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Risk Management

Leverage Trading (Example)What is leverage in Forex? Leverage is a facility that enables you to get a much larger exposure to the market you’re trading than the amount you deposited to open the trade. Leveraged products, such as Forex trading, magnify your potential profit - but also increase your potential loss. Leverage works by using a deposit, known as margin, to provide you with increased exposure to an underlying asset. Essentially, you’re putting down a fraction of the full value of your trade – and your provider is loaning you the rest. Leverage and risk management Leveraged trading can be risky as losses may exceed your initial outlay, but there are risk-management tools that you can use to reduce your potential loss. Using stop-losses is a popular way to reduce the risk of leverage. Attaching a stop-loss to your position can restrict your losses if a price moves against you. However, markets move quickly and certain conditions may result in your stop not being triggered at the price you’ve set.
Education
by Anbat
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
Impact of Trading Costs on 2% Max RiskRecap: Price is still within Decision 1 and 2. The analysis side of this post is of what is happening in that area and how minor levels are being formed. Money Man hopes that it is self-explanatory, especially to those who follow his normal analyses. But he also wants to elaborate on the previous “2% Max Loss” ed post. It is linked below and built on other ed posts linked there. Disclaimer – You should let your own mind work through this if you take your money seriously. This is not to be used as a quick reference but is a rough illustration as to effects – something for you to mull over if you have not already. Money Man sat down and drew a rough graph comparing trading costs of 0% (in green), 0.5% (say 0.25% to open trade and 0.25% to close it again) (in orange) and 1% (in red) total trading costs (what the exchange charges / spread). Basically, putting trading costs on top of a 2% Max Loss graph. If you are to follow the 2% Max Loss route, or whichever percentage, then what would strike you is how the effect of % trade costs grow with trade size and affects it. It sounds obvious and why write a post about it? Again, Money Man’s aim is to illustrate how awareness can temper decisions. A quick conclusion would be how the possible negative effects of short term (overtrading) with big size, even with 2% risk management, gets amplified by trading costs. Also, how costs hamper the amount you can risk and how it thus then hamper your possible gains beyond simply an upfront cost, but in a risk management environment, what you ultimately can risk. Various exchanges have various cost structures, and many hit the small volume trader much harder than the big volume traders – they want the liquidity and market makers. The structure is normally stepped and the change from one costing level to another is high. Conclusion: Do not be confused by all this. Simply follow your risk plan. Consider that say 2% risk on every trade is not the same as 2% for the week, etc and decide if you want to build the costs into your trading before you make a trade. The saying that comes to mind is: “If you are not calculating the costs of your trading; somebody else is”. Remember: No guarantees, only probabilities. Very Important to me: Please like if you appreciate the effort, Please comment and develop this further and Please follow if you see this analysis thread going somewhere you would like to know about.
BITSTAMP:ETHUSDEducation
by Rule72
10
Position Size Calculator (Use It On All Trades)Example CADJPY daily setup is a swing trade using the position size calculator, on chart. This should be down on all trades down, for risk management and to trade Forex for a lifetime and be part of the winners in trading. Yes, this example is on daily, but practice on 4 hour, 1 hour or lower charts using position size calculator. There are several free ones online, fine one you like and book mark it for easy access when needed. Good Luck.
Education
by Anbat
Supply Zones & Demand Zones (Where Swings Happen)Supply zone are areas of resistance on charts which price action reverses at a swing point and goes bearish and Demand zones are areas of support on charts which price action reverses at a swing point and goes bullish. Once Big Banks have consumed all of the SELL ORDERS- from a demand area price action will go up. No sell orders left, sharp move up. This is so that Big banks can move market quickly consuming buy orders along the way to their targets. Once Big Banks have consumed all of the BUY ORDERS- from a supply area price action will go down. No buy orders left, sharp move down. This is so that Big banks can move market quickly consuming sell orders along the way to their targets. Price action is #1 (ALWAYS)- Big banks will range for as long as they need to do accumulate positions for what direction they take Forex pair in future, that is why use the COT REPORT (to get a heads up on this information and to keep you trading with them not against them (which is a failing/gambling trading) There are major supply and demand zones on higher time frames on 4 hour or higher charts (used for swinging or daily time frame trading) and minor supply and demand zones on 1 hour or less time frames (used for scalping or day trading) Using supply and demand zones should be part of your normal practice and trading, they will give you possible entries and targets. You can tell weak and strong supply and demand zones, by how easily price action goes thru it and/or stops (makes a base at) or reverses at... They tell you a lot in Forex trading.
