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Riskmanagementstrategy

Are You Taking the Right Risks in Trading? Best RISK Per Trade What portion of your equity should you risk for your trading positions? In the today's article, I will reveal the types of risks related to your position sizing. Quick note: your risk per trade will be defined by the distance from your entry point to stop loss in pips and the lot size. 🟢Risking 1-2% of your trading account per trade will be considered a low risk. With such a risk, one can expect low returns but a high level of safety of the total equity. Such a risk is optimal for conservative and newbie traders. With limited account drawdowns, one will remain psychologically stable during the negative trading periods. 🟡2-5% risk per trade is a medium risk. With such a risk, one can expect medium returns but a moderate level of safety of the total equity. Such a risk is suitable for experienced traders who are able to take losses and psychologically resilient to big drawdowns and losing streaks. 🔴5%+ risk per trade is a high risk. With such a risk, one can expect high returns but a low level of safety of the total equity. Such a risk is appropriate for rare, "5-star" trading opportunities where all stars align and one is extremely confident in the positive outcome. That winner alone can bring substantial profits, while just 2 losing trades in a row will burn 10% of the entire capital. 🛑15%+ risk per trade is considered to be a stupid risk. With such a risk, one can blow the entire trading account with 4-5 trades losing streak. Taking into consideration the fact that 100% trading setups does not exist, such a risk is too high to be taken. The problem is that most of the traders does not measure the % risk per trade and use the fixed lot. Never make such a mistake and plan your risks according to the scale that I shared with you. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
15
Guard Your Funds: Only risk what you can afford to lose.🎉 Risk Management tip for Vesties and @TradingView community! 🚀 😲 We all know the saying "only risk what you can afford to lose," but do you know the powerful impact it can have on your trading journey? 🤔 In the ever-evolving world of cryptocurrency and futures trading, one fundamental principle stands as the cornerstone of profitable and sustainable trading journeys: Only risk what you can afford to lose. Embracing this essential concept is crucial for preserving capital, maintaining emotional stability, and cultivating a disciplined approach to risk management. In this article, we will delve into the significance of operating money and risk within the confines of one's financial capacity and explore the key pillars that underpin this approach. Understanding Risk Tolerance and Capital Allocation: 1. Assessing Individual Risk Tolerance: To truly understand one's risk tolerance and establish a robust risk management strategy, traders are encouraged to engage in a thought exercise that involves imagining potential losses in tangible terms. Visualize throwing money into the bin or burning it completely, purely to experience the feeling of losing money. This exercise may seem unconventional, but it serves a crucial purpose: it helps traders gauge their emotional response to monetary losses. During this exercise, consider the two extreme scenarios: the first being the largest amount of money you can lose without causing significant distress, and the second being the maximum amount of loss that would completely devastate you financially and emotionally. These two amounts represent your Fine Risk and Critical Risk , which reflects the sum you are willing and able to lose over a specific period of time without compromising your financial well-being. 👉 The next step involves breaking down the Fine Risk into smaller, manageable parts. 🔑 Divide the Fine Risk into 10 or even 20 equal parts, each representing the risk amount for every individual trade. This approach is designed to create a safety net for traders, especially when they encounter unfavorable market conditions. For instance, imagine a scenario where you face five consecutive losing trades. With each trade representing only a fraction of your Fine Risk, the cumulative loss remains relatively small compared to your risk capability, providing emotional resilience and the ability to continue trading with confidence. By splitting the Fine Risk into smaller portions, we can safeguard their capital and ensure that a string of losses does not result in irreversible damage to our trading accounts or emotional well-being. Additionally, this approach promotes a disciplined and structured trading mindset, encouraging us to adhere to their predefined risk management rules and avoid impulsive decisions based on emotions. Remember, risk management is not solely about avoiding losses but also about preserving the means to participate in the market over the long term. 2. Establishing a Risk-to-Reward Ratio: The risk-to-reward ratio is a critical metric that every trader must comprehend to develop a successful trading system. It is a representation of the potential risk taken in a trade relative to the potential reward. For a well-balanced and sustainable approach to trading, it is essential to ensure that the risk-to-reward ratio is greater than 1:1.10. A risk-to-reward ratio of 1:1.10 implies that for every unit of risk taken, the trader expects a potential reward of 1.10 units. This ratio serves as a safety measure, ensuring that over time, the profits generated from winning trades will outweigh the losses incurred from losing trades. While there is a popular notion that the risk-to-reward ratio should ideally be 1:3, what truly matters is that the ratio remains above the 1:1.10 mark. Maintaining a risk-to-reward ratio of at least 1:1.10 is beneficial for several reasons. Firstly, it allows traders to cover their losses in the long term. Even with a series of losing trades, the accumulated profits from winning trades will offset the losses, allowing traders to continue trading without significant setbacks. Secondly, a risk-to-reward ratio higher than 1:1.10, combined with proper risk management and a well-executed trading system, enables traders to accumulate profits over time. Consistently achieving a slightly better reward than the risk taken can lead to substantial gains in the long run. 3. Determining Appropriate Position Sizes: Once you have a clear understanding of your risk amount and risk-to-reward ratio, you can proceed to calculate appropriate position sizes for each trade. To do this, you can use a simple formula: Position Size = (Risk Amount per Trade / Stop Loss) * 100% Let's take an example to illustrate this calculation: Example: Risk Amount per Trade: $100 Risk-to-Reward Ratio: 1:2 Stop Loss: -4.12% Take Profit: +8.26% Using the formula: Position Size = ($100 / -4.12%) * 100% Position Size ≈ $2427.18 In this example, your calculated position size is approximately $2427.18. This means that for this particular trade, you would allocate a position size of approximately $2427.18 to ensure that your risk exposure remains at $100. After executing the trade, let's say the trade turned out to be profitable, and you achieved a profit of $200. This outcome is a result of adhering to a well-calculated position size that aligns with your risk management strategy. By determining appropriate position sizes based on your risk tolerance and risk-to-reward ratio, you can effectively control your exposure to the market. This approach helps you maintain consistency in risk management and enhances your ability to manage potential losses while allowing your profits to compound over time. Emotions and Psychology in Risk Management: A. The Impact of Emotions on Trading Decisions: Emotions can significantly influence trading decisions, often leading to suboptimal outcomes. Traders must recognize the impact of emotions such as fear, greed, and excitement on their decision-making processes. Emotional biases can cloud judgment and result in impulsive actions, which can be detrimental to overall trading performance. B. Recognizing and Managing Fear and Greed: Fear and greed are two dominant emotions that can disrupt a trader's ability to make rational choices. By developing self-awareness and recognizing emotional triggers, traders can gain better control over their reactions. Implementing techniques to manage fear and greed, such as setting predefined entry and exit points, can help traders navigate turbulent market conditions. C. Developing a Disciplined Trading Mindset: A disciplined trading mindset is the bedrock of successful risk management. This involves adhering to a well-defined trading plan that outlines risk management rules and strategies. By staying committed to the plan and maintaining a long-term perspective, traders can resist impulsive actions and maintain discipline during times of market volatility. D. Techniques for Avoiding Impulsive and Emotional Trading: To avoid impulsive and emotional