Get started

Risk

Nasdaq NQ hovering @wma200/mma50/June low zone;Diamond again?Nasdaq, si,liar to SPY has made 2 diamond patterns in May & June leading to a reversal with positive Rsi divergence. Could it be repeating similar set-up this Sept-Oct? It is currently hovering around the mma50+wma200+June low zone. Sometimes prices break a little below the diamond pattern first eating away the cut-losses before a reversal. If NQ makes another new low after Thursday’s economics data, it will be bad news. Not trading advice
CME_MINI:NQ1!
by xtremerider8
BTC returns to mean/pivot@19500;Bollinger squeezing for big MoveBTC keeps returning to the pivot line at 19500 which also acts as a support. It is also barely holding the base of the triangle as support. Bollinger Band is squeezing for a big move soon. As for now, the Head & Shoulder pattern neckline is still not yet broken, suggesting much lower prices if the neckline breaks. We just have to wait which way it breaks. If current double support holds, we may be seeing 22k next. If SPY continuous to break below the June low this week after major economic data on Thursday, there is a big chance BTC support will also fail. Then the17k to 16K zone is the next support. Not trading advice.
COINBASE:BTCUSD
by xtremerider8
EDUCATION WHAT IS DRAWDOWN | 3 Types Of Drawdown ExplainedHey traders , is it drawdown . The account drawdown is the highest observed loss from the highest value of the deposit to the lowest value of the deposit at a certain period of time . Imagine you started to trade with 10,000 $ account . At the end of the year , your account size reached 15,000 $ . 1 However , at some point through the year the deposit value dropped to 6,000 $ . It was the absolute minimum for the one - year period . At some point , your net loss was -4,000 $ or 40 % of your account balance . The account drawdown is 40 % . ! Knowing the account drawdown is very important for the risk assessment of the trading strategy . Usually , 50 % and bigger drawdown signifies an extremely high risk . There are 3 types of drawdown to know Current drawdown - a temporary drawdown associated with the negative total value of opened trading position ( s ) at present . Once you start trading with 10,000 $ deposit , you open several trading positions . Being opened , with the constant price movements , your potential gains fluctuates from positive to negative . For examples , with 3 active trades : EURUSD ( -500 $ at present ) ; GBPUSD ( + 200 $ at present ) ; GOLD ( -100 $ at present ) your current account drawdown is -400 $ or 4 % of your deposit . Fixed drawdown - the negative value of the closed trading position ( s ) at present for a certain period of time . While some of your trades remain active , some are already closed . Imagine the same deposit - 10,000 $ . On Monday you opened 6 trades , 2 still remain active and 4 are already closed . Your total loss from your closed trades is -500 $ . Your fixed Monday's drawdown is 5 % . Maximum Drawdown - the maximum observed loss from
CRYPTOCAP:TOTALEducation
by dr_heidary
WHAT IS DRAWDOWN | 3 Types Of Drawdown Explained 📚 Hey traders, In my videos, I frequently use the term "drawdown". Many of you asked me to explain the meaning of that term and share some examples. The account drawdown is the highest observed loss from the highest value of the deposit to the lowest value of the deposit at a certain period of time. Imagine you started to trade with 10,000$ account. At the end of the year, your account size reached 15,000$. However, at some point through the year the deposit value dropped to 6,000$. It was the absolute minimum for the one-year period. At some point, your net loss was -4,000$ or 40% of your account balance. The account drawdown is 40%. ❗️Knowing the account drawdown is very important for the risk assessment of the trading strategy. Usually, 50% and bigger drawdown signifies an extremely high risk. There are 3 types of drawdown to know. Current drawdown - a temporary drawdown associated with the negative total value of opened trading position(s) at present. Once you start trading with 10,000$ deposit, you open several trading positions. Being opened, with the constant price movements, your potential gains fluctuates from positive to negative. For examples, with 3 active trades: EURUSD (-500$ at present); GBPUSD (+200$ at present); GOLD (-100$ at present) your current account drawdown is -400$ or 4% of your deposit. Fixed drawdown - the negative value of the closed trading position(s) at present for a certain period of time. While some of your trades remain active, some are already closed. Imagine the same deposit - 10,000$. On Monday you opened 6 trades, 2 still remain active and 4 are already closed. Your total loss from your closed trades is -500$. Your fixed Monday's drawdown is 5%. Maximum Drawdown - the maximum observed loss from the highest value of the deposit before a new maximum is reached. Starting to trade with 10,000$ you are already trading for 5 years. Your account were growing rapidly and at some moment it reached 25,000$. Then the recession started. You faced a dramatic loss of 12,500$ before you started to recover. That was the maximum observed loss for the period. Your maximum account drawdown was 50%. ❗️Different types of drawdown give a lot of insights about a trading strategy. Its proper assessment will help to spot a high risk strategy and to find a conservative one. Constantly monitor your account drawdown and always check the numbers. What is your highest account drawdown? ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
