Forex: Cutting The Lawn A Little Closer and Leaving Some Grass to Seed

I've decided to tweak my Forex method for trading USD/TRY a little bit more. Recently I added in 100 pip take profit orders which are entered automatically when I place each trade. This has worked out rather well, but recent experience suggests that 100 pip swings are not as common as I had first thought them to be. Thus, I have tightened the take profit orders to 50 pips, which should put them within range of the typical daily moves of the USD/TRY pair.

I'm still focused on the interest income generated by this pair - this is just a way to grow the capital base quicker upon which the interest income is generated. At 50 pips per take profit, I'm still grabbing much more than I would have on any given trade than I would in interest alone. For example, at the time of this writing, $100 worth of USD/TRY sold short would earn around .91 cents each day (the method for calculating the interest can be found here). However, a 50 pip take profit order triggering would rake in $10.37, roughly eleven and one-half days worth of interest in an instant. Since I reopen positions immediately to keep the in-play amount in the account at 10% of the balance, I have the original capital going again earning that .91 cents each day anyway, only now more so because of the additional capital from the capital gain (I might miss a little while waiting for the London/New York session to open when the spread on USD/TRY is the tightest, but this is an insignificant amount of lost interest compared to the equivalent in the capital gain).

I also expect that tightening things up like this will help to establish more of the "clusters" I described in my first post about switching to the "Well Manicured Lawn" method. Since take profits will trigger more often around the current price action, subsequently re-opened positions should become steadily larger faster and this will help drag the average of all positions closer to break-even, helping to get old positions that are stuck in the red cleaned out from time to time. In the few days I've been running things this way, I can already see one such cluster forming about 300 pips above the first trade I opened after the last time all positions closed in profit.

The other tweak I'm making has to do with my monthly interest draws. I had been taking 100% of the interest out and relying solely on capital gains and my own contributions from work (bonuses and overtime pay) to grow the account. I've decided to leave 5% of the monthly accumulated interest behind to help grow things a bit more. It's a small amount, but over time it will come to represent a larger and larger amount in real dollar terms. Eventually I will stop adding cash to the account (I have a particular balance in mind that I want the account to reach, but this may change so I'm not stating it now). I plan to start building up portfolios containing other types of investments to diversify my passive income once this "engine" has been built, and at that point the only growth in the account will come from its own capital gains events and this little bit of interest being left behind each month. The larger this account gets, the sooner that day will come, so even this tiny bit of interest being turned to permanent capital will help to hasten its arrival.