Get started

Risk!!!

FET, wealth creation swing trade.We might see a breakout anytime soon, this bad boy is based on A.I, the future of everything. I wouldn’t underestimate the power of A.I & CRYPTO TOGETHER. The chart itself it is looking great . Don’t miss out our next research on risk and reward swing trades. As always we put quality over quantity, don’t forget to follow us for SWING trades research on risk and Reward Ratio. Swing trading is great because you can create a lot wealth in % by risking less $$. Compound Gains. Thank you for the Love, I really appreciate those likes, makes a difference.
COINBASE:FETUSDLong
by JhonMontana
3
HOPEFULLY BULLS WILL STRIKE IN AND HIT MY TARGET.The first question i always ask myself is "who is in control of price?" that way i can analyze my trrading from a price action point of view. So, who is in control of price on this one? First we have a bearish trend followed by a tiny pull back and then an indecision candle which tells us that the bearish power might transitioning to the bulls. Of course i might be wrong, but that is why i keep my Risk/Reward a 2:1 minimum, that way i only have to be right 40% of the time in order to be profitable. "Trading is not about being right most of the time, its about being profitable" - Anonymous Trading Details: Time Frame: 8hr Entry: Above the high of the indecision candle Stop loss: A few pips below the Indecision Candle Risk/Reward: 2:1 Account Risk: 2%
Long
by daldertg
[Advanced] How to aggressively grow a small (10k) account?Most of the time growing an account is a very slow grind. Make some, lose some, hope to make a little bit more than you lose. For example, with an average risk to reward of 1 to 5, and a win ratio of 21% (not counting once a year outliers), which is pretty good, breakeven being at 16.67%, after 100 trades the result will be - with a risk of 1% (flat) each time: - Profits = 21*5 = 105% - Loses = 78*1 = - 79% Net result = 26% Finding 100 good trades might take more than 1 year. With a theoritical compounding of 1% each trade the max profit would be: - Net = (1.05)^21 * (0.99)^79 = 25.94% Compounding is not always the magic trick. You might be looking at something like 20% a year. But once in a while, often in September-October, and sometimes at specific times such as March-April 2020, we get these monsters that go way further than usual. Often from a boring tight period, an explosion that grows exponentially, this pushes the reward dramatically. So we can end with a few winners at 10, 15R, rather than the usual ~5. So you can "easily" get the regular barely above breakeven 20% (for the example) with on top of that an occasional 10, 20, or even more, percent. On our small accounts these extras feel good, and they give a nice boost, but nothing dramatic. Growing a 10k account into 100k even with 50% a year will take 6 years. With 30% a year that would take 9 years. With 20% a year, 13 years. An experienced but poor investor, that spent years working on entries, exits, and so on, will need do something rather "dramatic" to grow his account. Doesn't have to be a complete gamble. An idea is after one of these "boost" periods, the investor could put all of that profit at risk. Say he made 32%, losing it all would be a major drawdown of 25%, but if the investor sees it as extra it is not the same as a crippling drawdown. Having a great period is nice (within years of moderate consistency), but it is not life changing. It might be a good idea to use that as some sort of springboard (or launchpad): - Losing that profit is a return to last step it is disapointing and the grind continues but even with an extra 30% the grind would still continue it wasn't going to be life changing. Maybe 6 months - 1 year worth of profit lost (but it was "extra" anyway). - Not losing it all (winning or even a period of breakeven) is great because it will allow the account to leap up suddenly, you quickly end up years ahead. So how does this work? Going to use an example. The investor gets 100 trades a year because why not (that's 2 a week or a little over 8 a month), has a reward 5 times the risk and a winrate of 21% (PF = 1.33). Account size = $10,000. Risk per trade = $100. The investor was able to grow 4000 into 10,000 over 4 years "slowly" (not that slow) but surely. The biggest drawdown ever was 20%. The yearly return is 26%. Over September to November he made $4000. He would "normally" make $1000 over 3 active months like this, but as is often the case, that period was violent with fear moves, winners just kept going and our investor that was able to add early ended up with 2 winners at 9+7 R each. So 32R. It can go very fast. 32%, on top of 8% on other grindy trades (over 3 months). Trying to catch whole trends and hold forever in my opinion is not realistic, but adding once or twice to winners is (talking about FX here), and winners (especially in March 2020 or September-October) going vertical does happen. So now how does the 10K investor scale up? Well $100 was 1%. 1% of 14,000 would be $140. but how about he more than doubles the risk?! So investor's profit in Sept-Nov was $4000 ("regular" $800 + "extra" $3200) and he/she decides to put it all at risk. He pushes the risk up to $280 which is now 2% of the new account size. After 12 loss in a row (down 3360) all the "extra" will be gone with only $640 profit left, the risk will then be reduced progressively, first down to 200 and if losses continue, 150 and finally back to 100. To attempt this our investor must have several years of results. From these years, taking out the handful of outliers, we know average RR & WR. The important question is what are the odds of 12 losses in a row? (With 21% WR) ==> First the probability of 12 losses in a row (if it was a random coinflip) are 6%. The odds are rather low. ==> Second the odds of exactly 11 losses out of 12 are 19%. In that case investor lost 1680/3360 -> Half. Still 6 lives left. ==> Once investor has 6 lives left the odds of losing all 6 times are 24%. Risking 280 rather than 140 means in 1 year rather than grow by 3640 (26%) the account will grow by 7280 (52%). Basically fast forward 1 year. In a way this is risking 1 year of profits to make 2. With something like 80% odds of making it. Aiming for much less than 12 lives is really gambling. An investor could also go for 20 or more lives but the higher the number the slower the grind. With 6 lives there is 1 chance in 4 to lose it all. But it would be a $560 risk, a huge increase from $100. Is there really a need to increase size by that much at once? It would not even accelerate growth that much. Our little investor can always make another jump after that first one. Because yes, that snowball can keep getting bigger. It is a terrible idea to keep going double or nothing, eventually it will be nothing, but we could find a compromise between being very careful and careless. We might not accept a 30% drawdown, or losing 3 years of very difficult very slow profit but if we can separate that say slow grindy 15% a year and go "I won't risk this" but the once a year or two monsters that provide 20%-40% at once (arbitrary numbers) we can see it as "extra", we got our account with 10k in in and the 4000 we just made well losing the 4000 technically would be a 30% drawdown on 14k but we can perhaps separate this, it was unexpected, and we put all of this capital at risk, without hurting our "main" capital. Might be a great way to boost growth without risking to blow up or being set back years. And if it works out. As I said the example investor (which is already at least in the top 5% by the way) made 7280 rather than 3640. An extra $3640. Actually since his account was $10,000 and he was supposed to make about 3600 in 1.25 year, but instead made 7280 + 4000 = 11,280, well that's an extra of about $7500. Last time investor risked 3400/4000 in 12 trades (6% odds of losing all 12 and perhaps ~15% odds of losing all that money over a longer time), maybe this time investor wants to risk 6000/7500 in 12 trades ($500 each!). 26R = $13,000. If it works out in 2 years investor's account went from $10,000 to $34,000 rather than $16,000. $24,000 profit rather than $6000 (or $10000 with the big winners). With what? 1 in 4 odds of only making 6000? It is still going to take years anyway, but it is possible to take ponctual big risks to try and jump up a few steps, without playing russian roulette either. Another quick example... I think this example is within the good compromise area. It would be possible to go "I will risk $1200 over the next 3 ($400 each)" but just 3 trades that gets rather random so it becomes gambling. Over several years risking "1200" (12% base account) over the next 3, well the randomness would even out but seems bad, better to have some sort of certainty. 4% and 6% odds to immediately fail means 94/96% odds of success, unless really bad luck that should rarely happen, this should work. Just not with rent money. And even if it fails the "base account" is still here, simply some unexpected profit evaporated. If it fails, can always re-try next time, after another while of grinding, making sure we are still actually profitable and it was just bad luck. On top of this whole concept of putting profit at risk for a boost, there are the very rare "generational" trades (George Soros versus BoE 1992), where risk is known to be limited (so no swiss tsunami), the odds are really high (way more than 21%), and the reward will be even better than 5R. Also more generally when having a great winning period, great conditions, but I would not trust anyone to be objective about that. Our eager investor that made 4000 could out 3000 at risk over 12 trades with $250 each, and leave the remaining 1000 for the "great ones" where maybe $300 can be risked at once (and if it works out a one time 1500-3000 boost), 300 being "only" 2% of 14000 so it's still fine, not completely crazy (we are talking about a serious investor that has been doing well for a few years not a retail day trader with a gambling addiction). Just like with trade selection strategies, there is no secret magic trick. This scaling strategy is honestly the best I can do. Maybe 1 last example... And finally, this can be tweaked. Rather than rambo the risk from $100 to $280 in the example I choose, still putting all or most of the 4000 at risk, an investor could first increase the risk to $190 (takes 20 losses to lose most of the 4000 rather than 12), and if that goes well, which if it's a profitable investor is more likely than not, then once at +5R (+$950) or so investor could then increase it $280 which overall is safer, and much more likely to work out. With $280 from the start 5R would be 1400 so investor left 450 on the table, not that big of a deal. From that point the next 12 will have a 280 risk, if unlucky then there is still profits left and we can drop to 190 before returning to only 100 which hopefully won't be the case, at least most of the time. Then stay at 280 a while (if it works out) and next time big profits appear, risk that + a part of the 4000, without touching the rest of the profit made in the meantime. Risking profits is really not the same as risking the "bulk" or "base" capital, that's a slippery slope... Rule number 1 = protect your capital Rule number 2 = do not lose money
Editors' picks
Education
by MrRenev
99
How to Backtest a Trading StrategyBacktesting is a manual or systematic method of determining whether a trading strategy or trading setup has been profitable in the past. A trader should backtest a strategy to help determine if a trading strategy is likely a waste of time and money, or if it shows promise and profitability in a variety of markets. While you can get software that does systematic backtesting… we prefer manual backtesting as it can be carried out by any type of trader, It is a key component in developing an effective trading strategy. There are infinite possibilities for strategies, and any slight alteration will change the results. This is why backtesting is important, as it shows whether certain parameters will work better than others. What Do I Backtest?
The first thing to note is that you don’t need a full trading strategy in order to start backtesting. 

