX (if you do), needs to develop a stomach for drawdowns as we have DD right from when we open a position. Big players also know that retail has less tollerance for DD.



> Maybe I need to give it more room to breath, I think by setting the SL too close to price, I kill it too soon.



Yeah, trailing stops, I went away from the conventional, as they are very inefficient and simply ratchet in to market price. Using conventional trailing stops I found I needed approx 60pips before starting to trail simply to reduce the ratcheting affect. I have my own opinion when using stops, and quite simply whenever I found myself playing around with stops I found I should be looking closer at entry instead. Stops work great on demo and strategy test, say no more.

I am not sure what type of entry you use, but opening at market price seems to be a common mistake most make, as we try to find a perfect entry, which simply does not exist.

Another good analysis tool for taking a close look at results is MT4i desktop for when you use MT4 that is. If you can stomach the DD your chart results look quite good, don't they, and extrapolated out over a longer time frame could be very impressive.

Keep up the great work!


----------



## NickF

cogs said:


> Looks like you may be on the way.
> 
> After seeing many manual pros and algos running it appears that a win percentage up to approx 66-67% seems to be a ceiling, and about as best as most can reach, there may be higher than that,  but it does not seem to be sustained. If there are, I am sure there are but they would be big dollar setups.
> 
> Your max drawdowns look a little high, having said that anyone who trades FX (if you do), needs to develop a stomach for drawdowns as we have DD right from when we open a position. Big players also know that retail has less tollerance for DD.
> 
> Yeah, trailing stops, I went away from the conventional, as they are very inefficient and simply ratchet in to market price. Using conventional trailing stops I found I needed approx 60pips before starting to trail simply to reduce the ratcheting affect. I have my own opinion when using stops, and quite simply whenever I found myself playing around with stops I found I should be looking closer at entry instead. Stops work great on demo and strategy test, say no more.
> 
> I am not sure what type of entry you use, but opening at market price seems to be a common mistake most make, as we try to find a perfect entry, which simply does not exist.
> 
> Another good analysis tool for taking a close look at results is MT4i desktop for when you use MT4 that is. If you can stomach the DD your chart results look quite good, don't they, and extrapolated out over a longer time frame could be very impressive.
> 
> Keep up the great work!




Thanks Cogs,

I learnt that a high success ratio is not necessarily the recipe for success, so I rather aim for consistency and lower DD. 

Coincidentally, I am also about to consider a better entry point. I have in mind to put half of money when I enter the trade, then use another half at a better price. If it happens the trade goes the right way immediately (which is rarely the case), I profit of half the funds. If it goes the other way, I buy some more - but only once (or maybe twice?).

The drawdown is hard to digest, but long term, it looks like the more DD one is willing to accept, more money is to be made - of course, provided the strategy has an edge. I found out that when I get itchy to close a losing position, that would be the best moment to buy some more - too many times I closed a trade near the peak of a reversal. But perhaps despite this "bad luck", being cautious maybe saved my skin a few times. So far, I'm grateful I survived the first 15 months and now I appreciate a bit more the value of patience (even if I am not a patient person) and knowing it only takes hours or days to lose or win big time. Although, if it's not boring, it means it's too risky.

Nick


----------



## NickF

Today could have been my best day in Forex, ever. All my trades were on positive and I caught a few big drops of the GBP and I ended up with a net profit of slightly over $500. I got so excited about the huge profit made in only one day, that I lost contact with reality. 

I was sure that the traders were panicking and selling at a loss and I could not see an end to the drop. I was waiting to see a profit of $600, then $700 and so on. I didn't care when the price started going backwards and the profit diminishing. Every few minutes the price seemed to start dropping again, so I was hoping again for reaching again the $500. I was not too concerned when the price reached $450. Not too concerned about $400. When it got to $350, I thought - I didn't sell at $450 or $400, why should I sell now at $350. 

To cut a long story short, I closed all my transactions for a profit of $120. This should still be very pleasing, if I ignore the fact I somehow managed to lose all the rest to $500. If somebody told me this morning that I will reach $500 and then I will lose almost all of it, I would have told they're dreaming 

So, at the moment I am more unhappy for making $120 today than when I previously lost $440. My account is at the moment $2881 (while earlier in the day it reached $3200)...

I also added two screenshots just to show how badly I am timing my exits. No matter if I wait an hour, or four, I seem to pick up one of the worst moments...







On the good side, one of my scripts (the more primitive one), seems to perform quite well. 

It started with $5000 on 21.05.2016. Unfortunately I can't run it on my current FXCM account, which only works with Trading Station. I created another proper account, but I don't have funds in it.




Nick


----------



## Jason Rogers

NickF said:


> Today could have been my best day in Forex, ever. All my trades were on positive and I caught a few big drops of the GBP and I ended up with a net profit of slightly over $500. I got so excited about the huge profit made in only one day, that I lost contact with reality.
> 
> I was sure that the traders were panicking and selling at a loss and I could not see an end to the drop. I was waiting to see a profit of $600, then $700 and so on. I didn't care when the price started going backwards and the profit diminishing. Every few minutes the price seemed to start dropping again, so I was hoping again for reaching again the $500. I was not too concerned when the price reached $450. Not too concerned about $400. When it got to $350, I thought - I didn't sell at $450 or $400, why should I sell now at $350.
> 
> To cut a long story short, I closed all my transactions for a profit of $120. This should still be very pleasing, if I ignore the fact I somehow managed to lose all the rest to $500. If somebody told me this morning that I will reach $500 and then I will lose almost all of it, I would have told they're dreaming
> 
> So, at the moment I am more unhappy for making $120 today than when I previously lost $440. My account is at the moment $2881 (while earlier in the day it reached $3200)...




