Nov 24, 2020 at 23:21
8 Replies
Biedrs kopš   6 ieraksti
Nov 24, 2020 at 23:21 (labots Nov 24, 2020 at 23:21)
I have been thinking, and I need expert advice.
Let's imagine this scenario. The example will be long, but it is also realistic. Bear with me.

I have been learning for a long time (how long is unimportant), and I have 'perfected' just one strategy. I put that in quote because I know you can never be TOTALLY perfect, but the point is I see more profits than losses (like in a ratio of 4 profits to 2 losses. That's a steady 66% profitability).

I have a $1000 account, risking a constant 1% per trade. I am a day trader, taking 1-2 trades every day, about 10 trades weekly. My average risk-reward ratio is 1:1.5.
That means, in a week, calculating all those figures, I make about 6.6% of my account and about 26% monthly (And I'm not taking in consideration the compounding effect of 1% constant risk amount).

Now my question.
1. What is flawed in this idea? Because I see everywhere online, that ROI is impossible (26% monthly). Why is it not possible to have a scenario like this in real life?

Please be nice. I'm trying to learn.
Pardon the long example I gave, I had to make it clear. And if you want to know how I came to that 26% result, you can ask me to illustrate.
Biedrs kopš   325 ieraksti
Nov 24, 2020 at 23:54
The problem is the assumption that 'My average risk-reward ratio is 1:1.5.' always. In periods, this might well be 1.5:1, and you will be down 26%. The market can also be slow for a long period of time, making weeks, even an entire month without any trades. The classic mistake of forcing trades in a slow market to make your monthly expectation might well be a death sentence. It is next to impossible being so stable month on month.

My monthly median is 20% lower than my average, with a low quartile of below half the average. The average over the course of a year or so remains fairly stable,

But there is nothing truly preventing you from making an average around 26% a month.
Biedrs kopš   373 ieraksti
Nov 25, 2020 at 10:12
You can make a 26% per month over a period of more than 6 months, of course. But for longer periods, like 2 or even 10 years you'll recognize that it will be very very hard. It's all about risk, money management and a good mindset for your chosen trading style. There might be months with 100%, there might also be months with -20% or even -50% if you're too greedy. A consistent trader most probably has something between 0.5% and 9.5% per month, with some very little spikes to the up- or downside. Someone should never force it to be a consistent trader. Just trade and see what you can get. In non-volatile markets you might make zero income, in more volatile markets you might make your 26% in one month. It's really depending on the markets in which you're actually trading in. Always stay humble and never force something. There's no 'make money fast' scheme out there. As harsh as it might sound, but only gamblers believe in such 'high income scenarios'.
patience is the key
Biedrs kopš   6 ieraksti
Nov 25, 2020 at 21:56 (labots Nov 25, 2020 at 21:57)
Thanks, @stian. Notes taken.
I always try to keep my trades at a minimum of 1:1 ratio, risking x for x. Otherwise, I don't take the trade at all.

Thanks again for the advice.
Biedrs kopš   6 ieraksti
Nov 25, 2020 at 21:58
Thanks @marco_mmbiz, that's good advice.

I'll keep that in mind
Biedrs kopš   65 ieraksti
Nov 26, 2020 at 03:12 (labots Nov 26, 2020 at 03:31)
You can make that, but in your example do you subtract your losses from your winnings to get a net? In your example you say, 66% profitable, so for instance:

First I have to estimate how many trades you take per month: We'll use 2 per day for 4 weeks = 10 per week x 4 = 40 trades per month.

Out of 40 trades, you win 66% = 26 wins, leaving 14 losses

Your risk per trade = 1% for losses, and your wins are 1.5% (your 1 to 1:5 R/R) = $15.00 per win, $10.00 per loss.

Win gross amount = $15.00 x 26 = $390 won
Loss gross amount = $1,000 x 14 = $140 lost
Net = $390 - $140 = $250 profit

That is assuming you set very strict stops and tp.

If you are actually getting these results, then you have answered your own question. However, if you are not, then you are not currently achieving those returns and therefore, maybe it's not that you can't achieve 26%, it may be that you aren't able to achieve those results with your current trade plan. Then would be a case of seeking out a better trade system that gets you those returns. Find someone who is getting these results and replicate their success by trading their system.

It's not what OTHERS tell you is possible. It is what YOU MAKE possible. Right?

There are people out there getting that kind of result. Check out other trader results on this website, and ask them what they are doing. Often people who are successful are more than willing to share information, at least enough to get you on the right track. If nothing else they will give you at least hints of what they are doing, just to brag about it, even if they aren't willing to give you lessons on how to replicate their trading success.

But to the basic question you had, yes you can get those results.

Check out Raja Banks on YouTube at wicksdontlie. He's doing that live stream every trading day. Watch free. Enjoy.
Sometimes you get the bear; sometimes the bear gets you.
Biedrs kopš   1 ieraksti
Dec 09, 2020 at 23:21
10 trades weekly is too much as a daytrader you will only find one or 2 trading opportunities where if you get between 50-100 pips on a trend you are doing well always risk no more than 3% of your equity .risk to reward is 1;3 usually .in day trading you will start of at the dailly pivot level and for a good trade aim for it to hit r1 take some profit off and then let it run to r2 or even r3 if you are agresssive /vice versa for short trades s1 s2 s3 .you can apply dailly pivots to your mt4 chart easilly
plan your trade/ trade your plan
Biedrs kopš   35 ieraksti
Dec 16, 2020 at 16:34
Possible, but extremely difficult. Good luck!
Dec 22, 2020 at 10:26
I think anything is possible in the market. At your end, all you can do is stick to your strategy and keep managing your trades easily.
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