Education
by Anbat
How To Trade High Impact Expected USD News (Patience)When USD news comes out before a 4 hour candle closes, I use discipline, patience and wait. A Lot of high impact expected news hits at 5:30 am (PST/USA) when New York session opens. This is London session and New York session overlapping 4 hours which I think is best 4 hours of day to trade. My Rules Area: (USD high impact expected news) 1) Use either a 5 minute or 15 minute time frame to trade on. 2) I use forexfactory.com for my news and results. 3) Use a highly traded USD currency (like Eurusd, UsdCad, UsdChf,Gbpusd or Usdjpy) to trade with. 4) If high impact news hits at 5:30 am---- then EURUSD example on chart (8/12/21 PPI mm) --- comes in---> refresh page and get results. Results were USD positive: actual 1.0% and forecast was 0.6% so was higher then forecast and/or expected, so USD shows strength, if you are trading the following pairs EURUSD , USD,AUD, GBPUSD, should go down, USDCAD,USDCHF & USDJPY should go up- related to USD high impact news results. 5) If high impact expected USD news hits prior (5:30 am PST/USD) to a 4 hr candle--I WAIT for top of hr of 6:00 am -10:00 am candle for any new trades. Why? let both spreads calm down to a normal range and all of the scalper traders clear out, to set up any possible further trades. This gives you 30 minutes to set up whole trade: Entry, Stop Loss and Targets for this. Remember EURUSD only has an ATR of 53-60 for last 5 weeks, so stops/targets are close. Chart set up is: 5 stop loss vs 14 pip target. Note high impact USD expected news was positive, so set up a bearish or sell trade with EURUSD. *Trade was entered on reversal of 5 minute DOJI candlestick right start of new 4 hour/6:00 am (not shown related to short time frame for TV/public to look at). I use both 5 minute time frame and 15 minute time frames to trade high impacted expected news on. Note: Price Action & Risk Management ALWAYS!!!
Education
by Anbat
Trading Psychology Is Worth 95% To Overall Failure or SuccessThe Cold Hard Truth "You Are You're Own Worst Enemy" You will probably develop technical skills required in placing trades and learning money management. But you constantly end up sabotaging yourself. What Is Trading Psychology? Knowing when to quit and when to push Using a stop losses Hitting targets Controlling greed, fear and hope *Discipline, Discipline, Discipline! If you want to be 10% successful FX traders then do the following: Have a trading plan and view, have money management rules, have emotional control, each trade is unique and has nothing to do with last trade, you do not revenge trade, you only trade during certain times not 24/7 & review trade results. Do opposite of above if you are part of the FOMO traders whom do not treat Forex trading as a probability based business but as gambling. Note: If a Forex trade is not doing what and when you want it too, then FIRE it ( get out of it), you are the BOSS. Have a detailed trading plan. More specifically have a detailed set of money management rules within a trading plan to take control over EMOTIONS.
Education
by Anbat
8 WAYS TO IMPROVE YOUR TRADING | Tips From Experienced Trader 🤓 In my years in trading, I’ve been approached by the new and semi-experienced traders for help and advice, and that's how it's supposed to be. Those that «have become» help those aspiring ones. Then I thought that tens of thousands of people are joining tradingview every day, and most of them are beginners and inexperienced traders, So I decided to share some knowledge here with you today. Condensed wisdom of years in trading. 🦉 You see, trading is unique in that it is accessible to people of all walks of life. Your previous education, social status, and other barriers, that might prevent you from entering some industries are completely absent in trading. The only tool you need is your brain, as trading is essentially an exercise in pattern recognition and our cognition is based on pattern recognition and the endless chain of association.🧠 So the CORE is your ability to learn and recognize patterns, and everything else gets added like pearls on the string. Master these KEY points below, and the Gods of trading might smile at you! ✏️🗒️ MAKE A TRADING PLAN - Develop a strategy! This bit seems obvious, yet so many traders arrive to this idea only after losing their first account. Don’t be like that, and you will lose your first account much slower. Research all the main strategies that are out there, and dive deep into the one you found appealing(for any reason). This step might take a year or even more, yet, trust me, this will be time well spent. I would advise simple multi-timeframe top-down technical analysis. I might be biased, as that’s the strategy I use myself, but learning it will give you the basics that you will NEED ANYWAY, whichever strategy you will end up using later. Also, I would choose it because it is intuitive and simple to use. You will be able to identify key levels on the chart after a week of staring at the charts and then work your way up, polishing entries, adding indicators if you like. 