Don't beat yourself up about not catching the entire move, Nick. If you buy at the exact bottom or sell at the exact top, that's luck not skill. Congrats on a good day of trading! 

That said, what made you decide to close with the $120 profit? Also, earlier in the day, what made you think the price would continue moving in your favor when you were up $500?


----------



## cogs

> That said, what made you decide to close with the $120 profit? Also, earlier in the day, what made you think the price would continue moving in your favor when you were up $500?



FXCM Rep.

Do you trade, if so can you show some of your decisions and live trades?

Or do you simply carry out research via forums for FXCM?


----------



## NickF

Jason Rogers said:


> Don't beat yourself up about not catching the entire move, Nick. If you buy at the exact bottom or sell at the exact top, that's luck not skill. Congrats on a good day of trading!
> 
> That said, what made you decide to close with the $120 profit? Also, earlier in the day, what made you think the price would continue moving in your favor when you were up $500?




Hi Jason,

I totally agree with you about catching the bottom or the top as pure luck/bad luck. I sold at a $120 profit only because I did not have the mental spirit to see a very good day turn into a losing day. I did not know if it will continue to go against me into negative territory. And I thought that a $120 is still excellent profit for me and take it, while being wiser next time. It turns out I made a mistake - I should have kept it, since I still expect the GBP to keep dropping. 

When the profit got to $500, I had the strong feeling to sell all what I have and then wait for prices to bounce back where I could buy again. But I've been somewhat psychologically affected in the past and now I am more afraid of losing a greater opportunity than losing money. If that $500 would have potentially transformed in $700 in a matter of minutes, I was afraid I would regret for selling too early. But of course, ultimately it was my greed that cost me losing the money I had in hand.

When I considered selling for close to $500 profit, I hesitated because I would have had to close each instrument separately and that takes some time for me, on the mobile. I wish the mobile application of Trading Station would offer a way to close all trades at once - I don't think there is such a feature. I am a bit slow in trading on mobile phone. However, that is really no excuse - I had many hours of prices going up and down and I noticed the higher highs and higher lows over the entire period. Well, I have to make peace with myself - it was easy come, easy go money.

So far I still have the best month ever. Because now I added funds in total of $3800 and I have at the moment almost $3000, I am quite comfortable with higher risk and don't panic as much when prices go against me - sometimes I add a bit to my positions - at this moment I am trading in total $15000 in three pairs. Yesterday I noticed a maximum profit of $80, which I hesitated taking it - it bounced back very quickly so I didn't have time to meditate too much. Because I believe the GBP will continue falling for weeks or months to come, and I noticed that many times when I target a short term profit, even if I make a good profit every day, it is nowhere as good as if I kept the pairs over the entire week. There is a huge potential for somebody to earn 5 times more by doing multiple trades per day rather than holding for a longer period, but that is not me. For example, if I hadn't sold my pairs for $120 profit, I would be in a much better position now. But I still managed to make a bit of profit the last day, yesterday I was up $80 and this morning I was left with just $13. Hopefully on Monday I will get back toward $80, or maybe even better.

It is easy to develop a false confidence in myself when things are going well for me. At the end of 2016 I will be able to draw a more accurate conclusion if my trading has improved compared to 2015. So far this year I had four negative months and three positive. I am 5% in profit, but we never know what tomorrow brings.

I see the game of trading similar with the training of athletes. It takes a huge amount of training to improve very slightly. And mental strength is extremely important. Yesterday I was watching a game of tennis, Roger Federer vs Milos Raonic. In the beginning, Federer was losing so badly, my wife was wondering why did he consider playing at Wimbledon anymore. But he had the strength of character to keep fighting and he was able to recover the tremendous disadvantage he had. He still lost the game, but in a very decent manner. Probably such attributes are beneficial for traders as well.

Nick


----------



## NickF

My EA that was apparently working well started to lose money quite a lot. I think it's my fault on one side, because I tweaked the parameters, to make it do trades more often. On the other hand, I think it performs better when there is high volatility, with major changes in price and high volume and not so well for average volatility. I'll try to improve it, by making it to work in reverse when the volatility is not high enough. I made my life hard by testing the strategy on multiple currencies (to increase the number of trades) and now I have to check if my simulation with past data shows the same results as I obtained during live trading...

Nick


----------



## cogs

So you are discovering your EA is only profitable in certain market conditions?

I think the next step is adding filters until it hardly trades at all, (he sais sarcastically).  Without sounding like a smarta$$ or giving too much away, you may need to add flexibility, or smarten into your entry method.

A simple method of test I use, is an EA must be able to be profitable on all pairs some extent, that have reasonable spread, if it is only profitable on one pair, it will fail eventually, for sure. The rationale, every pair behaves like the other (more or less agressive) at some stage, so eventually the same market entry or exit conditions will be encountered.