For example I personally am always looking at new trading setups and candlestick formation and then backtesting them to see how effective they are. 

You can test small parts of a trading strategy before putting them all together. 

And of course you can and SHOULD backtest your whole trading strategy in a number of different trading situations. 

How to Backtest

 1) You need data to use in testing… if you are testing short term strategies on small timeframes then use at least a few weeks of trading data.

If you are using higher timeframes then you should be using years of trading data.

 2. Define the strategy parameters. Entry conditions, exit conditions etc. Include as many “If X happens then I will do Y” scenarios as possible so that your strategy is repeatable. 

Its essential to include risk management in these parameters too. So decide on if you are risking a percentage of your account equally on each trade, what is that percentage. If you are managing your risk in another method, clearly define it as something you are able to measure. 

ALL OF THESE PARAMETERS ARE WHAT YOU ARE MEASURING AND TESTING. THESE ARE THE ELEMENTS THAT YOU CAN CHANGE TO SEE WHICH ARE MORE OR LESS PROFITABLE. 3. Use the TradingView rewind tool to go back in time and remove the predictive nature of knowing where the chart will be headed. 

You could go back in time and look for trades from a year, a month or a week in the past, depending on how far back you wish to look. 4. Analyse price charts for entry and exit signals. This can be done until all trades on the chart up to the current time have been located and marked or written down

(be aware that it can take some time and be prepared that you are unlikely to be able to do all of this backtesting in one session… it could take you a few sessions of backtesting and recording the trade outcomes to fully test a strategy.) 5. Once you have competed this process, then you can start to total all of the trade results up to see how profitable or unprofitable your trading strategy / setup has been over time. What Goes Wrong in Backtesting

Typically the pitfalls and the ways that people fail at backtesting are based around not being through enough. 

That could mean that people haven’t included enough data in the backtest. 

It could mean that they left too many unknowns in the strategy so when using it in a live trading situation the strategy isn’t usable or realistic.

Also it could be that people don’t back test for long enough to see if the strategy is profitable or not. If you only have a small sample size of trade then even a short losing or winning streak of trades would dramatically affect the results. You need enough trades to show winning streaks, losing streaks and all between so that you can be confident that your strategy will be able to withstand those situations in live trading. 

Imagine for example in your backtesting your strategy didn’t lose more than 2 trades in a row but when you start using it in live trading you get 5 losses in a row. This is a situation that hasn’t been tested so could show a different result. 