trading, traders can employ various techniques. Implementing cooling-off periods before making trade decisions allows traders to gain clarity before acting. Seeking support from trading communities or mentors provides valuable insights and helps traders stay grounded. Utilizing automated trading systems can reduce emotional interference and ensure trades are executed based on predefined criteria. In the world of cryptocurrency and futures trading, the fundamental principle of "only risk what you can afford to lose" remains the cornerstone of successful trading. Embracing this concept is essential for preserving capital, maintaining emotional stability, and cultivating a disciplined approach to risk management. Understanding individual risk tolerance and breaking down total risk into smaller portions allows traders to navigate unfavorable market conditions with resilience. Maintaining a risk-to-reward ratio above 1:1.10 ensures that profits outweigh losses over time, while determining appropriate position sizes enables effective risk control. Emotions play a significant role in trading decisions, and managing fear and greed empowers traders to make rational choices. Employing techniques to avoid impulsive trading, like cooling-off periods and seeking support, reinforces a disciplined trading mindset. In conclusion, adhering to the principle of only risking what you can afford to lose leads to sustainable success in the dynamic trading world. By implementing effective risk management practices, traders enhance their chances of achieving profitability and longevity in their trading journeys. 📝👋 Feedback is super important to us! 😊 We would absolutely love to hear your thoughts and comments about the article. 🧐 Did you find the information helpful and well-explained? 🤔 Your feedback means a lot to us and will help us improve our content to provide better insights in the future. 😇 Thank you so much for taking the time to share your thoughts! 🙏 We're excited to hear from you! 💬
INDEX:BTCUSDEducation
by Vestinda
How To Lose Small When Trading BigLosing trades aren't always bad. It's when you don't manage the trade before you lose that can make losing trades bad. Let me walk you through 4 positions that I stacked week and show you how I avoided losing thousands of dollars and kept the loss to under 1%. Firstly, it's important to understand that I am a swing trader which means I observe a variety of higher timeframes. Secondly, I use my own strategy called TMP. It's based around every pullback within the trend cycles so I can trade the continuation of the trend. Thirdly, This analysis was mostly done on the weekly, daily, 4 hour, and 2 hour timeframe. Lastly, I aim for more than 2:1 reward to risk trades and for these trades I was sure to keep my losses below $500 a trade. Trade 1 s3.tradingview.com This trade was based on the weekly timeframe. The reward to risk was around 4.50 and I knew I'd be in this trade long term. Probably around a month or so, maybe longer. I risked 0.50% in the trade because I needed to build the analysis and I knew I wanted to stack more trades in case price went my way which you will see me begin to build in the new few trades. Trade 2 s3.tradingview.com This trade was based on the 4 hour timeframe. Price made a new higher high on the 4 hour. I set a pending order so when price pulled back it would trigger me into the trade. This trade was a 8:1 reward to risk ratio. I risked 0.50% on this trade. Price began to go my way. I felt good about the trade. Trade 3- Trailing the stop begins s3.tradingview.com Price made a new higher high. I had to drop down to the 2 hour timeframe to get a good view of this trade. My feelings on this trade was neutral. I reminded my self that no matter what I'd follow my rules. So I set another pending order and went about my day. The Reward to risk on this trade was a 16:1. I risked 0.25% on this trade. Now at this time I'm sitting at 1.25% of risk in 3 trades. This was when I decided to move my stop loss on both trades underneath the third trades higher low. I had just a little risk left on both of these trades but nothing heart stopping. I was stoped out of the third position for a for around -0.27%. But my first two trades continued to run. Trade 4- The last stand s3.tradingview.com Then price went my way. I realized I wanted to be long again and the entry sat right where I'd just entered my precious losing trade. The reward to risk was 19:1. Whew! This was the opportunity of opportunities for me this week and I couldn't avoid entering. So I set another pending order to buy. It triggered and a few hours later, I lost the trade. and my other trades were taken out as well. I lost a total of $761. This was only 0.76% loss in my account because of how I managed my trades as price went up in profit. Had I kept my trades at the same risk(1%) and never moved my stop loss I could have lost $4000 this week. The key to losing small is to build out your positions each time price makes a new high or low depending on the direction of the trade. I built 4 positions and I have to say I would do it again. The potential for big rewards to risk got me, and I knew risk 1% on each trade would have meant I'd lose my funded account due to their drawdown rules. I cannot lose 3% in one day. Thats very manageable when you decrease your risk per trade. Thats what had to be done. If you don't think you can pass a challenge by decreasing you risk, your rewards aren't big enough. If you learn anything from the trades I entered this week, the previous statement above is how can lose small while trading big. Do I still believe NZDCAD can go up? Yes! As long as price stays above the weekly higher low. I'll build out this scenario again. Well, I really do pray you enjoyed this recap from my trading this week. I had no other trades on my other currency pair so it was a smooth trading week. Be sure to like this article if you enjoyed it and found it intriguing. If you have any questions do ask them below. Much love and blessing❤️ Shaquan
Long
by ShaquanLopez
2
GBPUSD ALERT: BULLISH DIVERGENCE DETECTED! 🚨📈💡 GBPUSD ALERT: BULLISH DIVERGENCE DETECTED! 📈🚀 🔍 What we've discovered during our examination: 🔍 📈 Bullish Divergence: Despite the prevailing bearish trend, we've identified a bullish divergence forming on the GBPUSD 1-hour chart. This could be a sign of a potential trend reversal! 📉🔄📈 📈 Relative Strength Index (RSI): The moment indicator RSI is backing this bullish divergence signal, suggesting a possible upward momentum in the near future! 📊🚀 🚨 Trading Alert: 🚨 📌 Time Frame: 1 Hour ⏰ 📌 Pair: GBPUSD 🇬🇧💱🇺🇸 📣 Our analysis indicates a potential bullish move for GBPUSD, but a word of caution before you hit that trade button: 🛑⚠️ 🚫 Trading always involves risk, and even though the indicators look promising, it's essential to consider your risk tolerance and use proper risk management strategies. 💼🛡️ 💡 Trading Tip: 💡 📌 Wait for Confirmation: It's crucial to wait for additional confirming signals before entering any trade. Always look for supporting evidence to strengthen your trade decision. 🕵️‍♂️🔍 📌 Set Stop-Loss: Protect your capital! Always set a stop-loss order to limit potential losses in case the trade doesn't go as planned. 🛡️💰 📌 Stay Informed: Keep an eye on market news and events, as they can impact the forex market. Stay updated to make informed decisions! 📰🌍 Remember, the market can be unpredictable, so never risk more than you can afford to lose! 🙅‍♂️💸 Trade responsibly and smartly! 🧠💪 Happy trading! 🚀📊💹 #Forex #GBPUSD #BullishDivergence #TradingAlert #TradeResponsibly
by T-Q
UNIUSDT Bearish Divergence 1H and 4H🚨📉 Alert to Crypto Traders 📉🚨 📈 #UNIUSDT #BullishTrend #BearishDivergence 📉 Crypto community, pay attention to UNIUSDT! 🚀📉 📈 The overall trend for UNIUSDT in the 1-hour and 4-hour time frames remains BULLISH, forming Higher Highs (HH) and Higher Lows (HL). 📈📈📈 🚨 However, we've spotted a concerning sign: #BearishDivergence on the Momentum Indicator RSI. 📉 RSI is showing Lower Highs (LH) and Lower Lows (LL) despite the price making higher moves. 📉📉 📉 This bearish divergence can be an early warning signal of a potential trend reversal or correction. 🛑🔄 📝 Trade Recommendation: 📌 Keep a close eye on UNIUSDT's price action and RSI movements. 📌 Consider tightening stop-loss levels or reducing position sizes to manage risk effectively. 📌 Exercise caution when opening new long positions, as the bearish divergence could lead to a pullback. 📊 Remember, successful trading involves understanding both bullish and bearish signals to make informed decisions. 🧠💡 🛡️ Trade responsibly and stay updated with market trends! 🚀📉 #CryptoTrading #TechnicalAnalysis #RSIDivergence #TradeSmart #RiskManagement #MarketAnalysis Disclaimer: This analysis is for informational purposes only and not financial advice. Cryptocurrency trading carries risks, and past performance does not guarantee future results. Always do your research and consult with a professional financial advisor before making trading decisions.
