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Risk

Risk management. How much to risk per trade?While not much is happening, remember to improve on your system more than anything else I believe. Reading every book on TA doesn't matter if you have a dumb system where you're guaranteed to blow your account sooner or later. Here's a friendly reminder on how much to risk on every trade. Suppose a 50,000$ starting account. *** Win 8 trades out of 10 on average. *** 2 losses in a row has a 4% chance of happening. Expect it to happen. 5 losses in a row has a 0.032% chance of happening. If that happens come on... Calculations. A/ Risking 10% account on each trade (starting 5k then 4500 etc). 2 losses in a row ==> Down to 40500. Down 9500. 5 losses in a row ==> Down to 29524. Down 20500. B/ Risking 2% account on each trade ($1000 then $980 etc). 2 losses in a row ==> Down to 48020. Down 2000. 5 losses in a row ==> Down to 45200. Down 4800. *** Let's say win 7 out of 10. *** 2 losses in a row has a 9% chance of happening. Will definitely happen regularly. 5 losses in a row has a 0.24% chance of happen. Should be a rarity but can happen! Very unlucky. Calculations same as previously. *** Win 5 out of 10 (rip). *** 2 losses in a row has a 25% chance of happening. Evertiem! 5 losses in a row has a 3% chance of happening. Enjoy! 10 losses in a row has 0.1% chance of happening. Unlucky!!! A/ Risking 10% account on each trade. 2 losses in a row ==> Down to 40500. Down 9500. 5 losses in a row ==> Down to 29524. Down 20500. 10 losses in a row ==> Down to 17433. Down 33000. Hey whattap baggy? B/ Risking 2% account on each trade. 2 losses in a row ==> Down to 48020. Down 2000. 5 losses in a row ==> Down to 45200. Down 4800. 10 losses in a row ==> Down to 40850. Down 9150. What about an aggressive but still not too insane 5% 5 losses in a row ==> Down 11 grans. 10 losses in a row ==> Down 20 grans 40% loss. Pretty harsh. Find your best strategy. Most trading education sites recommend 1 or 2%. If possible, it would be better to look at your past trades and calculate your hit rate figure how much you can risk BUT be conservative, for example you might be drunk at some time and start underperforming. Then you can easilly lose 5 times in a row so make sure you never go too crazy. Also the better the trade the more you can risk, but that can be subjective and I bet alot of people would screw it up, so if unsure just stick to your plan. Like buying a break at the top when overbought is way less good than buying at a monthly support with 5 min 15 min 1 HR and 4 HR RSI oversold...
BITFINEX:BTCUSDEducation
by MrRenev
5
Lesson on trading, TA and RiskG'day Cobbers and Shobbers, How are we this morning, did many of you manage to make so profit yesterday? I will start with a quick talk about Edges and trading strategy and how to be profitable from your charts. First if you take a look at the chart linked below from yesterday you will notice I flipped outlooks as the day progressed, I also traded on these calls, some I got stopped out on at small losses, a few I made breakeven or small profit after fees, the last one I made a massive profit on, none of those trades were any better than the other. Seriously! You have to look at your trades in the same way a Casino runs, lets look at the Roulette table for example on a black/red bet, now the "Edge" the Casino has in this situation is the 0 00 on the wheel, which gives the player a 47% chance of winning , the house at 47% plus the edge (Around 6%%) This edge over 10 bets this edge won't net the Casino much or anything at all but over millions of games, you can see the potential for profit. Trading is the same, once you have a strategy and find an edge, weigh up the risk to reward ratio and it fits your plan, you trade it, win or lose it does not matter, because if you have a good solid strategy and solid risk and money management plan in place, the profit will come. Taking the emotion out of trading is the first thing you need to do to last, this also relates to doing Technical Analysis. To be good at TA, you need to do more than just study and draw lines, you need to take out any preconceived Bias you have towards the market, be fluid and not stubborn. Big Egos and know it alls always fail, they are unable to admit when they are wrong and end up missing subconsciously the triggers and patterns that are going against their analysis, they filter out all the noise that is not in their favor and look for that which confirms their biases. Just remember The Market can do anything. you can do your research, analyze and be confident in your trade to go in a certain direction but you can not expect it to, which is why we trade on probabilities, when you see an opportunity ( set by your strategy / Edge) you need to factor in all the data in front of you, decide if it fits your R/R ratio, find an entry and set an exit and stick to it, if you miss the entry then let it go and wait for the next opportunity, it may come back and you will get another chance. Know your exit (look for resistance/support) levels, factor these in with your strategy (be it breakouts or simple MA crosses) before you set you buys/sells and take profits along the way. Risk You will hear people talking about Risk all the time and it seems pretty simple but it isn't. A simple explanation can be setting Stops and not risking more than a percentage of your account equity but it is more than that and it also part of what makes markets move. Risk = Pain. Pain is what causes big runs, first goes the stop losses in a big move, then the overleveraged and then those whose pain threshold is pushed beyond the limits, you know this to be true, its why you end up selling off your position at the bottom and then it magically moves up again. This is why you don't risk more than you are willing to lose, and you really got to believe it or this pain will cause you to sell at the bottom, good traders don't deal with this pain because they trade within Risk, they trade without emotion, knowing that a loss matters not, they are a part of trading, your strategy, if followed properly will profit over time. Many fail because they don't follow their strategy, they over-leverage, the place position sizes way to large and small moves against there position causes pain, pain causes loss of confidence. You can see where I'm going with this. G'day Thanks for dropping by, hopefully, you garner something valuable from my post, be it educational or an idea towards a trade of your own. Please share, like and comment and engage with me, I am here to help.
