Archive for August, 2010
Hey Windsor Park:
I’ve heard it mentioned once or twice, but what’s the Smart Trader 10-10-10 rule of thumb?
Signed,
- All Thumbs Trader
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Great question! Many traders from around the world have been using Smart Trader and have been very satisfied with the results! And one of the most common questions we get from those who haven’t seen Smart Trader yet, is this:
“How much will Smart Trader make, per month, if I just let it do its thing?”
To help answer that question for everyone, we found that the following rule of thumb applies to Smart Trader during normal market conditions.
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The Smart Trader 10-10-10 rule of thumb ($10k – 0.10 lot – 10%)
During normal market conditions, with an account size of $10,000 trading the GBPJPY at 0.10 lots, you’ll usually have less than 10% drawdown, and earn about 5%-10% per month!
So, $10k @0.10 lots = <10%DD & 5-10%/month
Now, that ratio holds true as you increase or decrease the initial amount.
Example #1:
$5,000 @ 0.05 lots = <10%DD & 5-10%/month
$25,000 @ 0.25 lots = <10%DD & 5-10%/month
$100,000 @ 1.0 lots = <10%DD & 5-10%/month
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Now for all you non-math people out there, be sure to remember that if you increase the lots, you’ll increase BOTH the potential drawdown AS WELL AS the potential return. (That’s riskier.)
So, $10k @ 0.20 lots = (about 10%DD) & 10%-20%/month.
And remember, this rule of thumb is not intended to be strictly accurate for every currency pair. Some pairs will have higher yields with lower drawdowns and vice versa.
Trade well!
- Jordan4x
Here are links to some Smart Trader results.
Beginning Amount - Trading Lot Size - Pair(s)
$10,000 . 0.20 Lots CADJPY
$10,000 0.40 Lots CADJPY & USDCAD
Here is an explanation of what you’ll see at forexfactory.com/windsorpark .
Click the picture for a closer view!
