5/17/2010

This is crucial, read it!

I didn't know how to catch your guys' attention, so I have used such a dramatic title...:) There has been a discusion under one of my posts on whether it is more important to make pips or have positive percentage of wins. I made an excell sheet where you can see the results for trading style like 1 minute daily is. You really do not need to be positive in pips, if you have your win ratio positive... If you want to make money on forex and are serious with trading, you have to understand money management properly. It makes the difference between trading and making money...:)

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6 comments:

  1. CaseyMay 17, 2010 at 10:25 PM

    Just to add to Slurpee's Money Management explanation: The way to calculate how many units to use per trade based on your desired risk is as follows:

    (Account Total x Risk)/ Pips risked x 10,000

    For example: My account is $1,000. Say I want to risk 5% of my account on a given trade. Let's say my SL will be set 150 pips away from my entry. I will calculate as follows:
    (1,000 x .05)/ 150 * 10,000 = 3333.3

    I will use 3,333 units (best to use a broker that lets you trade in units for precise risk management) for my trade, thereby only risking 5% of my account.

    This way, as Slurpee pointed out, it's not the pips that matter because on this trade making 150 pips will be worth $50 whereas on another trade where you're using 10,000 units, 150 pips would be worth a lot more!

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  2. SlurpeeMay 18, 2010 at 3:01 PM

    Thank you Casey for additional info. It is absolutely true. You need need to count how many micro/mini/standard lots you can trade each trade according to you risk appetite and amount of money on your account. I started with 1-2 micro lots when my account was 170 USD, now I trade 15-30 micro lots (1,5 - 3 mini lots), but I always have to count it - how many micro lots can I trade when I want to risk 10% of my account, when the SL is for example 60 pips away... This is really important to understand...

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  3. AnonymousMay 21, 2010 at 2:17 AM

    Hi Slurpee

    How has this week been for you ?

    Cheers

    Brett

    ReplyDelete
  4. SlurpeeMay 21, 2010 at 8:55 AM

    Hi Brett,

    so far 6 wins : 4 losses. There were some trades from last week, that closed this week...

    Slurpee

    ReplyDelete
  5. AnonymousMay 22, 2010 at 9:49 AM

    Hi Slurpee,

    Did you trade GU on 21st? I lost both the buy and sell. It means 2 losses fo yesterday. Bad day.

    Is it the same for you?

    Andras

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  6. SlurpeeMay 22, 2010 at 10:35 AM

    Hi Andras,

    yes I did and yes there were 2 losses for the day on this pair... I will post results of this week today.

    Slurpee

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