The goal is to backtest for long enough and through enough so that nothing in live trading hasn’t been tested previously. While it may not be possible to fully achieve this… it should be the goal and you should feel confident enough that you have done everything possible to ensure this is the case.
Editors' picks
Education
by JoelWarby
56
Gold for Quadruple WitchingPrincipal rule: Isolated corrections "a" and "c" legs should always be played. An opposing complex which we have not got into too much details here about, on the other hand, is the "b", often where our opposition is goaded into action, before being trapped and played out with momentum! As we have seen is the case in Gold, a quick test of 1518 measured target contains a certain latent weakness, which shows up when we measure the extension from "a' and "b". We can call this dynamic weakness. When, on the forth corrective wave, the swing stands still (and can often look at rest) like with the past few weeks of chop, from which it will take a lot of compression and effort to force. I mean by this that since sellers have forced the breakdown, early buyers are forced into a decision and now left thinking it would have been easier if I had waited. the correction complex is an instrument of attack! It is hard to explain the why behind markets (as with most things in life) moving in waves (for those looking to dig deeper on timing cycles and etc recommend checking the work of Martin Armstrong), however experience has shown that from mapping correctly with impulses and corrections it makes it easier to hold out. Notice the positions we were loading together in 2019 and the strategic requirement for riding the impulsive leg. You should ride impulses where possible without any need for help, corrections are more of a challenge and require further monitoring as there is still the chance of our opponent occupying the whitespace. For now continue aiming for 1518 before the fifth and final impulsive leg (multi-year rally) begins in 2022. If there is enough interest we can open up the Daily and four hourly chart tomorrow and start to zoom in to look for more positions with the expiries. Thanks again!
FOREXCOM:XAUUSDShort
by ridethepig
14
Trading Idea - #Steinhoff - The Gambling! HIGH RISK TRADE! BUY! Entry:0.2288 EUR Target: 2.7976 EUR (+1100% profit) Stop: 0.0794 EUR Steinhoff International Holdings N.V. specializes in the retail trade.Sales are distributed among the various business segments as follows: - Retail (97.9%); - Financial services (1.8%); - Other (0.3%). The geographic distribution of sales is as follows: South Africa (37.3%), Africa (7%), United Kingdom (19%), Poland (11.1%), Europe (16.5%) and Australasia (9.1%). Number of employees : 91 519 people. - South African retail group Steinhoff reported on Friday a 15% increase in sales for the nine-months ended June 30, as COVID-19 lockdown restrictions reduced throughout the period across its markets. - Steinhoff has been restructuring its operations since revealing accounting fraud in 2017, selling off assets and paying off debt. - A big hurdle to overcome is settlement of lawsuit claims from shareholders and investors, which it hopes will be approved in September at a creditors meeting.
SLong
by Traderherz-Analytics
$PAGS: to make you BAGS?Today we are witnessing a sharp turn around in Emerging Markets $EEM after the Jackson Hole meeting. $IWM a strong indicator of risk tolerance has seen a sharp move back up into it's middle pivot. Could the continued low rate environment and strong economy be enough to continue the rush into risk-on assets? Keep a close eye on $EWZ though (Brazil ETF in which PAGS is located) to pin point entries. On the technical side of things, keep an eye on entries in between the two trend lines in which the current candle stick is located between and stops outside of the bottom two trendlines. I'd look to scale in over the next couple of weeks and see how strong the dips in $IWM, $HYG and $EEM are to see how much continuation is possible to the upside. Good luck traders!
NYSE:PAGSLong
by Fox_Technicals
The Hard Truth About Trading 😅 Well, that is just a joke. Or not a joke? In every good joke, there's a sliver of truth... So many people blew their trading accounts in a blink of an idea chasing the profits, so many people went bankrupt practicing leverage trading... Do not be that guy in a picture. Be a true trader! Never forget about risk management and don't be greedy. Never let your emotions control you. Stay calm and humble while you trade. Have a great weekend! ❤️Please, support these drawings with like! It really helps!
Education
by UnitedSignals
3
The Hard Truth About Trading 😅 Well, that is just a joke. Or not a joke? In every good joke, there's a sliver of truth... So many people blew their trading accounts in a blink of an idea chasing the profits, so many people went bankrupt practicing leverage trading... Do not be that guy in a picture. Be a true trader! Never forget about risk management and don't be greedy. Never let your emotions control you. Stay calm and humble while you trade. Have a great weekend! ❤️Please, support these drawings with like! It really helps!
Education
by UnitedSignals
10
