Clean Trades on Both Levels Hello guys my idea on USDJPY. Expecting both buy and sell from both levels good trade ..
Trade safe. Tell me what you think about it.
Riskmangement
The Power of Risk ManagementRisk management is one of the key topics in forex trading that is not emphasised enough. Instead, there is too much emphasis on solely focusing on being on the right side of the market to consistently make money while ignoring proper risk management in the process. This post will completely debunk this, so after you have finished reading, you will hopefully have a completely new mindset on how to actually succeed long-term in forex.
Absolute Uncertainty
The forex market is a place where the majority of people struggle to find consistency. This is due to the nature of the market, where uncertainty is constant. What I mean by this is that the market is completely irrational and neutral; when you want to buy, there is somebody else on the other side that wants to sell, and vice versa. The market is filled with millions of other participants with their own goals, beliefs, and motivations; therefore, the market will go where it wants to go. Unfortunately, not enough people really grasp what this means and are obsessed with how many trades they can get right to make money.
The main purpose of risk management in forex is to reduce your trading risk and grow your trading capital safely. It is great to have good skills in determining the market's direction, but more importantly, you need to have good risk management skills too.
Two different traders, Same Trades, Two different outcomes
Let's put this into practice. Let us assume that two different traders both took the exact same ten trades and both won five of the ten trades taken. Let's call these traders 'Trader A' and 'Trader B. Trader A is just obsessed with being right in the market. The trader is quite skilled in understanding the market, but the trader is just focused on how many trades are closed at profit. Trader A risks about 2% per trade; however, trades are usually cut short, and thus ends up taking profit at about half of the initial risk (2% risk per trade and 0.5:1 risk-reward). Trader B understands that the market is completely irrational, where anything can happen at any time, and to trade the market succesfully, must treat trading like a business, causing the trader to have strict risk management rules (2% risk per trade and 2:1 risk-reward) that are stuck to at all times.
As you can see from the above image, Trader A ended up with a 5% decrease to the account and Trader B ended up with a 9.98% increase to the account after both traders taking the same ten trades, why did this happen? The answer is simple Trader A cut the profits short and ran the losses whereas Trader B ran the profits and cut the losses. It does not matter if you are right or wrong in trading what matters is how much you make from your right trades and how much you give back to the market on your wrong trades.
Forex Journey Ends Before Getting Started
Due to many people not understanding the power of risk management, their journey in forex ends before it even gets started. To explain further, a lot of traders either do not calculate their risk before they trade the markets or they are aware of their risk but decide not to place high importance on it (a fatal mistake). This is one of the biggest killers of forex traders, and all it takes is one bad trade before the market takes all your hard-earned money and you are out. The market is an unforgivable place that will not care if you are blown out; it will continue to go on with or without you participating, and you must give it respect. The higher your risk, the lower your long-term survivability probabilities are. Remember, if you don't have funds to trade, you can't participate! It is as simple as that, so you must treat trading as a business and not as a casual hobby if you aim to consistently make money over the long term. Let's see how your survivability chance decreases the more you risk.
Position Sizing
Now that you understand how crucial it is not to risk too much of your account in a trade but do not know exactly how to calculate how much you should be risking per trade, how do we calculate this?
In forex, a pip movement on a one-lot contract is approximately $10, so if you enter a trade on a forex pair and it moves 20 pips against you, you will be approximately $200 down. It is very important to understand this because if you do not, you will not know how much you should be risking per trade, and you may end up overexposed in the market with a high chance of blowing your account. For example, if you have a $10,000 account balance and want to risk 2% ($200) of your account per trade on a one-lot contract, that is 20 pips; therefore, your stop loss should be around 20 pips.
However, on the same account balance, if your stop loss is 100 pips, let's say, and you are not aware of pip calculations, you are potentially risking 10% of your account in that trade alone, which is extremely dangerous, and as seen in the above example, it only takes 10 trades in a row to blow your account on 10% risk per trade. But what if your strategy requires a 100-pip stop loss, as that is where your stop loss level is, and you really want to enter the trade? You just have to trade a smaller position size! 2% of $10,000 is $200, and we know that 1 pip is equal to around $10, so $200 is equal to 20 pips. Now how do we trade this with good risk management if we want a 100-pip stop? Let's see the image below:
So as you can see in the above image, if you are on a 2% rule, which is good risk management, all you need to do is reduce the position size if your strategy requires a larger stop. There is nothing stopping you from entering the position. In the forex market, safety must come first at all times. To add, it is not worth having a smaller stop loss just to be able to trade a bigger position size, as this can be very detrimental to your trading due to the fact that in forex, there is a lot of market noise due to so many participants, and it is very easy to get whipsawed on a small stop loss and get taken out of your position.
The next time you are about to enter a position, ask yourself if it would be better to have a larger stop to protect yourself from getting squeezed out of the position. If so, just reduce your position size accordingly and have a larger stop. Always remember that the market does not limit you from trading your opportunities if you have a larger stop but do not want to risk a large percent of your account in the trade; you just have to trade smaller.
