Small Account Big Leverage

B

baggerlord

I'm a working dude. I put money out of my paycheck into 2 things for investment: mostly buy and hold long term stock stuff with no leverage, and a forex account that I just opened for smaller amounts. I plan to trade this with massive overleverage.

What you can expect from this journal:

1. Infrequent trades. Probably no more than 3 a month and that will be unusual.
2. Way too much leverage.
3. Monthly to bimonthly contributions (me adding money to the account)

I'm trading my personal take on ACD. I only trade the AUD/USD because it has nice moves right now. I only enter positions near the beginning of the month.

I don't mind massive % drawdowns because I plan to make monthly contributions. 10% yearly would be nice and all but doesn't really do much for me on a $500 account. Thats my starting balance by the way. I fully expect to lose at least 20% on my bad trades but thats OK because I'm adding more money periodically.

The goal is to run the account up to a level where the losses in real $ amounts get to the edge of my comfort zone and then I will scale the risk back to a reasonable %.

I use daily levels and a monthly level to get into trades. I calculate them using a different method than usual. I'll explain it some time. Right now I'm short at 1.0262 $2 a pip. My monthly A down is at 1.0238. Like I said I use my own calculation and it would be way different as a % of ATR for other products. It is based off analysis of monthly swings in the last 10 months or so.

I don't have a hard stop or target. The stop is based on price action and my levels. I guess it isn't true that I don't have a hard stop because a margin call is definitely a type of stop loss.

The point of this journal is entertainment.

My first criteria to get out will be if there is a strong reversal bar around my A down level, or above it. If I get a close below it on the daily chart I'll be looking to hold for a trend.
 
Normally I'll take smaller position but I'm doing some work on the computer tonight so I'm able to do some daytrade type stuff to keep the risk down. I think my normal position size will be .50 a pip per $500. I'm going to reduce this before I go to bed.
 
OK I scaled down to .50 a pip because daily range has nearly reached avg and I am sleepy. Holding the rest for a hopeful monthly breakdown.
 
In case you're not already familiar with "Risk of Ruin", there are a number of good threads here on ET that have dealt with the concept fairly recently (from memory, look up intradaybill and "risk of ruin").

If you are really going to trade this way, you can probably do yourself a favour by setting a goal ahead of time, and quitting then if/when you hit the goal ...

Good luck!
 
Hello. I played poker full time for 8 years and I did the math on my winrate, standard deviation, and ror every way you can imagine. When your ongoing contribution to an account is a certain % of account value, there is zero ror. If I'm depositing $500 a month I can technically risk $500 a month. This changes as the account grows and the money becomes more difficult to replace. I'm treating this more like a blackjack or poker bankroll than anything. The % risk will definitely go down if the account grows.
 
Well the action today was promising. It is sitting right below the monthly A down level and if today closes where it is at or lower, it will also be a daily C down by my numbers and a good sign of weakness at this level. I might even add to my position in the morning.

Something that I am starting to do for my own improvement is to plot the daily levels every day and take a screenshot. I save these on my computer for analysis, with the idea that at some point in the future I will likely have a career change that will allow me to trade intraday. I'll post these here and there if there is any interest.
 
Quote from baggerlord:

Something that I am starting to do for my own improvement is to plot the daily levels every day and take a screenshot. I save these on my computer for analysis. I'll post these here and there if there is any interest.
More...

I would say post them here for your own reference, rather than for readers. 6 months down the line, once you have taken 20 or so trades, and want to go through your last 6 months of thought process behind trades and how chart looked at that time, reviewing this journal will prove to be very helpful for your own trading.

Another option could be to save the charts in a MS Powerpoint and write some commentary, if you want to keep it on your computer. I think that might also work.
 
I'm expecting this trade to make it to the 1.0112 level. Thats the more traditional monthly A down area and I expect it to get tested given the action so far this month. Criteria to get out at this point would be a breakout above a swing high on the daily. If it makes it past there to around the whole number that will be my exit.

Charts coming, probably this weekend.
 
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