🔁 Review your plan after every trading session! After you started trading, even on a demo, DO YOUR HOMEWORK, or else all the trading that you do is in vain, and you will NEVER LEARN. Start your day by reviewing the previous day’s trades, as you will have a fresh perspective that isn’t clouded by emotions of the moment. This WORKS WONDERS! Have a diary with trades, write down your thought process of how you arrived at the particular trade. Then write down your assessment of the next day nearby. Several months' worth of a journal like that is a GOLD MINE, where you can mine data, looking at what works, what does not, etc… ⚠️ DON’T RISK MORE THAN YOU CAN AFFORD TO LOSE - Protect your positions! USE STOP LOSS and place it the moment you entered the trade. Don’t let your mind play tricks on you. As your inner voice will tell you «Why SL? I will close that trade manually, If I see that I was wrong» Nah, you won’t. You are kidding yourself. So DO use SL, don’t give your money to the market makers! 💯 Don’t risk more than 5% of the account! Now that we know we need to use SL, I strongly advise you to never risk more than 5% of your account in one trade. In fact, I do not risk more than 1% per each trade myself. Use a lot calculator to help you determine how much you are risking in dollar value per trade. It is a bit boring, but will save you a ton of money! And who said trading needs to be fun, huh? You are a grownup and it's your job! 😌 BE DISCRETE AND DISCIPLINED -Once you have the system, don’t overthink it! After you mastered your system, backtested it on multiple pairs and begin trading on demo, stop worrying about whether the strategy is good or bad. You chose it, it showed results on the backtest, now get out and test it on the market. Time will show if your choice was correct. 📜 Follow the rules and reflect on the results later! Once the system is chosen, make the rules that are as simple and clear as possible so that you could approach each trade with a ready-made algorithm. This will take a lot of stress off your mind. 💢 CONTROL YOUR EMOTIONS - Too much anger or excitement alike hurt your trading! Having a strict algorithm helps massively, and when trading you need to learn to abstract yourself from the monetary values on the screen. These are just numbers, and you are playing a game of probability, so there will be winning and losing streaks. Learn to treat both with indifference. 🌁 Play it cool! Trading is a battle of wills. Whoever has the hardest balls wins. So be cool! ⌛️ BE PATIENT - Keep your eyes on the big picture! When even considering trading as a potential career, please accept the simple fact that there will be losses, a lot of them, all the time. You will NOT be making money for quite some time. Accept it as part of the game and it will be much easier for you physiologically. If you come with the make easy money fast mindset, you will lose! 🏅 Winning takes time! I’ll stress it again, learning trading will take a lot of time, and there are some hard times ahead of you, so prepare for this beforehand, and no, you are NOT unique or special, so you will have to go through the same trial and error ordeal as others. There are no shortcuts. ✔️ ACCEPT YOUR LOSSES AND MOVE ON - Remember that you are in this for the long haul! When feeling down because each trade this week was a losing one, imagine yourself free from the location, from your job, from all the constraints that usual people have, and remind yourself, that that’s exactly what you are working towards, because the moment you can make stable returns, you can multiply your income by a factor of x10 overnight. It might be a factor of an x100, it just depends on how big your balls are. So whenever you want to quit, think of what life could have been like if you persisted! 🚫 A loss is a part of the learning process! You will lose multiple accounts. There is no way around it! This is your way of learning, and no one has created a different one so far. You might be as good as a God on demo, but the moment you enter the real world emotions kick in and you will have to learn a lot again. So when entering trading, be prepared to pay the market a fair price for educating you. And remember that the reward is much greater still! 📰 READ THE NEWS - Current events can affect the markets! This one is certainly not for beginners! If you start doing that from the start, it will be too much info for you and you will get lost in the constant swirl of hot air that surrounds the markets. But once your strategy is good enough and you are beginning to be profitable, you might want to start paying attention to the key events and dates that might have an effect on your trading. I never actively trade fundamentals myself, but who said that you shouldn't? 