What’s Your Hourly Rate as a Forex Trader?

What’s important to you? Just money? Your time? How about freedom? Many successful Forex traders that I personally know spend many hours every day looking at charts, trying to identify a trade setup. This is fine if you really love staring at a computer screen all day. It makes me wonder, however, why these same people left the corporate world to trade. Some of them certainly made more money with a 9-5 job than they do as currency traders. So basically, they have traded one mediocre job (with predictable hours, salary, and benefits) for another mediorce job with many more predictable hours, no guaranteed pay and absolutely no benefits.

I think that I provide TRUE Set and Forget Forex Signals.  These trades don’t have a target, but they do normally offer traders seferal days to exit at a similar price to my exit.  Acutally, getting in and out late usually makes better money with my signals than I do.  I have a set of strict rules that I follow whether I want to or not, so my results are not sterilized.  They’re just damned good, and consistent across all market conditions year after year. 

My time is important to me. My freedom is important to me. Anyone who knows me knows that I LOVE my money and have a strong money “edge” to my personality. But I’m not willing to stare at a chart all day to get it, and I don’t think that you should either.

My clients spent approximately two hours trading my Helix signals since May 6 2010. During that time, my clients achieved a REAL 38% equity increase. If I factor in the open trades, that number goes up to a 48.25% equity increase. This is all verifiable by reviewing my live results at MyFXBook.  Let’s take a hypothetical trader with a $10,000.00 account trading my signals at my recommended 1:1 leverage. 

$10,000.00 * 48 = $4,800.00

$4,800.00 / 2 hours = $2,400.00 per hour.

What was your hourly rate with your last forex signal provider?  How much does your current provider pay you?  Is it less than $2,400.00 per hour?  I bet it is!  Think about it.  Even with a $1,000.00 micro account, my signals paid my subscribers $240.00 per hour.  They did this without stress, without worrying about closing trades over hte weekend, and without sacrificing vacations, children’s events, and family get-togethers. 

How’s that for a job?

Wins Losses and Profits! I’ll Take Em All!

I attended a webinar a year or so ago that was put on by another well known professional currency trader.  During this webinar, he went on and on about how much he loved his losing trades.  Like many of us pro traders, he’s a relatively weird guy.  I guess the isolation of trading makes us a little “off” at times.  He made comments about “making love to his losers”, and “cuddling with his losers.”  Well, I don’t know about all of that, but I can relate to the fact that a string of losses indicating a huge winner.  This is especially probable in trend following systems.  When I review my results year after year, I notice something interesting.  I see strings of relatively small losses in the 80-200 pip range, then a few small winners, also in the 80-200 pip range that make up for those losses.  Then I see a monster 1,600 pip winner.  Those monsters are the trades that I am looking for.  They are the reason that I wake up in the morning.  They are the only reason that I trade my trend following portfolio. 

If I seriously analyzed my results, I’d probably find that the split is about 40:40:20.  That is to say that about 40% of my trades lose, 40% of my trades are small winers (which make up for the losers) and 20% of my trades support my lifestyle.  In a trend following system, you must expect small losers…plenty of them!  Strings of losers come during periods of congestion.  That is to say that accumulation and distribution of an asset is pretty equal.  This just means that supply (roughly) equals demand, and the asset is fairly valued.  This is just part of a normal market cycle.  Then, something changes.  Some fundmamental weirdness occurs that causes the supply and demand to shift.   When this happens, we often see a monster trade!  Real beasts of 1,000+ pips are experienced by trend followers in these breakouts.  This is the trade I wanted.  All of the rest of those small trades are just noise to me. 

Many of you will find it odd that I consider anything under a 500 pip profit a losing trade.  It’s just another waste of my time and margin to sit on a flat market.  But I know that trend following is like fishing.  Sometimes a fish takes my bait (losing trades), soetimes I catch little fish that I can use as bait (small winners), and once in a great will, I catch a 50 lb Musky (Monster trades).  All the while, I wanted the Musky, but had to deal with the bait theft and the small fish repeatedly until that I finally hooked the big one. 

Traders are not all that different from fishermen, really.  Beginning fishermen are easily frustrated by the tiny bait fish, and the loss of time.  They stop fishing, maybe one cast from landing the big one!  The experienced angler knows that his best bet is to always have his hook in the water.  During periods when small ish are being caught, and bait is being taken, anglers know that a larger fish is sure to be near by, and HUNGRY…looking for an easy meal.

When a market gets ready to break from a consolidation, big money traders start accumulating at the bottom (or top) of that consolidation range.  You can easily identify this activity by looking at the lower timeframes.  When a 5 minute chart shows single bars going to hte top of a range, then drifting slowly to the bottom, what do you think they are doing?  They are looking for an easy meal.  Don’t be that meal.  Wait for the breakout and trade a break on strong volume.  Then stay in that trade to the end! 

Winners…Losers…whatever.  I want that monster trade, and my hook will be in the water until I get it!

EURUSD (3/19/2010 – 6/15/2010) Making the Case for Large Stops

Look over your EURUSD  trade journal for this year.  Between 19 March, 2010 and 15 June 2010, how many losses did you have?  How many of those losses were on short trades?  I lost a few, to be certain.  Every one of them that cost me money  had a small stop loss.  How much did your tight stops cost you last year?

I opened a short position on EURUSD on 3/19/2010 and held that position until 6/15/2010.  It never even came close to the stop loss.  I pulled 1.272 pips from that trade.  You can see this trade, and the rest of my verified live results at MyFXBook.com.  The stop loss on the trade was pretty wide by most folks standards, but pretty small by mine.  This trade is not exactly “typical” of my trend following trades, but it is about an 8 point buck in hunting standards.  I’ve pulled 1,700+ pip trades, and even a 4,000+ pip trade on the GBPUSD with my trend following systems.  The 100% honest, and absolutely verifiable (by paying subscribers) results for the entire portfolio can be seen in my results page.

My point is that plush stop loss orders reduce the risk of your trade stopping out.  I use modest leverage (usually 1:1 – 3:1)  so that if I do stop out, I haven’t lost much.  I seldom ever see a stop out.  My trend following systems generate buy and sell signals to get me out of trades way before that happens.  The stop loss does play an important role when market weirdness occurs though.  I’m not talking about news releases.  Those never come close t one of my stop losses.  I’m talking about those massive world-events like unexpected wars or the second coming.  You know, those once in a lifetime events.

Small stop loss trading has its place.  I do my fair share of trading with razor thin stops.  But it’s much more busy than I care to be on a daily basis.