Determine Your Objectives - Step 3
I believe I went through this already when I read through Chapter 3 of Trade Your Way... and conducted an interview with myself. Nonetheless its not a bad idea to revisit and maybe expand on my objectives for trading Forex.
I think I have a handle on the more concrete objectives. I want to earn 10% over the course of a year on my capital. I intend to accomplish that with what will most likely be a trend-trading system, designed to be traded on daily data. With automation its hoped that I could go to a smaller time-scale and trade more often, but that would require signing up with a new broker, which is something I'm not yet ready to do. Also I believe its in my advantage at present to work on a system and understand the logic and performance characteristics behind it before I commit the effort into automation.
I intend to trade only the GBP/USD pair to start, while still tweaking and learning the ins and outs of trend-trading. Eventually I'd like to trade multiple pairs, but my concern with that ambition is correlation. It won't do me a great deal of good to trade in a highly correlated pair, like I'm guessing the EUR/USD is. However even a highly correlated pair could give me another opportunity to have a great trade, and in trend-trading, missing one trade could be the difference between a profit and a loss in the long term.
I don't want to risk more than 1% of my capital on a trade. I need to be able to stay in the game for the big trade that could make the year. Not having really looked at any numbers, I think I'll size each trade so that 1% of my capital is based on the ATR. I think one of the Donchian systems mentioned in Way of the Turtle used a 2*ATR stop, so I may do something like that.
On a more personal level, my objectives are to grow through handling the adversity and the success of trading Forex. I think it will be a great experience to understand more about myself. On an educational level I think I will learn more the Forex market, like economics and statistics among other things. I definitely aim to engage in continuously learning throughout this process.
Although I think I've already covered it in this post, I'll write about determining a time frame for trading.
I think I have a handle on the more concrete objectives. I want to earn 10% over the course of a year on my capital. I intend to accomplish that with what will most likely be a trend-trading system, designed to be traded on daily data. With automation its hoped that I could go to a smaller time-scale and trade more often, but that would require signing up with a new broker, which is something I'm not yet ready to do. Also I believe its in my advantage at present to work on a system and understand the logic and performance characteristics behind it before I commit the effort into automation.
I intend to trade only the GBP/USD pair to start, while still tweaking and learning the ins and outs of trend-trading. Eventually I'd like to trade multiple pairs, but my concern with that ambition is correlation. It won't do me a great deal of good to trade in a highly correlated pair, like I'm guessing the EUR/USD is. However even a highly correlated pair could give me another opportunity to have a great trade, and in trend-trading, missing one trade could be the difference between a profit and a loss in the long term.
I don't want to risk more than 1% of my capital on a trade. I need to be able to stay in the game for the big trade that could make the year. Not having really looked at any numbers, I think I'll size each trade so that 1% of my capital is based on the ATR. I think one of the Donchian systems mentioned in Way of the Turtle used a 2*ATR stop, so I may do something like that.
On a more personal level, my objectives are to grow through handling the adversity and the success of trading Forex. I think it will be a great experience to understand more about myself. On an educational level I think I will learn more the Forex market, like economics and statistics among other things. I definitely aim to engage in continuously learning throughout this process.
Although I think I've already covered it in this post, I'll write about determining a time frame for trading.
posted by Young Pip at 1:33 PM
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