The aim of this post is to warn would be traders of the harsh & long road to success. here goes..
Suppose the odds of your strategy r slightly worse than a 50-50 coin flip at 40(win)-60(loss). but u improve your edge by taking $2 profits for each $1 you risk
your e(v)= ($1x 40%x +2R) - ($1x 60%x -1R)= +$0.2
(aka u can expect to make $0.2 on average for each $1 u risk)
suppose your target income & bankroll r as follows
tgt mthly income = $5k
acc bal = $10k
risk/trade = 2%x 10k = $200
crunching some numbers. this means you have to take 125 trades to churn a $5k profit with your strategy's +0.2R e(v)
avg trade e(v)= $200x (0.2)= $40
est no. of trades to hit tgt mthly income= $5k / $40 = 125 trades
too tough? break it down into realistic 1st steps:
milestone 1) make 4 +2R trades per mth= $160
milestone 2) double acc bal deposit to 20k
& make 4 +2R trades per mth= $320
milestone 3) compound.
it is tempting to use leverage, but if you dont know what you r doing. a word of warning- it is not for the average joe. mental preservation is more important than capital preservation.
This tough road is also why supposedly successful traders r selling systems. It is so much easier to collect $ pple r willing to throw away for hope. It is also why reasonably successful traders mentor for a fee- to diversify their income & reduce the burden of trading for a living on their mental state of mind.
Trading for a living is tough. give up now & save your precious time & money. do something else you have a passion for. OR slog at it for an average of 7 years that it takes to make the average successful trader.
edit- missing multiplication signs
Suppose the odds of your strategy r slightly worse than a 50-50 coin flip at 40(win)-60(loss). but u improve your edge by taking $2 profits for each $1 you risk
your e(v)= ($1x 40%x +2R) - ($1x 60%x -1R)= +$0.2
(aka u can expect to make $0.2 on average for each $1 u risk)
suppose your target income & bankroll r as follows
tgt mthly income = $5k
acc bal = $10k
risk/trade = 2%x 10k = $200
crunching some numbers. this means you have to take 125 trades to churn a $5k profit with your strategy's +0.2R e(v)
avg trade e(v)= $200x (0.2)= $40
est no. of trades to hit tgt mthly income= $5k / $40 = 125 trades
too tough? break it down into realistic 1st steps:
milestone 1) make 4 +2R trades per mth= $160
milestone 2) double acc bal deposit to 20k
& make 4 +2R trades per mth= $320
milestone 3) compound.
it is tempting to use leverage, but if you dont know what you r doing. a word of warning- it is not for the average joe. mental preservation is more important than capital preservation.
This tough road is also why supposedly successful traders r selling systems. It is so much easier to collect $ pple r willing to throw away for hope. It is also why reasonably successful traders mentor for a fee- to diversify their income & reduce the burden of trading for a living on their mental state of mind.
Trading for a living is tough. give up now & save your precious time & money. do something else you have a passion for. OR slog at it for an average of 7 years that it takes to make the average successful trader.
edit- missing multiplication signs