Do full-time forex traders exist or is it just make believe?

[contra]

Quote from Jack_Larkin:

Cash rate announcement tonight. With all the less than awesome news there's a chance it might be lowered.

Either way, expect a snap.

hoping for a no-cut which would be the better move IMO (up).

AUD underperformed Monday on rumours of large sales expecting RBA rate cut.

Sydney Morning Herald reported rumours of Soros selling large amounts Monday.

so as far as positioning... could get some decent profit taking.


there is trade data a few hours prior, and should be decent stops gathering below the touted barriers but we are back above this weekly TL, sitting right on it. It held the lows under more usd pressure.

I might prefer EUR/AUD here on the no-cut scenario with fresh draghi rhetoric and PA. Even with a cut maybe...

 

[cornix]

Quote from atticus:

It's best practice to sweep profits and trading fixed lots if you're risking more than you're earning. Not ridiculing anybody here, but everyone on this thread is running a risk/reward >1. I include myself in that calc as my preferred trades are in DNT exotics.

R:R >1 in the sense that all account is at risk whenever a trade it made?

 

[SimpleTrades]

Quote from cornix:

R:R >1 in the sense that all account is at risk whenever a trade it made?

I think he means that the amount you are prepared to lose before being stopped out is greater than your expected profit on a given trade.

For me, I risk $1000 each time. My stop is set by the margin requirement of about $390. So, I can lose about $600 before a margin call. However, I close the trade after a profit between $50 and $100. Therefore, to be profitable over the long run, I have to have a very high success rate, over 75%. This is why I pull my profits out of the account immediately. At worst, I will lose $600, not $600 plus all accumulated profits. I should say $600 + slippage.

Edit: actually my average profit is somewhat lower than I thought. $36.74 per trade. 66% not 70% in 2013.

 

[contra]

I see no problem with limiting the amount you wish to deposit your broker for a few fx trades you do, except it limits you to one trade or so at a time.

I don't understand why it would be optimal not to compound and take profits out though.

 

[SimpleTrades]

Quote from contra:


I don't understand why it would be optimal to not compound and take profits out though.

All it takes is one big loss and all your hard work has been eliminated - not just the profits, but also the original deposit. Whereas if you withdraw your profits, all you lose is the original deposit minus the margin requirement (in my case) plus slippage.

The thing about compounding is that each subsequent trade has an exponentially increasing potential loss. That's why Xspurt's suggestion that 40 pips a day to a $million is absurd except under extremely lucky circumstances. If you're compounding, an average of 40 pips per day can actually send your account to $0.

 

[atticus]

Quote from cornix:

R:R >1 in the sense that all account is at risk whenever a trade it made?

No, the average amount lost exceeds the avg amount won.

 

[cornix]

Quote from atticus:

No, the average amount lost exceeds the avg amount won.

Ah in this classic sense. Certainly not my case. My average losses are smaller than average winners.

 

[contra]

Quote from SimpleTrades:

All it takes is one big loss and all your hard work has been eliminated - not just the profits, but also the original deposit. Whereas if you withdraw your profits, all you lose is the original deposit minus the margin requirement (in my case) plus slippage.

The thing about compounding is that each subsequent trade has an exponentially increasing potential loss. That's why Xspurt's suggestion that 40 pips a day to a $million is absurd except under extremely lucky circumstances. If you're compounding, an average of 40 pips per day can actually send your account to $0.

Well that's if you're adjusting the size every trade. I would also use the money for more trades at once, which needs more margin.

I see what your saying for your case but fail to see this as optimal in all cases.

 

[SimpleTrades]

Quote from contra:

Well that's if you're adjusting the size every trade. I would also use the money for more trades at once, which needs more margin.

I see what your saying for your case but fail to see this as optimal in all cases.

You're right. In your case, since the size of your average loss is smaller than your average win, this is not optimal for you. Reread what Atticus originally said. He suggested that sweeping profits was appropriate for those with an R:R > 1. In your case, R:R < 1

Edit: Oops. I am mixing you up with cornix. Time for sleep.

 

[atticus]

It's no different than casino gambling. If you're winning at gaming then you should move cash off the table, unless you're gambling at edge (counting at 21 into a high count) in which bet-variation is critical (increasing bet-size into high 10-factor).

It's why Kelly is worthwhile in trading as long as you can quantify your edge. Bet-size should be kept proportional to stake unless your edge is large.