Questions And Answers For June 2010 (Part I)
July 2, 2010 by Kelvin
Filed under Currency Trading FAQ
All these questions are made possible with the help of our newsletter subscribers and I hope that more of you will participate in this section so that all of us can grow our trading knowledge together.
- Question #1: How much would I have to lose before a margin call is implemented?
This question depends on 2 factors, your account balance and the amount you have traded. In your trading platform, there will always be a section that shows you the balance, Used Margin and Usable Margin.
The Used Margin refers to the amount of money you have used to place your trade. The Usable Margin is calculated by subtracting your Used Margin by your Balance. Once your Usable Margin falls to zero, your broker will exit all your trading position irregardless of whether they are in a winning or losing position.
I hope that I have answered your question and do get back to me if you still have any doubt.
- Question #2: Is it possible to give orders to the platform to cut off all trades when the account falls 500 dollars?
Yes, it is possible to give orders to the platform to closed your trades when you are losing $500. This can be done by placing a stop loss order on your platform. All you need is to create a stop loss order on the currency pair you are trading and once it falls to that amount, the system will help you to exit your position.
It is very dangerous to trade without a stop loss as you can be totally wiped out when they is any sudden big movement due to the news.
In addition, you can also place a limit order to tell the system to exit your position when you hit a certain profit.
- Question #3: Hi, I am exploring the viability of Forex trading for living. Was wondering how often do you trade (hours per day, days per week, weeks per year). What is your average weekly pips and drawdowns and effective ROI. Thanks for your help. Also, how many strategies do you employ?
Personally, I will look at my chart everyday but I will only enter my trade whenever I see a setup that is according to my strategies.
On average, I place about 2 to 3 trade per week and the drawdown for each trade is about 3% of my account. As for the ROI, I roughly get about 20% to 25% per month.
As for the strategies to use, it depends on the type of market I am in. If I am in a strong trending market, I will go for trend trading and if I am in a ranging market, I will either do range trading or wait for breakout trading.
It is very important for you to understand the market conditions before you decide on the trading strategy to use. Some strategy works very well in a trending market but sucks when you use it in a ranging market.
- Question #4: I have wanted to find the best and accuracy indicator that can give me 95% accuracy that can make me constant income everyday.
To be frank, I am unable to give you any indicator that can promise you $50 to $100 per day. This is because there is no holy grail in the field of forex trading. Every dollar you make has to come from your analysis and strategy. Everything in trading lies on probability and there is no sure win strategy. If I were to tell you there is one, you should stay away from me.
- Question #5: Hi Kelvin, I have read all yr emails regarding forex trading and I gain a lot of experience through your emails, but kelvin you never mention the time frame whenever you send the mail when giving tips, so pls mention what time frame to view or to trade….TKS
All the information I have shared with you can be used in all time frame and that is why I did not specify when time frame I am using. As for the time frames to use, it depends on your trading style. As for me, I usually use the 5 min, 15 min and hourly to place my trade.
I am still answering the questions that is sent to me and I will post them as soon as possible. If you have anything to share regarding the questions above, please comment below as I wish to build a community where traders share their ideas.
Other Related Posts:
Kelvin, I have a question regarding trade exits. I have read elsewhere that I should exit a trade before my stop is hit if the indicators that I used to enter the trade have reversed. Do you agree with this? I do not know what the probability of success is when following this approach. However, I have seen recently in my own trading though that the stop would not have been hit and then I enter again at a less favorable price, when the indicators turn again.
Hi Brian
I will say that there is no right or wrong answer for this question. If you take a look at the history of that indicator, you may find some trades where you might get stop out when the indicator reversed. Trading is a game of probability and you need to choose your exit strategy that gives you the best probability of winning.
There are some trades where I exit my position when I see the indicator reversed while some trades I will exit my position only when the price hits the target profit. The best will be to put your trading strategy to demo testing and see what type of exit strategy works best for your strategy. I hope that I have somehow answer your question.
If anyone of you who are reading this subscribers only section has some input, do feel free to give your comment.
I noticed that because of volatility and fluctuations on the market the prices tend to jump around a little, even if the trend is definite and all indicators are OK. So I just make sure my stop loss is far enough so that fluctuations will not trigger it, maybe about 20-30 pips. Then I just grit my teeth and stick to my TP and SL, because if I click the BUY/SELL button, it means for me there is no turning back. Sticking to my model is crucial to me and only in one of a dozen cases I might go against it and exit manually.
Hi Aryangor
Thks for sharing your thought. I totally agree with what you say about sticking to your plan and this is one of the key to successful trading.