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Trade Planning - How to Trade PlanThis video explains how to effectively trade plan to limit your risk and to maximize your gains. When it comes to Risk Management and Trade Planning, it's important to maintain a clear mind about the possibility of the asset your assessing going in either bullish or bearish direction. Furthermore, this video explains some ideas on how and where to place stop losses based upon entry confirmations and provides insights about position managing your trades as they develop into a winner. I hope you find this video informative and hope you use this video to your best advantage with your day-to-day trading activities. Thanks for watching. Always remember to trade safe - trade well. Regards, Michael Harding RISK DISCLAIMER Information and opinions contained with this video are for educational purposes only and do not constitute trading recommendations. Trading Forex on margin carries a high level of risk and may not be suitable for all investors.
FX:XAUUSDEducation
by Michael_Harding
ridethepig | Temporary High Cooking For Gold📍 Equity Liquidations Feb/March 2020 Gold buyers now hold a solid position, since the break of 1750 our opposition has been trying to get blood from a stone. The solidity behind the bull case has been so strong to date and it shows in itself the fact that 'everything is not roses' despite how the politicians and media sell re-openings and activity data. The highs cannot be ignored here, we have been tracking the $1,900 target together and came +/- within crumbs yesterday but failed for the official tick. The break. The move is still premature on account for those wanting to swing into the $2,000's and beyond. Challenging the bull case here is deflation and liquidations in equities. Retail have been sent into the wilderness, which in no way can turn into the Edenic garden they hope for. Note how the original 5 wave sequence started in 2018 when we traded live the assault from the lows: Buyers have had the upper hand ever since, sellers are hoping to prevent for as long as possible the annoying move to all time highs. In order to liberate the $1,900 highs buyers will need to pullback and allow equity liquidations to take place and secure the required energy. So those looking to take shorts in the same way we switched sides earlier in the year, we can calmly finish our profit taking from longs and look for the appropriate welcome of offers into the book. Note how we are combining defence at soft resistance and ONLY aiming to attack when we see a closing BELOW yesterdays low (1865.xx in spot). To put simply, we are outguessing profit taking in and the strategic start of wave 4 which will last into September. As usual thanks for keeping the feedback coming 👍 or 👎
FOREXCOM:XAUUSDShort
by ridethepig
18
VIX and stock market crashes I want to discuss why I use the trend in the VIX index as an indicator for downside risk. When the VIX is trending higher, I interpret that as increasing downside risk for stocks. My reasoning is as follows. I use the VIX Index as an indicator for real put demand. I say real demand, because traders buying and selling intraday is not what I’m looking for. If VIX is trending higher, it signals to me that larger risk-taking market participants are hedging the downside. When long puts, you’re also long volatility (demand for puts = long volatility demand). When those market participants buy put options, market makers (not risk takers) selling those puts needs to hedge. They do so by delta hedging, which is, in short, shorting the underlying security. When volatility increase, the delta of an OTM option rise. This is logic: an OTM option is more likely to go in-the-money (ITM) when volatility is higher. This is why you sometimes will see sharp sell-offs and market crashes: as the market starts to fall, market makers have to short more of the underlying to stay market neutral. This is causing a self-reinforcing cycle. So, when I watch the VIX intraday, I look out for the VIX trending higher. If so, the stock market is vulnerable. If the VIX is trending down, as on Friday, I’m not anticipating a sharp sell-off into close.
TVC:VIX
by eirikb007
2
Stock Trading Tips for FriiiiiidayStocks cratered on an abysmal day in the tech sector. The S&P is finding support at 3220, which is a very strong nested Fibonacci level. This is a healthy corrective wave for the overall impulse. The next level of support follows below at 3200, a psychological, technical and nested Fibonacci level. This is about as strong as it can get (our powers combined meme here). The Kovach OBV has rounded off, however, so be prepared for a dip if we are wrong and we don't get a bounce off current levels. We are still in buy on dip mode, so patience will prevail.