by T-Q
1
Forex Journal #3 : GBPUSD Keeps FallingIn my journal, I'm noticing GBPUSD made a new lower low on the 4 hour timeframe. Although price is in an uptrend as clearly seen on the daily and weekly timeframe, any sells taken will be a countertrend trade. I prefer to trade down to my weekly estimation zone 1.27620 and entering on the 4 hour timeframe to keep the stop loss small. Trade at your own risk and risk level. I'd love if you can reply your thoughts and like the video for more
Short
by ShaquanLopez
1
Understanding US Economic newsUS Economic Indicators: We know about trends and trend changes, but why a trend changes? The tops and bottoms of the market are determined by the fundamentals, like news releases, while the technicals show us how we get between those two points. So a news release can be the cause or trigger of a trend change. So it is to our advantage to at least be aware of upcoming news releases. Here are some releases to watch for: Non-Farm Payrolls Non-Farm Payrolls have proven itself to be one of the most significant fundamental indicators in recent U.S. history. As a report of the number of new jobs created outside the farming industry each month, a positive or negative NFP can get traders to act very hastily. A better than expected figure is very bullish for the dollar, whereas a more sluggish number usually results in the dollar being sold off. There is another component of unemployment released on the same day: The Unemployment Rate. Unemployment measures the amount of people that are out of a job, but are actively seeking one. If this number is smaller, then it means that the people that are seeking jobs are finding them, possibly meaning that businesses are well off and that the economy is expanding. The NFP is a number, usually between 5-6 figures, whereas the Unemployment rate is a percentage. A higher NFP number and lower unemployment number are generally bullish for the dollar and vice versa. It is difficult to trade the NFP and Unemployment Rate only because many times traders will not pay attention to what seems to be the most significant components, but will instead focus in on what reinforces their bias. Also, the release causes a significant amount of volatility in the markets. FOMC Rate Decision Interest Rate decisions for the Fed Funds Rate are very important when trading the U.S. Dollar. When the Fed raises interest rates, the yield offered by dollar denominated assets are higher, which generally attracts more traders and investors. If interest rates are lowered, that means that the yield offered by dollar denominated assets is less, which will give investors less of an incentive to invest in dollars. When the decision is made about the rate it is always accompanied by a statement where the Fed gives a brief summary of what they think of the economy as a whole. When reading the statement it is important to check the exact language. Many times by the time that the decision is published, it is usually factored into the market. This means that only slight fluctuations are seen if the decision is as expected. The statement on the other hand is analyzed word for word for any signs of what the Fed may do at the next meeting. Remember the actual interest rate movement tends to be less important than the expectations for future interest rate moves. Retail Sales The Retail Sales figure is an important number in a series of key economic data that comes out during the month. Because it measures how much businesses are selling and consumers are purchasing, a strong retail sales figure could signal dollar bullishness because it means strength in the US economy, whereas a less-than-expected number could lead to dollar bearishness. Again, the logic behind this is that if consumers are spending more, and businesses are making more money, then the economy is picking up pace, and to keep inflation from creeping in during this time period, the Fed may have to raise rates, all of which would be positive for the US dollar. Traders tend to use the Retail Sales figure more as a leading indicator for other releases such as Consumer Confidence and CPI, and thereby don’t usually “jump the gun,” unless the numbers are terribly out of proportion. Foreign Purchases of US Treasuries (TIC Data) The Treasury International Capital flow (TIC) reports on net foreign securities purchases measures the amount of US treasuries and dollar denominated assets that foreigners are holding. A key feature of the TIC data is its measurement of the types of investors the dollar has; governments and private investors. Usually, a strong government holding of dollar denominated assets signals growing dollar optimism as it shows that governments are confident in the stability of the U.S. dollar. Looking at the different central banks, most important seems to be the purchases of Asian central banks such as that of Japan and China. Waning demand by these two giant US Treasury holders could be bearish for the US dollar. As for absolute amount of foreign purchases, the market generally likes to see purchases be much stronger than the funding needs of that same month’s trade deficit. If it is not, it signals that there is not enough dollars coming in to match dollar going out of the country. As a side note, purchases by Caribbean central banks are generally seen to be less consistent since most hedge funds are incorporated in the Caribbean. Hedge funds generally have a much shorter holding period than other investors. US Trade Balance The Trade Balance figure is a measure of net exports minus net imports and tends to be negative for the U.S. as it is primarily a “consuming” nation. However, a growing imbalance in the Trade Balance suggests much about the current account and whether or not if the U.S. is “overspending” on foreign goods and services. Traders will understand a decreasing Trade Balance number to implicate dollar bullishness, whereas a growing disparity between exports and imports will lead to dollar bearishness. Because the figure precedes the Current Account release, it pretty much helps project the direction of change in the Current Account and also begins to factor in those expectations. Current Account Balance The U.S. Current Account is a figure representing the total accrued deficit of the U.S per quarter against foreign nations. Traders will interpret a greater deficit as bad news for the U.S. and will consequently sell the dollar, whereas a shrinking deficit will spark dollar bullishness. Usually, the Current Account Deficit is expected to be funded by the net foreign securities, but when ends don’t meet in these data, the Current Account could signal a big dollar sell-off. Additionally, because the Current Account data comes out after the Trade Balance Numbers, a lot of its expectations begin to get priced into the market, so a surprise to either side of expectations could result in big market movements for the dollar. Consumer Price Index (CPI)/Producer Price Index (PPI) The Consumer Price Index is one of the leading economic gauges to measure the pace of inflation. Many investors and the Fed constantly monitor this figure to get an understanding about the future of interest rates. Interest rates are significant because not only do they have a direct impact on the amount of capital inflow into the country, but also say much about dollar-based carry trades. If the inflation number comes in higher than expected, traders will interpret that to mean that an interest rate hike is more likely in the near future and will thus buy dollars, whereas a figure that falls short of expectations may cause traders to wait on the sideline until the Fed actually makes a decision. Essentially, trading a negative change in CPI is much more difficult than trading a positive change due to the nature of different interpretations. A significant increase in the CPI will result in much dollar bullishness, but a decrease will not necessarily result in dollar bearishness. The CPI measures inflation at the retail level (consumers), while the PPI measures the inflation at the wholesale level (producers). Gross Domestic Product (GDP) The U.S. Gross Domestic Product is a gauge of the overall output (goods & services) of the U.S. economy. If the figure increases, the economy is improving, and often the dollar will strengthen. If the number falls short of expectations or meets the consensus, dollar bearishness may be triggered. This sort of reaction is