Plan, Analyse, Assess, Review
1. Plan
Before you take a trade, always have a plan for your risk management. The 2% risk per trade rule is always a safe rule, and the best traders tend to use this rule. Always know what your account balance is, what your risk amount should be, and exactly where your stop-loss needs to be. Always remember that if your stop is too tight, try trading a lower position size to give you more leeway.
2. Analyse
When you get a trade setup, before you pull the trigger and enter the trade, ask yourself, "Is there enough reward in this trade setup that it is worth entering the trade?" If the answer is no, do not take the trade! Remember, trading is not just about being right or wrong; it is also about how much you take or give to the market when you are right or wrong. The reward must always be worth the risk, and you must constantly analyse this before entering the market.
3. Assess
Make sure you often assess your current risk management, especially when you are in a trading position. For example, if your position is about to reach your take-profit target but the market looks like it wants to keep going past your target, instead of coming out of the position completely, why don't you instead take some of the position out and keep the rest of the position in? You can trail your profit to your original target and potentially make extra profits this way with nothing to lose. The same goes on the other side: if you enter a trade and at some point are no longer comfortable with the position, do not be scared to cut the position short and exit the position. Always listen to your gut instinct, as it may be telling you something for a reason.
4. Review
Always review your risk management. Take a look at your past trades and try to learn from them. Was your stop-loss too tight in a lot of your trades? Was your stop not tight enough in a lot of your trades? Are you cutting yourself short, and could you have a higher risk-to-reward ratio in a lot of your trades? There is always room for improvement, and the only way to improve your risk management is to review your previous trading history to see what possible adjustments you could make to your risk management. Remember, you should treat trading as a business if you want to succeed long-term, and most, if not all, successful businesses constantly review their risk management.
The power of risk management is absolute. If this post has not done enough to convince you of this, always remember that you are always one bad trade away from being put out of business. The majority of beginner traders blow their accounts in the first three months of trading; this is not due to them not understanding the markets but due to poor risk management and not treating trading as a business. Always remember to maximise your profits and cut your losses. All trading involves risk, and there is no 'holy grail' strategy that can eliminate risk entirely. However, by managing your risks effectively, you can reduce the impact of risk on your trading and increase your chances of long-term success.
BluetonaFX
USDCAD ..A Very Big Decline Coming in on USDCADHello guys, My Idea on USDCAD is for a Big Push to the Downside , Which from the Daily Timeframe Down to the H4 Timeframe we are Overall Bearish and Which the H4 has Currently Switched Bearish and We are Expecting the Continuation Trend to the Downside for a Good Selling Opportunity from Level 1.36110 . Like and Drop your Comments ❤
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!❤️
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.
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Gbp/Usd Reaches Fair Value.Gooday to you all.
Gbp/Usd Reaches Fair Value.
Today's idea is around the British pound vs The US Dollar (Gbp/Usd)
We spotted fair price for the fX/Currency pair that we believe will produce a potential buy opportunity for the pair.
We will buy the pair should we we have a 1hr candle close above the identified price zone at 1.28200 with profit target set to 1.29300
Use adequate risk management if you are to execute a trade with this analyses.
Enjoy and happy trading! We are the #ExodusTradingDesk.
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.
EURUSD I Starting to consolidate I Will head downWelcome back! Let me know your thoughts in the comments!
** EURUSD Analysis - Listen to video!
We recommend that you keep this pair on your watchlist and enter when the entry criteria of your strategy is met.
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NIFTY 50Nifty is trading in same range since Friday both movement is expected either give breakout or breakdown if give breakout from range then targets 18820,18872 but it must close and sustain above 18760 for this targets and if give a breakdown then targets 18558,18511 but it must close and sustain below 18746
Research and trade consult your financial advisor before trading I am not responsible for any of ur profit and losses
RISK MANAGEMENT As we wait for GBP CPI news later today and the BOE rate hike decision on thursday , its good to remind ourselves that one trade doesn't make us its a marathon not a race . The volatility associated with these fundamentals is always a double edged sword . STAY WOKE
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.
Educational: Relative Drawdown vs. Absolute DrawdownUnderstanding the concepts of relative drawdown and absolute drawdown is crucial for effective risk management and evaluating the performance of trading strategies. In this publication, we will delve into the understanding of both relative drawdown and absolute drawdown.
🔷 Relative Drawdown: (Sometimes referred to as equity drawdown)
Relative drawdown is like looking at how much your money went down compared to the highest amount of money you had in your piggy bank before it started going down.
Relative drawdown measures the decline in equity relative to the previous peak value, expressed as a percentage. It provides a proportional view of the drawdown in comparison to the highest equity point achieved. Traders often utilize relative drawdown to assess the performance of their trading strategies over time. By calculating the relative drawdown, traders can determine the percentage loss from the peak and evaluate the strategy's ability to recover from losses.
