Forex trading is so difficult. I still didn't get a good way to drive it. The below is what i am looking for, 1. I need a good trading system and back-tested. Only this can prove the stategy 2. Max drawdown pips in the back-test. I will according this to determine the leverage to use. The target is my money cannot lose more than 20% any time. 3. Profit. I have to generate enough profit. Of course as much as possible, my current stock investment return is 20-30% return a year, so should greater than that.
I have several trading system. I am not using it because I am not satisfied with the result. So I'd like to discuss them here. The back-test software used is metatrader I have a moving average system, tested in daily chart from 1995-2005, the total pips 5768, so average 576pips/year, max drawdown 860 pips.
If 860 pips max draw down, 20% loss tolerance in the account, then need $4300 in mini account, get $570 profit average/year, so the annual return is 13%.
tonyzhou, Your expectations seem to be reasonable. I imagine you could trade with no more that 10 mini's per 4k to accomplish your goal Diversify with three forex instruments that represent six currencies. Only take trades in the direction of the longer term trend on the daily, weekly or monthly. And use some sort of oscillator to signal you to enter and exit with. Simple really, but Forex trading is hard when your actually doing it. Do not be disappointed with the responses here, I think what the fellas' are trying to communicate is that you will need to learn how you want to trade...and the only way is to discover that for yourself. There are no free lunch's. But if you want to search the threads here and look for some different techniques that may work for you, you just might fall into something. I would like to invite you to my thread http://www.elitetrader.com/vb/showthread.php?threadid=79533 for you to see if it might be something that catch's your interest. Remember that YOUR trades are YOUR trades and nobody else's. Michael B. P.S. I commend you for developing a plan and posting to this Forum. Good trading to you and welcome to ET.
How much labor does this system represent? (the time needed for you to watch and execute?) Also the axis does not represent a date, just a number of trades or days or ....? Of course the smoothest upward sloping graph is the nicest, without any cliffs!
This is just back-test result. I didn't think about how to implement it , how much effort will take. . But as this is based on daily chart, so I hope just watch the chart several times a day? I think this is a reasonable effort to get a 13% return
I would like to make more than 13%. Minimum 25%, if the loss tolerance is 20%. But that is just me. Please visit my link and perhaps regression lines used within your existing MA system, might improve results. Michael B.