FX:SPX500Long
by quantguy
ridethepig | Sovereign Debt Crisis Cooking!This looks like the real deal... the trip we are planning for Gold here should be carefully mapped before making the play. 📍 If possible make use of the ' momentum ' Entice the sellers with obstacles inside 1820-1810 rage (a temporary stopover to collect energy). All that before playing the impulsive manoeuvre. Compare also this diagram: For its own sake, previous 1650 and 1700 resistance became latent support to help plug the ladder. The appetising bulls are now ready to march towards $1,900. An old, old story, but constantly worth playing for those tracking the recession the flows in Gold have been clean and simple for a while. There is no motivation for sellers and neither a reason to close longs. Buyers are in full control, the advance through $1765 will confirm the move. Lets see if we can get it for the Weekly Closing. With Covid boredom kicking in and retail participation through the roof we have all the boxes ticked to complete the Sovereign Debt Crisis. Smelling a massacre in the coming sessions for Equities, full of energy and arrogance of a second wave. Gold longs are the gentler approach, a worthwhile virtue. GL.
FOREXCOM:XAUUSDLong
by ridethepig
9
XRP where is it heading? I think it is gonna drop another time, if not, then why is it not showing the proper signals for a upward breakout. There’s no power before it’s moves. So next time it drops I’m gonna buy. I buy and sell with in the channel but never my full position. Always less than 25% of my full position in the pair. Because I don’t want to be wrong and lose. But I can risk 25% for a bigger gain but a small loss if I am wrong and it blows upwards. Management baby.
BITFINEX:XRPUSD
by JacobTrader100
1
RISK TO REWARD 📚 An Educational Write-up on How to Find ThisIntroduction: This illustration explains the minimum Risk-To-Reward ratio needed based on your average win-rate while using a fixed % risk amount. "Risk-To-Reward ratio": The ratio of what you stand to lose compared to win. "Fixed % Risk": A static % amount of your total account balance at risk per trade. "Fixed Dollar Risk": A static $ amount at risk per trade. Regardless of account size fluctuations. "Win-rate": The % out of all trades that are winners. Steps: 1. Before being able to determine what Risk-To-Reward is acceptable to use, you will need to create a baseline measurement of your strategy's performance. 2. To create this baseline, you will need to backtest your strategy and obtain its current average win-rate. 3. This can be done using your pre-determined entry logic with a fixed stop-loss/take-profit offset amount. (Adjusting your entry logic prior to finishing a round of backtesting may produce skewed results. Do not "cherry-pick" trades as that will lead to false results.) 4. Based on the resulting average win-rate you can then find the minimum Risk-To-Reward ratio you should be using. 5. Backtest again using the more optimal Risk-To-Reward ratio and repeat this step until the most optimal backtest results are obtained. Here is the formula for determining your Average win-rate after you have tallied the wins/losses of your backtest: #W = Number of winning trades #L = Number of losing trades (#W / (#W + #L)) * 100 = your average win rate % ----- Introduction to Fixed Dollar Risk: We have found it common for people to use the logic of fixed dollar risk amounts when calculating win-rates needed to break even, but then to use a fixed % risk in practice. This simple-to-make mistake can lead to account erosion over time due to the way compounding works. The fixed dollar approach uses relatively simple math for breaking even as shown below. Example: 3 losing trades followed by 1 winning trade using 1:3 risk-to-reward achieves breakeven (ignoring trading fees and slippage) This risk-to-reward ratio itself implies the win-rate needed (lose $100 three times, win $300 once, you break even). The fixed dollar amount risk doesn't deal with compounding. As such, its logic cannot be used for fixed %. ----- Using Fixed Percentage Risk: Fixed % uses a more complicated and less apparent method for calculating how to break even. As shown in our illustration, if you take three losses in a row you won’t break even after your next win. Fixed % is always dealing with the same % of your current balance. So as your balance decreases, the total dollar amount risked is less, and the total dollar amount gained with each win is reduced. Thus, strings of losses require additional wins compared to the fixed dollar approach. The fixed % method ensures against account erosion by showing the minimum win-rate needed to use each risk-to-reward ratio. MATH NOTE: We used a simplified method for finding the minimum win-rate to make this useful and generally applicable. Our method is based on a given risk-to-reward ratio