In today forex faq, we have a question from one of our fellow traders and below is the question
Hi, thanks for the opportunity. I am participating in a trade contest for the first time. I am happy to make a “respectable” 1 to 2.5% daily. The contest is now in its 4th day and the first five contesters are already more than 400% above where the started. What am I doing wrong. My conservative mindset is such that if I make 400% in 4 days, I will get a heart attack!
In my opinion, those that got 400% growth in 4 days are those that manages to capture a big trend movement. These are usually traders that trades either breakout strategy or trend strategy as these are the 2 strategies that produces great profit if you are in for the big trend. However to achieve 400% in 4 days does requires some luck as you have to encounter the big trend which something did not occur.
Personally I feel that if you are able to make 1 to 2.5% everyday, it will add up to 20% to 50% growth every month which is incredible. However you may not win the contest but you will have no problem making a living out of forex trading.
One more point I want to add is to make 400% growth in 4 days, the amount of money risk per trade will be pretty high.
Let us take a look at the chart for GBPUSD Hourly on 10 September 2012 08:00 to 14 September 2012 08:00. The price moved up a total of 277 pips. Let says that your stop loss is set at 25 pips and now your risk reward ratio is 1:11.
To achieve 400% growth, you will have to risk at least 36% on one trade so that you can make 400% growth in 4 days. Risking so much in one trade can be a disaster if you go wrong.
I hope that I have answered your question and do feel free to give your comment below regarding this question.