FutureMillionaire? said:
Yes, I can see there have been moves of that magnitude, but how can you possibly know, in advance, that a move is going to be that sustained? You could be going for 150 pips, and find that it turns against you at 149 ... then goes right back where you started. (or beyond...to your stop). I can't see how you could have any degree of success, as it seems to happen far too infrequently.
Let me explain more thoroughly. I
never know in advance if a move is going to be large or exhaust in seconds. Never! Moreover you can never be sure about anything in the market. That's just why you (and everyone) do have losses. But everything I'm speaking about is probability. What I do know is that statistically I would have an opportunity here to gain some 100 or 200 pips risking only 50 or 70. And also statistically I do know that the probability of a success is, say, 50%. From basic math you can easily judge that it's enough to put some money at stake right at this situation.
As to the price not reaching the target exactly - if I'm before the monitor, I can close the position manually if I see that there're some 3 or 5 pips left and the market has become slow moving, or if I'm away from my computer I'd place a stop order a bit further and a limit order a bit tighter. If you trading some 10 to 20 pips this method won't work because you'll always have stops equal or greater than targets, but if we're talking now targets 2 to 4 times greater than stops, it's just OK to adjust levels for some 10 pips.
When you speak about the frequency of trading opportunities, you should bear in mind the time horizon at which you're going to trade. For me, it's years. I prefer to stay rather conservative with some 100 to 200 per cent a year but stable, making profits regularly and risking not more than a precisely calculated share of my deposit. For someone else maybe it's too long to wait. When I started trading I saw the volatility and thought - hell, what for to wait for days to gain those damn 100 pips when I can quickly whipsaw them within several hours? Just buy and sell, buy and sell... I think I don't need to say that I wasted my first deposit (luckily a demo one) very quickly. Only after some time I realized that this point of view is self-indulgence, I took the desirable for real. There are of course methods of trading volatility, especially on stocks and futures, they are called scalping, but in the long run the profitability of such techniques is nearly the same as of position trading I'm trying to explain and they are certainly not suitable for a beginner. In other words, it's an illusion that you can earn more
on regular basis trading short movements on small time-frames.
As always, good luck.