and assumes the max number of losses in a row to produce a minimum win-rate, it does not factor in all different possible loss strings and their probability. ----- WHY USE FIXED % !?: The question one will have at this point is, "Why to use fixed % if it is so F'ing complicated!?" The answer to that is simple. Despite being more complicated, fixed % is actually objectively better by almost every other measure. With fixed % you generally perform better than fixed dollar during strings of losses and wins. As with fixed %, you lose less as you go down (because you only ever lose 1% of your balance), and you gain more as you go up (because of your winnings compounding). Not only that, but you also perform better even when losses and wins are more scattered, as you can see on the chart below. ----- Conclusion: Fixed % is more complicated than fixed dollar... to say the least. However , it is none-the-less superior in most instances. Use the logic above while using fixed % risk, since if you use fixed dollar logic but use fixed % in practice you will underperform your theoretical results. If there are any major flaws in our logic/approach please let us know in the comments as of course, we are looking to provide as accurate instructional writeups as possible!
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BITSTAMP:BTCUSDEducation
by AlphaBotSystem
65
Best Trading Ideas for StocksStocks broke down from what appeared to be an inverse head and shoulders pattern yesterday. This is why it is important to wait for confirmation of a breakout before trading this pattern. It is also important to check the Kovach Momentum Indicators since these suggested a divergence, indicating a breakdown. Stocks are looking technically very weak at the moment, and the Kovach Indicators are all trending downwards. It looks like we are in the midst of a corrective phase in a 5-3 Elliott Wave. Watch for support at 3116, but if this cycle continues, we could test lower levels at 3094 or 3071.
FX:SPX500Short
by quantguy
Best Trading Ideas for GoldGold has rejected our 1832 level from yesterday, but it did make quite a run for this level, falling just short of it. Gold futures have found support at 1815, which is a technical level which aligns with the nested Fibonacci levels. Our Elliott Wave analysis suggests that there could be one more run left in the tank. if we are wrong, it could retest lows around the 1800's or even the upper 1700 handle. The Kovach OBV has been very strong but appears to have leveled off for now. The Kovach Chande has pulled back, confirming that current levels may be a great entry opportunity. If so, keep a tight stop, because there is a vacuum zone down to 1804.
COMEX:GC1!Long
by quantguy
Economic, geopolitic, monetary news. Issue No 8.1- Get rich quick: Conspiracy guilty supplement company that got closed resurfaced and they have issues again *********************** In a youtube video, bodybuilder John Meadows (Moutain dog), GS VP turned fitness businessman, talks about a supplement company (ran by someone called Wes Hauser, in Atlanta) that were manufacturing a product which he designed, they kept his name on it but the ingredients were all off, and then it was found they cut costs on ingredient, replacing some, changing doses, I don't think there was any cardboard in the mix, but they were some illegal steroids imported from China/HKG. Wes Hauser a few years ago struck a deal and pleaded guilty to a count of conspiracy, yes conspiracy is a real charge not just something crazy people do. Conspiracy and speculating those are the bad words that sheep love to hear, that are used to make people look crazy, detectives speculate on suspects, motives, crime scenes, murder weapons, and use the evidence they have and their rigorous speculation to formulate conspiracy theories. Oh no they must be crazy! What about those crazy conspiracy nuts that said the NSDAP had big plans for war and for the jews? Woohoo, where are those that laughed? They all quickly disappeared! Just like anyone that has been calling me a perma bear since 2017 :D Anyway the same people, or at least that Wes Hauser, is back in business, and in the same town, Atlanta, a new company with a new name. And big surprise, their used ingredients have been found to be different to what is on their displayed ingredient list, who could have guessed? I think the FDA has given them yet another chance... But you just know they'll get in trouble again. Once a criminal always a criminal. You can read about the story/stories online in the news, or you can watch the video. No matter what businesses you run, don't try to get rich quick. You just know those guys are going to keep cheating and trying to get rich quick their whole life and getting in trouble, for a shot at maybe getting lucky and escaping the law. If they just played by the rules from the start they might have made it already who knows... 