I got an email last week and it was polite, sincere, and earnestly curious:
"Do you have any robot systems that make 100% in a month?"
I COL'd. (I Chuckled Out Loud). How perfectly awesome.
No, hahaha, of course I don't have a system that doubles your account in a month. That's ridiculous. No one has a system like that--and if they do, they're a liar!
In my mind, that email was just another example of traders having unrealistic expectations.
And then, on a lark, I started looking at my charts.
Then I looked a little closer.
Did I speak too soon?
One of my favorite movie scenes comes from the 1987 classic The Untouchables (it's the story of Eliot Ness trying to bring down Al Capone).
In the scene, Eliot Ness, desperate to catch Capone, agrees to go on his first liquor raid. Surprisingly, with guns in hand, Sean Connery (his mentor) takes Ness and his small posse of untouchables to a bank. Ness is incredulous.
"Mr. Ness. Everybody knows where the booze is. The problem isn't finding it. The problem is who wants to cross Capone?"
Maybe I did know where the life-changing returns were.
Maybe the problem isn't finding out-sized returns. The problem is: who's willing to risk everything for a big return?
Here's what I found.
First, as you know, I like trading on the Forex Big Three (the GBPUSD, USDJPY, and EURUSD). Those are the highest volume currency pairs and those definitely work out the best in testing.
Plus, those three seem to translate from research to real life the best.
The problem is that regulators have idiotically strangled leverage on just about everything.
I love the GBPUSD on multiple trading systems, but now leverage has cratered to a pitiful 20:1 in the U.S. In the same way, the leverage on the USDJPY has fallen to a putrid 25:1.
The returns that were so promising in the past have, in recent years, become harder to get (if you live outside the USA, I envy you more than you'll ever know).
But then we have the EURUSD. It's the one place we can still go to get adult-sized leverage. The one safe haven for people with dreams.
Magnificently, the EURUSD still gets 50:1 (please don't tell anyone or else the obtuse leverage police will ruin this, too).
So is there any system we can trade using the EURUSD that can change our lives?
How about the greatest trading strategy of all time?
If we took that strategy and took it to the limit, what is really possible?
Forget maximum drawdown numbers. Forget sound risk management. Forget everything you ever learned.
Just have a seat, take a deep breath, and bear with me for a second.
Using a trend following breakout strategy, is it possible to double your account in a month?
It is possible.
Here are the numbers.
Looking at the month end numbers since 2010, there have been 7 months that returned at least $10,000 on a hypothetical $10,000 account.
Of those 7 months, four returned 150% or more in thirty days.
And if we're willing to make a mere 50% in a month, the number of those months jumps to 14.
I repeat: the Breakout system had 14 hypothetical months of 50% returns.
Now this is the part where we say: Trading is very risky and you should never trade any money you're not willing to lose.
And, no doubt about it, to get those returns we would have to be willing to lose our entire account.
But it is possible.
It may not be reasonable or recommendable, though.
Even if you know where Capone is, that doesn't mean it's a good idea to cross him. Crossing him can lead to a botched arrest, humiliation if you fail, and/or death (to you or loved ones).
For a confrontation of Capone to work, you have to have elite training, incredibly deep pockets, and luck. And even then, it may not work out.
The same goes for trading.
While it was wrong of me to dismiss anyone who is looking to double their account in a month, that doesn't mean it's a good idea to go for it. It would take training, a ton of trading capital, and luck to double an account.
For most traders, it's just not a worthwhile proposition.
Nonetheless, in tomorrow's YouTube video, we'll do a deep dive into the odds of catching that big winning trade and what it would look like in real life to try to do something as crazy as this.
I won't lie. It's pretty crazy (and not for the faint of heart).
Hope to see you then.
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