For example, if a trading account reaches a peak equity of $10,000 and subsequently experiences a drawdown with a low point of $8,000, the relative drawdown would be 20% ($2,000 decline divided by $10,000 peak). A higher relative drawdown indicates a more significant loss relative to the previous peak, potentially highlighting the need for adjustments in risk management or strategy refinement.
🔸Relative drawdown provides traders with insights into the consistency of their strategies and the extent of losses experienced during adverse market conditions. It helps them compare the drawdowns of different strategies or trading systems using a percentage-based metric, enabling a better understanding of risk exposure and the ability to set realistic expectations.
🔷 Absolute Drawdown: (Sometimes referred to as balance drawdown)
In contrast to relative drawdown, absolute drawdown quantifies the actual monetary value of the decline in equity from the initial balance to low .
Continuing from the previous example, if the lowest equity point during the drawdown was $8,000, the absolute drawdown would be $2,000. Absolute drawdown focuses on the actual amount of money you lost from the starting point to the lowest point. It helps us understand the total decrease in money without comparing it to any percentages or ratios.
🔸By understanding the absolute drawdown, traders can assess the real monetary value lost during a drawdown period, which helps in making informed decisions regarding position sizing, risk allocation, and overall portfolio management. It also assists in evaluating the effectiveness of risk management strategies in terms of limiting losses during drawdowns.
NB: It is worth noting that it is important to clarity when discussing balance base drawdown as the balance base drawdown can be calculated based on the starting balance of each day or trading session which in this case will have a drawdown calculated based on a dynamic balance as oppose to the static initial balance.
-----------------
Relative and absolute drawdowns play a vital role in assessing the performance and risk exposure of trading strategies. While relative drawdown provides a percentage-based view of the decline in equity from the peak, absolute drawdown quantifies the monetary value of the loss. Traders should consider both types of drawdowns to effectively manage risk, set realistic expectations, and make informed decisions about their trading strategies. Remember, understanding and managing drawdowns are key elements of long-term success in the trading world.
It's important to understand that drawdowns are a natural and inevitable part of trading. No trader, no matter how experienced or skilled, is immune to drawdowns. Here's a simplified explanation of why drawdowns occur and why traders should not be discouraged by them: When you play a game, there are times when you might make a mistake or encounter challenges that cause you to lose points. Similarly, in trading, the market can sometimes move in a way that goes against your expectations or trading strategy, causing temporary losses in your trading account. This decline in the value of your account is known as a drawdown.
Drawdowns occur due to various factors, such as changes in market conditions, unexpected news events, or even errors in decision-making. Markets are influenced by many participants, and their behavior can be unpredictable at times. Therefore, it's natural to experience periods of drawdown.
Traders should not be discouraged by drawdowns for a few important reasons:
🔸Learning Opportunity: Drawdowns provide valuable lessons for traders. They offer insights into potential weaknesses in their trading strategies or areas where they can improve their risk management. By analyzing drawdowns, traders can refine their approach and enhance their trading skills.
🔸Long-Term Perspective: Successful traders understand that trading is a long-term game. Drawdowns are often temporary and can be followed by periods of profitability. By maintaining a long-term perspective, traders can ride out drawdowns, knowing that their overall success is determined by their ability to stay focused, adapt, and stick to their trading plans.
🔸Risk Management: Drawdowns highlight the importance of proper risk management. Traders who implement effective risk management techniques, such as setting stop-loss orders, diversifying their portfolios, and managing position sizes, can limit the impact of drawdowns on their overall trading performance.
🔸Psychological Resilience: Drawdowns test a trader's emotional resilience. Successful traders understand that emotions like fear or frustration can cloud judgment and lead to impulsive decisions. By developing emotional resilience and maintaining a disciplined mindset, traders can navigate drawdowns more effectively and make rational decisions based on their trading plans.
🔸Consistency is Key: Consistency in trading is crucial. Drawdowns are part of the journey to profitability. Traders who remain committed to their strategies, continue learning, and adapt as needed have a higher likelihood of success over the long run.
US30 Trade Analysis for Day Traders and ScalpersUS30 - Dow Jones Industrial Average Index Trade Analysis
US 30 Forming Ascending Triangle on Day time frame, Overall trend is bullish.
FOR SCALPERS
Entry Points for short trade: 34528
Target: 33321
4H / Day Trade
Entry Points for long trade: 34528
Target: 37000
manage your risk according to your portfolio size
for more analysis
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CADJPY, SHORT term sell opportunity Price action is failing to break above a critical area which is showing bearish movement. We can see price has approached a double top level that has been rejected and impulsively pushed downward printing a possible H&S pattern within a larger corrective structure.
Looking for a short opportunity to bottom boundary around 103.00
Trade Safe
Gold continuation upwardsHello fam, well price is still ranging between 1965 and 1953 levels. Still waiting onto a solid confirmation on the 4hr.
Well price has been rejected several times from the 1953 support level but also it has failed to break through the 1965. Therefore, i expect a pullback to the 1953 with a solid candle on the 4hr then a solid confluence on both 4hr and 1hr.