🤏 Keep in mind big political events that can cause big moves! This! If the FOMC meeting is tomorrow, you better close all your positions today, because whatever analysis you made might get invalidated by what the FED minutes bring to the market. We are playing probabilities that we can predict based on past experience, but whoever is trying to predict the FED and the market's reaction to it is fooling themselves, so once such a whale enters the room our ability to predict rationally vanished, thus we need not trade that day at all. And the FOMC is just an obvious example. Important statistical data such as CPI, jobs, etc might affect the pair you are trying to trade, and you better know about it. As a famous trader’s saying goes «Not being in the Market Is a position too» 🆕 UPDATE YOUR TECHNOLOGY - Slow internet connection or an old computer might make you miss your trade! There is a side note yet do not neglect your workstation. Don't let it be dirty or messy, and make sure your equipment, i.e. a computer or a smartphone work properly. Missing a trade because of a bug is SUCH a pain! You don’t want that, right? 📈And not trading update charts is even worse as some level breakouts can happen in seconds. That one is less relevant today thanks to tradingview charts being awesome, yet always make sure that the data on the chart is given to you without a delay. Trading a setup that ain’t there anymore is not good… 🦉📚 These are the «words of wisdom» that came to my head today, and I really hope I helped some of you get back on track, or begin your path as a trader with a slightly better understanding of what is ahead of you. ❗️ JUST REMEMBER: IT IS POSSIBLE! But it will take time, money, and effort, so brace yourselves, and may the odds be always in your favor! 💖Adios, Amigos! Give me a like and comment, if you agree with what I said!💖
OANDA:XAUUSDEducation
by UnitedSignals
21
How to Assess Your Trading Performance|Consistency & Perspective Hey traders, 👨🏻‍💻I am trading forex for more than 8 years. During the last 5 years, I am actively posting my analysis & trades on TradingView. Growing my audience, it was very peculiar for me to contemplate the reaction of my followers to my trading performance. (by the way, we must say thanks to tradingview where the posting system does not allow to delete the posted trades so that each and every author is easily backtestable). 👩‍👩‍👧‍👧👨‍👨‍👧‍👧Those who follow me at least a half a year know that occasionally I have winning streaks when 9 out of 10 of my forecasts play out nicely. Sometimes, however, I face the drawdowns and catch a sequence of losing trades. And sometimes the performance is mixed with the probabilities being on my side slightly. 🥇While the reaction to winning streaks is quite predictable: I am praised by the members and get nice tips. The reaction to losing streaks is worth discussing in detail. It turned out that quite a huge portion of a trading community has a completely wrong understanding of a trading nature. 🤬The single loss is considered by them to be a failure, a mistake. Facing the sequence of losses, they quickly become negatively biased to the person that they have just recently praised. With the continuation of a drawdown, they blame the analyst and launch a barrage of criticism towards him. 🔍Then they are in a search again. They are looking for a trader that will be constantly right. Catching the new one during a winning streak, the cycle repeats. At some moment such people become disappointed in trading and drop this business... ❗️Losses, losing streaks and negative days/weeks/months are inevitable. If you want to become a full-time trader, you must be prepared for the fact that trading won't give you a stable income. Your equity curve will be in constant fluctuation. Your goal in this game is simply to lose less than you make. You must become disciplined enough to keep following the rules of your trading strategy no matter what. You must learn to be consistent in your actions. You should learn to perceive losing trades not as a failure but simply as the moment when the market takes its share. Feeding you, giving you the opportunity to make money out of thin air, the market definitely has a right to claim its dividends from you. ⭐️Change your mindset, learn to lose and the magic thing will happen. ❤️Please, support this idea with a like and comment!❤️
OANDA:XAUUSDEducation
by VasilyTrader
28
High Impact Or Medium News? Use Patience I have seen high impact news strategies from 1 minute to 1 hour online, if you are interested in this kind of trading please investigate further. Always use great risk management and stop losses on every trades- when high impact news hits, that currencies BASE pair will determine what direction its goes, negative down and positive up. If I trade high impact news, wait for at least 5 minutes or maybe to end of that 1 hour or 4 hour candle that news is coming out on too trade. Like example of USDCAD on Friday high impact news was positive for the USD (base currency) NFE, Unemployment Rate while while CAD impact news was negative Employment Change and Ivey PMI. Per chart, for next 3 to 4 hrs price action was one sided with bulls controlling pair- it there a way for you to have gotten a piece of this? Per chart example: 13 pip stop loss 60+ pip target/profit with right risk management would have worked great. Please look on forexfactory.com for other high impact news events then look at Trading views charts and mark them up on how you could have made a news related trade and profited. Best way to trade medium or high impact news is wait at-least 5 minutes or until end of that hour or 4 hour candle is done, too set up a possible trade. When your set up is with right pair, price, session & time- trade it.