2- Intense stupidity: Corona sales plummeted, while spirits in particular Tequila (that uses bats) skyrocketed *********************** To be precise, if I got this correctly, Corona sales first went way down, in part because people stopped going out, and there were polls where a large number of supersticious idiots said they did not fully understand the link between Corona and Coronavirus - I don't remember the exact wording but it was something along those lines. Some people (38%) back in a feb poll said they'd never buy the beer under any circumstance but I don't know what that number was before the virus fearmongering campaign started. Corona beer sales have recovered, but spirits are the ones with the best quarter (correct me if I am wrong) with in particular Tequila and I just wanted to mention them because Tequila is very special: It uses the tequila plant (it's called agave or something) which gets polinated by bats. The depression will provide some nice cheap prices. And will all the sad depressed alcoholics, price will go up up up. ABI (the biggest one) is already at 2007 levels haha! They're Belgian ofc, so they don't have the overpriced effect USA companies have (and some other including Indian). "There is as much chance of repealing as there is for a hummingbird to fly to the planet Mars with the Washington Monument tied to its tail." - An idiot that was very, very, oh so very wrong in 1930. 3- Intense stupidity: Most young americans (muh education) in a street poll have no clue what the 4rth of July is *********************** A quick one here before deviating, the eDuCaTiOn obsessed young muricans don't even know what the 4rth of July stands for, all the supersticious brainwashed idiots know is that "it's racist or something". I bet all the "dumb rednecks" know exactly what the 4rth of July is :D The USA are one of the most "educated" country in the world, but afaik most of their brains come from foreign countries (and that's going to stop soon, the word you are looking for is "aaaaaaaaaaaaaaaaaah"). They seem like such a bunch of complete idiots. I don't know exactly how high in the "most educated" tier list the USA are but I know they are pretty high, not 1rst of course, Russia has the 1rst spot, I also know Germany is way behind (they don't waste too much time on useless degrees, doesn't stop them from having a strong and resilient economy). The average Murican can't place european countries on a map, not only that they can't even place their own states on a map! What do they learn at school other than trashy junk science and the 780 genders? Math (and logic) has been a big disappointment for decades now, I don't even dare to look at how awful the level has gotten recently. Jim Simons says it's because decent mathematicians go work for big tech firms and quant funds, and what's left to teach are the bottom of the bucket. That's probably a big reason. I really wonder what's going on in US universities, I spent 3 months in 1 but I didn't go to classes, I just co wrote a paper there. They seemed like reasonable human beings, it was a while ago thought, AND it was a STEM area, no gender fluid studies there. These "universities" sound like the biggest bunch of absolute cretins. In France we have an elitist system where apart from a few select ones, all universities are basically absolute trash that accept anyone. They got thousands of low level students, classes are huge, students are lazy. Seems like such a waste of time to go there. The elites go to "schools" and institutes that at minimum study a dossier on the student, but most require an exam. The 1 university I know to be selective has no exam (afaik), they look at dossiers instead, and trust me to get in finance (at least back then) they will ONLY look at your english and maths xd I got accepted having 15+/20 in maths and english (and a math specialty with a high score too) and around 0 in every other subject except physics :D Man all these subjects are so useless why do they even exist? Such a waste of gov budget... I really wish the world would not waste so much on useless studying. At least France is doing something right, while alot of money and effort is wasted on the delusional no future people that all are accepted in Universities provided they got a high school degree (and some schools that are total scams accept students even without a degree - gullible people gonna be gullible), at least the elites that will be productive and pay taxes get their school covered, including a place to sleep, food, etc. And the top school students have special status (official, officer, ...) so their students get a salary, something around 1500 euros is usual I think. They are going to be high ranking officials, managers, scientists, officers... Those are the