again tied to interest rates, as traders expect an accelerating economy to be mired by inflation and consequently interest rates will go up. However, much like the CPI, a negative change in GDP is more difficult to trade; just because the pace of growth has slowed does not mean it has deteriorated. On the other hand, a better than expected number will usually result in the dollar rising as it implicates that a quickly expanding economy will sooner or later require higher interest rates to keep inflation in check. Overall though, the GDP has fallen in significance and its ability to move markets since most of the components of the report are known in advance Durable Goods The Durable Good figure measures the amount of capital spending the U.S. is doing, such as on equipment, transportation, etc., both on a business and personal level. Essentially, the more the U.S. spends the more the dollar stands to benefit; the opposite is also true. This is because increased spending could very well be a harbinger for inflation, and thus consequently, interest rate hikes. Traders will usually focus in on the durable goods figure, but not too deeply, as it usually precedes data regarding housing starts and the annualized GDP figure release. Therefore trading based on the Durable Goods number is only voluminous when stagnancy in other key economic releases has been confirmed by a market consensus.
Education
by Mihai_Iacob
21
Learn the ONLY REASON Why You Should Try on RETEST!Hey traders, Being breakout traders we have two options for trade entries: when the breakout is confirmed, we can either open a trading position aggressively once the candle closes above/below the structure, or we can be conservative and wait for a retest of the broken structure first. What is peculiar about the second option is the fact that the majority of pro traders prefer the retest entries. In this article, we will discuss the pros and cons of retest trading. ✔️First, let's discuss whether the retest is guaranteed. NO. How often do we see that? Around 50-55% of the time. Does it mean that 45-50% of breakout trades will be missed? YES. The main disadvantage of retest trading is that a lot of trading opportunities will be missed. Occasionally the breakout triggers a strong market rally, not letting the price return back to the broken structure. Take a look at that triangle pattern on Bitcoin. The price broke its support BUT did not retest it, so trading only the retest, the opportunity would be missed. So what is the point to wait for a retest then? Why let the market go without us in case if there is no retest? ✔️Most of the time the breakout candle closes quite far from a broken level. Opening the trading position once the candle closes and setting a stop loss below/above the broken structure, one can get a very big stop loss. Such a big stop that its pip value exceeds or equals the potential return. 🖼In the picture, I drew a classic channel breakout trade. The aggressive trader opened a long position as the candle closed above the channel's resistance. His stop loss is lying below the lower low of the channel. Analyzing his risk to reward ratio, we can see that his reward equals his risk. On the right side is the position of the conservative trader. His stop loss in lying on the same level. However, instead of opening a trading position on a breakout candle, he decided to wait for a retest of the broken resistance of the channel. Just a slight adjustment of his entry-level gives him a completely different risk to reward ratio. ❗️Patience pays in trading. Missing some trades a retest trader will outperform the aggressive trader in the long run. Trading is about weighting your potential gains & losses. Paying commissions and swaps for every trade, it is much better for us to trade less but pick the setups that give us a decent potential reward. What type of trading do you prefer? Let me know, traders, what do you want to learn in the next educational post?
Education
by VasilyTrader
7
⚖️ How Much You Need To Recover LossesWhen an investment's value fluctuates, the amount of money required to bring it back to its initial value is equal to the amount of change, but with the opposite sign. When expressed as a percentage, the gain and loss percentages will be different. This is because the same dollar amount is being calculated as a percentage of two different initial amounts. 📌The formula is expressed as a change from the initial value to the final value. Percentage change = ( Final value − Initial value ) / Initial value ∗ 100 Examples: 🔹 With a loss of 10%, one needs a gain of about 11% to recover. (A market correction) 🔹 With a loss of 20%, one needs a gain of 25% to recover. (A bear market) 🔹 With a loss of 30%, one needs a gain of about 43% to recover. 🔹 With a loss of 40%, one needs a gain of about 67% to recover. 🔹 With a loss of 50%, one needs a gain of 100% to recover. (If you lose half your money you need to double what you have left to get back to even.) 🔹 With a loss of 100%, you are starting over from zero. And remember, anything multiplied by zero is still zero. As the plot graph showcased on the idea, after a percentage loss, the plot shows that you always need a larger percentage increase to come back to the same value To understand this, we can look at the following example: $1,000 = starting value $ 900 = $1,000 - (10% of $1,000), a drop of 10% $ 990 = $ 900 + (10% of $900), followed by a gain of 10% The ending value of $990 is less than the starting value of $1,000. 🧠 Psychological Aspect: Investors should be able to mentally admit that they have incurred a loss, which is expected in trading. The investor should give some time to heal the process and only keep a close watch on the market situation. Huge losses incurred might disrupt the decision-making skill and stop trading for a few days until the confidence is regained. There should be the right focus to approach the right opportunities, and there should not be any regrets of any loss during trading. 👤 @QuantVue 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
1
📊 7 Steps To Plan Your TradingHere are 7 steps to consider before entering a trade. Pick one or multiple options for each step to incorporate into your plan. 🔷 Timeframe: This step involves determining the desired timeframe for the trade, which can vary from day trading on shorter timeframes (m15 to h1), swing trading on intermediate timeframes (h4 to d1), or position trading on longer timeframes (d1 to w1). Choosing the appropriate timeframe helps establish the trade duration and the level of monitoring required. 🔷 Risk Management: This step focuses on determining the level of risk to allocate to each trade. It is recommended to risk a certain percentage of capital per trade, typically ranging from 1% to 3%. This ensures that losses are limited and helps maintain consistent risk across trades. 🔷 Conditions: Identifying market conditions is crucial for trade planning. Traders need to assess whether the market is ranging (moving within a defined price range) or trending (showing a clear upward or downward direction). Understanding the prevailing market conditions helps in selecting appropriate trading strategies and indicators. 🔷 Markets: This step involves selecting the specific financial markets or instruments in which to trade. Traders can choose from a wide range of options, such as equities (stocks), options, bonds, futures or Crypto. The choice depends on individual preferences, market knowledge, and the availability of suitable trading opportunities. 🔷 Entries: Determining entry points is essential for initiating a trade. This step involves selecting entry strategies based on the identified market conditions. Common entry methods include taking advantage of pullbacks (temporary price retracements within a trend), breakouts (entering when price surpasses a key level), or trading news events that can cause significant price movements. 🔷 Stops: Placing stop-loss orders is crucial for managing risk and protecting capital. Traders need to determine stop levels that are strategically placed away from market structures, such as support and resistance levels. This helps minimize the chances of premature stop-outs due to normal market fluctuations while still ensuring that losses are controlled. 🔷 Targets: Setting profit targets is essential for determining when to exit a trade. Traders can choose between fixed targets, where a predetermined price level is identified to take profits, or trailing stops, where the stop-loss order is adjusted as the trade moves in the trader's favor. Both approaches aim to capture gains and lock in profits while allowing the trade to run if the market continues to move favorably. 👤 @QuantVue 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