Without stating the obvious, it does look like your stops are being hit in your losing streak? Your profit curve actually looks like an 1H or 4H line chart.

Sounds like you are keen, so you will sort it out. If you are keen and enjoy coding it really does make a difference to your end results.


----------



## NickF

cogs said:


> So you are discovering your EA is only profitable in certain market conditions?
> 
> I think the next step is adding filters until it hardly trades at all, (he sais sarcastically).  Without sounding like a smarta$$ or giving too much away, you may need to add flexibility, or smarten into your entry method.
> 
> A simple method of test I use, is an EA must be able to be profitable on all pairs some extent, that have reasonable spread, if it is only profitable on one pair, it will fail eventually, for sure. The rationale, every pair behaves like the other (more or less agressive) at some stage, so eventually the same market entry or exit conditions will be encountered.
> 
> Without stating the obvious, it does look like your stops are being hit in your losing streak? Your profit curve actually looks like an 1H or 4H line chart.
> 
> Sounds like you are keen, so you will sort it out. If you are keen and enjoy coding it really does make a difference to your end results.




Hi Cogs,

Thanks for the tips. The good thing is that I put my EA to send me email for every transaction it opens and it keeps track of EA version (I change the version every time I modify something), all values of parameters I had at that stage, account balance, profit, open trades, etc. Probably even better would be to write entries into a log file, rather than chase the emails. 

The graph unfortunately does not show the time on X-axis. The profitable trades happened rarely, while the bad ones happened much more often.

I discovered that the losing streak only appeared since July 6, so in only last three days it did all those bad trades. As I mentioned before, it takes a long time to get optimal parameters for each currency (over 24 hours per instrument). And because the trades were happening sometimes as rarely as one per week, I was not sure if the EA still operated. Now I fixed that - during the day, the EA sends emails to me every hour and it informs about open trades and balance.

Besides that, I am still not sure why the strategy tester gives different results compared to actual trading. I run backtesting on all currencies since July 06 and I could not come up with a total loss as big as it shows in the graph. And I am running backtesting on every tick.

Anyway, chasing every email since Jun 3, I noticed that I made changes to parameters twice. On Jun 23, I set all instruments with identical parameters. On Jun 24 I had big change in balance - from $6011, it dropped to $4971 and later the same day to $6376.

On Jun 30, I was not happy because trades were happening too rarely, so I pushed the EA to perform trades more often by relaxing the entry rules. I also skewed the Stop Loss and Take Profit (I chased more profit and less loss). I wanted more excitement and I got it - but not in the expected direction 

Well, that should teach me a lesson - to use optimized parameters, rather than guessing the parameters and be more patient. Good trades don't come too often. 

Compared to your method, which seems to perform on every instrument with the same set of parameters, I am trying to use optimized parameters for each particular instrument. I will revert to optimized parameters and wait another month and see if the balance improves. Perhaps I should look if I find an "universal" set of parameters, that gives reasonable results for all instruments. I'll keep that in mind.

Looking back at what I've done, it's like I try to build a violin. But not only I don't know how to build the violin, I also don't know how to play it - so even if the violin would sound good in expert hands, to me it doesn't sound good, so I tweak it 

What I could do now is to backtest with the original set of parameters for each instrument and see if the result would be better. If only the backtesting would give the same results as the real trading...

Nick


----------



## cogs

> If only the backtesting would give the same results as the real trading...



From my experience this is the key, so your tweaks mean something. 

Which results don't match, your entries or exits?

With an engineering background I like to analyse but also consider the 'human factor', I found only 2 conclusive and accurate ways to know if my changes were correct or not, data collection/analysis and back testing that matches live results. Live exits will hardly ever match back testing results, because once your position is in the market your position forms part of liquidity, so is fair game for others searching for liquidity. Because MT4 has friendly export methods, I used to run many spread sheets to analyse results, chart it up and .



> Looking back at what I've done, it's like I try to build a violin. But not only I don't know how to build the violin, I also don't know how to play it - so even if the violin would sound good in expert hands, to me it doesn't sound good, so I tweak it



Sounds like a 'Quants' approach to trading.


----------



## NickF

cogs said:


> From my experience this is the key, so your tweaks mean something.
> 
> Sounds like a 'Quants' approach to trading.




Good one Cogs 

I will investigate which results don't match (entries or exits). But considering I am doing paper trading (therefore I don't alter the course of trading with my own trades), I don't think I should see a difference in either entries or exits.

Meantime I discovered something interesting. During the week, I can do my optimizations on FCXM MT4 Platform. But on Saturday, FCXM has the servers closed and I can't use it. Because for me the weekend is the time when I have most time to play with things, I opened a demo account with NoorCM and I run optimizations using their MT4 and their data. Today I had the idea to compare results, using the same strategy and same settings. When doing simulations for 2016, the results are very different - FXCM shows a profit of $3128 and NoorCM (where I've done the optimization) shows a profit of $7569. If I optimize on FXCM and then test on NoorCM, I should see a higher profit on FXCM. In my EA, I am using both price and volume and as far as I know, every broker has its own interpretation of volume (perhaps it is actually the number of trades counted by that broker during the bar and not related to the value of the trades - if that's the case, then 10 trades of $1000 would appear as a higher volume than 1 trade of $1000000).

