Profitability Scenario. What is flawed in this idea?
Nov 24, 2020 at 23:15
655 Angesehen
5 Replies
Nov 24, 2020 at 23:15
I have been thinking, and I need expert advice.
Let's imagine this scenario. The example will be long, but it is also realistic. Bear with me.
I have been learning for a long time (how long is unimportant), and I have 'perfected' just one strategy. I put that in quote because I know you can never be TOTALLY perfect, but the point is I see more profits than losses (like in a ratio of 4 profits to 2 losses. That's a steady 66% profitability).
I have a $1000 account, risking a constant 1% per trade. I am a day trader, taking 1-2 trades every day, about 10 trades weekly. My average risk-reward ratio is 1:1.5.
That means, in a week, calculating all those figures, I make about 6.6% of my account and about 26% monthly (And I'm not taking in consideration the compounding effect of 1% constant risk amount).
Now my question.
1. What is flawed in this idea? Because I see everywhere online, that ROI is impossible (26% monthly). Why is it not possible to have a scenario like this in real life?
Please be nice. I'm trying to learn.
Pardon the long example I gave, I had to make it clear. And if you want to know how I came to that 26% result, you can ask me to illustrate.
Let's imagine this scenario. The example will be long, but it is also realistic. Bear with me.
I have been learning for a long time (how long is unimportant), and I have 'perfected' just one strategy. I put that in quote because I know you can never be TOTALLY perfect, but the point is I see more profits than losses (like in a ratio of 4 profits to 2 losses. That's a steady 66% profitability).
I have a $1000 account, risking a constant 1% per trade. I am a day trader, taking 1-2 trades every day, about 10 trades weekly. My average risk-reward ratio is 1:1.5.
That means, in a week, calculating all those figures, I make about 6.6% of my account and about 26% monthly (And I'm not taking in consideration the compounding effect of 1% constant risk amount).
Now my question.
1. What is flawed in this idea? Because I see everywhere online, that ROI is impossible (26% monthly). Why is it not possible to have a scenario like this in real life?
Please be nice. I'm trying to learn.
Pardon the long example I gave, I had to make it clear. And if you want to know how I came to that 26% result, you can ask me to illustrate.
Nov 25, 2020 at 02:10
Not impossible but hard to see it in a sustainable way. Have you tried doing this on a demo account not only back testing? If this scenario has worked well then go for it! We all traders have different approach to the market and because of that we all have different results. What fits for you might not fit for me and vice versa. At the end if you feel comfortable with your strategy and are getting good results then keep doing it and enjoy trading and obviously the money it will come to you!
Mitglied seit Nov 17, 2020
19 Posts
Dec 09, 2020 at 10:29
Using some perfect strategy is also a good start. As Long as the strategy is profitable and does not bring any loss.
Mitglied seit Jul 23, 2020
869 Posts
Oct 03, 2021 at 14:33
Try to use this strategy in the demo for one week you will find that your 66% probability decrease.
Mitglied seit Jul 23, 2020
759 Posts
Oct 03, 2021 at 14:49
Your risk-reward ratio is low. Try to increase it a bit.
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