The Perfect Edge

I don't know how I missed this excellent post.

I understand your point. I have trained myself to let the instrument dictate these things...I think? :)

I am very conservative in nature and I simply am not happy gambling. I avoid any roller-coaster type of effect. Now do I miss yields...the answer is yes...but I have found my full time and part time Holy Grail for now...

Strategic placement and position to eek out my small yearly (but consistent yield) is where I seem to understand and excel. I have tried a lot of stuff that makes more money, but I am miserable trading it.

Michael B.




Quote from achilles28:

Playing the devils advocate for a minute.

Is it possible trading full time forces a trader into a psychological corner; dictating miniscule risk is taken to preserve emotional 'continuity', at the cost of forfeiting significant profits earned?

I say this because the Wizards and others have noted some of the most profitable strategies are those generating 25-40% winners.

My conclusion: most traders, understandably, cannot tolerate low win rate systems (implying high dd) when their sole income source is trading.

Does this equate to missed opportunity?
More...
 
If I were to do a forex trade on a currency pair that pays interest using 100 to 1 leverage, would I get paid interest on the full leveraged amount or just the actual cash I put down. For instance, lets say I put down 1,000 dollars and leverage myself to 100,000 dollars on a JPY/USD dollar trade. Will I get an interest payment on 100, 000 dollars or a 1,000 dollars.
Thank You in advance
 
You net on the leveraged amount...this is why the interest earned is in the triple digits at 50:1 annually....PM me for the ranked spreadsheet...

You see I really do not care that much, if one of my scalps fail....

But as illiquid (ET member) states the money is made in the fluctuations of price, thus I added grid trading and scalping to my system. There are 33 pairs and many positive interest choices, so I consider this a discretionary portion of my system trading (I derive 73% of my profits from this, while holding leverage and DD at bay).

Michael B.

P.S. Many dealers do not pay if your over 50:1...




Quote from Johnny Walker:

If I were to do a forex trade on a currency pair that pays interest using 100 to 1 leverage, would I get paid interest on the full leveraged amount or just the actual cash I put down. For instance, lets say I put down 1,000 dollars and leverage myself to 100,000 dollars on a JPY/USD dollar trade. Will I get an interest payment on 100, 000 dollars or a 1,000 dollars.
Thank You in advance
More...
 
Ok...its shaping up. The strategy to get light over the weekend I think is prudent.. As I think the Yen will continue to gain strength next week after it gets done with its retracement. The heavy position in the EUR/AUD seems to hedge it a bit...

I have managed to get leverage down to 3.4:1 while pulling a total on 0.13% in trades(32.5% annual ROI) plus a bonus of interest of 0.03%(10.95% annual ROI) out of the market today (estimating interest, but will know more at 18:00est).

I am still trading as the spreads have not widened yet at the marketmaker I use. (EUR/HUF target might hit)

Michael B.
 
A lot of traders do not understand that the progressive approach that I use maintains a low leverage/drawdown, but still allows trade size to grow.

So the second half of the year the yields become more interesting on the 100k...Most HF mangers discount my trading and do not pay much attention, as I am slow out of the gate, but I end the year respectable.

I am a 2-5% yield a month trader....looking to improve through discretionary choices to 3-6% per month and I have the capacity to achieve 4-7% per month.

But again, I do not really concentrate on yields. I concentrate on leverage used and max drawdown for the year.

Its small adjustments and reasonable expectations that matter. Traders!...project conservatively and become known for accurate and down-to-earth projections. Always take the negative side of your yield promises when speaking to another, this is how you remove pressure and gain respect.

Anybody that works with can always depend on my projections and honest commentary.


Michael B.
 
In my conversations with several professionals, it seems now-a-days accredited investors/institutions want higher yields than I am producing. I must get better at my discretionary trades and never let my Drawdown rise higher than 15%. I do not know how much leverage to use in 100% Retail Spot Forex trading, that is institutionally acceptable. But I have seen 5:1 max.

I introduced discretionary trading to my system which has taken me up one level (from 2-5% per month to 3-6% per month).

Now I am going to ramp up ever-so-slightly over the next few weeks and see if I can get into the 4-7% per month area.. (I will go over 5:1 leverage perhaps)

I am currently at:
  • Start:100K
  • # of Days: 99
  • Bal $110,968.86 (avg monthly yield 3.32% with only one losing month)
  • NAV $108,228.18 (avg monthly yield 2.49%)
  • Max Drawdown 7.70%
  • Current Drawdown 2.47%
  • Max Leverage: 4.48:1
  • Current Leverage: 4.08:1

Michael B.

Trading ($8,015.15) composes 73.07% of the above balance and interest earned ($2,953.71) is 26.93% of the banked profit in the balance (not NAV).
 
Electric,

I have backtested by equities swing trading strategy on a pair in currencies and it's looking pretty good... I'm learning more about the Forex market... can you elaborate on the whole interest thing? So are you saying that you make some cash holding it overnight?
 
Yes. You get paid for holding certain pairs in a certain direction. And its rather substantial.

My trading has changed since I discovered Forex in July 2004.

Foreign countries have different economies of scale and I have always been interested in this. I remember that I once drove over to Mexico to Bancomer bank and opened up a savings account. I think I made like 26% interest! I thought it was great back then then I learned that Mexico ofter devalued their peso! So I drove over there and closed the account!

Today, Foreign exchange and the computer has changed a lot...The Peso is still devalued though and the risk is still there, but it is much more convienient to lose your money! And with Leverage! There are 33 pair offered at my marketmaker to spread out my losses with...

Lol...I hope to illustrate that there is a way to pull money out of this losing game while keeping your marketmaker happy. A consistent and reasonable return on your investment with a reasonable risk should be the goal and I plan on building my track record here.

Michael B.




Quote from sirpangolin:

Electric,

I have backtested by equities swing trading strategy on a pair in currencies and it's looking pretty good... I'm learning more about the Forex market... can you elaborate on the whole interest thing? So are you saying that you make some cash holding it overnight?
More...
 
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