Post by Mr Oakmont on Sept 2, 2016 22:01:29 GMT -8
1) Disclaimer
Before we begin, just know, this is all simple in theory, but difficult in practice.
2) Affordable Risk
Start off with whatever you consider "affordable" risk.
For the sake of this thread we will just say $50.
3) The Mental Attitude
You have to treat it like digging a hole to find the buried treasure. Wins make the hole deeper.Losses make the walls of the hole cave in.
4) Don't Think of the Money, Think About Net Winning Trades (NWT)
When you use a 50% stop loss and 100% take profit, a losing trade will only cause you to lose the profit you made on the last trade. When you scale your leverage down to compensate for the loss, a winning trade will get you back to where you were before the last trade.
This is why you shouldn't think about the money, but think about the Net Winning Trades (NWT).
What is a NWT? It simply means how many more wins you have had than losses.
5) 9 NWT = 100,000% Gain
If you have 9 Net Winning Trades, scaling up after each trade, you will make a 100,000% gain.
9 NWT examples
9 wins 0 losses
18 wins and 9 losses
30 wins and 21 losses
50 wins and 41 losses
150 wins and 141 losses
You get the point? As long as you get those 9 Net Winning Trades, you will make a 100,000% gain.
6) The Math
T1 -Balance $100 - Risk $50 - Take Profit $100
T2 -Balance $200 - Risk $100 - Take Profit $200
T3 -Balance $400 - Risk $200 - Take Profit $400
T4 -Balance $800 - Risk $400 - Take Profit $800
T5 -Balance $1600 - Risk $800 - Take Profit $1600
T6 -Balance $3200 - Risk $1600 - Take Profit $3200
T7 -Balance $6400 - Risk $3200 - Take Profit $6400
T8 -Balance $12800 - Risk $6400 - Take Profit $12800
T9 -Balance $25600 - Risk $12800 - Take Profit $25600
which totals.....
Balance $51200
7) Stop Loss and Leverage
This should be pretty self evident but here it goes
If you use 300:1 leverage, 17 pips is your stop loss. Your target is 34 pips.
If you use 200:1 leverage, 25 pips is your stop loss. Your target is 50 pips.
If you use 100:1 leverage, 50 pips is your stop loss. Your target is 100 pips.
If you use 50:1 leverage, 100 pips is your stop loss. Your target is 200 pips.
8) Image #1 - Digging for Treasure (Net Winning Trades Concept Illustration)
9) Image #2 - Example of a 200,000% gain in 4 days of swing trade the 30 minute time frame
10) What to do after making $50,000
After reaching $50,000 (or whatever you feel comfortable with), you should start trading lower leverage and lower risks. Here is what I would do, but you can do whatever you want.
a) assuming i made the $50,000 profits in 1 year or less, i would be taxed and only have $35,000 to $40,000 remaining (unless tax free)
b) i would take the $40,000 and attempt +to make 20% gains every month, which would give me around $400,000 at the year end, and after taxes i would have roughly $300,000 remaining.
c) now i would reduce my leverage by HALF, and trade the exact same way i traded the year previous. i would aim for 10% gains per month, and at the year end, my profits would be $600,000 with a total balance about $900,000. after taxes remaining balance would be about $750,000
d) the next year i would aim for 6% per month, and double my money by year end to $1.5 mil. repeat for next 5 years and retire (semi retire, i would still trade weekly charts, just no scalping, probably more stock and commodity investments to be honest)
Variation
Using 1:4 RISK REWARD and initial stop loss of $25
Account balance = $50, giving two attempts to get going.
Risk = 50%
Reward = 300% (4 fold)
$50 total, first trade risk $25
Win = $150 total
Win = $450 total
Loss =$225 total
Win = $675 total
Win = $2025 total
Loss = $~1000 total
Win = $3000 total
Win = $9000 total
Loss = $4500 total
Win = $~13000 total
Win = $39000 total
Win = $117000 total
9 wins, 3 losses.
