In FX 10 is the Magic Number

Boris Schlossberg

Over the past few weeks, I must have made more than 1000 short term trades. Some were on demos. Most were live accounts. Some trades were done on raw spread, others used a full spread broker. Here is what I discovered.

It doesn’t matter what strategy you use. It doesn’t matter if you trade chop. It doesn’t matter if you trade trend. It doesn’t matter if your spread is 0.2 wide or 1.4 wide. It doesn’t matter if your target is just 3 pips or even 1.5 or 5 or 6 or even 7 -- you can’t make money in FX day trading unless you target is 10 pips.

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The reason is -- to paraphrase Bob Dylan is that you got to pay somebody. It may be the Devil or it may be the Lord, but you’ve got to pay somebody. Regardless of how you make your trade your average cost per trade is 1.5 pips (either spread or 1 pip commission + raw spread). That translates to about 15% cost of doing business.

When you factor in the vagaries of the market, the risk/reward payoffs, the various news bombs that blow up your trades, that frankly is about as much cost as you can absorb. If you go down the 5 pip level, the transaction cost becomes too large at 30%. Basically, you give up a third of your gross profit right off the bat and few businesses can survive that math over the long haul.

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10 pips is also a very reasonable distance for a day-trade. The average true range for a major pair is about 100 pips (yes, yes I know that’s wishful thinking in these low volatility times -- but it is still a decent rule of thumb). That means that a 10 pip trade is about 10% of the daily move which is very achievable 2-3 times each day. Like a perfect bowl of porridge, 10 pips is not too cool, not too hot. For those of us who like to day trade -- 10 pips is juuuuuuust right:)

As to all the snarky position traders who constantly berate day traders for just churning our accounts -- feel free to ridicule all you want, but some traders in my chat room have been trading for years with drawdown profiles of less than 10% -- and that’s basically what? -- a bad week in your world :).

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GBP/USD – 10 Days Without a Rally

GBP/USD – 10 Days Without a Rally

Chart Of The Day

GBP/USD – 10 Days Without a Rally

Ten trading days have past without a rally for GBP/USD. This is the longest stretch of weakness for the pair since September. U.K. data has been weak and while the trade deficit narrowed in November, the improvement was less than the market anticipated with falling exports reflecting weaker demand from Europe and China. The Bank of England meets next week and given the recent trend of U.K. data and market volatility, they will be less inclined to raise interest rates in the near future, which could accelerate losses for the British pound.

Technically such a long and exhaustive move begs for a relief rally and that may happen near 1.45, the next psychologically significant support level for GBP/USD. However if 1.45 does not hold then there is no major support for the pair until the May 2010 low of 1.4230. Should GBP/USD rebound, it will find resistance at 1.4650 and 1.4800.

Day Trading Signals May 29 – Daily Tally VT +10

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

BK Day Trading Chat Room Results  5/28

BK Trading Room Results

USD/JPY +10

   

Want to join our chat room (its included in your subscription)?

Just Email contact@bkforex.com with subject line “Slack”

   

****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

Date Currency
Event
GMT Strategy
May 29 -Th USD/JPY US GDP 12:30  C-Trader
May 29 -Th EUR/JPY US GDP 12:30 C-Fighter

 

  

Last 24 hours Results
Crowd Fighter 
GBP/USD -17
 

C-Trade
GBPUSD +10
 

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (May 29, 2015) -- Good Luck Trading!

1. US GDP  (8:30AM NY Time) USD  -- GDP Data is hard to call but will be market moving

Day Trading Signals May 14 – Daily VT Official Tally +10 News +10

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

BK Day Trading Chat Room Results  5/13

BK Trading Room Results

AUDUSD +10

   

Want to join our chat room (its included in your subscription)?

Just Email contact@bkforex.com with subject line “Slack”

   

****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

Date Currency
Event
GMT Strategy

 

  

Last 24 hours Results
Crowd Fighter 
No Trades
 

 
C-Trade
GBP/USD +10
 

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (May 14, 2015) -- Good Luck Trading!

1. NZ Business PMI and Retail Sales (6:30PM NY Time) Bearish NZD — Potential downside surprise given sharp drop in employment

2. US PPI and Jobless Claims (8:30AM NY Time) Bearish USD — Potential downside surprise given drop in import prices

Day Trading Signals May 7 – Daily Tally +10 VT +22 News

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

BK Day Trading Chat Room Results  5/05

BK Trading Room Results

EURUSD +10

   

Want to join our chat room (its included in your subscription)?

Just Email contact@bkforex.com with subject line “Slack”

   

****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

Date Currency
Event
GMT Strategy
May 7 -- Th AUD/USD AU Employment 1:30 C-Trade
May 7 -- Th AUD/USD AU Employment 1:30 Fighter

 

  

Last 24 hours Results
Crowd Fighter 
GBPUSD +12
 

 
C-Trade
GBP/USD +10

 

  

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (May 6, 2015) -- Good Luck Trading!

1. Australian Unemployment Report (9:30PM ET) Bullish AUD — Potential upside surprise given rise in employment component of manufacturing and services ISM

2. Chinese Trade Balance (TBD) No Trade — Will be very market moving but Chinese data is difficult to predict 

Day Trading Signals April 23 – Daily Tally +10 pips

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

BK Day Trading Chat Room Results  4/23

BK Trading Room Results

NZD/JPY +10

   

Want to join our chat room (its included in your subscription)?

Just Email contact@bkforex.com with subject line “Slack”

   

****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

Date Currency
Event
GMT Strategy
Apr 25- Fr EUR/USD IFO 8:00 GMT C-Trade
Apr 25- Fr EUR/JPY IFO 8:00 GMT C-Fighter

 

  

Last 24 hours Results
Crowd Fighter 
EURJPY -17
 

 
C-Trade
AUD/USD -15
GBP/USD -15
EURUSD +10

 

  

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (April 24, 2015) -- Good Luck Trading!

1. German IFO (4AM ET) Bearish EUR — Potential downside surprise given weaker ZEW expectations and German PMIs

2. US Durable Goods (8:30AM ET) No Trade ---- Durable goods orders can be volatile and difficult to predict. Impact on the dollar should also be limited. 

Day Trading Signals April 10 – BK Trade Room Tally +5 pips

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

BK Day Trading Chat Room Results  4/09 +5

BK Trading Room Results

NZDCAD+5

 

 

Want to join our chat room (its included in your subscription)?

Just Email contact@bkforex.com with subject line “Slack”

   

****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

  

   

  

Date Currency
Event
GMT Strategy
Apr -10 USD/CAD CAD Employment 12:30 C-Trade
Apr-10 USD/CAD CAD Employment 12:30 C-Fighter

 

  

Last 24 hours Results
Crowd Fighter 
No Trade
 

 
C-Trade
No Trade

 

  

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (April 10, 2015) -- Good Luck Trading!

1. UK Industrial Production (4:30AM ET) Bullish GBP — Potential upside surprise given minor increase in manufacturing PMI index. New orders and export orders also increased

2. Canadian Employment (8:30AM ET) Bearish CAD — Potential downside surprise given sharp decline in employment component of IVEY PMI.