Trade responsibly, ensure proper risk management.
Patience is key.
RISK MANAGEMENT: A CASE FOR THE HIGHER TIMEFRAME
Abstract:
This publication explores the differences between higher timeframes and lower timeframes in trading and delves into how various factors, such as spread, commissions, and news releases, affect these timeframes. Additionally, the concept of price fractality is discussed, highlighting how both higher and lower timeframes exhibit similar patterns despite their apparent distinctions. It is argued that higher timeframes offer certain advantages by mitigating the challenges faced on lower timeframes.
Introduction:
Trading involves analyzing and interpreting price movements to make informed decisions. Traders often utilize different timeframes, each offering unique perspectives on market behavior. This publication aims to examine the distinctions between higher timeframes and lower timeframes, focusing on the impact of spread, commissions, and news releases, while considering the fractal nature of price.
Higher Timeframes:
Higher timeframes, such as daily, weekly, or monthly charts, encompass longer periods and provide a broader view of price movements. These timeframes tend to smooth out market noise and offer a more comprehensive understanding of overall market trends and patterns. Key differences and advantages include:
🔹Reduced impact of spread: Higher timeframes generally exhibit wider price ranges, making the spread a relatively smaller percentage of the overall movement. This can minimize the impact of spreads on trading outcomes.
🔹Lower impact of commissions: Longer timeframes typically result in fewer trades, reducing the frequency of commission charges and their impact on profitability.
🔹Less sensitivity to news releases: Higher timeframes are less susceptible to sudden price fluctuations caused by news releases or economic events. Traders can avoid getting caught in high volatility and erratic price movements.
Lower Timeframes:
Lower timeframes, such as hourly, 15-minute, or 5-minute charts, focus on shorter periods and provide more granular insights into price movements. These timeframes are characterized by faster-paced trading and require different considerations. Key differences and challenges include:
🔹Spread impact: Lower timeframes tend to have smaller price ranges, making the spread a larger percentage of the movement. This can impact profitability, as traders need to overcome the spread before a trade becomes profitable.
🔹Commission sensitivity: Frequent trading on lower timeframes can lead to more commission charges, affecting overall profitability. Traders should consider the impact of commissions on their strategies.
🔹Increased vulnerability to news releases: Lower timeframes are more prone to sudden price movements triggered by news releases. Traders need to be vigilant and manage risks associated with unexpected volatility.
Price Fractality:
Price movements can be argued to be fractal in nature, exhibiting similar patterns at different timeframes. Fractals are self-repeating patterns that emerge at various scales. In trading, this means that the price behavior observed on a higher timeframe can also be found within the price movements on lower timeframes. This suggests that the market's dynamics are consistent across different timeframes.
Despite the similarities in price fractality, higher timeframes offer advantages due to their reduced exposure to certain challenges:
Conclusion:
In conclusion, understanding the differences between higher timeframes and lower timeframes is crucial for traders. While both timeframes exhibit fractal patterns, higher timeframes offer advantages by minimizing the impact of spread, commissions, and news releases.
🔹Smoother trends: Higher timeframes help identify more significant and reliable trends, reducing the impact of noise and false signals prevalent on lower timeframes.
🔹Enhanced risk management: Longer timeframes provide clearer support and resistance levels, enabling better risk assessment and position sizing.
🔹Reduced emotional stress: The slower pace of higher timeframes can help traders avoid impulsive decisions caused by the rapid price movements often seen on lower timeframes.
Conclusion:
In conclusion, understanding the differences between higher timeframes and lower timeframes is crucial for traders. While both timeframes exhibit fractal patterns, higher timeframes offer advantages by minimizing the impact of spread, commissions, and news releases. By adopting a strategic approach that aligns with their trading goals and risk tolerance, traders can harness the benefits of different timeframes and enhance their trading performance.
Predicting the bottom of AvalancheAVAX/USDT.P on BYBIT
Looks like the W-X-Y pattern is coming to an end and we will try to predict the bottom as best we can to catch a swing trade of wave C or even a 3 and a new rally.
If the count is right and the weekly support level at 13.910 does not hold, a one to one (of the W-X-Y) price target will be next. We could speculate the weekly level then will serve as a SR flip to confirm the start of the last wave 5.
Watch out for the weekly bar ending as a spinning top or doji for a bullish reversal up to wave 4 of 3 of C of Y in the last zig zag.
Risk
For me the stop level would be either right under weekly level at 12.180 or at the low of 10.535 also giving a double bottom setup. If we se it go all the wave to the high of wave A we could se a Risk/Reward ratio at a proximally 6.
Targets
First target for locking in profit would be the weekly level at 13.910 then we have the point of control for the whole correction at 17.285 and the high of A or 1 at 22.795.
Avalanche Market Cap
Avalanche market cap is now ricing to $4,741,712,576 and as of writing the trading volume (24h) is $132,773,075.
