Hey Guys, I have a newbie question has the market ever move more than 1000 pips in one direction, if yes what is the max it has move within the past couple years? I'd like to know if dividing my equity by 1000 is a safe bet in calculating my lot size I don't like to trade with stop losses I prefer to wait until the market comes back around before taking my profit. I usually divide by 1500 - 2000 but I'd like to start dividing my 1000.
Hi Demus,
I have attached three charts that show you how 1000 pips of movement looks on a daily, weekly and monthly charts. Look at those spikes on the monthly till it moves 1000 pips. Each of them is several hundred pips. You need very good psychological control to keep such trading strategy running correct and keeping disciplined targets.
There are many traders that use this kind of strategy, but you need really big account to do that or else your profit will be very very tiny.
What is the TP that you are aiming? If you are aiming to get 100 pips, then one losing trade will have an impact of 10 profit trades. That is not a healthy strategy.
If you are aiming at 1000 pips TP, consider the swap cost that this strategy has. You might make a profit in pips, but end up in a loss of money because of the swap!
You have to negotiate with your broker the swap cost and really, only in the case that your account is big enough.
Do not divide your equity by 1,000 if you have 1,000 pips SL. You have to divide your equity by 10,000, because 1 pip = $10
So, if your account is small, start considering an alternative strategy. Whatever you come up with demo test it for 3 months. If it is profitable, then go ahead with it.