Inspired by my strategy update (on not targeting 100% win rate), I decided to test that strategy on my demo account. With a $25k starting capital, I made random buys and sells on forex, with a 30 pip limit and a 10 pip stop. Risk/Reward 1:3. The theoretical ideal. Pfft. Crashed and burned. Lost $2k in like a blink of an eye. Of course it could be due to my stops being too tight, but still.
I then restarted with $25k, but this time I used a R/R of 1:5. Sure, it's still a bad R/R, but this time I used a 10 pip limit and a 50 pip stop, with generic price analysis such as not trading sideways, watching for double bars, resistance and support lines. The idea is that the odds of getting a win are higher, yet it doesn't have to be extremely high before I can hit a loss. My earliest strategies of say 2 pip limits meant that I had to win almost a hundred times before each loss. Now I only need to win 6 times before each loss.
Presto. As of time of writing, my demo account is up $4.5k. If I closed all losing positions now, it would stand at $3k. That's 12% return on really not much work in a day. And it further proves my theory - there is no such thing as a bad trade, only bad systems. Just a tweak (from a 1:3 to a 5:1 R/R) and I turned it all around.
Quite interesting indeed. Let's see where this goes!
Yours,
X
Update: Went into some trades at 0600hrs.
Lost two and still down by 3k. The spreads were too wide to handle methinks. So timing continues to be important - no trading early in the AM. GMT that is.
Update 2: Lost 15k. Somehow not working. I think I need to stick to the 2359 rule as well.
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