Conclusion
I will continue watching the price action on Avalanche and if it will continue to decline and unfold in way similar to the predicted pattern. It could be an interesting swing trade to the upside for a low risk.
USDJPY | H1 | Trade UpdateUSDJPY hit my stop loss earlier today as it continued to push up passed the resistance, on our higher timeframes we can note that since USDJPY didn’t go in the direction of our short term Sell order we can expect to see it push further up.
Will be uploading my medium/long term view of USDJPY as the day progresses.
ACB Aurora Cannabis Long SetupOn the 4H chart ACB has dropped out of a head and shoulders pattern list winter with high
volume into a downtrend with lower volume now into support / demand as shown by the
Luxalgo indicator. The anchored VWAP is also trending downward with support at the minus 1
and minus 2 standard deviations. The volume profile shows the majority of the recent share
exchanges have been at the $0.65 per share area. If price rises above that POC line of the
profile, ACB will get the attention of new buyers while short sellers will begin to cover thus
causing buying pressure and momentum. I will buy a sizeable quantity for perhaps $1-2K shares
once price gets over that POC line. Prospective buyers will consider this to be a reversal
confirmation. I will be one of them. The first target is the volume void at $0.79 or about
25% with the other target being one standard deviation above VWAP at about $.90. Stop loss
will be set at $0.05 below the entry. For profit insurance I will hedge with a single put option
contract at a strike of $0.70 with a 90-120 DTE to diminish risk at a minimal cost.
Practical Insights into the Risk ManagementHey there, amazing @TradingView community! It's @Vestinda, and we're on a mission to deliver content that truly makes a difference.
👉 To become a successful crypto trader, it's essential to have a solid understanding of trade and risk management concepts, such as stop losses, position sizing, and scaling. In this article, we'll explore these key concepts in-depth to help you minimize your risks and maximize your gains in the cryptocurrency market.
Four Risk Management Concepts Every Crypto Trader Should Understand
To effectively manage the risk associated with trading, it is essential to first develop a comprehensive trade management and risk management strategy. Before committing your capital to any position, it's critical to have a clear plan in place to minimize potential losses and optimize your overall trading performance.
Successful market speculation requires effective risk management to preserve capital, which is the primary objective. By minimizing losses and maximizing gains through a comprehensive trade and risk management strategy, traders can achieve long-term success in the market.
One of the key strategies employed by the most successful traders is to minimize their losses while allowing their profitable trades to run. This approach is essential for avoiding disastrous scenarios, such as allowing profitable trades to turn into losers or allowing a single bad trade to wipe out an entire account. By focusing on risk management and trade management, traders can increase their chances of success and protect their capital over the long term.
It's true that implementing the "cut losses quickly and let profitable trades ride" strategy can be challenging, especially for discretionary traders who need to constantly evaluate changes in fundamentals and market sentiment against price movements. However, there are trade and risk management ("TRM") tools and methods available that can help simplify this process.
While these tools and methods may seem complex at first, they are quite accessible and easy to learn. With the right TRM strategies in place, traders can effectively manage risk and optimize their performance in any market condition.
Before diving into trading, it's crucial to understand four key concepts in trade and risk management:
Stop losses: Stop losses are predetermined exit points designed to limit potential losses on a trade. By setting a stop loss, traders can automatically close a position if the market moves against them beyond a certain point, minimizing their losses.
Traders may use price action signals, technical indicator signals, fundamental analysis, or a combination of all three to determine the appropriate level for a stop-loss order. This helps to limit potential losses on trade and is a crucial component of effective risk management.
Position sizing: Position sizing refers to the amount of capital allocated to a specific trade. By properly sizing positions based on risk tolerance and market conditions, traders can optimize their overall risk management strategy and minimize the impact of potential losses.
Position sizing refers to the process of determining the quantity of cryptocurrency to long or short based on the maximum amount of value a trader is willing to lose if the trade fails, also known as "max risk." For novice traders, it is recommended that the maximum risk should not exceed 1-2% of their portfolio for short-term transactions and 5% for longer-term positions.
For example, if a trader has a cryptocurrency account with $ 1,000 and wishes to purchase a token with a market price of $ 10.0 per token, they would need to determine the appropriate position size to maintain their desired level of risk. If their analysis indicates that they should place a stop loss at $ 5.0 per token to limit their maximum risk to 2% of their account, or $ 20.0, then the appropriate position size would be 4 units (40$ position size). This way, if the token's value drops by $ 5.0, the resulting loss of $ 20.0 would equal 2% of the trader's account.
Scaling: Scaling involves adjusting position sizes based on the performance of a trade or the overall market conditions. By scaling into or out of positions based on market conditions, traders can adjust their risk exposure and optimize their potential for gains while minimizing potential losses.
Scaling refers to the practice of dividing entries and exits into two or more orders around a trader's intended entry/exit area to reduce the likelihood of setting an entry too low or too high. This is particularly important because it is nearly impossible to predict the exact price or time at which the market's direction or volatility levels will change.