Education
by VasilyTrader
15
High Risk & High Reward - LUNA CLASSICHello Team, As we can see LUNC is forming a massive falling wedge after a huge run up (Bullish Formation : *Upon Breakout). A strong volume resistance break to the upside from this falling wedge can have massive upside potential. We are looking to start adding small positions as we continue lower. Key Notes: This is a very high risk play due to being a highly skeptical trading pair; only for small position sizing. Fundamentals to follow: Bitcoin Strength/Weakness USD/Stock Market Strength/Weakness : Strong Correlation Previous Posted LUNA/C Trade: 1000%+ Run to the upside
Long
by GenesisGo
1
>1%Hello everyone Today I want to discuss with you a serious issue of risk management. Surely each of you has heard about the 1% rule: do not risk more than 1% of your capital in one transaction. The rule is well-known and quite useful, it is better to lose 1% than the entire capital. Beginners, although they know this rule, rarely follow it and this is a big problem. I think this is the main problem of beginners, people think that the problem is strategy, but FOREX trading is a game of probability. The Probability Game Not every trader understands what probability is. Most are afraid to study this question because they are afraid of long mathematical formulas. Do not be afraid, you need to study! And even if you don't want to do it, there is an easier way. In simple words: probability is something that happens more often than usual, but not always. Not clear? Let's take any pattern. By the method of research and observations, experienced traders decided that this pattern is often found on the market and it can be traded, while trading this pattern does not promise 100% results. This means that if you trade this pattern infinitely many times, you will be in the black at a distance. At a distance… We're getting close. Distance is a series of transactions. Whatever pattern you choose, whatever strategy you have, you need distance, you need to make a series of trades so that the pattern works out in order to understand whether this strategy is really profitable. But if you risk everything or almost everything in one trade, what distance will you have? Exactly. Without a series of trades, you will not be able to profit from the pattern, without risk management and following the 1% rule, you will not be able to make a series of trades, because your capital will disappear very quickly. Do you think that 1% is too little? Professional traders risk an even smaller percentage in transactions. The goal is to stay in the game as long as possible and that's when you'll be super profitable. Traders who risk less than 1% in transactions get huge profits at a distance, so don't worry about profits, think about losses, how to reduce and avoid them. Demo account The biggest advantage of a demo account, in my opinion, is that it is free and every trader can train to follow risk management for free and as much as he wants. I advise you to set aside a month for trading on a demo account with the right risk management. Set a goal not to open trades with a risk of more than 1%. And no matter what your strategy is, just follow the rule. I assure you, you will see the difference. Analyze, study, train and victory will find you. good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
6
Some helpful trading tips ✅✅Trading Advise from Richard Dennis who turned a $400 trading account into $200 million. 1. Whatever method you use to enter trades, the most critical thing is that if there is a major trend, your approach should assure that you get in that trend. 2. A good trend following system will keep you in the market until there is evidence that the trend has changed. 3. When you have a position, you put it on for a reason, and you’ve got to keep it until the reason no longer exists. 4. You should expect the unexpected in this business; expect the extreme. Don’t think in terms of boundaries that limit what the market might do. 5.  Trading decisions should be made as unemotionally as possible. 6. Trade small because that’s when you are as bad as you are ever going to be. Learn from your mistakes.
BITSTAMP:BTCUSDEducation
by cryptobrainbox
Stop Loss Alone is not Risk Management - What is Your SystemTo be successful, you must develop consistency in your trading. You can achieve this by creating a system to trade. One that provides an edge to fit your lifestyle and personality. Discipline is required to stick to your system so that you can measure results (wins and losses) over a large number of trades. A simple journal helps you to measure your trades. This provides edge and success unfolds over time, requiring a strong mindset to create, adhere and measure. Goals are achievable through steps that are part of the process. Things to consider when developing your system are: Market Phase, Price Structure, Areas of Value, Areas of Entries as well as Exits, Multi Time Frame Analysis, Trend Lines, Support and Resistance, Dynamic Support and Resistance etc. Pro Tip: Trade clean and don't clutter your charts. Trade around a couple of levels with a single indicator. Be PATIENT to let trades come to you once you have made a trading plan. And when the market enters your zone, be READY to take action and trigger your entry based on rules. If you're a new trader or a struggling trader, feel free to reach out and ask me a question. If you liked this idea or if you have your own opinion about it, write in the comments. The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations.