most selective schools, and graduates will pay a whole lot of taxes, so it's truly a good investment by the government. Of course, the no future surrender losers are whining that competitivity is bad and we should all be equal losers and surrender and no school should be selective anyone should be able to go where they want and be a garbage pos loser that loves to surrender and find excuses for failing. The only countries I know to have such a système of competitive exam institutes or "grandes écoles" are France (duh), Algeria Tunisia Morocco, India, Ghana, and China was interested but I'm not sure what they got exactly. Problem with all these countries (except France and I guess more and more China) is all the elites just get out. Ghana has been crying for a while about it. Engineers and so one just move to West Europe & NA where they'll make much more money. The USA are going full supersticious prehistoric animals (that use junk science as their god ironically, science, the thing that is supposed to be the opposite of superstitions), not quite sure about Europe. But I'm sure countries that are not rich will be able to retain much more brains and go up up up. I see a bright future for the arab world, well not sure, maybe WW2 in the middle east... But North Africa should be good. If the islamists are in check I might go live in Tunisia myself, I'm so fed up with the supersticious virtuous pious woke marxist templars of the west. And it's too cold in the winter. 4- Stock market: Unemployment still at great depression levels and alot of job losses are permanent. Unpriced *********************** Nice "recovery" by the US indices, there are still tens of millions of unemployed people, and a large number are permanent. And even if a number of the unemployed are just being decalred now to get checks, there's plenty that are really new. And the added permanent ones are a problem. I do not know how many are permanent (a bunch of businesses closed, so at least there are those jobs). You better bet that alot of companies used this crisis to get rid of anyone they considered a deadweight that they were carying for a while and could not easilly get rid of. Plus let's be honest, democrats are trying their hardest to destroy the US economy to make Trump look bad, they're willing to pay any price. Sorry, I meant they're willing to make the population pay any price. Not themselves duh! Let's defund the police and hire private security for ourselves on taxpayer dollars amirite! I trust them to make a great job destroying the US economy ^^ Dog goes "woof" Cat goes "meow" Bird goes "tweet" And bear goes "IT'S GOING TO ZERO" 5- Venezuela gold news: England court said no, you cannot sell your gold, we don't recognize Maduro *********************** Leaders of the socialist utopia have been whining for a while about their gold being stuck in England. UK high court has given it's verdict: get rekt m8 we aren't giving anyone the gold. The west backed opposition is just going to keep getting in the way of socialist utopia führer Maduro, and say he rigged the elections and try to impeach him and so on... I don't get it, they were all so happy they had tears in their eyes a few years ago, and now they're mad, what happened? Changed their minds? Haha get f'ed. Chavez won elections with 60% and massive support and they were some coups back then. Did something really change? Were they rigged back then? Hollywood and the deep state were the biggest supporters of Chavez lmao that aged well. Stupid morons, performance monkeys, know your place. 6- BIS warns of generational crisis & biblical tsunami, and for the first time since 1950 suspends dividends *********************** And bear goes "Oh happy day, everything is imploding and I told you so". I am delighted. Spoiler: they did not use those exact words (but close). The morbidly obese guy with a huge body and tiny head said he had never imagined he'll live such a crisis. Need a bigger head duh! He had warned BEFORE 2020 of fragility, and the potential for boom boom, but looks like it it much worse than what he had imagined. Who's the perma bear now? In reports, the BIS calls the coronacrisis "generation-defining". You can do a research on those keywords on their site, plenty of results. Say it once again. Generation-defining crisis. Ah yeeeesss, it feels good. "A global shock of this magnitude puts a premium on international cooperation.". There's a big premium on China-India cooperation right now haha. There's a big big premium in the USA between blacks & whites. They don't use the words depression, recession, tsunami, etc... Lame. They're trying so hard not to scare anyone when it's clearly a gigantic collapse. The director himself said he never thought he'd see such a crisis in his lifetime, and they keep warning about the crisis and its consequences. But they