Education
by Anbat
The 5 Steps To Becoming A TraderThe 5 Steps to becoming a trader Step One: Unconscious Incompetence. This is the first step you take when starting to look into trading. You know that its a good way of making money because you've heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be? Price either moves up or down - what's the big secret to that then. Step Two - Conscious Incompetence This is where you realize that there is more work involved in trading and that you might actually have to work a few things out. You consciously realize that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit. Step 3 - The Eureka Moment Towards the end of stage two you begin to realize that it's not the system that is making the difference. You realize that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment. Step 4 - Conscious Competence You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it looses and when you're on a loser you close it swiftly with little pain to account. Step Five - Unconscious Competence Now we’re cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 200 pips in a day doesn't make you any more excited that getting 1 pips.
Education
by Anbat
The 10 Golden Rules Of Forex TradingForex markets can be volatile and uncertain at the best of times, and inexperienced traders can easily end up chasing their losses. Yet it is precisely this volatility that gives you the potential for major profits. These 10 rules of Forex trading may give you the best chance of landing on the winning side. Please remember, however, that trading carries a high level of risk to your capital and profit is not guaranteed. The 10 Golden Rules Of Forex Trading: 1) Avoid Forex trading software that claims to guarantee returns. No Forex software can assure you of winning trades. 2) Always use a demo trading account. We have all heard that practice makes perfect, and it is true. 3) Forex trading can be highly stressful- avoid emotional trading. Whenever real money is changing hands, the risk of loss is ever-present. 4) Invest in a solid Forex education. Knowledge is power-we all know that. Forex tools will improve your trading performance. 5) You can learn to trade Forex successfully. Learn from reliable Forex strategist or mentors, you tubers, your success is far greater. 6) Manage your Forex capital wisely. Forex markets change hourly, session or daily characterized by high volatility. Use stop loss, entry and exits always. 7) Manage your investment-per-trade wisely. This is a crucial aspect of Forex trading. Never invest more than 2% of your account on one trade. 8) Use common sense. Strong currency against a weak currency. Major news. Use common sense when judging the effect of current/upcoming events. 9) Ensure you use risk management strategies at all times. Limit your amount you trade per position. Using knowledge, signals and technical strategies. 10) Be especially cautious about overextending yourself with leverage. Leverage is a two sided coin- can magnify profits and losses. By following these 10 golden rules to Forex trading, you should find yourself in a much better position over the long term. Your focus should always be on trading currency pairs that you understand, in a way that does not expose you to too much risk. Read up about market conditions likely to impact upon the currencies you’re trading, limit your leverage to an affordable amount, and use a demo trading account to understand the market dynamics.
Education
by Anbat
Compounding "Most Powerful Force"★ Compounding interest is a powerful investment tool. By reinvesting your trading earnings, you can significantly boost your returns over the long term. Compounding refers to interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the initial principal deposit. As a result, compounding accelerates returns as you are earning not only interest on your principal, but interest on your interest. Anyone can benefit from compounding interest. The longer your money compounds, the faster it grows. For example, if you had a $5,000 Forex trading account earn 2% per day for one year (260 business day) and just let account grow, you will make over $800,000.00 US within the 1st year. You can accelerate your earning power even more by contributing principal payments to your accounts periodically. Even small deposits will realize significant benefits with compounding over the course of time. This is just by trading Forex, if you contribute additional monies, then account will grow quicker. "Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't... pays it."- Albert Einstein Note: There are free daily compounding calculators online- for you too put your own account size in, % in, days for see how much compound interest would substantially and quickly increase your Forex trading account- just let your account account, with having a plan, risk management and patience.
