How much do I need to make per trade?

Hi coz

There's no easy answer to this. It depends on a huge number of factors.

Firstly what sort of timeframes are you trading off, if your trading from a 1 minute chart you might be looking to capture 10 pip moves, if your trading the monthly charts, you might be looking to captutre 5000 pip moves. If youve been demo trading, you'll have a feel by now for what suits you.

The risk reward ratio and the strike rate of the system your trading will also have a massive influence. In simple terms you might develop a system with 90% winning trades, that take small 10 pip targets, with a 60 pip stop loss, so you get lots of small wins, offset by the occassional large loss, or you might feel more comfortable with a system with a 250 pip target with a 10% win rate, that uses a very tight 20 pip stop, so lots of small losses offset by the occassional large gain. Thats where psychology plays such a big part.

The types of strategies you use, and how you manage stops has a huge influence on these figures. Some sorts of systems are more suited to fixed targets, others work better with a trailing stop type approach. You might also want to consider multiple lots and scaling into or out of trades.

Techniques that assist one system can totally destroy another, and thats why its hard to advise. Speaking personally, I know that my system works best with a trailing stop strategy, but despite that, for the most part, I still trade ineficiently using set targets, because of a whole host of psychological issues that Ive yet to overcome, I dont like holding through retracements, I dont like leaving trades overnight etc. Only you can work this stuff out for yourself, and even when you know intelectually what works and what dosnt, implimenting it is a whole different matter

If your new to this Id suggest doing a search for system expactancy, and try to understand all of the factors that play a part, then take a long hard look at your demo results, and it should start to come into focus a bit more.

hope that helps

regards

zu

zupcon,

Thanks for the great information; that makes a lot of sense. Right now I am working on strategies for short time frames. I also do not think I will be holding positions overnight.

What I was most concerned about was commissions, but since I first posted I've learned that the company I'm currently demoing with doesn't charge them. Is this common practice in the Forex markets and if so how do these companies make any money?

So much still to learn...

coz:
zupcon,

Thanks for the great information; that makes a lot of sense. Right now I am working on strategies for short time frames. I also do not think I will be holding positions overnight.

What I was most concerned about was commissions, but since I first posted I've learned that the company I'm currently demoing with doesn't charge them. Is this common practice in the Forex markets and if so how do these companies make any money?

So much still to learn...

Hi Coz

Designing strategies for short timeframes does make an awful lot of sense, in as much as it gives you a large statistical sample size, so you soon get to find out if the strategy works. The upside is if you find a reasonable edge, you get a lot of opportunities to exploit it, but the downside is more paid in commissions or spreads.

Most retail forex brokers profit from the spread, which is the difference between the bid and the ask, although it is possible to find commission based brokers. This is a contentious issue, and different brokers have different policy's, but many may very well take the other side of their cients trades, if it suits them to do so. So when the punter loses, they gain

There's also 1001 other little tricks they pull, slippage getting into and out of trades, a pip here a pip there, rejecting trades if price is moving against them, then they take a little nibble out of swap rates, and of course the more unscrupulous generally have the power to widen spread a little if it suits em, or manipulate the feed by a pip or so to take out stops if it makes sense for them to do so.

I wouldnt worry to much about your broker making money, they'll be just fine

all the best

zu

All the answers

All the answers in one place it worek for me and i know nothing about fxtrading give it a tray

verry easy and understandable gives you a good idea

Here's a generalized answer- professional Forex traders are happy with 5% return per month. Yes, only 5%. That is not what you're going to see on these forums, you're going to see all kinds of lunatic claims, especially from the Martingalers, whom you should avoid.

My apologies to those I have just offended.

Stay away from SNC, they are not on firm financial ground. If you want to demo with them that's okay, but don't give them real money.

Coz,

You are asking the exact questions I asked myself, and others when I started to put my toe in fx. If only I had asked different questions, I would have been much further ahead than I am currently.

My simple answer - open a demo account with Oanda, preferably with the amt of capital u plan to put in originally. Demo trade, practice, trial and error, what ever you want to do. Look at the pips, not the $. If your aim is 2pips per trade, see how long u can get those 2 pips. If your aim is 50 pips per week, see how long you can sustain that. Look at pips, not $.

Once you are consistently profitable for 3 mths, open a live account with Oanda. Not knowinig your financial situation, I would say, the max you should put into the live account is $300. Reason - If you can not make pips with $300, there is ABSOLUTELY no reason you can be positive with $3000, or even 100k. Focus on success rate, and pips. Once you are getting your pips, increase leverage. Stick to what you are doing.

Why Oanda - it is probably the best retail broker to start off on. It gives you ultimate flexibility in terms of trading size. You can trade with $1 if you want!!!And you earn interest on your capital sitting there. And it has one of the best spreads outside of news for retail broker.

Wish you all the success.

Cheers,

K.