Still at it
Well, so far so good. I have been sticking to smaller profit targets (10 pips) unless there is a potential big movement that looks promising. The reasoning behind the smaller target, like I mentioned in the previous post, is partly due to the ease of getting it. I have been getting a better grasp on a certain trading vision. Nothing new, essentially that slow and steady wins the race. Several big names in the forex world talk about it, Rob Booker being the one I recall at the moment. The idea is to curb greed by understanding that 10 pips a day is easy and even though it sounds small, it all adds up in the end. So here is some math that makes sense to me. Now the disclaimer is that this is all idealized. Perfect conditions are rare, but the math is sound. The reality is that it will probably take a little longer than what the numbers say, but it still makes sense.
In any type of investment, the rule of 72 (or 69,69.3, etc) can give you an idea of how long it will take that investment to double at a specific and constant interest rate. If you are not familiar with the formula, google it.
Typically, this is used for long term investing in stocks, mutual fund, etc. Typically, the rate of return is 10-20% each year. So for an investment with a 10% annual yield, it would take 7.2 years for the initial capital to double. and if it were 20% it would take the same initial capital 3.6 years to double.
For my forex account I have adjusted those numbers to work with what I believe to be a feasible plan. My goal is to gain 1% a day. So all I have changed is the percentage and the time it takes to earn that percentage. Considering that most people look to risk between 1-5% in forex, their profit target is typically higher than mine, which is 1%.
According the the rule of 72, earning 1% each day (20 trading days in a month), it would take about 3 1/2 months to double. In 7 months, it will have quadrupled (from the original amount), and at the end of a year it will be 8 times the initial balance.
With that type of growth, if you started a micro account with $100, in less than 5 years, earning 1% a day, your account would be worth over $1,000,000.
Again, this is idealized. Nevertheless, if you are going to dream, DREAM BIG.
This vision is where I am at. I set small profit targets, and watch them grow together to one gigantic whole.
I welcome any comments and criticisms.
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