my target is 5% per trade - is this realistic

Discussion in 'Forex' started by trc49492, Jul 7, 2005.

  1. trc49492


    am I being unrealistic aiming for a 5% return on every forex trade...?"

    and I dont mean haphazard trades... very carefully thought out ones that are chosen based on highest probability outcomes...

    I suppose it doesn't have to be forex.. could be anything..

    but is that too greedy to aim for such a percent return per trade?

    or WHAT percent are you guys happy with and aiming for on each trade?

  2. The market itself has a way of answering your question. :)

    If you can make 5%... or 105% on each trade, do it.

    Only one thing stands in your way.

    The forex.


  3. Sanjuro


    That is not unrealistic.

    The real question is how much are you risking per trade to make that 5% trade.

    Good Luck!

  4. trc49492


    Well actually I am devising a 'plan' of sorts..and at least according to this trading plan I still always want to aim for 5% whether I am trading 300.00 per trade or 300,000 .

    the idea here is to avoid greed and try to stay consistent.
  5. You probably are.
    Give it a try and don't forget to write us a postcard about what you found out.
  6. If your 'plan' is successful, I think you certainly can earn 5% per trade.

    Though, as another poster mentioned, you must take your risk of loss side into consideration and also have a 'plan' to deal with drawdowns.
  7. I hope you realize that your trade size does not have much to do with either your original inquiry or with Sanjuro's question.

    What he was really getting at was -- what is your typical risk (stop loss), expressed as % of the account net value, when your potential reward (target profit) is 5%?

    You can see that there are 2 key elements interacting here:

    1) average risk / reward ratio, or R-multiple;

    2) average % wins vs. % losses, or reliability.

    Recall that expectancy per trade is defined as

    Expectancy = % Wins x Avg. Win + % Losses x Avg. Loss

    Note that breakevens are ignored, not lumped together with wins (or losses). For a system, whether discretionary or not, to have a positive expectancy, that expression must be greater than 0. That should be one of your top, primary goals. Without it, no amount of perfect money management, psychology or anything else will make a difference.

    The mere fact that you are developing a plan is excellent. Work on the numbers above until you find a way to get to a sufficient positive expectancy point that works for you, and you'll have won half the battle.
  8. trc49492


    well my typical risk parameter is to set stop loss at about 2% or slightly more depending on the situation.. ( max 3%)

    so again, goal is 5% return for each trade...

    stop loss 2% or max 3%

    of course the objective is to avoid triggering stop loss as much as possible so that the 5% per trade continue to grow the account
  9. Position size relative to account should be consistent, so the proportional r/r is the same; the 5% target should be ignored, each trade's potential will differ from others. But in most cases you must be able to let a profitable trade run further if it wants to.
  10. fxknight

    fxknight are being realistic but like people have said - how muc are you risking? I try to have profit/risk ratio of at least 2:1 if not more so if you are gunning for 5% you might have some tight stops which might make it hard.

    Theres no right or wrong way though so good luck to you.
    #10     Jul 7, 2005