Until now it was not important to me on what platform I was doing the optimization (because I did not expect significant differences) and it was clearly a mistake.

It would be interesting to check with a script based only on price - the results should also be different (every broker would be able to close the deals with different partners), but the question is how different would the results be. I don't expect the prices to be extremely different. A smart algorithm on the broker side would be able to chose the best partner for trading the currency. Speed is also very important, because a slower algorithm would miss the best opportunities. But this is way out of my league, I'm just speculating.

Sometime ago I came across a page that shows the profitability of Forex traders, based on broker (from 2013): http://piphut.com/2013/11/what-percent-of-forex-traders-make-money-is-trading-forex-profitable/

It shows that the most profitable traders were at the time with Interactive Brokers, while other brokers are less profitable. For example, FXCM had about the same number of accounts as Interactive Brokers, but the profitability was of 28% vs 44%. It could be that because IB has a much more complex trading platform, traders with more experience were using it. I've been using Trading Station from FXCM since I started and I enjoy the platform. It is well designed, reliable, has nice features and it is easy to learn and use.

It would be interesting to find if in more recent years the profitability by brokers has changed. 

Nick


----------



## NickF

I found another profitability report (from Q4 2015) in here:

http://www.financemagnates.com/fore...-profitability-report-shows-improved-trading/

Interactive Brokers are still on first position and the figures have improved only slightly.


----------



## Jason Rogers

cogs said:


> FXCM Rep.
> 
> Do you trade, if so can you show some of your decisions and live trades?
> 
> Or do you simply carry out research via forums for FXCM?




Hi Cogs,

While my role on this forum is to discuss forex with other traders, particularly FXCM clients, and answer questions about our platforms and services, I also trade personally. My main strategies use the Speculative Sentiment Index (SSI) as contrarian indicator, and I post some of my trade ideas on other forums where I maintain a signals and strategies thread. I'm not sure if I can post a link to those here, but please send me a PM if you have more questions.


----------



## Jason Rogers

NickF said:


> Hi Jason,
> 
> I totally agree with you about catching the bottom or the top as pure luck/bad luck. I sold at a $120 profit only because I did not have the mental spirit to see a very good day turn into a losing day. I did not know if it will continue to go against me into negative territory. And I thought that a $120 is still excellent profit for me and take it, while being wiser next time. It turns out I made a mistake - I should have kept it, since I still expect the GBP to keep dropping.
> 
> When the profit got to $500, I had the strong feeling to sell all what I have and then wait for prices to bounce back where I could buy again. But I've been somewhat psychologically affected in the past and now I am more afraid of losing a greater opportunity than losing money. If that $500 would have potentially transformed in $700 in a matter of minutes, I was afraid I would regret for selling too early. But of course, ultimately it was my greed that cost me losing the money I had in hand.




Hi Nick,

I got the impression from you that might be the case, which is why I asked. It's important to have an exit strategy before you even open your trades. This might be based on a price target, or signals you might receive from indicators on your charts. As I mentioned to Cogs, I use SSI, as one of my primary trading tools, so I get my closing signals based on when the market sentiment has turned on a particular currency pair.





NickF said:


> When I considered selling for close to $500 profit, I hesitated because I would have had to close each instrument separately and that takes some time for me, on the mobile. I wish the mobile application of Trading Station would offer a way to close all trades at once - I don't think there is such a feature. I am a bit slow in trading on mobile phone. However, that is really no excuse - I had many hours of prices going up and down and I noticed the higher highs and higher lows over the entire period. Well, I have to make peace with myself - it was easy come, easy go money.




I'm not sure how many trades you had open, but you can call the FXCM trading desk anytime 24 hours a day, and ask them to close any or all of your open trades over the phone. Also, I don't think there's any easy money in forex. Your trades that go more smoothly than the rest are the fruits of hard work you've already sewn and are also meant to carry you through the barren periods that will inevitably come.


----------



## Jason Rogers

NickF said:


> It would be interesting to find if in more recent years the profitability by brokers has changed.






NickF said:


> I found another profitability report (from Q4 2015) in here





Hi Nick,

Unfortunately, those reports don't take into account the difference in account opening minimums between brokers. Therefore, what they end up showing is the correlation between account balance and profitability which is also confirmed by our research.

It's important to note that FXCM offers services to traders at all levels, including Mini accounts ($50 minimum), Standard accounts (2k minimum), Active Trader accounts (25k minimum) and multi-million dollar institutional (FXCM Pro) accounts. By contrast, the other broker you mentioned has a minimum account opening balance of $10,000.

Below are stats from a DailyFX study on trader profitability in relation to account balance based on thousands of FXCM accounts. It showed that FXCM clients with an account balance of at least $10,000 (which is the minimum for the other broker you mentioned) had a profitability percentage of 43%.