BITFINEX:BTCUSDEducation
by TroyByrne
10
How it's all connected upIn this video I explore how the US Dollar strength affects stock markets and the EURUSD. When I was very new to trading I had not known about all this - and late in the game I wished that somebody would have told me sooner. Shorter term bounces of the US dollar can cause traders to exit positions too soon. Around this time day traders could find that spikes in the US dollar causes them to be bounced out of trades that are long or short on other instruments. Volatility is what we need in trading, but there is a kind of love-hate relationship with it.
FX:US30Education
by Captain_Walker
Volatility itself could kill the marketsThe VIX is called the 'Fear Index'. That's for a good reason. In times of high volatility what do you do? People in general stay out i.e. they sell off and keep their powder dry, or look for safe havens. They fear for their money, even if they don't admit it. As a trader you're told 'volatility is good for traders'. But really - is it? It depends on how extreme the volatility is. How many of you have stayed out of the markets simply because you cannot withstand the volatility and risk? I think there are many who do so - and they are right. No point jumping in and getting fried if you cannot take the loss (in your stop losses). The average true range on many charts are pretty high in recent times. And if your stop loss is sensibly going to two times average true range (at least), many will know that they cannot take the loss. It's this simple, do you throw your money into a volatile market, like stocks at this time - and have any degree of confidence that tomorrow morning or two months later, your assets are gonna be worth more? I think not. So logically most people will not venture much into stocks at this time. Forex markets too are becoming more volatile in the last 2 months and more so in the last week. Can you jump in and with what level of stop-losses? Most people are gonna stay away. This is about mathematics. Most people have smaller accounts and cannot withstand the volatility, so would sensibly stay out. The whole thing is connected up. The Yen and USD to Wall Street (the US30); the EURUSD to Ger30. They've got you cornered! :)) If a majority - even 51% of people - stay out, it means they've gotta liquidate, which means selling off. If this idea is right then it means there is more downside to lots of indices and possibly increased volatility on forex markets.
CBOE:VIX
by Captain_Walker
OMG - A Wedge Breakout Setup!Welcome to my OMG trading idea/guide to crushing it!! As with everything else in the crypto space, we have been pulling back from our recent surge. OMG outperformed a lot the other major coins during this surge, rising just over 46% from the bottom!!! Hats off to OMG. If this is the wave 1 then can OMG assure us more gains in the next wave up? Potentially. I know some people would say this coin is undervalued compared to the other major coins out there but we aren’t here to discuss that. We are here to trade like a boss. This 46% surge shows the strength of this market and we need to capitalise on it. The surge topped at the resistance level shown on the chart which has been an action area for OMG. On the pullback, we have formed a descending wedge which has fallen nicely onto the dashed line which previously acted as resistance. Breakouts from formations like this can be very profitable so I’m going to talk you through how to trade them. Hopefully it doesn’t break out before you read it!!!! Also, I will be trading this as I’m laying it out to you now. Breakouts are one of traders most favourite types of trade as it can offer a trader a high probability trade as we have clear defined stop levels and targets. Breakouts happen in a patterns like this where price contracts towards an apex and are usually broken out with high volume. The trick with trading these setups is getting as close to the breakout without getting caught by fakeouts. I usually find placing buy-limit orders just outside the formation the best way to get in the market so we don’t have to depend on our agility to get in at the right price, it will be done automatically. In this case, I would place my buy-limit at $11.25. Our target can be calculated by the height of the wedge. As the resistance is just before this target, I will be using resistance as my target at $12.45 (10.7%). Not all traders use stops however this is a sure way to get us out of the market if it isn’t acting how we are expecting it to. I would place my stop just inside the formation at $10.87 (3.4%). If we re-enter this