keep avoiding no-no words to not scare simpleton. It's so stupid, they literally explain it is biblical and we're all going to die but let's avoid simple words that scare stupid people. "2020 will be a year for the history books ... output drops have been the largest since the Great Depression ... global sudden stop ... crippled both supply and demand, crushing the production of goods and services." So close to calling it a great depression, come on. They really like the word risk, there's 1 every sentence. Awww but why do they only use euphemisms, idiots don't understand euphemisms. Well I shouldn't argue with idiots anyway, plus when proven wrong they act victorious anyway so whatever they're so far beneath me why even bother. "Although the profit for the financial year came in at SDR 166 million, SDR 295 million less than in the previous year, our total comprehensive income more than doubled, to SDR 1.6 billion, boosted by substantial unrealised valuation gains from the rising gold price and a fall in bond yields." (The SDR is the IMF world reserve currency that tries to be less dependant on the USD). -> Buy Gold -> Make Gold tier 1 -> Oh noes! A big crisis! Quick! Rush to Gold! -> Rub hands About the dividends my source is the belgian bank: www.nbb.be A few months ago, the ECB asked banks not to pay dividends for the year. BIS just showing the example. Hey isn't that a systemic risk? If top banks don't pay then other banks below in the pyramid scheme can't pay, and so on. Taxpayers should take the blow to make sure bankers get their full profits. Even if they all made big gains on gold (at least Russia China and major central banks did now I don't know about all banks). The most important release is probably the annual economic report www.bis.org Page 21 they drew their cryptocurrency pyramid scheme I see. 1 crypto to rule them all. That's some scary s**t right there. Back in 2007 the BIS warned of great depression dangers from a credit bubble popping from greedy bankers speculating on trash bonds with mega leverage. Spoiler: the BIS was right (except it didn't go all the way to a great depression maybe because "QE and bailouts worked" - the USA are burning and they are dealing with a communist revolution and are entering the greatest depression in history 10 years later but hey, it worked great! Well done!) www.telegraph.co.uk If you wonder what direction they'll keep going just look at the heads of governors meetings: Powell, German guy, French guy. It's going to be the same guys, the same countries, the same tools, and a big big explosion. MrRenev "warns of risks" of biblical collapse and possible "risks" to western central bank governors. I'm going to do what they do and replace everything bearish by "warn of risk". What a running gag. Oh and also rather than say "absolute collapse that decimated the lifesavings of millions" I'll say "there was volatility in the markets" 🙃 I found out why they call it volatility, it is because when it happens your savings... volatilize. Sorry. I'm so tired of those slow mode no trend markets, even Bitcoin is not spared lol. I can't wait for "risks" and "volatility".
by MrRenev
4
A brief introduction to RISK MANAGEMENT:If you like my ideas and the work I do, please check out the links in the signature and give me a like ;). As I tend to get a lot of questions about this topic, most traders don’t seem to understand basic risk management in trading! From my experience capital protection and risk management are probably the most important part of any trader's skillset. So that is why I wanted to address this in a more elaborate educational Idea. The kind of questions I get: - I’ve got half my portfolio in this coin and the other in this do you think I need to sell. - Do you think I need to sell my … and buy … - I've been holding this since it was at that price do you think it will go down more ... I know these don't necessarily seem like bad questions to most people, but that is not actually how you should be trading. Note: In crypto trading lots of people (myself included) keep their portfolio in BTC or ETH. Now in doing this, you should not look at the dollar amount of the asset, but the goal should be to increase the amount of the asset you hold. If you are going to switch every five minutes because you think about the dollar amount of said asset, I would advise you to stay in dollar and trade from there. Now with that little particularity out of the way, we can look at how trading should be done. It is known most retail traders take positions with their entire capital and then when it drops they get scared and don’t want to sell because psychologically they can’t handle the risk. Now, this is the best way to blow up your entire portfolio in the shortest amount of time. In trading, you can never be sure a trade will be a winner so you should always make sure you can handle a string of losers without it affecting the bottom line too much. Example of how human psychology works in regards to this is a study done around the Kelly Criterion formula: ( This example is from the Wikipedia page of the Kelly Criterion ) Each participant in this study was given $25 and asked to bet on a coin that would land heads 60% of the time. Participants had 30 minutes to play, so could place about 300 bets, and the prizes were capped at $250. The behavior of the test subjects was far from optimal: Remarkably, 28% of the participants went bust, and the average payout was just $91. Only 21% of the participants reached the maximum. 