MrRenev portfolio exposedHere is my current short term portfolio. This might give the reader an idea of how a moderately diversified short term portfolio might look. I use various tools (including turbos, options...) so it's hard to say how much I have in, but I know how much of original risk I got. Which is today €500. I added my little XRP bag from earlier this year to my crypto holdings to get to exactly 500. It makes more sense to build a PF looking at risk rather than the size that doesn't mean anything by itself. Of course I have some winners and I have trailed my stop so this is why I precise "original" risk, that's the risk when I opened the position. The whole thing is maybe €40,000 with €25,000-€30,000 in Forex which would make it around 70% but it is less volatile, in "risk" terms it's actually 30%. Entry stops are tight (for example 0.50% with FX, 2% with S&P, 1% with commodities depends). I am sure I have 25 to 30K in FX, it's the rest that is hard to evaluate. Here is the detail: 30% - Forex: 2 longs on the Yen, 2 shorts on AUD, and short USDZAR. 25% - Commodities: Gold, Platinum, Natural Gas. All long. 23% - Indices: All in the S&P500 long, pyramided in since April. 12% - Crypto: Mostly Bitcoin. And a bit of XRP (it's less than 6 month old). 10% - Stocks: Pfizer & Moderna. I also have a few stocks & cryptos that I hold long term and have not listed here. And cash in the bank. And physical goods in my house. I even have stamps and a few old coins. I don't check on it every day, or week, or month, or year, but I really don't care about the long term stuff, I am focussed on the long term. Looks like I have found a perfect trick to not worry. I am not "ultra" diversified, but some billionaires have hinted that diversification may be for idiots. If you saw Ray Dalio present his "holy grail" you know that (roughly) you get a huge improvement in risk adjusted returns going from 1 to 5 (good) positions, a little more improvement going from 5 to 10, and it basically flatlines past 10 positions no matter how much you add. This is universally true, I'm sure it can be proven by a mathematician and the limit of growth will be Euler's number 2.718 (like maybe the stdev can only be improved 2.718X?), no matter how many uncorrelated positions are added. The reasons for having dozens of positions is either you're such a whale you have to, or you're trying to attract clients and plenty of positions makes you look pro and justifies the cost and also makes it look too complicated to do for a novice. My positions shown here are all short term, with: FX and Commodities and Stocks (65%) all under 2 months S&P500 and Crypto (35%) all under 6 months I have been long US indices since September or October of 2020 but it was tech100 and I closed it all since then. 33% of my holdings are correlated to the US stock market but I am in the green on the S&P and have guaranteed stops, I have pyramided into my winner over time, so there is actually no major risks there. I am not a professional risk manager and I don't give advice but I don't think I have crazy risks. No single instrument (a currency, an indice) ever has a leverage over 5 (when adding all pairs or all correlated indices). The max leverage I have been using on a position ever as far as I can recall is 2 (0.25% stop loss with a leverage of 2 = risk of 0.50% on the single position). Anyone who understands elementary school level maths should be able to understand the problem with too much volatility: A 3% drawdown takes a 3.09% profit to get back to breakeven. This is 3% more (3.09% is 3% more than 3%). A 10% drawdown takes an 11.11% profit to get back to breakeven. This is 11.11% more. A 30% drawdown takes a 42.9% profit to get back to breakeven. This is 42.9% more. A 70% drawdown takes a 233.33% profit to get back to breakeven. Good luck. Simply since this is short term there will be much more volatility, so careful with leverage! (Indeed, if a long term portfolio had say 15% deviation happen every 100 years, the short term one could have this every 100 months or even 100 weeks). And then there are the black swan events... They don't happen but when they do it stings. And in one's career they WILL happen. Bill Hwang got destroyed by having 5 leverage on all his money, concentrated in a few stocks. The "Swiss Franc Tsunami" was a 15% drop. You'd have to be a complete mongrel to get wiped out, that would require over 6 leverage on a single currency. Legend james Cordier had next to 100 leverage divided between only half a dozen commodities, he was riding at least a 10X on NatGas alone. Even if you had 10 leverage on stocks but distributed in 10 a 20% gap down wouldn't wipe you out it's very unlikely they ALL gap down. Don't go 10X in stocks even if diversified, that was just for the example, in the EU it's not even possible anyway max is 5. I even posted ideas for some of those positions With Bitcoin I think I post everything. Not sure. Almost 1 year ago, "buy area visited", hah I actually bought the very bottom. As I said this is nearly 1 year old but I moved to the S&P500 back in April to catch a new swing. 2 different trades within a long term bull bias. Buying pullbacks with tight stops you get stopped often but you also buy the very bottom often. I probably mentioned my transition to the S&P500 somewhere but without details and I don't write every single time I add or take profit or reduce my position. Might add a bit to crypto if it keeps going. Hopefully I get to short GME soon, should reduce my overall stock risk, maybe. It can always shoot up while the rest crashes down, I don't think this is likely it's a 1/100 thing, it does happen, and you want to make sure you'll survive it, but it doesn't happen that often so it's worth taking the risk. Typicall I might have something like this: 10 positions 2 wins I'm trailing (> 5R) 3 little wins trying (2.5-4.5R) 5 positions around my entry (between -1R and 2.5R) I rarely see red in my accounts, losers go quite fast. So mostly I look at positions in the green. It has the benefit of feeling good. Losers hold losers, that simple. Individual positions are very volatile, I might see a currency pair have a drastic move against me and crush my soul, but then I log in my accounts and I see my overall profits have not moved much, while the 1 pair was crashing 3 other ones sligthly went up. So it makes it more of a slow and steady growth rather than some hysterical bipolar game.
Education
by MrRenev
3