For example, if a trader intends to buy a token for $ 10.0 but their analysis indicates that it may drop as low as $ 8.0 before sentiment entirely flips bullish, they should consider dividing their entry/exit orders into multiple price levels. This way, they can enter the trade with a partial position if the token's price does not drop below $10.0, but if it drops to $ 8.0, they can scale into a lower average price of $ 8.75.
By using scaling and position sizing in conjunction with a maximum stop loss level, traders can effectively manage their risk and reduce the likelihood of incurring significant losses. While these concepts are relatively simple, understanding and applying them correctly can help traders avoid significant risks in the cryptocurrency market.
Leverage: Trading with leverage involves taking positions that exceed the account's total capital, which can be done through crypto exchanges (CEXs) offering margin trading or some DeFi protocols providing advanced borrowing mechanisms.
For instance, assume you have $ 100 in your account, and you want to purchase 1 unit of XYZ token worth $ 100, creating an open position valued at $ 100. Margin trading offered by a CEX may only require a 10% margin, meaning you only need to invest $ 10 instead of the entire $ 100. You can then utilize the remaining $ 90 to open additional positions, which can be tempting for many traders.
With a 10% margin requirement and a $ 100 account, you can open a position size of 10 XYZ tokens, having a notional value of $ 1000 ($ 100 x 10 units), with the CEX holding the $ 100 in your account as a margin for the trades.
This would make you leveraged 10x, which is considered an extremely high amount of leverage. If the token increases in value by 10% in a short period, the position value would grow from $ 1000 to $ 1100, which means you could double your account value from $ 100 to $ 200 (i.e., $ 100 profit + $ 100 margin). Alternatively, if the token rises by 20% to $ 1200, you would triple your account to $ 300 in value.
Although the potential for high profits may sound exciting, it is crucial to remember the risks associated with trading with leverage, and it is advisable to exercise caution and not get carried away by the prospect of quick and easy gains.
Many traders are lured by the potential profits of leveraged trading, but it's important to remember that leverage can be just as dangerous as it is rewarding. If a trader opens a position with 10x leverage and the position loses just 5%, that would be a loss of $ 50, which is 50% of their $ 100 account.
Additionally, if the position were to lose 10%, resulting in a $ 100 loss, the trader would receive a margin call and would need to deposit more money to keep their trades open.
If they are unable to do so, the CEX will close all positions, also known as being "liquidated". The CEX will use the margin that the trader had provided to cover the $ 100 loss, which means that the trader's account balance would be reduced to $ 0. It's essential to be aware of the risks of leveraged trading, as you could potentially lose everything you've invested.
It's important to remember that leverage in crypto trading is a double-edged sword that can either grow your account or quickly deplete it. While it's possible to make significant profits with leverage, it's equally possible to suffer substantial losses.
As a new trader, it's important to acknowledge that trading with leverage requires expertise and a sound risk management strategy, which can be challenging to implement successfully.
Therefore, it's wise to approach leverage with caution and focus on developing your skills and knowledge before considering this tool.
Here are some recommendations that can help you navigate the exciting but risky world of crypto trading:
First, it's important to be conservative with your risk-taking and to only invest in your very best trade ideas. Limiting your total exposure to the crypto sector to a small percentage of your total liquid capital, starting at 1%, is a good way to minimize your risk.
You should also limit your exposure to a specific crypto asset to a small percentage of your total crypto portfolio, with a 1% to 2% max risk on short-term trades and a max of 5% risk on longer-term positions. Using a stop loss with every position is also crucial to limit potential losses.
Remember, perfect timing is near impossible, so consider scaling into trading positions or "dollar cost averaging" into longer-term investments. Take profits along the way if a trade goes your way. And most importantly, avoid using leverage, which can be a double-edged sword and lead to substantial losses.
Lastly, only invest your capital in your very best ideas, which should be low-risk/high-reward setups on high-probability ideas. Don't force trades when there are no compelling opportunities, and remember that "no position" is a perfectly fine position when you don't see any good opportunities.