area then we are back to square one and we have to find another entry. So here we have around 1:3 risk to reward ratio which is perfect for me. I am happy to enter this trade knowing I won’t get burnt if it doesn’t work out. A point that is worth mentioning - as we expect high volume on the breakout, our trades should be profitable as soon as they are executed. If price hesitates after your order is placed then it could be a sign that it is a false breakout. When this happens it is ok to step out of the trade and work on another one. The frustration it causes isn’t worth keeping it there just to see is drop down to your stop loss. You want to be in control at all times. Thank you for taking you time to read this! Please feel free to comment or ask questions. If you feel like this added value to you then please give it a like/give me a follow! You can follow me through this link -> www.tradingview.com
BITFINEX:OMGUSDLong
by JoshThomas04
S&P 500: Hedging against bear market riskThe "S&P 500" started on Wednesday to fill the open gap between March 8 and March 9 (above 2740, below 2751). This is bullish and should lead to a bounce in the next days, thereby taking the "S&P 500" higher again. But in case this bounce fails to keep the market going upwards above 2800, the idea is to hedge against further downside risk with a short placed above the high of March 14, at least while the long from 2651 remains open (see related chart idea below). Short entry: 2785 Stop loss: 2833 Target: 2640 Risk/Reward: 3 The Directional Movement Index (DMI) indicator shows that the downtrend was almost over after March 12, but then instead resumed on March 13 on the "S&P 500". The Directional Movement Index (DMI) indicator didn't cross bullish on the "Dow Jones", a signal which is even more bearish than on the "S&P 500".
SP:SPXShort
by ChartArt
CUR; A risky but potentially lucrative investmentIf I decide to reduce shares in either of my holdings (FB, PYPL), CUR would be a small bet I would be willing to take. It recently shedded about half it's value since the huge spike up. It seems to have finally found bottom. I have support and resistance lines drawn in, if I end up investing, I would set a stop just below the support, and play the sell out (limit) by ear, rather than setting one. Perhaps they will have another breakthrough soon with trials or something. Who knows though, it's a risky sector/stock. Lemme know your ideas below, this is my first time posting about a penny stock. -Kristian
CLong
by KristianB12
Core rules to trade with Sinewave & MomentumHope this educational content will help you make a better use of the indicators. Remember that these rules are just ground rules. Positions sizes and stops positionning will depend on your own risk profile. This is up to you to find your comfort zone on these parameters. Indicators used in this video are : PRO Sinewave & PRO Momentum Don't forget to hit the like/follow button if you feel like this post deserves it ;) You can check my indicators via my TradingView's Profile : @PRO_Indicators Kindly, Phil
BITSTAMP:BTCUSDEducation
by PRO_Indicators
25
S&P 500: The showdown of the US government shutdown The Senate majority leader Mitch McConnell is making contingency plans for the growing possibility of a government shutdown ( www.fxstreet.com ). The RSI momentum indicator is starting to show a bearish divergence, after the "S&P 500" had reached my previous long target at 2800 points. Due to the uncertainty regarding the outcome of a government shutdown are signs of weakness visible at the R3 price resistance. To hedge open long-positions I recommend to place a small sized short around here. Short entry: 2798 Stop loss: 2808 1. Target 2768 2. Target: 2708 Risk to SL at 2675: 10 points Reward (1. Target): 30 points Reward (2. Target): 90 points
SP:SPXShort
by ChartArt
BTCUSD two patternsHello. Two possible patterns appeared. H&S and W. Indicators shows bull`s tendens. For the last days my forecasts were very good with the help of indicators, so i think it`s more chances to go up from that point, at least to 17k (upper bb line). Cant say will it be higher or not, because we lack of fandamental now. The threshold is ma20 at 1d tf. breaking through will mean up, bouncing will draw right shoulder. Who`s holding - move your stop losses. Thank you for attention:) If my charts helped you somehow, you can help me with donation. I`m saving up 0.02 btc to start trading and the part of it i`ll use to get the tradingview pro pack. Any satoshi from you is precious for me. Watch status to make it. Thank you for attention!
BITSTAMP:BTCUSDLong
by IvanGuskov