The order of the wins and losses doesn't matter.
Before we begin, just know, this is all simple in theory, but difficult in practice.
2) Affordable Risk
Start off with whatever you consider "affordable" risk.
For the sake of this thread we will just say $50.
3) The Mental Attitude
You have to treat it like digging a hole to find the buried treasure. Wins make the hole deeper.Losses make the walls of the hole cave in.
4) Don't Think of the Money, Think About Net Winning Trades (NWT)
When you use a 50% stop loss and 100% take profit, a losing trade will only cause you to lose the profit you made on the last trade. When you scale your leverage down to compensate for the loss, a winning trade will get you back to where you were before the last trade.
This is why you shouldn't think about the money, but think about the Net Winning Trades (NWT).
What is a NWT? It simply means how many more wins you have had than losses.
5) 9 NWT = 100,000% Gain
If you have 9 Net Winning Trades, scaling up after each trade, you will make a 100,000% gain.
9 NWT examples
9 wins 0 losses
18 wins and 9 losses
30 wins and 21 losses
50 wins and 41 losses
150 wins and 141 losses
You get the point? As long as you get those 9 Net Winning Trades, you will make a 100,000% gain.
6) The Math
T1 -Balance $100 - Risk $50 - Take Profit $100
T2 -Balance $200 - Risk $100 - Take Profit $200
T3 -Balance $400 - Risk $200 - Take Profit $400
T4 -Balance $800 - Risk $400 - Take Profit $800
T5 -Balance $1600 - Risk $800 - Take Profit $1600
T6 -Balance $3200 - Risk $1600 - Take Profit $3200
T7 -Balance $6400 - Risk $3200 - Take Profit $6400
T8 -Balance $12800 - Risk $6400 - Take Profit $12800
T9 -Balance $25600 - Risk $12800 - Take Profit $25600
which totals.....
Balance $51200
7) Stop Loss and Leverage
This should be pretty self evident but here it goes
If you use 300:1 leverage, 17 pips is your stop loss. Your target is 34 pips.
If you use 200:1 leverage, 25 pips is your stop loss. Your target is 50 pips.
If you use 100:1 leverage, 50 pips is your stop loss. Your target is 100 pips.
If you use 50:1 leverage, 100 pips is your stop loss. Your target is 200 pips.
8) Image #1 - Digging for Treasure (Net Winning Trades Concept Illustration)
9) Image #2 - Example of a 200,000% gain in 4 days of swing trade the 30 minute time frame
10) What to do after making $50,000
After reaching $50,000 (or whatever you feel comfortable with), you should start trading lower leverage and lower risks. Here is what I would do, but you can do whatever you want.
a) assuming i made the $50,000 profits in 1 year or less, i would be taxed and only have $35,000 to $40,000 remaining (unless tax free)
b) i would take the $40,000 and attempt +to make 20% gains every month, which would give me around $400,000 at the year end, and after taxes i would have roughly $300,000 remaining.
c) now i would reduce my leverage by HALF, and trade the exact same way i traded the year previous. i would aim for 10% gains per month, and at the year end, my profits would be $600,000 with a total balance about $900,000. after taxes remaining balance would be about $750,000
d) the next year i would aim for 6% per month, and double my money by year end to $1.5 mil. repeat for next 5 years and retire (semi retire, i would still trade weekly charts, just no scalping, probably more stock and commodity investments to be honest)
Variation
Using 1:4 RISK REWARD and initial stop loss of $25
Account balance = $50, giving two attempts to get going.
Risk = 50%
Reward = 300% (4 fold)
$50 total, first trade risk $25
Win = $150 total
Win = $450 total
Loss =$225 total
Win = $675 total
Win = $2025 total
Loss = $~1000 total
Win = $3000 total
Win = $9000 total
Loss = $4500 total
Win = $~13000 total
Win = $39000 total
Win = $117000 total
9 wins, 3 losses.
The order of the wins and losses doesn't matter.