Education
by imr4nkh8n
Trading Psychology | How to Perceive Your Trades 👁 Hey traders, In this post, we will discuss a common fallacy among struggling traders: overestimation of a one single trade. 💡The fact is that quite often, watching the performance of an active trading position, traders quite painfully react to the price being closer and closer to a stop loss or, alternatively, coiling close to a take profit but not being managed to reach that. Fear of loss make traders make emotional decisions: extending stop loss or preliminary position closing. The situation becomes even worse, when after the set of the above-mentioned manipulation, the price nevertheless reaches the stop loss. Just one single losing trade is usually perceived too personally and make the traders even doubt the efficiency of their trading system. They start changing rules in their strategy, then stop following the trading plan, leading to even more losses. ❗️However, what matters in trading is your long-term composite performance. A single position is just one brick in a wall. As Peter Lynch nicely mentioned: “In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” There are so many factors that are driving the markets that it is impossible to take into consideration them all. And because of that fact, we lose. The attached chart perfectly illustrates the insignificance of a one trading in a long-term composite performance. Please, realize that losing trades are inevitable, and overestimation of their impact on your trading performance is detrimental. Instead, calibrate your strategy so that it would produce long-term, consistent positive results. That is your goal as a trader. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
Education
by VasilyTrader
15
'Spidey sense' tingling? Depends how you know what you know.Safe experience lull you into a false sense of security, even when you know about a clear and present danger. That's what experts on risk and decision making** say about the role of our personal experience in our risk perception. Take 9/11 for example. Many, suddenly concerned about the risk in flying, opted to drive instead. However, in reality the risk of injury or death while driving is multiple times that of flying. Why was driving perceived as safer? Studies of decision making say that a big factor is the *way* people get most of their information. When that information comes from repeated personal experience (like car trips) it is given a bigger weight in the decisions we make. The catch is when the typical experience shows no danger simply because the threat is very rare, novel (for us) or out of our awareness. It's August 25th, 2022 and, stock indexes are levitating, held up by some unseen force. The "Doom and Gloom" on you tube is starting to ring hollow. We know the risks: inflation, dollar, rates, etc. etc. etc. I won't bore you further with my mundane perspective of, what has been for me, a mundane market. You already know the punchline cleverly hidden in the chart on the right (a 3 day chart of VIX). Out of curiosity, was I the only one caught off guard? If you were asked, out of the blue, to draw the 3 day VIX, would it look like that? and lastly- The best explanation I have is the one offered above. What would you add? or subtract? -Trade Safe. **The research on decisions from experience is extensive but these are good points of departure: Thinking Fast and Slow , D. Kahneman. Chapter 30. Rare Events The Black Swan : The Impact of the Highly Improbable Paperback – January 1, 2008. pp 76-78 Decisions from experience and the effect of rare events in risky choices. Psychological Science . 15. 534-539. Hertwig, R., Barron, G., Weber, E., and Erev, I. (2004). The Effect of Safe Experience on a Warnings’ Impact: Sex, Drugs, and Rock-n-Roll ." Organizational Behavior and Human Decision Processes 106, no. 2 (July 2008): 125-142. Barron, Greg, Stephen George Leider, and Jennifer N. Stack. "
SP:SPX
by gb50k
1% risk per trade is too much, try this insteadHello traders, Remember when you just started trading, almost everywhere you could hear about the 1% per trade risk rule? While this is not too bad, I think in most cases 1% risk is too much. Here's why: 1. If you're trading a 100k prop firm account, 1% is $1000. Imagine you have a very usual losing streak of 3-4 trades. Now you've lost 3-4%, and $3-4k in dollar amount. If you're a day trader, it could happen in one day easily. Ask yourself honestly, how would you feel about it all and if you will be capable of executing your edge? 2. Most prop firms will have a 5-10% drawdown breach rule So again, a very usual losing streak will take you halfway to account termination. 3. 1% risk leaves almost no room for days where you executed poorly or traded emotionally. We are all humans and we make mistakes. Something goes wrong and you trade the setup you were not supposed to be trading. And instead of stopping after 3 losers, you continue to trade more. So what can we do about it? My suggestion is very simple: risk no more than 0.1-0.25% per trade. If your average winner is 3-7RR, then with a good account size a 1% winner is just huge and more than enough. And if you're going through the evaluation process, such a small risk will keep your equity curve in control and still will allow you to grow it to profit targets. Hope it helps!
