I think it is not about market predictiability. It's about market inpredictability and a lot of changes in short amount of time - technical and mental. New platforms, bigger leverage, 5 digit quotes , more knowledge about market, bigger and bigger volume. We should say something also about brokers cheats like VirtualDealer Plug-in what might also make us 'Stopped-out'.
It all comes down to your system at the end of the day and a few things need to be looked at. Check out your Z-score which tells you how likely losses will follow losses, you can of course also check your trading history. You also need to consider your risk:reward ratio.
If you have a system that could lose 20 times in a row 5% stake will blow you out. If it could lose 10 times in a row then you are down half your capital and recovering from that in effect means you have to double your capital, which is not easy.
Here's an example. I used to have a pattern that historically only won 12% of the time, but when it worked it gained 10 times more than when it lost. So overall it was a winning strategy, however 5% would blow your account. 1% was a reasonable risk. I also had a strategy that won 56% of the time with a 1:1 risk reward and so 5% was not an unreasonable stake.
You also need to bear in mind how many trades you are entering at once if you are trading multiple pairs and probably set yourself a total percentage risk for the whole basket of trades.
So the short answer, analyse your system's performance historically and then expect things could be worse than that.
11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
dgaf posted: @UncleSteve its all about risk & money management. ... and it is safer to use more money and lower risk/gain.
Very true, I didn't reply before but thanks for the input.
I have had a heck of a month so far following this system, and the only real change for February is going to be adding other instruments as long as they are trending. I might do them in demo only for a month.
the R:R ration is interesting, and I have done well so far by setting my SL at a visually indicated place (like the last D1 swing) and then dividing what I'm willing to risk by the distance in points (pipettes) to get an approximate lot size. I then set a TS equal to the SL distance and this month has been very good for that. I'll post some pics later when I get a chance.
adrian8891 posted: I think it is not about market predictiability. It's about market inpredictability and a lot of changes in short amount of time - technical and mental. New platforms, bigger leverage, 5 digit quotes , more knowledge about market, bigger and bigger volume. We should say something also about brokers cheats like VirtualDealer Plug-in what might also make us 'Stopped-out'.
Very true, and my response to this is to rerun my stats regularly and document the things I learn. I have a simple log I use, just a 4-column spreadsheet where I record things that happened that I didn't like, things I did to try to figure out a solution and what happened as a result, lessons learned, and date solved (or dropped).
Re the dealer plug-ins I'd love to say they're a myth, but I know my broker close enough to have discussed them with him. They do exist and the liquidity providers / software providers encourage brokers to use them. My broker is audited monthly to make they are doing what they say, and they say they have turned all such plug-ins off.
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