​


----------



## NickF

Jason Rogers said:


> Hi Nick,
> 
> Unfortunately, those reports don't take into account the difference in account opening minimums between brokers. Therefore, what they end up showing is the correlation between account balance and profitability which is also confirmed by our research.
> 
> It's important to note that FXCM offers services to traders at all levels, including Mini accounts ($50 minimum), Standard accounts (2k minimum), Active Trader accounts (25k minimum) and multi-million dollar institutional (FXCM Pro) accounts. By contrast, the other broker you mentioned has a minimum account opening balance of $10,000.
> 
> Below are stats from a DailyFX study on trader profitability in relation to account balance based on thousands of FXCM accounts. It showed that FXCM clients with an account balance of at least $10,000 (which is the minimum for the other broker you mentioned) had a profitability percentage of 43%.
> 
> ​




Hi Jason,

Thanks for your answer. It is obvious that many $50 accounts would have a very short life compared to a larger account, so the research I read elsewhere does not compare apples with apples. I am satisfied with your explanation.

Nick


----------



## NickF

Oops, I did it again!

In my last trading day I lost over $800. I got relaxed, confident because of a pretty healthy balance, got a false sense of security because, despite reaching a total of $25000 in a very volatile market, my usable margin was 95%. Kept hoping my imaginary resistance levels will bounce the price back.

I didn't look that the GBPJPY has fallen sharply for six weeks in a row. I didn't take into consideration "what if the GBP will bounce back one or two weeks in a row"? In fact, I didn't even ask myself, what if GBP will increase strongly even ONE day only? I kept accumulating positions when the price "got better". 

Now I am considering whether I should quit Forex for good. I am not concerned as much about my latest loss. I am more concerned about repeating the same mistakes again and again. Like not using risk management. Not being satisfied with a profit of 1% per day. Not concentrating more on learning than on trading. Being more interested in growing back my account instead of using good practices. Well, at least I got what I deserve 

My account dropped from about $2950 to $2145 in one day.


----------



## Jason Rogers

NickF said:


> I got relaxed, confident because of a pretty healthy balance, got a false sense of security because, despite reaching a total of $25000 in a very volatile market, my usable margin was 95%. Kept hoping my imaginary resistance levels will bounce the price back.




Sorry to hear that, Nick 

Did you mean $2500? And how did you determine these resistance levels?



NickF said:


> My account dropped from about $2950 to $2145 in one day.




My first thought reading this is that your leverage must have been extremely high. As mentioned in the article I linked to in my post yesterday, stats show that traders who use 10:1 leverage or less tend to have more success than those who use more than 10:1 leverage.


----------



## NickF

Jason Rogers said:


> Sorry to hear that, Nick
> 
> Did you mean $2500? And how did you determine these resistance levels?
> 
> 
> My first thought reading this is that your leverage must have been extremely high. As mentioned in the article I linked to in my post yesterday, stats show that traders who use 10:1 leverage or less tend to have more success than those who use more than 10:1 leverage.




Hi Jason,

In the end, I was trading a total of 25 microlots of $1000 each, in total trading $25000. The resistance levels were lines that were previous highs or lows in the past or lines where the price was hesitating a long time.

So, I had over $2900 in my account and for a 10:1 leverage, if I understand correctly the leverage, I could have used up to 29 microlots at a time. In the last twelve months I've never reached 10:1, I always used less. I probably reached 5:1 quite rarely as well. Two days ago I also used less than 10:1 leverage and despite this, I managed to lose almost 30% of my account in only one day, the majority on GBYJPY. During the day and night, from my net short (around 130.963), the price went against me over 250 pips.

I thought about what should I do next. The day after I lost the money I was considering to take out all the money and stop trading. But now I think that would be a waste of the effort I put since 24-April-2015, when I first opened the account. 

My focus for the future should be to trade at a level where I am capable of showing some consistency every week if possible. If I have a few weeks where I can get to be 1% up, that would give me confidence that I probably hope to make 1% ($20 per week in profits) per week long term (which is still very high anyway, it amounts to 52% per annum) and I can target a higher profit. If I can't do that, then my target will drop to 0.5% per week or whatever needs to be to show some consistency. 

I will try to use maximum of 3 microlots in total at any time. I will also move my funds into my other account, where I can use the MT4 scripts and if I am happy with any of my scripts, I will run them, one microlot per transaction. I still have $2145 in my account and that is more than what I have when I first started. Despite having five consecutive losing months, I still think I can turn a profit. I was probably too aggressive. We'll see.




Nick


----------



## Jason Rogers

NickF said:


> Hi Jason,
> 
> In the end, I was trading a total of 25 microlots of $1000 each, in total trading $25000. The resistance levels were lines that were previous highs or lows in the past or lines where the price was hesitating a long time.
> 
> So, I had over $2900 in my account and for a 10:1 leverage, if I understand correctly the leverage, I could have used up to 29 microlots at a time.




Hi Nick,

You have understood correctly. Your leverage was within 10:1 which is good. The reason I thought your leverage might have been higher is because you said you lost $800 in a single day. I found that hard to believe on your account size unless your leverage was extremely high, and I was correct.

When I look at the Closed Trade List from your report, I can see that you did not lose $800 in a single day. Rather, your losses were accumulated over several days with your first trade opened a week ago. This highlights an aspect of risk management where you can improve. While it was good that you kept your leverage below 10:1, you neglected another important aspect of risk management which is a stop loss.