Education
by Yelli_trades
Where are you now? The mean of volatility adjusted indexes.The summary: Stocks fell ("Faded"?) out of the main upward channel. Bulls can hang there hats on the ATR that has not confirmed a reversal. Chart shows the mean of 3 US stock indexes divided by their respective volatility index: SPX / VIX , NDQ / VXN , DJA / VXD. This is one approach to putting all 3 on a single scale and is conceptually similar to Z-score, Sharpe ration and Normalization, to name a few** Getting all 3 on the same scale is useful for both comparison and, as in the present chart, aggregation. (SPX appears above on top for reference.) Summary: Last session "stocks" fell out of the main upward channel. They have also fallen bellow the long term median (red dots). However, there are bullish features as well: ATR indicator: Typically inverse stocks Were *not* seeing the same "break out" (added Regression channel +/-2STD) It is not yet in free fall and there's plenty of structure to the left for support and pullbacks. Notes: ** There are issues with taking the mean of any of these statistics. For example two Zscores of 0 and 3. It's true that their mean is 1.5 but there are very few valid conclusions one can draw from that outcome. It will have a "smoothing" effect (mean reversion) which is not entirely undesirable for our purposes.
SP:SPX
by gb50k
Trade setups I would take and how to manage riskJust like this. Buy and sell limits above and below structure, as in the most recent highs/lows, with your TP in general being a return to structure. Brutally easy way to scalp and make money. Few more examples... This one shows where the stop loss might be. In general, I go with a 2/3 or 3/4 type rule, where I'll have a wide cluster of limits, then a gap, then a hard stop that closes all of them. Just in case. Your order clusters should be wide enough with this strategy that it almost never gets hit. Regular market movement should not be hitting your stop loss. That kind of behavior should generally be reserved for news events that catch you off guard. Now as far as actual risk goes, this is entirely determined by you and no one else. There's no single correct way to do this. A lot of people are dead set on the idea that you should never risk 10% of your account, but how big is the account? Is it $10,000? Is it $100? If it's $100, why not risk $50+ when the odds of a loss are very low? On EUR/USD, you might have a hard stop loss of 50 pips with 15 tickets separated by 2 pips each. Each ticket would be 1k (0.01 lots). If 1 pip on a 1k is $0.10, then a 50 pip stop loss is $5. Your second ticket is 2 pips away, so that loss would be $4.80. Third $4.60, and so on. It's doable, right? Maybe the price dips 20 pips into your counter-trend limit cluster, eating 10 limits. Then the price returns to the support or resistance near your starting point, and you decide to close all of your tickets. The profits from that would be $2.00, then $1.80, then $1.60, and so on. That might not seem like much in comparison to the stop loss, but consider this: your stop loss will have a 0-5% chance of ever getting hit. It's straight profit. And it's constant, and consistent. I cannot stress that enough! You can be doing this all day long. So, what if you want to follow a trend in this manner? It's the same deal, really... just throw limit orders below (or above) trending wicks. Like this: It's all just structure. You bet with structure, and you bet against structure. At all times. You only require a 50% retracement from your starting ticket in order to break even. If you even feel uncomfortable with what's going on in front of you, it doesn't take much for you to get out safely and start over with a new cluster of limits. There is absolutely nothing wrong with closing out safely. You'll be trading so frequently you aren't even a little bit obligated to let things "play out". Maybe you don't like how quickly the momentum built into your cluster, and it retraces down to the 50% area so you wanna break even, but then you start laying more limits above and below because you believe that momentum is likely to slow down. I'm gonna tear down a phrase that I'm sick of hearing: the trend is your friend . The trend could be the worst friend you've ever had. Sometimes he's really cool, and he's the life of the party. But he really likes hanging out with you, especially when nothing is going on. He really likes to wait! He doesn't exactly value your time, and he's perfectly content sitting in a chair next to you watching paint dry. He smacks the remote out of your hand when you try to turn on the TV. This trend guy can be a real jerk sometimes. You also suspect he might be bi-polar, because sometimes when you get excited to do things with him, his mood shifts the moment you open your mouth and suddenly the fun has been sucked out of the room. That is the trend. On some pairs like USD/JPY, a trend can go on for a very long time, and there's a lot of money to be made. The problem is it is speculative . You don't know where that trend is going to end. Nobody is clairvoyant, and most people will make incorrect guesses. If you simply remove this requirement of speculation, where you have to be "correct" in your guesses in order to make money, you will do better in almost any market. If your goal in trading is to make consistent money, then the trend is not your friend. He's an acquaintance at best. You have to associate with him in business and that's about it. You spend just