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The Story of a Failed Trader | OKXIDEASOnce upon a time there was a man who was a very poor and he belong to a middle class family but he had the ability to dream it. He was 20 years old and he also think that he spend all of had 20 years doing nothing, he was a dreamer. He wanted to become a rich man, he finding ways to become a rich man, he tried almost every thing but failed. One day he watched a video about trading on YouTube and he decided to become a trader, become a rich with trading and fulfill all of had dreams. He started to learn trading, he watched all of educational videos about trading on YouTube and spend had 15 hours every day just watching videos, now he knows about the basic trading he shifted to the analysis part of trading, he started to practice and learn the technical analysis. He find the method that he can trade with, he combined some technical indicator signals and created strategy for himself. Now he had very passionate about trading, wanted to open a real account and start trading with real account. He had some saving money around 500 dollar he deposited that money in the real account and start trading with that money. He started dreaming from the first day of trading and created some trading rules for himself like he had to take 10% risk per trade and don't take that trade which is below 1/1 risk to reward ratio. On the first day he had taken almost 3 trades and win all of them, now he was more excited for trading he had made $192 profit means something around 38% profit on 500 dollar account. He wanted to trade more but he was a little bit smarter one, he think that i am in profit and my wining ratio is 100% so why i just damage my wining ratio and why i just risk my today profit so he had decided to come back tomorrow. On the second day he had $692 total balance in the account, he had to play a little bit more smarter than a previous day and he decided to take 10% risk per trade of the current total balance $692 in the account rather than the starting balance which is $500. On the second day he take almost 4 trades and he won 2 trades out of 4 trades, now the account condition had almost break-even no loss & no profit, he decided to try again and trade more, he finding the reason to trade more and then he calculate today and yesterday total taken trades which is 7 trades, he think that i won 5 trades out of 7 trades so my wining ratio is almost around 70% which is good and i can trade more because my wining ratio is still above 50% so i am still in positive side. He trade almost 3 trades again and he lose all of them, now he had very sad and almost broken, he decided to step back and come back later. He sturdy himself and come back on the third day, now he had facing a little bit draw-down on the third day the total account balance is around 484 dollar, he started looking for the trades opportunity and at the end of the day he took almost 5 trades with the 10% risk per trade but the third day results had also again bad and he lose 4 trades out of 5 and just win 1 trade, he had very shameful from himself, he closed the laptop goes to outdoor and talk to himself. He analysis the current situation of the account, it that point the total account balance is around 276 dollar he almost around 45% in draw-down and the wining ratio had below 50% so now he entered to the negative side. On the fourth day morning he traded 2 trades and he lose both of them now he almost lose the hope and the account condition had around 72% in draw-down and he left only 138 dollar in the account. At the time he give up and he just decided to depend on just one trade, he just waiting for the best opportunity of the day and finally he got the trade but at the end he lose that trade again and he almost blow out had account.
After that all he had stressful and sad from almost one week, he decided to leave the trading and move on to the next thing and he looking to find other things that suitable for him because he think that trading is not suitable for him. One month later he just scrolling on the internet and he see the FAQ that 90% of traders lose and only 10% had succeed, now he had a little bit shock and he think that its pretty normal every trader in the 90% had facing that stage which stage that i faced.
He decided to come back to trading and start from the zero, he started to modify had strategy and created new rules for had strategy like he set this time risk to reward ratio for had trades is minimum 1/2 and he decided to risk only 2% of the total account also he decided to take only 2 trades per day, this time he opened the demo account rather than the real account and start trading with demo account, he decided to journal had journey and after one month of consistency he hadn't break any rules and when he see the results after month he had profitable, now he feel like stronger and he continue the journey with that same demo account after three months he had similar results and still profitable. In that time he think that i don't have much money and in trading it's required a lot of money to earn a lot of profits, he started to search for that how he had to prove himself to big investors and raise money for himself to trade. One day he searching and he knows about prop firms trading now he had interested in that and wanted to know more about prop firms, he think that this is the big opportunity for himself to become succeed quickly, now he decided to trade with prop firms and buy the challenge from the prop firms, he adjusted had strategy rules and trading plan according to the prop firms requirement, now but the only problem is that he don't have money to actually buy the prop firms challenge. By the way he was dropout from the school after completing had secondary education and so he just setting at the home, he don't have much money to buy the challenge, the pocket money of him had just depend on him father and he hadn't want to say to father to give me extra money because of him father was very poor and he work as a taxi driver, so then he had decided to get the any kind of job for himself and try to earn some money in the form of salary and buy the challenge with that money, he worked hard and after one month he got the salary and then he just swift to the prop firm website and buy the $50000 account challenge for himself, now he started trading with challenge account phase one, on the phase one he decided to risk only 1% per trade, take only 2 trades a day and the every trade risk to reward ratio had to minimum 1/2 after one month of consistency he gained +8% profit, he was in profit but he hadn't achieved the prop firm required profit target which is +10% in that case prop firm gives traders free retake so then he take the challenge again with the new account and new month from zero and he think that my wining ratio for the previous month is almost around 40% with minimum 1/2 risk to reward ratio and my daily limit is 2 trades so i need to increase my daily limit from 2 to 3 because if i traded with the same rule 2 trades a day then i hadn't pass with 40% wining ratio. He calculate some numbers like he think, if i take 3 trades per day so then at the end of the month my all trades had to be 60 trades per month and if i maintain my 40% wining ratio then i can easily pass the challenge with that mindset he started the challenge and strictly follow the rules after month he hadn't maintain the 40% wining ratio and he end up with some loss and failed the challenge, this time he almost faced big depression after some days left he realized had mistake and he think i made mistake that i increase my daily trades limit because of this my wining accuracy goes down, i just forced myself to take 3 trades per day and get trapped into the normal trades.
