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LOT SIZE CONSISTENCY
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Członek od Oct 19, 2009 22 postów
drgoodvibe
Nov 17 2010 at 23:59
I'd have to agree with Tom on this one..
My lot size is dependent on money management and currency pair volatility. Get up, dust yourself off.. and ride! www.omegasupreme.com |
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Członek od Jul 25, 2010 2 postów
imagesfx
Nov 18 2010 at 00:00
Trading is all about making decisions. That seems simple and straightforward enough, but I’m not referring to the typical ‘buy or sell,’ ‘how much,’ or ‘where’-type trading decisions. Instead I’m talking about the likely biggest trading decision you’ll ever make- Deciding exactly what kind of trader you want to be. How will you approach the market ? What timeframe will you focus on? What will inform your trading decisions ? In short, deciding what trading style you will pursue will probably be the single biggest determinant of your trading success or failure. From my experience, most traders don’t even explicitly acknowledge this question, much less get around to actually settling on an answer. But the best traders always do and that’s how they sur vive year after year, market after market. Such trading success is usually attributed to ‘discipline,’ but that raises the question “Disciplined to what ?” The answer, I would suggest, is maintaining a disciplined trading style. But you can’t achieve that discipline if you don’t settle on your trading style(F) Like many new or aspiring traders, I spent my first couple of years trading without an explicit style and my results showed it. Money made one month would be given back the next, or money made in the morning would be coughed up later that same afternoon. It was a frustrating experience to say the least. Many traders get carried away in the euphoria placing trades using varying lot sizes. The major disadvantage is that it does not allow you assess you performance easily It brings about Trade Inconsistency It brings about lack of trust in your trade deployments It gives drawdowns easily i.e a 1.0 lot size 5 wins can bee brought down by a singe 5.0 Loss It kills your confidence as an experienced trader . i will love us to discuss this issue as it portends to be one of the major reasons why people fail in foreign exchange trading |
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Członek od May 30, 2010 23 postów
Tom (ttfx)
Nov 18 2010 at 00:23
(zmieniany Nov 18 2010 at 00:51 )
I set my stop where the market tells me I'm wrong. The size of the stop depends mostly on market volatility. There's no euphoria. I don't care for lot size. I may even don't know how many lots I have on stake. But I have to know that my stop is placed sensibly and that my risk is 1% of equity. I need to see momentum (first signs at best). Then have to see some 'room' for the trade to go the right direction; twice the stop size at least. That's all.
Then: If I trade one lot with a 50 pips stop (very high volatility) and hitting it makes a 1% loss, then I lose 1% of my account. If I trade five lots with a 10 pips stop (moderate to low volatility) and hitting it makes a 1% loss, then I lose 1% of my account. If I win in both trades and exit each trade after it went twice the stop size in my direction, then I gain 2% of my account with each trade. What's wrong with that? What inconsistency brings this in? Am I meant to use fixed size stops to be a trader? Or am I not allowed to scalp during low volatility periods if I also take some swing trades for +100 pips gain from time to time? With every of my trades, I'll make or lose some % of equity. Sometimes I make 0.56% with a trade. Today I've made 4.22% with a single trade loaded with lots since the stop was 8 pips only. Sometimes I make a 0.47% loss. Then another 0.22% loss. Any single loss cannot exceed 1.00%. I don't over-tight my stops to make trades with 'euphoria' lots - I'd have to be crazy if I'd do that. Most of my losses I exit before the stop is being hit. I have considerably more winning trades than losing ones. And my risk/reward ratio on closed trades is 1/1.7 over past three months (about 300 trades). I don't consider myself a successful trader simply since I'm not one yet; starting live in 1-2 weeks. But what's wrong if the math works? I'd really like to sort it out! I really don't understand the point; everybody has different style of course, maybe some really good traders use fixed stops/fixed lots/fixed target ratios and it works for them. But every trader has to know what works for him at best. For me, responsibility to market conditions and changes are the key and I do my best to adjust my trades to it. I trade EURUSD only, entries and exits off M1 chart. trading |
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Członek od May 30, 2010 23 postów
Tom (ttfx)
