When trading Forex, is it viable to trade currencies for 1-2 pips continuously? Does the broker take too much of a cut for that? I'm thinking of investing $1000 and trading at 0.5 lot... Any thoughts from you business gurus out there?

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Anonymous Mon Mar 6 15:58:36 2017 No.1838653 [Reply] [Original]

When trading Forex, is it viable to trade currencies for 1-2 pips continuously? Does the broker take too much of a cut for that?

I'm thinking of investing $1000 and trading at 0.5 lot... Any thoughts from you business gurus out there?

>>	Anonymous Mon Mar 6 17:43:04 2017 No.1838907 >>1838653 Bumping

Anonymous Mon Mar 6 18:37:23 2017 No.1839028

>>1838653
You have a commission, can't use a market maker broker for scalping, to pay for each trade on top of the bid ask spread. If you're trading EUR/USD which is usually trades around 0.4 pips during Asian session and around 0.3-0.1 pips during Europe/US sessions with commission you're looking between 1 to 0.6 pip cost for each trade which gets worse if you're trading other pairs as none are as liquid as EUR/USD. Now add your stop loss. At what point is the market not doing what you expected it to do which requires you to get out of your losing position? I trade with really tight stops and about the tightest I can get on EUR/USD is 5 pips. There are rare occasions were a tighter stop is justified but those opportunities are rare. That's a cost of 5.6 to 6 pips. If you're closing a position that goes your way by 2 pips you will gain 1.4 to 1 pip on each trade. A risk reward of 5.6:1.4 means one losing trade will require four wins to get back to even. At 6:1 you would need six winning trades to get back to even after one loss. In other words you need a winning rate of 80-86% just to stay even. I highly doubt you will be able to achieve that.

You should instead look to do the opposite and get the highest risk reward as it is inversely proportional to your winning rate. Say you bought EUR/USD when it tried to breach support with a 10 pip stop. Buyers ended up holding the level and shorts started to cover causing the price to rise. Instead of closing your position when it reached two pips you rode the trend until buyers started losing steam 100 pips from your buy entry. That's a risk reward of 11:100. I need a win rate of only 10% to stay even.

>>	Anonymous Mon Mar 6 18:43:38 2017 No.1839037 >>1839028 I should add that when some brokers have released win rates for their retail clients the number are usually between 45-55% and jumping as high as 67% for GBP/JPY pair for some reason. >80% is clearly an outlier. Stick to better risk reward.

>>	Anonymous Mon Mar 6 18:52:42 2017 No.1839054 File: 61 KB, 885x941, chlomo34.jpg [View same] [iqdb] [saucenao] [google] >>1838653 >When trading Forex, is it viable to trade currencies for 1-2 pips continuously ofcourse not, you silly >>1839028 comissions? in 2016? what the hell..

>>	Anonymous Mon Mar 6 19:01:24 2017 No.1839072 >>1839054 ECNs charge a commission per trade

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