Education
by Anbat
The 80/20 Rule (Work Less Make More)The 80/20 Rule: 80% of your Forex results (profit) will come from 20% of your setups (work). This is why in Forex you should only trade high quality setups with the right pair, at the right price, in the right session and at the right time. The 80/20 Rules applies to work, life, business and trading. Question is: In Forex scalping or day trading> What will make the largest difference for your increasing profits? Then do more of that in trading. The 80/20 rule can change your life! Focus on what give you the most results (80%) while not focusing on useless activities (20%). Here are some examples of The 80/20 Rule: (You can make your own 80/20 rules- which will help you in life, work, play and trading) 80% of the effects come from 20% of the causes. 80% of results come from 20% of effort. 80% of Forex profits come from only 20% of all trade setups. 80% of profits come from trading 20% of all setups in London NY overlapping session. Financial markets moves 80% are technical and 20% fundamental. If you have a plan, have a routine, have a journal, have right physical frame of mind (emotional, focus, discipline, patience control), use right risk management & only trade high quality setups in Forex, this will give you best risk reward and win rate% and give you more profit & time to enjoy life. Focus on trading only your best setups. It is a way of thinking about your time as well, it applies quite well focusing on time management. If you think about it, if you can work out what the most important 20% is for what you are trying to achieve you will probably get done 80% quite rapidly. Applying a simple tip to make bigger profits by applying the Paretto Principle or 80/20 Rule to increase profit potential and reduce risk. The rule is simple, works and helps you, focus on the best trade set ups for long term Forex trading success.
Education
by Anbat
Risk On-Risk Off (FX Retail Trader)Risk On Risk Off: This is often abbreviated as 'RORO': *Note: Every session can change from risk on risk off (Sydney-Tokyo-London-New York) What Is Risk-On Risk-Off? Risk-on risk-off is an investment setting in which price behavior responds to and is driven by changes in investor risk tolerance. Risk-on risk-off refers to changes in investment activity in response to global economic patterns. During periods when risk is perceived as low (greed), the risk-on risk-off theory states that investors tend to engage in higher-risk investments. When risk is perceived to be high (fear), investors gravitate toward lower-risk investments. 'Risk On':*GREED This refers to periods when there is more confidence in the general market and investors want to pursue more risky or progressive trading instruments. An example of such a currency in Forex is the EUR, NZD, CAD, GBP and the AUD. During periods of confidence investors will often sell their 'safe' USD to buy the more risky or progressive instrument, such as the EUR or NZD etc, in the hope that they will benefit from a surge the latter's value. Selling of the USD results in over supply and a fall in its value and the purchase of the AUD results in a demand and consequent rise in its value. In 'risk on' periods, USD usually declines in value relative to many other currencies such as the AUD or CAD. Risk Off':*FEAR This refers to periods when there is more fear in the market and investors want to pursue, or invest, in safe-haven type of trading instruments. Examples of a safe haven currencies include the USD and JPY. During periods of economic uncertainty the USD is viewed as a relatively safe-haven trading instrument and when traders buy the USD then the value of the USD increases. 'Risk Off' periods, USD usually rallies relative to most other currencies. As a consequence USD index, the USDX, increases as well. Euro dollar index, the EURX, usually declines in 'risk off' periods. Yen is viewed, as a safe haven instrument as is Gold. Knowing risk-on/off concept gives traders a competitive advantage. Very helpful when trying to avoid over trading, as correlations should help to do that.
Education
by Anbat
ATR indicator (Always Use This)The ATR (average true range) indicator is the single best indicator that all FOREX traders should be using for all trades (use it or lose it). You can put ATR indicator on your chart always and/or just glance at number (in upper left) and take it off your chart, just have it handy always. What is the ATR: (Default setting (14) works fine for me in FX trading. It tells you how many pips the currency pair has moved, on average, in the past X amount of candles. Why you should be using ATR 100% of the time on every trade: 1) The ATR is crucial for Money Management 2) Money Management is crucial to winning *Know that money management is what will separate you from the losing traders. How To Use ATR In Setting Up Trades: (Never Trade Without It) 1) To know how far back from entry price away your stop loss, which is either ATR x 1.5 (works mostly) or ATR x 2.0 (if you want larger stop loss) 2) To know where to place profit targets and/or targets, 1st target is same as risk or stop loss is and 2nd target is double what the stop loss is. When you are describing Forex RISK, instead of saying unit size or dollar amounts, instead say How much are you trading per pip? Using the ATR will prevent you from getting stopped out of more trades, will keep in more trades. The professionals use ATR for stop losses and targets. ATR can be used on any time frames, but look for other evidence like price action at support and resistance areas, fib ret (golden zone) 50%-61.8%, pivot points, doji candles, harami setups, and engulfing setups to use ATR indicator for possible trades.
Education
by Anbat
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