Nov 18 2010 at 01:06
(zmieniany Nov 18 2010 at 01:22 )
and last but not least:
I think the OP talks about inconsistencies resulting from poor psychology and MM - about the cases the trader becomes overconfident and rises his trade size in a rush to make more.. but such a problem is not lots; it's an overshoot of RISK EXPOSURE with that particular trade.. And that's not the same; LOT SIZE IS NOT RISK. LOT SIZE IS AN ATTRIBUTE OF RISK. There have to be some serious money management flaws. Maybe the trader has a working system, but I personally can't imagine any single trade would wipe my previous 5 profits. Yes, there are losing streaks. There are larger drawdowns coming from losing streaks. But I honestly think if some serious drawdown is a result of a single huge loss (or few huge losses) - then there's something wrong. Not with LOTS, but with the TRADER. And you won't make him a better trader even if you would force him to trade constant lot sizes only.. Such a trader will have some other trading psychology issues yet to be solved.. Just my 2 pips ;-) trading |
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Członek od Nov 09, 2010 54 postów
WorldTrader
Nov 19 2010 at 08:26
Nice short
Slow But Steady |
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Członek od Nov 24, 2010 6 postów
Youngmogul86
Nov 24 2010 at 08:44
IMO lot sizing has all and ONLY to do with volatility/time... In MY strategy, I gauge the pair that im focused on in 1 of 4 groups... Flat (non trading)... and 3 seperate pip based groups.. one of which trades for 25 pips, one trades for 50 pips, and the other trades for 100 pips... regardless of the lot size I trade, I limit my P/L to 2%. Now, whether that 2% will be made/lost in 25, 50 or 100 pips is 50% based on my accuracy in judging the momentum and direction of the moving market and 50% my accuracy in judging the volitility in that same market.
If you are losing 4x as much dinero in a position thats 4x your standard, you really should stop and read a bit on money management and size positioning. The two fit together like a masterlock and key. This is where limiting losses comes into play. I can take any person... ANY person.. And in one hour or less, teach them enough about capital management, that if they can be successful in just 52% in all their market-directional decisions... They will be wealthy. Heck, If you make the carry trade on every pair, limit your loss to 1% per pair, and place your TP @ 1%.. statistically, the Law of Averages says you would have been 50% correct... That is.. 50% of your trades would have 'won'<(man I hate using that word). Plus, you would reap all the interest from EVERY trade, regardless of W or L. Ohh yeah, I'm new here... And my introduction. My name's Dustin, I currently live in Kentucky... My SN is Youngmogul86 everywhere I go. I trade to pay my car payment/mortgage. I have a fulltime job as a forklift operator.. And spend every other second on Oanda.. (My broker of choice) Im currently testing my accuracy with a 'high risk' account which I risk 3% per trade. Im addicted to trading-related propaganda (books) and have too much knowledge about finance to be 24. I've made and lost 200k before I was 23... Then decided to get serious about my trading endeavours. I now make 12-16% a month which covers my main bills.. and I don't 'shoot for' any number... I 'shoot for' accurate or well thoughtout trades that I can stand behind without emotion. I know this wasn't the place for an introduction... will repost it in the introduction thread (i sure hope there is one ;p) |
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Członek od May 30, 2010 23 postów
Tom (ttfx)
Nov 24 2010 at 08:54
Welcome here, Dustin :-).. great post.
trading |
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Członek od Jan 09, 2011 23 postów
T1FX - TripleOneFX - www.t1fx.com (t1fx)
May 05 2011 at 03:38
I think size could be vary according to the trigger.
I personally use 1% - 5% per order depending on the trigger, 1% - 3% for scalping, 1%-2% for swing , 3%- 5% for scalping trend breakout. Unless the trade are using exactly the same condition for trade trigger and same risk:reward, else I think it would be much better to varies our lot size depending on the risk:reward condition for optimum profitablity. Usually I am not concerned about how my statement records looks like, I just focus on the risk exposed and the profitability. The marketing is a dynamic market, it may not be feasible to use the same strategy to enter the market every time too. The risk:reward some times is not depends on the strategy, it is depending on the strategy + market condition. Different market condition poise a different risk:reward for each strategy. Usually I differentiate the market condition by elliotewave @ H4 & DAILY TF. +5% a month, keep all the banks away. |
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