NickF said:


> Two days ago I also used less than 10:1 leverage and despite this, I managed to lose almost 30% of my account in only one day, the majority on GBYJPY. During the day and night, from my net short (around 130.963), the price went against me over 250 pips.




That's kind of like a driver with no brakes in his car saying, I crashed despite never exceeding the speed limit. When you trade, your brakes are your stop loss, the point at which you cut your losses on a trade and move on. A good rule of thumb is to try not to risk more than 2% of your account on any trade.

With $2000 in your account 2% of your equity is $40. Since you can trade micro lots in your account and risk as little as 10 cents per pip, you have the ability to risk up to 400 pips on a single trade. Whether you risk that much will depend on other factors, however.

First, its a good idea to plan in advance how much you must seek as a reward (profit target/limit) compared to how much you are willing to risk (stop loss) in order to justify the risk of placing the trade. Our data show that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. 

Some traders use a ratio of 2:1 which means they seek twice as much profit as they are willing to risk on a trade. They would only be willing to risk 400 pips on a trade if they saw 800 pips of potential profit. That might work for a long term trader, but a short term trader could apply the same ratio by risking 40 pips and seeking 80 pips potential profit.

The important thing is to make this decision before you open the trade. If you only intend to seek 80 pips profit, you have to be willing to close the trade for a 40 pip loss and move on. You can't change a short term trade into a long term trade simply because you don't want to take the 40 pip loss. That means you end up taking on more risk that you had initially planned throwing off your risk/reward ratio.

Ask yourself, would you prefer to place long term trades risking 400 pips to seek 800 pips? If so, you can trade 1 micro lot per trade and risk 10 cents per pip. If you would prefer to risk 40 pips to seek 80 pips profit, then you can trade 10 micro lots and risk $1 per pip. If you make these decisions before you open your trade and set your stops and limits in advance, then you can reduce the chances of suffering 30% losses like the one you just had.


How to Create a Stop
How to Create a Limit


----------



## NickF

Jason Rogers said:


> Hi Nick,
> When I look at the Closed Trade List from your report, I can see that you did not lose $800 in a single day. Rather, your losses were accumulated over several days with your first trade opened a week ago. This highlights an aspect of risk management where you can improve. While it was good that you kept your leverage below 10:1, you neglected another important aspect of risk management which is a stop loss.



I lost $806 in less than 24 hours. Around 11 am, my open trades were about $40 in profit. From 11 am till 4:20AM when I decided to close all trades. I obviously didn't have a good night, I could not sleep, wondering if I should close all of them or not. I was considering to close just a part of them, but in the end I closed them all. It turned out it was a good decision, because the next day GBP increased even more. 


Jason Rogers said:


> That's kind of like a driver with no brakes in his car saying, I crashed despite never exceeding the speed limit. When you trade, your brakes are your stop loss, the point at which you cut your losses on a trade and move on. A good rule of thumb is to try not to risk more than 2% of your account on any trade.



It was in no way an excuse. Out of the all things I am doing bad and need to be corrected, the high leveraging is not a problem for me. As you pointed out, I need to focus on setting stop losses and take profit points, as well as finding good entry points. 

In fact, I already moved my funds into my other FXCM account and now I will make a script that will monitor every open trade for stop loss and take profit limits and if I didn't set any limits myself when I entered a trade, it will use a default value (like 80 pip/120 pip from the entry price, while always staying under 2%) and close my trades for me. In case I only set SL or TP, it will calculate the other limit. Later, I will calculate the limits automatically based on support and resistance levels and also, on not exceeding the 2% limit.

If I can not be disciplined myself, this does not mean I can not accept a supervising system doing what's right.

I am yet to decide what ratio I should have between SL and TP. I will probably based it on optimizations, perhaps even for every currency pair. Even my Expert Advisors show the most profitable parameters are the ones where the TP greater than SL.



Jason Rogers said:


> With $2000 in your account 2% of your equity is $40. Since you can trade micro lots in your account and risk as little as 10 cents per pip, you have the ability to risk up to 400 pips on a single trade. Whether you risk that much will depend on other factors, however.
> 
> First, its a good idea to plan in advance how much you must seek as a reward (profit target/limit) compared to how much you are willing to risk (stop loss) in order to justify the risk of placing the trade. Our data show that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent.




This is extremely valuable information (I find most of the statistics you provided is important).



Jason Rogers said:


> Some traders use a ratio of 2:1 which means they seek twice as much profit as they are willing to risk on a trade. They would only be willing to risk 400 pips on a trade if they saw 800 pips of potential profit. That might work for a long term trader, but a short term trader could apply the same ratio by risking 40 pips and seeking 80 pips potential profit.
> 
> The important thing is to make this decision before you open the trade. If you only intend to seek 80 pips profit, you have to be willing to close the trade for a 40 pip loss and move on. You can't change a short term trade into a long term trade simply because you don't want to take the 40 pip loss. That means you end up taking on more risk that you had initially planned throwing off your risk/reward ratio.
> 
> Ask yourself, would you prefer to place long term trades risking 400 pips to seek 800 pips? If so, you can trade 1 micro lot per trade and risk 10 cents per pip. If you would prefer to risk 40 pips to seek 80 pips profit, then you can trade 10 micro lots and risk $1 per pip. If you make these decisions before you open your trade and set your stops and limits in advance, then you can reduce the chances of suffering 30% losses like the one you just had.



