10 Pips Per Day - Everyday
- Thread starter Trader200K
- Start date
I'll trust your number crunching as I'm a bit the worse for Christmas spirit
Theoretically, yes. Practically, no.
Apart from the obvious liquidity issues there are a multitude of reasons why this could not be done in practice, not least of all a psychological one.
Compounding as you have demonstrated is an extremely powerful tool, unfortunately most full-time traders need to pay the grocery bill and in my case exorbitant alimony as well as other investment opportunities so I usually start a month with a set balance after withdrawing profit.
Put this in perspective and in it's true context, the City generate some extraordinary wealth for it's participants, some City traders take home 7 and even 8 figure bonuses, think of the revenue they must produce for their respective companies!
Ok, coming back down to earth for a minute, it's not completely out of the question to profit 10 pips per day on average. As someone mentioned earlier that's 200 pips a month on average, any full-time trader would be dissapointed with much less I imagine, I know I would be.
Glad you're finding it useful but before you go on a mission to find an ECN they also have a downside.
This thread makes an interesting read
(mods: I hope it's ok to post a link to another forum, if not please remove)
http://forexfactory.com/showthread.php?t=8046
I can't deny I'm guilty of that one, too eager to click some buttons before reading the manual and I get into all sorts of trouble.
Actually giving IB support guys their due I was probably a right pain!
Volatlity percentage (I think it is known as something else. Either way it needs to be factored into your equation.)
Slippage percentage. (when your size increase so does your fill time) This is of course with market orders, but what about limit orders. They may or may not get filled at your order size. Or you may get a partial fill.
All these variances matter and should be factoring into your equations. There are a bunch of additional numbers to factor in, but these 2 are a start.
I too am reading that book, and I was particularly struck by Harneker's modest goal and his use of automation. It is quite clear that when Harneker talks about 10 pips, he is referring to single lot trades with a $10 pip value. That equates to $100 per day or $25k per year. Obviously if you trade one mini-lot or multiple standards lots, the dollar value changes. I also monitor my trading results in dollars because my capital is also the rent money. My objective is small, steady gains. I don't know how much capital would be required to achieve $25k per year, but I think $100k is doable, at least for an experienced trader.
I make my living trading stocks through IB. I am fully automated, so I have a lot of free time to explore other trading ideas. I traded currency futures about a dozen years ago, but I didn't like currencies then because of disruptive factors such as central bank intervention. Lately I am starting to think more favorably about trading spot forex. What I am thinking is that there may a considerable amount of dumb money in that market. Nothing in this thread leads me away from that conclusion. That and the dealer games make for potentially exploitable inefficiency.