1
Risk Management Strategies for Conservative& Aggressive Traders📚 #Risk_management Risk management in forex for retail traders is essential, especially considering the use of leverage. Leverage allows traders to control larger positions in the market with a smaller amount of capital. While leverage can amplify profits, it also increases the risk of losses. Here's how risk management and leverage factor into forex trading: -Position Sizing with Leverage: When using leverage, traders need to be cautious about the size of their positions. Higher leverage ratios allow for larger positions, but they also increase the potential for significant losses. Proper position sizing is crucial to ensure that potential losses are within the trader's risk tolerance. -Stop-Loss Orders with Leverage: Leverage magnifies the impact of market movements, which means losses can accumulate quickly. Placing appropriate stop-loss orders becomes even more critical when using leverage. Traders should set stop-loss levels based on their risk tolerance and the volatility of the currency pair being traded. -Risk-Reward Ratio with Leverage: Leverage affects the risk-reward ratio. While leverage can enhance potential profits, it can also amplify losses. Traders should be mindful of maintaining a favorable risk-reward ratio when considering their profit targets and potential losses. -Diversification with Leverage: Diversification is important for risk management, especially when using leverage. By spreading exposure across different currency pairs or trading strategies, traders can minimize the impact of adverse price movements. Diversification helps to mitigate the risk associated with concentrated positions. -Trading Plan and Journal with Leverage: When using leverage, having a well-defined trading plan is crucial. It outlines the risk management rules, including leverage usage, position sizing, and stop-loss levels. Maintaining a trading journal becomes even more important as it helps traders review their leverage usage and analyze the impact on their trading performance. -Emotional Control with Leverage: Leverage can heighten emotional responses in trading. Traders may be tempted to take on excessive risks or panic during periods of losses. Emotional control becomes vital to avoid impulsive decisions driven by fear or greed. Traders should stick to their risk management plan and avoid overleveraging. In summary, risk management in forex trading is even more crucial when leverage is involved. Traders need to carefully consider position sizing, set appropriate stop-loss levels, maintain a favorable risk-reward ratio, diversify their trades, adhere to their trading plan, and exercise emotional control. By incorporating these practices, traders can navigate the risks associated with leverage and protect their trading capital.
TVC:DXYEducation
by Moon_SmartMoney
2
eur/usd analysis as we prepare for New York openwhats up good people and profitable traders! today im looking into buying eurusd ,, technically and fundamentally we can anticipate price to push higher with any pairs going against the Dollar as we heard yesterday, interest rates will stop increasing for now so this fundamental news is bearish for the dollar price is starting to move nicely creating higher highs and higher lows as it pushes to the upside!! Disclaimer - trading is risky and one can loose some or all of your money trading in the financial markets remember when it comes to trading, the difference between a successful trader and unsuccessful trader is the successful trader has a trading plan following their risk management per trade with all trades sharing in on a 1/2 Risk/Reward or greater! Disclaimer - this information is shared for educational and demo purposes only,
Long
by therealbinarymaster
The Power of Risk Management 💪 How Can Being an Average Analyst Lead to Profits? The Power of Risk Management and Risk Percentage Introduction : In the world of finance, where exceptional skills and expertise are often sought after, it may seem unlikely that being an average analyst could lead to profits. However, there is a simple formula that can help you achieve good results despite your average performance. This formula revolves around the concept of risk management, which many of us fail to implement effectively or understand correctly. Moreover, risk percentage plays a vital role in this equation, shaping the number of opportunities available to traders. The Importance of Risk Management and Risk Percentage: In our current field, there are individuals who possess the skills to read charts and build analyses but struggle to use them effectively. On the other hand, some people have the financial means but lack the ability to distinguish between bullish and bearish trends. Somewhere in between is the average individual, whose accuracy may not exceed 50%, but they may still perform better than both of the aforementioned groups. However, it's important to note that having the necessary skills, money, and proper application is a requirement for everyone in this field. Applying the Risk-to-Reward Ratio and Risk Percentage: The key lies in implementing risk management, a concept often overlooked. Let's consider a scenario where you execute 10 trades, with 5 trades reaching their targets and the other 5 hitting the stop-loss. Without proper risk management, you find yourself back at the starting point or, worse, your account shrinks. This highlights the problem that needs to be addressed. Now, let's examine the same performance but with the application of risk management, including the risk-to-reward ratio and risk percentage. By determining the risk-to-reward ratio for each trade and defining a risk percentage, we can significantly impact our results. Understanding the Risk-to-Reward Ratio: The risk-to-reward ratio plays a significant role in determining the potential profitability of your trades. A ratio of 1.5:1 or 2:1 is often considered favorable, but it's important to understand how different ratios can affect your overall trading outcomes. To grasp this concept, let's consider a risk-to-reward ratio of 1.5:1. This means you are risking $1 to potentially gain $1.5. With a 50% accuracy rate, even if you lose 5 trades out of 10, your net gains will exceed your losses. This is because the profits from the winning trades will surpass the losses from the losing trades. Similarly, a risk-to-reward ratio of 2:1 implies that you are risking $1 to potentially gain $2. With a 50% accuracy rate, even if you lose 6 trades out of 10, your net gains will still be positive. The profits from the winning trades will outweigh the losses from the losing trades. Higher risk-to-reward ratios, such as 3:1, offer even greater potential for profits. Even with a lower accuracy rate of less than 40%, you can still achieve overall profitability by allowing your winning trades to compensate for the losses. The Role of Risk Percentage: Risk percentage, on the other hand, determines the amount of capital you are willing to risk on each trade relative to your account size. By defining a specific risk percentage, such as risking 2% of your account on each trade, you establish a predetermined limit on potential losses. This ensures that your losses are controlled and do not exceed a predefined threshold, protecting your overall trading capital. Additionally, the right risk percentage opens up opportunities for multiple trades, increasing your chances of finding profitable opportunities while mitigating the impact of any individual trade that may result in a loss. For instance, imagine you have a trading account with $1,000 and decide to risk 1% on each trade. This means you are willing to risk $10 on any given trade, allowing you to potentially take 100 trades. Alternatively, if you choose to risk 0.5% per trade, you can potentially take 200 trades. It's important to strike a balance between the quantity and quality of trades when implementing the appropriate risk percentage. While having more opportunities can be beneficial, maintaining a disciplined approach and executing trades that meet your predefined criteria and align with your trading strategy is essential. Conclusion: In conclusion, being an average analyst or trader doesn't mean you can't achieve profits in the financial field. By implementing proper risk management, specifically by utilizing the risk-to-reward ratio and risk percentage, you can enhance your results significantly. Learning and understanding risk management is crucial for success in the market. So, embrace this simple formula and take charge of your trading journey, regardless of your initial performance level. Good luck to all. 🙏we ask Allah reconcile and repay🙏