18 of the 61 participants bet everything on one toss, while two-thirds gambled on tails at some stage in the experiment. Using the Kelly criterion and based on the odds in the experiment (ignoring the cap of $250 and the finite duration of the test), the right approach would be to bet 20% of one's bankroll on each toss of the coin. If losing, the size of the next bet gets cut; if winning, the stake increases. If the bettors had followed this rule (assuming that bets have infinite granularity and there are up to 300 coin tosses per game and that a player who reaches the cap would stop betting after that), an average of 94% of them would have reached the cap, and the average payout would be $237.36. In this particular game, because of the cap, a strategy of betting only 12% of the pot on each toss would have even better results (a 95% probability of reaching the cap and an average payout of $242.03). Now, this is why we do not want to trade like this. We should choose a risk level we are comfortable with per trade and keep this consistent. You can use the Kelly Criterion which can be difficult to do because it requires the win probability per trade for the calculation. Now you could get this by trading a certain trade setup you like to trade, let’s keep it simple, a 100 times. By doing this, you could gage the probability of this setup being a winner and that would allow you to use the Kelly Criterion formula. For beginners, a simpler way of doing this is the 1 percent rule. This means you risk 1% of your portfolio per trade. Simple example: You have a risk-reward per trade of 1/1.5 and your strategy has a win rate of 50% of the time and you make 100 trades on a 10000 dollar portfolio. You would end up with a 25% gain after 100 trades even though the 50 losing trades lost you a total of 5000 dollars. Because of the risk-reward the winners got you 7500 dollars which brings you to 12500 dollars in the end. This is a simple example but it shows the importance of both risk/reward and position size. Of course in reality it would play out slightly different. You would recalculate after every trade if your portfolio decreases due to a loss, which means you reduce your positions to make sure your risk stays at 1% of your portfolio and if you win you increase your positions to do the same. Another thing people get wrong with this rule is they start just betting the same position on each trade of let's say 5% and think they will get out when they lose 1%. This does not work!!! You should look at your setup and where you want to place your stop and look at the percentage between your stop and your entry. If this is for example 20%, you take your 1% risk tolerance and divide it by 20, then multiply it by 100 and that will be your position size. If you are using leverage you will need to divide this position size by the amount of leverage used. An example of risk-reward is shown above. From my experience, some general rules I use which tend to improve your results on top of a risk management system as described above: 1. Cut your losers quickly and keep your winners. 2. Don't change your stop unless you take profit and move it above break even. 3. Always place your stop at a technical level and not a random percentage, for example, the last highest low. Of course, you can adapt this to fit your trading strategy and style but the basics will be the same. I hope this was helpful and if anything is unclear feel free to ask me a question through chat.
Education
by VrotteOtter
Coronavirus 2.0: Top Strategies for BondsBonds priced in yesterday's risk-off sentiment. On 30 min charts we have a perfect Sickle Pattern. If you traded this pattern, you would have made 10 ticks on the ZN. The Sickle Pattern is exclusive to Ghostsquawk, so if you want to learn more about it, consider one of our trading courses. The Kovach OBV is still very bullish, but the Chande indicates a pullback. This is reasonable because momentum does seem to have waned, but ZN has not really pulled back significantly. It would be wise not to FOMO into a long position. Instead, wait for a dip to 138'29 or 138'26, the two nearest Fibonacci levels.
CBOT:ZN1!Long
by quantguy