as much time associating with the counter-trend, because you should be doing business with both of them constantly. Now, on the other hand, if your goal is to invest (AKA gambling), that's a separate concept entirely. You're trying to grow a tree from a seed when you invest, and there's nothing wrong with that. But most people cannot live off of it. You can't even order pizza with your investments until they come to fruition. A trader can make consistent money every single day, without knowing or caring where the market is going or what it's going to do. Price continues trend, price retests, trader makes money. Price reverses, price retests, trader makes money. That's it . No waiting for retarded "key support levels", no waiting for "confirmation", no speculation, no technical analysis. Just raw risk management, getting in and out of the market quickly and constantly. Now, the one downside to being this kind of trader is you generally can't do this easily with the basic tools provided by your platform, meaning you would need scripts, EAs or whatever in order to quickly deploy limit clusters. The tool I'm working on allows me to drag a horizontal line on the screen, and I have a panel of buttons that do interesting things. I can click "Sell limits" and a whole bunch of sell limit orders appear just above the line. I can move that line again and click "Adjust TP", and the take profits for all of those orders will appear right below the structural retest point I'm targeting. I have buttons to close profits, to close pendings, close all tickets... it's just the bees knees. This is an MT5 EA, which most people won't be using, but I trade on CryptoAltum so that's what I use. I will leave it here for free. Lastly, have some limit order porn. Every single rectangle is a place where you could've had limits that got filled and made money. On really strong trends, you might notice that the retracement only returns to around the 50% point of your limit cluster, but you'll notice how uncommon that is and how easily you could've gotten out with little to no loss. A lot of the time, I won't even restrict myself to structure (swing highs and swing lows) even though that's the most reliable way to do it. I'll literally just put limits above and below any wick because I feel like it and I can make a profit in all likelihood. ...Anyway. I hope you enjoyed this write-up. Leave a comment if you did, or have any questions!
Education
by WinkleTrades
The easiest way to make money tradingI'm going to show you one of the simplest, and most effective ways to trade. Period. Just about every other type of trading is speculation; this is not. This is making money regardless of where the market goes, and you don't even have to have a clue as to what the market is going to do next. I repeat: you do not need to know where the market is going to make money . In these pictures, every rectangle represents a cluster of small limit orders getting filled, with the anchor point (starting place) being a wick rejection. That's it! You'll notice that in almost all of those cases, the retracement from the limit block exceeds 100%, meaning 100% of the limit orders in that block are profitable. You only actually need to see the price retrace by 50% of that block to break even. This is why I laugh when people say "the trend is your friend". The counter-trend is your friend too. The market is your friend. You don't have to know where the price is going, and you can make money in either direction as long as you're placing your limit orders in a way that goes with the flow. You're trying to capitalize on liquidity 100% of the time, and liquidity is really, really common. You can literally place trades based on every single candle if you want to! If there is a wick, you can trade it. Even if you're wrong, having tiny limit orders spread out through a cluster based on that wick means your hard stop loss would be hit rarely. You should still definitely have a hard stop loss, just in case a doomsday scenario comes. So imagine you have a $2000 account. On a 1k (0.01 lot size), 10 pips is $1. Let's say you have 100 limit orders, separated by 1 pip each. 50 of your limit orders get hit, and then the price retraces by 50 pips. Given that your average entry point would be 25 pips (the halfway point), you would have made 25 pips profit on a 50k, meaning $125 profit on a very high probability trade. In those pictures, even the big moves don't hit all 100 of your limit orders, not at once. Not even 50 all at once. I'm not saying that doesn't happen obviously, but the probability of it happening is very low in relation to how frequently you'd be making profitable trades. So what you do is you either commission a script or write your own to deploy all these limits very quickly. I'm currently having one commissioned for me in MT5 which works very well. I can drag a horizontal line that serves as an anchor point, deploying x amount of limit orders with y distance between each other, z order sizes (0.01). I can even have them all share the same stop loss and take profit, or have SL/TPs a specific distance from each individual ticket. I'd show this stuff here, but TradingView doesn't like pictures coming from the outside. If you use metatrader 5 and would like my tools, feel free to message me. I'm not sure if I can edit this later, but I hope I can... I tend to rethink things a lot and hate having to finalize something. Anyway. I hope this helps.
FX:XAUUSDEducation
by WinkleTrades
10