DislikedIn forex trading like everything else, you have to pay your dues (sometimes quite literally if you are not careful.) I crashed my first forex account and did serious damage to the second before I developed the style that worked for me.
While I can't tell you what will work for you,....I can share what I did on my road to surviving the forex market.
My first goal was to be consistent in my trading (seven successful trades out of ten was my goal.) Next I had to decide how much risk I was willing to live with, as well as, a nonemotional, mechanical, way to increase the number of lots in my trades. I did that by setting up an excel spread sheet with the following headings; # Lots, Stop pips, Margin, Total Margin Required, Trade Profit, Draw, To Account, Balance. Once the formulas are tied in, you can see the potential risk for your trades. There are only three places you can make changes in the formulas, Beginning Balance, # Lots, and Draw. All columns with the exception of the # Lots column (which is a straight number) are in dollars . I'll dig up an example and post it soon.
When a change is made in the the # Lots column, all columns with the exception of the Draw column are changed.
The Total Margin Required column is the combined total of the Stop Pips and Margin columns.
The Stop Pips column is the number of pips your stop is set to in dollars. It is the most important in my mind. It tells you in dollars how much you will be risking for the number of lots you want to trade. I prefer to look at dollars vs percentages when evaluating my risk (i.e. $1,000.00 is more sobering to me than say 2%.) I also use my balance in determining the number of lots to trade. The spread sheet holds forty-four trades with increasing lots as you move down the page. If I experience a loss, I look to the balance on the spread sheet that is the closest amount below my actual account and place my next trade using the # of lots indicated.
The draw column is the amount you pull from the account to pay yourself.
I have one sheet for the EUR/USD and GBP/USD (since those currencies are in even dollars) and one for GBP/JPY, USD/CHF, USD/JPY, which are approximately $0.85 per pip.
I decided to setup a corporation for my trading account. Some people had said to me that a corporation is a lot of extra paper work for just one person. However, I preferred the benefits of a corporation. The corporation pays me biweekly and takes my taxes out of my check just like any other paycheck. The company has different tax advantages than I do as an individual. The most important reason in my mind, for setting up a corporation is....it's cleaner. Everything is documented and above board.
If my ramblings have not answered your question,..I hope they have at least pointed you to the road best suited to you.
Trade well...live well.Ignored
I’m thinking this logbook might serve me well with history and charts of why I’m doing what I do. Not sure if others do this but I can see the benefit in staying disciplined in running a log.
Clansman, you sure seem to have your ducks in a row. That is great. You treat your trading as a business (Corp). I’m all ears to learn from people who have done what I wish too… Sure most will tell me my chances are small of making it and others will judge one for how they represent themselves in cyber space, but the fact is the opportunity presents itself for those who have the desire and discipline to go after it. Being new to this I know the road is unsure and uneven, but anything worth having is worth working for..
Thank you Sir for your great idea!!
Check Mate GAME OVER