It looks like if I want to improve myself as a trader I can not avoid the parts I don't like and only to what's exciting. I'll work on what I need to improve.

Thank you very much for your mentoring.

Nick


----------



## NickF

Jason Rogers said:


> And how did you determine these resistance levels?



Hi Jason,

I have now the opportunity to show how I identify a support level (resistance for me, when shorting). In this case, I looked for it after I accepted a loss of $29 or 231 pips. This morning I was watching the GBPJPY - I expect it is a matter of time before it will start falling again (I think it bounced back too much). I noticed that it's been falling for the last twelve hours, and the fall was accelerating (or so I thought). 

Because of known high volatility I decided for a SL of -$30 and a TP of $60. 

Within minutes after I shorted, the price went up. When I looked further to the left of the chart, I saw the price hesitated for a long time around 136.19. To me, now (after I got wiser), that looks like an example of a support line.

I made another mistake when I entered this trade. I thought the price could go back to the level of 139.33, but I was expecting it will go down. What I didn't calculate is what would be my loss if the price raised from my buy 136.478 if the price reaches 139.370 (289 pips). I didn't expect there were so many pips in between the two levels.

Nick


----------



## Jason Rogers

NickF said:


> I lost $806 in less than 24 hours. Around 11 am, my open trades were about $40 in profit. From 11 am till 4:20AM when I decided to close all trades. I obviously didn't have a good night, I could not sleep, wondering if I should close all of them or not. I was considering to close just a part of them, but in the end I closed them all. It turned out it was a good decision, because the next day GBP increased even more.




Hi Nick,

I stand corrected. We have seen heightened volatility in both the British Pound and Japanese Yen post Brexit. It might be worth considering trimming your effective leverage (perhaps to 5:1 or even 3:1) given present conditions.



NickF said:


> I have now the opportunity to show how I identify a support level (resistance for me, when shorting).






NickF said:


> I made another mistake when I entered this trade. I thought the price could go back to the level of 139.33, but I was expecting it will go down. What I didn't calculate is what would be my loss if the price raised from my buy 136.478 if the price reaches 139.370 (289 pips). I didn't expect there were so many pips in between the two levels.




If I understand your charts correctly, you are using a combination of moving averages to determine your stop and resistance levels. It's still possible to place these trades with wider stops but it requires using a smaller trade size. For example, if you trade one micro lot of GBP/JPY (1000 pounds) then you are risking less than AUD 13 cents  per pip (at the current AUD/JPY exchange rate of 80.12). That means 289 pips on this trade size would equate to risking $36 which is less than 2% of your current account balance.


----------



## Wharris

Hi nick, are you still trading? How are you travelling?


----------



## cynic

According to Nick's profile page, there's been no activity for over three weeks. 

I do hope that you are still with us Nick, as I am sure that I am not alone in having enjoyed and benefitted from this thread.

In the meantime, perhaps others might like to share their respective experiences. 

For those (like myself) who have gripes with their forex provider, it might be worth noting that this thread has already attracted the participation of a representative of one well known forex provider and one never knows who else might be reading.

Anyhow, these past few weeks, I broke with my traditional aversion to forex and dabbled with the EUR/USD.

I just closed my last remaining short position about an hour ago, and haven't decided yet, if and when, I shall resume trading forex.

I am interested to hear from others that have traded that particular (or similar) beastie and what their experience of stop orders was like.

Have you ever loved stop orders? 

Do you still love them? 

Or are you, someone like myself who has , after seeing them trigger in mysterious and inappropriate ways, come to avoid them like the plague?


----------



## Wharris

cynic said:


> According to Nick's profile page, there's been no activity for over three weeks.
> 
> I do hope that you are still with us Nick, as I am sure that I am not alone in having enjoyed and benefitted from this thread.
> 
> In the meantime, perhaps others might like to share their respective experiences.
> 
> For those (like myself) who have gripes with their forex provider, it might be worth noting that this thread has already attracted the participation of a representative of one well known forex provider and one never knows who else might be reading.
> 
> Anyhow, these past few weeks, I broke with my traditional aversion to forex and dabbled with the EUR/USD.
> 
> I just closed my last remaining short position about an hour ago, and haven't decided yet, if and when, I shall resume trading forex.
> 
> I am interested to hear from others that have traded that particular (or similar) beastie and what their experience of stop orders was like.
> 
> Have you ever loved stop orders?
> 
> Do you still love them?
> 
> Or are you, someone like myself who has , after seeing them trigger in mysterious and inappropriate ways, come to avoid them like the plague?




I don't really use stop orders, although i did close out my eurusd position around the same time at 1.11433. 
I'm quite the control freak and if I am unable to see what is happening on my chart I tend to be hesitant using an order! Today has been a relatively positive day, 5 out of 6 positions closed positively although positive news out from the U.S helped to to put the perverbial nail in the coffins.