BITSTAMP:BTCUSDEducation
by HamadaMark
3
The Secrets of Making Four Figures Through Trading. The secrets of making four figures through trading. In this Trading view Post, we will explore the key strategies and considerations that can significantly enhance your swing trading results. As a forex coach specializing in this trading style, I'm excited to share valuable insights and empower you to achieve your financial goals. Small Accounts are Out, Prop Firms are In Problem : Insufficient Earnings with Small Accounts Solution : If you aspire to make four figures, it is essential to trade with five figures. Turning $100 into $10,000 or $500 into $100,000 is much quicker and more feasible when you have a larger capital base. With a prop firm, you can afford to trade less frequently and prioritize quality over quantity, eliminating the struggle often associated with small account trading. Implement a Proper Risk Management Strategy Trade with Skill, Not Luck To safeguard your capital and increase profitability, it is crucial to limit your risk on each trade to no more than 1%. This approach allows you to rely on your trading skills rather than luck. Remember, success in trading is a result of consistent and disciplined decision-making. Consistency in Risk Allocation Maintain a consistent 1% risk level as your account grows. As your balance increases, the amount of money you risk will grow proportionally. For example, if you start with a $100,000 account, you would risk $1,000 (1% of $100,000). As your account balance reaches $101,000, your risk would be $1,010 (1% of $101,000), and so on. Consistency in risk allocation ensures that your percentage risk remains the same while adapting to account growth and drawdown phases. Leveraging Position Sizing Based on Account Size Your position size, or lot size, plays a critical role in determining how much you value each pip movement. It is essential to find the right position size to prevent excessive drawdown or losses that can jeopardize your trading account. Position sizing calculations consider your account balance, percentage risk, and stop-loss levels. For instance, if your stop loss is 30 pips and you have a $10,000 account, your position size would be $100 (1% risk) divided by 30 pips, resulting in $3.33 per pip. Your lot size will be 0.33 per pip . By maintaining consistent risk management practices, you can aim for profitable trades while preserving capital. Focus on Higher Reward-to-Risk Opportunities Problem: Losing Trades Depleting Capital To sustain long-term profitability, it is essential to prioritize trades with a higher reward-to-risk (RR) ratio. Winning trades compensate for losing trades and help you overcome drawdown phases. Avoid subpar trades that you force or that fall below your minimum RR requirements. Strategies to Achieve Higher RR: Multiple Timeframe Analysis: Shorten Stop Loss Analyze multiple timeframes to identify strong trade ideas. Once you've determined a suitable trade on a higher timeframe, drop down to lower timeframes to tighten your stop loss. This approach allows you to manage risk effectively and maximize your RR ratio. Utilize Higher Timeframes or Tools: Extend Take Profit When dropping down to lower timeframes, refrain from shrinking your take profit target. Instead, utilize higher timeframes or tools like Fibonacci to extend your take profit level. By setting reasonable profit targets, you increase the potential for achieving higher RR trades. Main Talking Point 3: Quality Trades and 4-Figure Trade Planning Problem: Inconsistent Trading Results Solution: Trading with a focus on quality trades offers numerous benefits. By targeting high-quality opportunities and planning trades effectively, you can profit during trending markets, reduce mistakes, and avoid the need to chase after four-figure profits. Commitment to Make 4 Figures & Stay Under Drawdown Limits Plan Weekly and Allocate Resources Plan your trades every Sunday to determine the potential profit or loss for each trade. Identify high-quality opportunities and allocate 1% of your capital to each trade. Assess if each opportunity meets your minimum RR requirements and if it brings you closer to achieving four-figure profits. Example: $10,000 Account Suppose you risk $100 on Trade 1 and make $333 (3.33% return), followed by risking $103.33 on Trade 2 to make $516.65 (5.16% return). After two trades, you have earned $849.65, representing an 8.49% increase in your account balance. Continuously monitor and adjust your trades to maintain profitability. Is this possible? Yes! Is this easy? No! Why? Because you'll have to get out your own way and head to make this possible. While achieving consistent four-figure profits through trading requires dedication and skill, implementing the strategies discussed in this post can significantly enhance your chances of success. By trading with a prop firm, implementing proper risk management strategies, focusing on higher RR opportunities, and prioritizing quality trades, you can navigate the dynamic world of trading with confidence and boost your financial growth. Remember, trading success comes from discipline, continuous learning, and a well-defined trading plan. Best of luck on your journey to four-figure profits! Shaquan Hey! If you found this post valuable like the post and let me know below what was your takeaway❤️
Education
by ShaquanLopez
3
Calculating Lot Sizes Just Got EasyIn the world of forex trading, achieving consistent profitability requires not only sound strategy but also effective risk management. One crucial aspect of risk management is determining the appropriate lot size for each trade. In this blog post, we will explore the best methods for you to calculate lot size, emphasizing the use of tools available on TradingView, a popular trading platform. Understanding Lot Size Lot size refers to the volume of your trade and is measured in units of the base currency. It plays a significant role in determining the potential profit or loss of your trade. By selecting an appropriate lot size, you can maintain control over your risk exposure and align your trades with your overall trading strategy. Utilizing TradingView Tools TradingView offers you two valuable tools, the Short Position Tool and the Long Position Tool, which assist you in evaluating the true reward-to-risk ratio of your trades. These tools enable you to make informed decisions by considering the potential profit against the predefined risk. By assessing the reward-to-risk ratio, you can determine the viability of a trade and make adjustments as necessary. Calculating Lot Size Using TradingView's Order Panel To calculate your lot size on TradingView, you can leverage the platform's Order Panel feature. The Order Panel provides you with a convenient way to input your trade parameters and receive lot size recommendations based on your risk preferences and account balance. By using this built-in functionality, you can quickly determine the appropriate lot size for each trade without the need for complex manual calculations. Lot Size Calculation Formula Alternatively, you may choose to calculate your lot size manually using a straightforward formula. Here's the formula you can use: (Account Balance * Risk Percentage) / Stop Loss in Pips = Lot size $25000 * 1* = $250/30= 41,666 units or $4.16 per pip or 0.41 lot size To utilize this formula, you need to know your account balance, the percentage of your account balance you are willing to risk on a trade, and the distance of your stop loss from the entry price, expressed in pips. By plugging in these values, you can derive the appropriate lot size that aligns with your risk management strategy. Conclusion Calculating lot size is an essential aspect of your forex trading journey that directly influences your risk management. Simplifying this process enables you to focus more on your strategy and execution. TradingView offers you valuable tools such as the Short Position Tool and the Long Position Tool, which provide insights into the true reward-to-risk ratio of your trades. Additionally, TradingView's Order Panel streamlines the lot size calculation process. Alternatively, you can utilize a simple formula to manually calculate your lot size. By adopting these methods, you can enhance your risk management practices, leading to improved trading outcomes. Remember, successful trading involves comprehensive risk management, and calculating the appropriate lot size is a crucial step toward achieving long-term profitability. Shaquan