At that time he hadn't left any pathway he almost try everything but at the end he faced failure, him father had now getting older and he decided to step back again he start going to the normal job and start saving 30% of had salary, he do that job for almost one year and after one year later he had some saved money in the bank account to buy multiple 10x challenges, he come back to the trading but this time he hadn't leave the job and he do trading like part time thing. He started had journey again he decided to hadn't give up and repeat the process so then he started buying challenges after one by one in some challenges he failed in phase one in some he failed in phase two in some he almost pass the challenge and got the live funded account but hadn't get payout and lose the account in the first month.
The journey had started goes on and he just repeating the process and doing try again and again.
Will be continued.....
Some lessons from the story
> Never open real account in the start, try to learn first on demo account.
> Don't try to be smart in the front of the market.
> Don't lose hope in draw-downs just repeat the process of your trading plan.
> Take every trade with the hope of wining.
> Never depend on a single trade.
> Don't leave too fast stay in the market.
> Give yourself enough time to create the solid proven strategy that works at least for you.
> Respect your trading limits.
> Don't depend on just trading and never leave your job, consider trading like part-time thing in the starting.
> Learn from your mistakes and improve your performance.
> Make mistakes but don't repeat that mistakes again.
> Never depend on small capital always look for an opportunity.
> Journal your journey, record your trading performance and improve next time.
> Don't fear from failure.
> Be patient, market is here not going anywhere.
> Don't force yourself to take normal trades wait for good opportunity always.
> Don't count the numbers, you need to count the percentage.
> Don't try to be rich quickly.
> Step back, if you damaged from market then simply step back and come back stronger don't try to fight.
If you learned any other lessons from the story, let me know in the comments.
What you feel about one day he will be succeed or just the failure always, also let me know in the comments.
I hope you enjoyed the story, appreciate my work with like comments and share.
I wish you good luck in trading.
Turtle Power: Experiment Turns Novices into MillionairesHi and welcome back! As a trader, you have probably at one time heard about the Turtle Traders, right? But what was it, and what can we learn from it?
Let me take you on a journey into the fascinating world of the Turtle trading strategy! 🐢💰
This legendary trading experiment, conceived by two master traders, Richard Dennis and William Eckhardt, in the 1980s, showcases the power of a well-designed system and the right mindset.
Dennis believed anyone could be trained to trade successfully, while Eckhardt argued that trading skills were innate. To settle the debate, they devised the Turtle trading experiment. They selected a diverse group of 23 individuals, known as the "Turtles," and taught them a trend-following trading system focused on trading commodities and currencies. The core principles of this system were:
Follow the trend : The Turtles used Donchian Channels, tracking 20-day and 55-day price channels, to identify breakouts and breakdowns. When the market price broke above the 20-day high, it was a buy signal. When it broke below the 20-day low, it was a sell signal.
Cut losses short : The Turtles followed a 2% rule, never risking more than 2% of their account on any single trade. They calculated position sizes using the N value, the 20-day average true range (ATR), dividing the 2% risk amount by the N value.
Position sizing and pyramiding : The Turtles adjusted their position sizes based on market volatility and employed pyramiding, adding more contracts at specific increments up to a maximum limit as the market trended in their favor.
Stop Losses : They used a stop-loss order equal to 2N for every trade, exiting the trade to minimize losses if the market moved against their position by twice the N value.
Diversification : The Turtles traded a diversified portfolio of markets, spreading risk and enhancing returns.
Scaling Out : They used a two-tiered exit strategy, exiting a portion of their position when the market retraced by 10-day low/high and the remaining position when the market retraced by 20-day low/high.
With these principles, the Turtles were handed real money to trade. Over the next four years, they collectively made more than $100 million , proving that trading success could be taught. The Turtle trading experiment demonstrated the power of a disciplined, trend-following system combined with the right mindset.
In conclusion, the Turtle trading strategy is an extraordinary tale of how a simple, yet effective, trading system can lead to remarkable results when executed with discipline and consistency . As you venture into the world of trading, remember that the strategy in itself is not as important as the lessons of the Turtles: stay disciplined, follow the trend, and manage your risk . You might just be the next trading success story! 🌊📈
Want to become a Turtle?
💡 Curious about the Turtle trading strategy? Dive into TradingView's Public Indicator library, where you'll find a collection of Turtle-related scripts crafted by the Pine Script™ community. Just open a chart, click "Indicators," and search "Turtle" to access a variety of indicators that'll give you a feel for this legendary system. Happy exploring!
💡 The Original Turtle Rules (PDF): This free eBook, written by Curtis M. Faith, one of the original Turtles, contains the original Turtle trading rules and guidelines.
Link: www.trendfollowing.com
🚀 Like and follow if you appreciated this article.
📖 More useful publications can be found under "Related Ideas" below ⬇️⬇️⬇️
AUDUSD, SHORTPrice action is setting up for sellers to take control as we could see a potential H&S pattern printing within the bear flag structure stsrting from the strong impulse down at the double top range.
Wait for bearish confirmation before entering a sell position.
Thanks
Trade Safe
