Practice Exercise #3 (Money Management Test on DEMO)


If you started this Practice Exercise #1 you probably notice that this isn't working on ranging market (we had some examples of 5% losses on the last couple of days, due to Cyprus situation).

Testing this, with a SL=30p, we notice that in a range market of let's say 50p, our profit target of 90p is almost impossible to reach even if our position run in profit, for a while. And the SL will be hit, eventually, unless the PA will break any side, to have that 50% to catch the new trend (based on flipping the coin math probabilities).

The first idea that we can think of, to improve the initial exercise, is to use the Position Management (to "lock the profits"). 

NEW:
The second idea that we can think of, is to use a double number of pips as SL = 60p. And of course to double the TP = 180p, as well.
The reasons behind this are described here.
In order to keep the same MM, we can't use 20 opened positions like in the Exercise #1 (since we've doubled the SL and we need to keep the same % of loss per trade ).
Then, we will have the next steps for this new exercise:

1. Open a DEMO account = $10,000 (or continue to use the old one)
2. Take a coin (yes a coin).
3. Establish which coin sides will give you the signals. E.q head = long, tail=short
4. Open 10 pairs on your platform (NEW)
(only pairs for not ruining the margins requirement. e.q no gold/silver/oil/indices, etc)
5. Flip the coin for first pair.
6. Enter (market order) using 0.01 lots (0.1 for $100,000 account), SL = 60p, TP =180p (NEW)
7. Go to the next pair and do the same entry technique, then the next...until 10 pairs (not 20 like in the previous exercise).
8. After having 10 opened positions, stop trading (NEW)
9. If any position run in profit, move the SL = Entry ± Spread ± few pips or use Trailing Stop
10. Let all the positions to run, until the new SL/TP hit.
11. If any position is closed (TP/SL hit), on the next day, open a new trade by flipping the coin, again (and move, the SL, for the profitable positions).


* Important note: Practice TEST on DEMO purpose, only!


As I expected, the last week exercise didn't offered us enough published results, due to the people lack of time (jobs, etc). As soon as I will have it, I will update it on the Exercise #2 post.

The result for this Exercise #3 will be published here, as soon as I will have it, as well. Probably this exercise will take us 2 weeks, since we've doubled the SL and TP levels (no of pips). If we will still have a range market, it will be hard to have sooner, some closed trades to count for it.


Best Regards,
^^_Lord_Ice_^^ 

13 comments:

  1. I like this Article beause it is knowledgable and summarised. I enjoy reading this article. thank you for sharing such a wonderful post,
    I will surely work as per mentioned in this article for training

    ReplyDelete
  2. great post, i really like it. by the way you might wanna try this site. http://www.askmariosingh.com

    ReplyDelete
  3. hi , Same thing about that article is real very knowledgable ........................................

    This trading line is real so good and right way...............................

    Animation Notes

    ReplyDelete
  4. Very nice and rich information article. I learned a lot from it, Thanks for sharing it with us.. . . . Prime trade FX

    ReplyDelete
  5. The government has cleared the proposal of private sector lender YES Bank to raise Rs 2,650crore through qualified institutional placement (QIP) from overseas. The approval, given by the Cabinet Committee on Economic Affairs (CCEA), would result in foreign investment amounting to about Rs 2,650crore being received in the country.
    stock tips
    commodity tips

    ReplyDelete
  6. Hi lord_ice thanks for sharing this very informative post.
    As i am looking into,i did a lot of research on saving money that is actually needed and what is really wanted.I had read and it gives me insight how much work,discipline and focus i had to change the way I thought about finances and wealth building. Cheers

    ReplyDelete
  7. I just had a class that talked about some forex trading training in Utah. I think its really interesting. Thanks for sharing i learned a lot!

    ReplyDelete
  8. اسعار الذهب اليوم في السعودية - Gold prices today in Saudi Arabia


    اسعار الذهب اليوم

    منتدى أخبار العالم ، أخبار الوطن العربي مصر ، ليبيا ، السعودية ، المغرب الجزائر - News Egypt, Libya, Saudi Arabia, Morocco, Algeria

    منتدى أخبار - World News

    ReplyDelete
  9. Hi

    The post reveals me in and out about the Forex services.Keep on sharing Good Stuff.

    Forex

    ReplyDelete
  10. Great article.. and I truly believe that demo account is the best for practicing and getting idea about. i definitely wanna wok with as mention in the article recently i've used fx-insight for deemo but I couldn't hope this will help me.

    ReplyDelete
  11. The management of foreign exchange market becomes necessary in order to mitigate and avoid the risks. http://aff.bestforexpartners.com/click.php?ctag=a3092-b1154-p

    ReplyDelete
  12. QUANTUM BINARY SIGNALS

    Get professional trading signals sent to your mobile phone daily.

    Start following our signals today & gain up to 270% a day.

    ReplyDelete