by ShaquanLopez
3
Embracing Risk ManagementEmbracing Risk Management in Forex Trading: In the world of forex trading, embracing risk management is an integral aspect of achieving long-term success and preserving your capital. Implementing effective risk management strategies is essential to navigate the inherent uncertainties of the forex market. Let's explore some key principles of risk management in forex trading. • Define Your Risk Tolerance: Before entering the forex market, it is crucial to determine your risk tolerance. Assess your financial situation, investment goals, and personal comfort level with risk. This will help you establish appropriate risk parameters and guide your decision-making process. • Proper Position Sizing: Determining the right position size is a critical element of risk management. Avoid overexposing your trading account by allocating a reasonable portion of your capital to each trade. A general rule of thumb is to risk only a small percentage of your account balance (e.g., 1-20%) per trade. This ensures that a string of losing trades does not significantly impact your overall account balance. • Utilize Stop-Loss Orders: Implementing stop-loss orders is vital to protect yourself from excessive losses. A stop-loss order sets a predetermined price level at which your trade will automatically be closed if the market moves against you. Place your stop-loss orders based on technical analysis, support and resistance levels, and market volatility. This tool helps limit potential losses and protects your trading capital. • Take-Profit Targets: Setting take-profit targets is equally important in managing risk. A take-profit order enables you to exit a trade when the market reaches your desired profit level. Determine your take-profit targets based on technical analysis, market trends, and reward potential. Regularly reassess your take-profit levels as the market evolves to secure profits and prevent sudden reversals. • Risk-Reward Ratio: Maintaining a favorable risk-reward ratio is crucial for long-term profitability. Aim for trades that offer a potential reward that outweighs the potential risk. A positive risk-reward ratio means that your potential profit is greater than your potential loss. This allows you to achieve profitability even with a lower win rate, as long as your winning trades outweigh your losing trades. • Regular Evaluation and Adjustment: Consistently evaluate and analyze your trading performance to identify strengths and weaknesses. Keep a trading journal to review your trades, assess your decision-making process, and identify areas for improvement. Adapt your risk management strategies based on market conditions, and avoid chasing losses or taking excessive risks due to emotional impulses. [ i]Remember, risk management is an ongoing process that requires discipline and continuous monitoring. Stay informed about economic news releases, market events, and volatility to adjust your risk parameters accordingly. Embrace risk management as a fundamental part of your forex trading journey, and let it guide you towards consistent profitability and capital preservation. In forex trading, success is not solely determined by profitable trades but by effectively managing risks and protecting your trading capital. By embracing your risk management principles such as defining your risk tolerance, proper position sizing, utilizing stop-loss and take-profit orders, maintaining a favorable risk-reward ratio, and regularly evaluating and adjusting your strategies, you can navigate the forex market with confidence and achieve sustainable results. Embracing Risk Management trading GOLD: In the golden path of trading gold, risk management takes center stage as a paramount factor for success. It is crucial to implement effective risk management strategies to protect your capital and navigate the inherent uncertainties of the forex market. Let's delve deeper into the key aspects of risk management in trading gold. • Proper Position Sizing: Determining the appropriate position size is the foundation of risk management. Carefully consider your account size, risk tolerance, and market conditions when deciding how much of your capital to allocate to each gold trade. Avoid overexposure by keeping your position sizes in line with your risk tolerance, allowing for potential market fluctuations. • Stop-Loss Orders: Implementing stop-loss orders is an essential risk management tool. Set a predetermined level at which you will exit a trade if the market moves against you. This ensures that your losses are limited and prevents them from spiraling out of control. Always place stop-loss orders based on sound analysis and risk-reward ratios to protect your capital. • Take-Profit Levels: In addition to stop-loss orders, establish take-profit levels to secure your profits. These levels are predetermined price points at which you will exit a trade when the market reaches your desired profit target. Take-profit orders help you lock in gains and avoid potential reversals that can erode your profits. Regularly reassess your take-profit levels based on market conditions and adjust them accordingly. • Risk-Reward Ratio: Maintaining a favorable risk-reward ratio is essential in risk management. This ratio represents the potential profit you can make relative to the amount you are willing to risk. Aim for trades that offer a higher potential reward compared to the potential loss. By consistently seeking trades with a positive risk-reward ratio, you increase your chances of profitability over the long term. • Regular Assessment and Adjustment: Risk management is an ongoing process that requires continuous assessment and adjustment. Regularly review your trading performance, analyze your trades, and identify areas for improvement. Adapt your risk management strategies as market conditions change and stay vigilant in monitoring your trades to ensure they align with your risk parameters. Do remember again, risk management is not about avoiding risks altogether but rather about managing them intelligently. By implementing proper position sizing, setting stop-loss and take-profit levels, and maintaining a favorable risk-reward ratio, you can protect your capital and create a solid foundation for long-term success in trading gold. In the golden path of trading, risk management is not a choice but a necessity. Develop a disciplined approach to managing risk, and let it guide you towards a prosperous journey where the allure of gold meets the prudence of risk ☆ Good Foreign Exchange Trading Daysz ☆ J
OANDA:XAUUSDEducation
by ATU_TAD
