Guys, now that some of you are getting more familiar with trend trading, had taken some live trades and made some profits. Congratulations !
Here, I want to focus on Risk Control Strategies in a more in-depth manner for your trading :
1. Elimination : The risk can be controlled by eliminating the activity. This means STOP TRADING. Eg : You are in a foul mood, quarrel with wife/GF/BF/Doggie, etc wake up on the wrong side of the bed, etc. STOP your trading activity. Trading must be happy, exciting, full of hope and forward-looking. When you are under the weather or just not up to it, get out of trading. Your emotions is going to wreck your results. Be it a 10 or 100 or 1000 dollars loss, it will cast a black shadow on your next performance and affect your result. Keep your results as green (profitable) for as long as you can. More about that later.....
2. Substitution -Substitute the risk by replacing it with alternative activity. Here, we are not talking about substitute trading with say selling ebooks online in that sense but rather, substitute say, a forex pair , eg. USDJPY with USOIL (commodity) or HSI (futures) or AAPL (shares) instead. One can get too immersed in a particular product chart and at times but find it hard to get out to see the bigger picture. You need a substitute to jolt your memory and think straight. It is better to find unrelated instruments than to substitute USDJPY with EURJPY , still in the cross yen category.
3. Programme Control - risk is controlled by introducing check before execution. Eg. is your laptop fully charged ? The last thing you want is to key in your order half way and the battery went dead on you. Or you rewarded yourself with a new laptop and are not familiar with it yet. Play around for a while before your live trade.
Other checks can include : position size, stop loss, trend, etc.
How about your environment for trading ? Is it indoor or outdoor ? Just because technology is easily accessible, it does not mean your mood stability will match the external environment as well. You need to really know yourself in all this.
4. Personal Protection - risks controlled by ensuring personal attire offers adequate protection. Eg. some traders are comfortable trading in their pyjamas while others swear by office attire. You need to find something that you are comfortable with. Are your nails properly trimmed ? You want to avoid the costly mistake of fat fingers syndrome and key the sell button instead of buy or 10 lots instead of 1 lot situation.
I hope this has been helpful for you guys.
Here, I want to focus on Risk Control Strategies in a more in-depth manner for your trading :
1. Elimination : The risk can be controlled by eliminating the activity. This means STOP TRADING. Eg : You are in a foul mood, quarrel with wife/GF/BF/Doggie, etc wake up on the wrong side of the bed, etc. STOP your trading activity. Trading must be happy, exciting, full of hope and forward-looking. When you are under the weather or just not up to it, get out of trading. Your emotions is going to wreck your results. Be it a 10 or 100 or 1000 dollars loss, it will cast a black shadow on your next performance and affect your result. Keep your results as green (profitable) for as long as you can. More about that later.....
2. Substitution -Substitute the risk by replacing it with alternative activity. Here, we are not talking about substitute trading with say selling ebooks online in that sense but rather, substitute say, a forex pair , eg. USDJPY with USOIL (commodity) or HSI (futures) or AAPL (shares) instead. One can get too immersed in a particular product chart and at times but find it hard to get out to see the bigger picture. You need a substitute to jolt your memory and think straight. It is better to find unrelated instruments than to substitute USDJPY with EURJPY , still in the cross yen category.
3. Programme Control - risk is controlled by introducing check before execution. Eg. is your laptop fully charged ? The last thing you want is to key in your order half way and the battery went dead on you. Or you rewarded yourself with a new laptop and are not familiar with it yet. Play around for a while before your live trade.
Other checks can include : position size, stop loss, trend, etc.
How about your environment for trading ? Is it indoor or outdoor ? Just because technology is easily accessible, it does not mean your mood stability will match the external environment as well. You need to really know yourself in all this.
4. Personal Protection - risks controlled by ensuring personal attire offers adequate protection. Eg. some traders are comfortable trading in their pyjamas while others swear by office attire. You need to find something that you are comfortable with. Are your nails properly trimmed ? You want to avoid the costly mistake of fat fingers syndrome and key the sell button instead of buy or 10 lots instead of 1 lot situation.
I hope this has been helpful for you guys.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.