----------



## cynic

Wharris said:


> I don't really use stop orders, although i did close out my eurusd position around the same time at 1.11433.
> I'm quite the control freak and if I am unable to see what is happening on my chart I tend to be hesitant using an order! Today has been a relatively positive day, 5 out of 6 positions closed positively although positive news out from the U.S helped to to put the perverbial nail in the coffins.




It was a good day for me also. I closed a total of 6 trades. 4 had been opened that day and the others were old trades that I had waited on patiently for weeks. My drawdown a week or two ago, might have been daunting, if it weren't for the fact that these trades were only microlots.

Anyway it's nice to have a clean sheet again.


----------



## Wharris

Indeed, I still trade micro and mini lots, all of my trades were entered this afternoon,  I have 2 trades now going which ill let run and hopefully hit my target overnight.

 I usually scalp, however I gravitated back to the 1 hour chart for convenience which has paid off, I pulled 62 pips from gbpaud today, ordinarily scalping would probably have yielded the same, however I most likley would have had losing trades, I tend to trust the longer time frames so I probably won't dabble in the "noise" anymore  (so to speak).

On that note I've burned enough midnight oil, time to hit the sack!


----------



## cynic

Nice one! 

I exited my weakest short for a mere 2 pips just to get rid of the durned thing!

My other trades averaged a meagre 6 pips. My percentage profits, on cash deployed, for this past fortnight would be the envy of many, if only they had been generated on larger sized possies!


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## minwa

cynic said:


> Or are you, someone like myself who has , after seeing them trigger in mysterious and inappropriate ways, come to avoid them like the plague?




Trading the exchanged traded FX futures on CME solves this mostly. Only downside is you have to convert funds to USD. But if you are actively speculating you are looking to make return higher than any potential loss(or gain) on AUDUSD exchange rate from funds conversion anyway.


----------



## cynic

minwa said:


> Trading the exchanged traded FX futures on CME solves this mostly. Only downside is you have to convert funds to USD. But if you are actively speculating you are looking to make return higher than any potential loss(or gain) on AUDUSD exchange rate from funds conversion anyway.




Thanks for the tip, minwa. Should I find myself wanting to scale up into larger position sizes, I may well consider brushing the dust off some of my earlier trading systems and availing myself of the real deal.


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## Wharris

minwa said:


> Trading the exchanged traded FX futures on CME solves this mostly. Only downside is you have to convert funds to USD. But if you are actively speculating you are looking to make return higher than any potential loss(or gain) on AUDUSD exchange rate from funds conversion anyway.




Hi minwa,

I haven't looked at fx futures much so my understanding of it is minimal, does it work in the sense that if the current price for audusd is 75200 and i sell a futures contract at 74000 would i lose money until price reaches that level? And once price reaches that and below I would be profiting from further decline? Or have i got that wrong? I just read the CME intro to futures and am puzzled ha. Time for my coffee i think!


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## minwa

Wharris said:


> Hi minwa,
> 
> I haven't looked at fx futures much so my understanding of it is minimal, does it work in the sense that if the current price for audusd is 75200 and i sell a futures contract at 74000 would i lose money until price reaches that level? And once price reaches that and below I would be profiting from further decline? Or have i got that wrong? I just read the CME intro to futures and am puzzled ha. Time for my coffee i think!




Na, that is a options contract or similar derivative. Futures are much more straight forward, for most part it behaves the same as trading the spot FX - linear profit/loss based on simple difference of whatever price you bought and sold at.


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## Wharris

minwa said:


> Na, that is a options contract or similar derivative. Futures are much more straight forward, for most part it behaves the same as trading the spot FX - linear profit/loss based on simple difference of whatever price you bought and sold at.




Ahh ok got ya, I'll keep researching as time go's on i think, thanks for your response!


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## cynic

minwa said:


> Na, that is a options contract or similar derivative. Futures are much more straight forward, for most part it behaves the same as trading the spot FX - linear profit/loss based on simple difference of whatever price you bought and sold at.




Please correct me if mistaken, but I was of the impression that those were quarterly forward contracts (as opposed to cash/spot).


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## minwa

cynic said:


> Please correct me if mistaken, but I was of the impression that those were quarterly forward contracts (as opposed to cash/spot).




Probably ! Not familiar with those which is why I said options or similar derivative :


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## peter2

Yes, all futures contracts expire at specified periods, most quarterly. At expiry they can be settled by cash or by delivery of the commodity. It's important to know when the contract you're trading expires or it's first notice day. Positions bought to be held for long periods need to be rolled over to the next contract before expiry. 

Retail traders are not expected to need delivery and most brokers will automatically close open trades before expiry or 1st notice day. 

Futures markets operate like any other, there are bid and asks and market depth. The major difference with futures markets are that every futures contract contains specifications that describe quantity and quality of the commodity to be delivered. 

Currency futures contract have differing quantities.  EUR $125,000, GBP $62,500, AUD $100,000 etc..  This makes the value of each tick or price movement different. You cannot buy/sell part of a futures contract. 

Forex uses a standard lot size of 100,000. The forex market allows the standard lot to be bought/sold in smaller parcels eg. 40,000, 10,000, even 1,000.


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## cynic

Thanks for that info peter.

Another important distinction between the cash/spot derivatives, and their forward/futures equivalent, is that those annoying daily rollover adjustments do not occur when trading the forward contracts.


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