⚙️Creating a Trading Plan⚙️📍Creating a trading plan and trading journal are two important steps in developing a successful trading strategy. Backtesting is also a crucial component of any trading plan. Here are the steps you can follow to create a trading plan, trading journal, and backtest your strategy. 🔷Define Your Goals and Risk Tolerance The first step in creating a trading plan is to define your trading goals. You should have a clear idea of what you want to achieve with your trading, such as making a certain amount of profit per month or year, and how much you are willing to risk on each trade. Your risk tolerance will also play a role in determining your trading strategy. 🔷Choose Your Trading Methodology The next step is to choose your trading methodology. There are many different trading strategies, such as trend following, momentum trading, and mean reversion. You should choose a strategy that fits with your goals, risk tolerance, and trading style. 🔷Define Your Trading Rules Once you have chosen your trading methodology, you need to define your trading rules. Your trading rules should cover when to enter a trade, when to exit a trade, and how much to risk on each trade. Your rules should be clear, objective, and based on your trading methodology. 🔷Create a Trading Journal A trading journal is a record of all your trades. It is important to keep a trading journal so you can analyze your trading performance over time. Your trading journal should include the date and time of each trade, the entry and exit price, the size of the position, and the reason for entering the trade. You can use a spreadsheet or a specialized trading journal software to keep track of your trades. 🔷Backtest Your Strategy Backtesting is the process of testing your trading strategy on historical data to see how it would have performed in the past. You can use specialized backtesting software or create your own backtesting tool using spreadsheet software. Backtesting allows you to refine your trading strategy and identify its strengths and weaknesses. 🔷Analyze Your Trading Journal After you have started trading, you should analyze your trading journal regularly. Look for patterns in your trading performance and identify areas for improvement. You should also review your trading plan and adjust it as necessary. 📍Key Takeaways: 🔸 Defining your trading goals and risk tolerance is important before creating a trading plan. 🔸 Choose a trading methodology that fits your goals, risk tolerance, and trading style. 🔸 Define clear, objective trading rules based on your trading methodology. 🔸 Keep a trading journal to record all your trades. 🔸 Backtest your trading strategy to refine it and identify its strengths and weaknesses. 🔸 Analyze your trading journal regularly to identify areas for improvement and adjust your trading plan as necessary. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
4
📈 The Trailing Stop Loss📍 What Is a Trailing Stop? A trailing stop is a modification of a typical stop order that can be set at a defined percentage or dollar amount away from a security's current market price. For a long position, an investor places a trailing stop loss below the current market price. For a short position, an investor places the trailing stop above the current market price. A trailing stop is designed to protect gains by enabling a trade to remain open and continue to profit as long as the price is moving in the investor’s favor. The order closes the trade if the price changes direction by a specified percentage or dollar amount. 📍Important Takeaways 🔹 A trailing stop is an order type designed to lock in profits or limit losses as a trade moves favorably. 🔹 Trailing stops only move if the price moves favorably. Once it moves to lock in a profit or reduce a loss, it does not move back in the other direction. 🔹 A trailing stop is a stop order and has the additional option of being a limit order or a market order. 🔹 One of the most important considerations for a trailing stop order is whether it will be a percentage or fixed-dollar amount and by how much it will trail the price. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
4
forex risk management "How much should I risk"Risk management is an essential aspect of Forex trading that can help traders protect their capital and minimize losses. Forex trading is a high-risk activity, and it's important to have a solid risk management plan in place to ensure long-term success in the market. One of the most common risk management strategies in Forex trading is the use of stop-loss orders. A stop-loss order is an instruction to automatically close a trade at a certain price level if it goes against the trader's position. This helps to limit potential losses and protect the trader's capital. Another effective risk management technique is position sizing. Position sizing refers to the amount of money a trader risks per trade. A general rule of thumb is to risk no more than 1-2% of your trading account balance per trade. This ensures that a string of losses won't wipe out your entire account balance. This is very useful especially if your are trading a Funded challenge like FTMO Traders can also use diversification as a risk management strategy. This means not putting all your eggs in one basket by trading only one currency pair. Diversifying your portfolio can help to spread out the risk and minimize the impact of any potential losses. Moreover, traders can also use hedging as a risk management technique. Hedging involves opening a position that is designed to offset potential losses in another position. For example, a trader could go long on one currency pair and short on another currency pair to hedge their exposure to market volatility. In conclusion, risk management is a critical aspect of Forex trading that should not be overlooked. By implementing effective risk management strategies such as stop-loss orders, position sizing, diversification, and hedging, traders can protect their capital and minimize their losses in the Forex market. Traders who prioritize risk management are more likely to achieve long-term success and profitability in Forex trading.
UEducation
by glorias3972
⚠️ Risk Management Examples Showcase📍What Is the Risk/Reward Ratio? The risk/reward ratio marks the prospective reward an investor can earn for every dollar they risk on an investment. Many investors use risk/reward ratios to compare the expected returns of an investment with the amount of risk they must undertake to earn these returns. A lower risk/return ratio is often preferable as it signals less risk for an equivalent potential gain. 📍Consider the showcased example: An investment with a risk-reward ratio of 1:3 suggests that an investor is willing to risk $100, for the prospect of earning $300. Alternatively, a risk/reward ratio of 1:4 signals that an investor should expect to invest $100, for the prospect of earning $300 on their investment. Traders often use this approach to plan which trades to take, and the ratio is calculated by dividing the amount a trader stands to lose if the price of an asset moves in an unexpected direction (the risk) by the amount of profit the trader expects to have made when the position is closed (the reward). It is very important to calculate your R:R before entering a trade. Sometimes the trade might not be worth the amount you're risking vs the reward you can get. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
2
The Two Types of Risk Management PlanHello traders, 1) Fixed Risk Calculates position size for next trade as a percentage of account depend on how much risk you willing to take every time every trade you taking you need to use fixed risk for every trade like for example 1% risk per trade so in this type of risk management plan we should require 100 losing trades in a row to blowing out our account a lot of people just using this simple method and this is very easy and understandable. 2) Cutting the Risk : In this method cutting the risk we just normally trade 1% risk per trade but if we lose that trade so we just cut the risk to half for example if i trade with 1% risk and i lose so now the next second trade which i am taking i will be using 0.5% risk in that trade if i lose then i will be just keep using the same risk 0.5% some traders are are keep reducing the risk size like they come all the way to to 0.25% maybe they work for it but in our scenario if we keep losing we will be not reducing more than 0.5% risk per trade and when win comes then after our winning trade we will be back to the normal risk which is 1% risk per trade and keep trading with 1% risk per trade so short summary is if we lose cut the risk to half if we when if we win back to the normal risk if we win again stay with same normal risk but if lose then reduce the risk to half. The reason behind that is in the fixed risk you have 100 traders to blowing out your account means 100 chances but in cutting the risk now we just calculate if we lose 100 trades in a row like fixed risk we would not blow out our account,, let's say we take our first trade and we lose now we are in -1% then another trade we will be taking with 0.5% per trade risk so here is 0.5% × 100 trades = 50 means if we continue to lose in a row after 100 trades we will be facing -50 draw down, so cutting the risk to half after lose trade is the safest method who wants to play safe and more chances to survive in the market. I wish you good luck and good trading. If you like the post, support my work with like comments and share thanks!
Education
by TheLoserMan