Strategy Coding E05: Risk Managment (Part 2)Wrapping up from Part 1, I cover the example of taking 1/3rd profits and how that affects your risk in a potentially losing trade.
Riskmangement
Strategy Coding E05: Risk Management (Part 1)This is a deep dive into the concepts surrounding "Risk Management" and how to realistically model managing risk.
We will discuss:
Risk Units
Scaling in to positions at a one third risk unit increments
Raising stops
Taking profits
Closing/exiting the position.
BEARISH MOVE ON GOLD First till this moment when I share this trade I'm a beginner . S based on my strategy i see the gold falling down .
in case you want follow my trade . LET YOUR RISK MANAGEMENT BE YOUR HELPER
Don't Blow Your Account | Learn How to Avoid Margin Call
Hey traders,
In this educational article, I will share with you 5 simple tips that will help you not to blow your trading.
1️⃣Always Use Stop Loss.
Let's start with the obvious - with the stop loss order.
Never ever trade without that. Before you open your trade, plan in advance its placement, stick to it once the position becomes active and never remove it.
2️⃣ Manage Your Position Sizes
I know that most of you are trading with a fixed lot. That is a bad habit. You should measure the lot size for each trading position you take. You should define in advance the risk percentage you are willing to lose per trade and calculate the lot sizes for your trades accordingly, then.
3️⃣Avoid Taking Too Many Positions
Remember that in trading, quantity does not imply quality. The more trades you take, the harder it is to manage each position individually. I would suggest opening maximum 5 trades per day and holding no more than 8 trades simultaneously.
4️⃣ Avoid Trading Too Many Markets
The wider is your watch list, the harder it is to focus on each individual element inside. Do not try to control as many markets as possible, instead, narrow your watch list and concentrate your attention on your favourite trading instruments.
5️⃣Remember About Volatility
The more volatile is the market that you trade, the harder it is to trade it and the bigger stop losses you need to keep your positions safe. Remember, that the volatility is the double-edged sword. It can bring substantial profits, but it can also blow your entire account in a blink of an eye.
Following these 5 simple rules, you will make your trading much safer. Study them and add them in your trading plan.
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10 Common Lies and Misconceptions About Trading 🥺🤮1. People are born traders. While it is true that certain personal characteristics make it easier to trade, no one is born a trader. One of the main themes of the Market Wizards books written by Jack Schwager is that almost none of the market wizards was successful from the start. They all worked hard at it.
2. You have to have a high IQ to trade. Just not true. In some ways, an above average IQ may be a hindrance. Trading is a human performance activity where strong intellectual abilities are unnecessary.
3. Top traders are successful because they have the "right trading personality." There is no such thing as the "right trading personality." Researches have been unable to find a strong correlation between personality type and trading success. It is important, however, to understand your personal characteristics and how they may help and hinder your trading.
4. Trading is easy. It sure looks that way, doesn't it? Just draw a few lines on the chart, watch your indicators, and follow the price bars. The truth is that trading is a difficult business to master. It involves different skill sets and abilities from what are needed in most other professions and careers. The trader must understand his or her personal strengths and limitations and develop specific skills to deal with the mental and emotional demands of trading. The later skills are the most difficult to develop and the most overlooked.
5. You must be tough, hard charging, and fearless to be successful. That's more media hype than anything else. It glorifies a strong ego, which is a detriment in trading. The most successful traders I know quietly do their research, study the charts, and patiently wait for the right moment. They strive to keep their ego out of their trading.
6. You must trade without emotions. If you are human, that's impossible. More importantly, when you understand your emotions you will realize they are assets, not liabilities. The real keys are:
To be aware of how your emotions interact with and influence your trading, and
To develop the skills needed to trade with them.
7. Top traders are usually right about the market. Top traders have many, many scratch and losing trades. Top traders are at the top because they exercise good risk control, limit the amount of loss from any given trade, and have developed a psychological edge that allows them to be unfazed by small losing trades. Most of their trading consists of modest profits and very small losses. When conditions are right, they step up size and let the profitable trades run.
8. Paper trading is useless - it's not a real trade without money behind it. If you aren't paper trading,you are doing yourself a disservice. You should always be paper trading your trading ideas. Why limit your education and experience by the amount of capital you have? Paper trading keeps you sharp ; you learn the conditions under which your trading ideas work best. Where else can you get such vital education at so little cost?
9. Master the technical skills and you will be successful. This is where most traders spend the vast majority of their time, but it's only part of the picture. You also have to learn important performance skills. Traders should spend as much-if not more-time learning to develop their psychological edge as they do in developing their technical trading edge.
10. Trading is stressful. It certainly can be stressful, and it certainly is stressful for many. It doesn't have to be. Successful traders have a certain mindset. They put little importance on any given trade. Their focus is on the long haul. They know that if they attend to the aspects of trading that are within their control (i.e., trade selection, entry, risk control, and trade management) the profits will take care of themselves.
source: DailyFX
nas100 analysis - 06 feb 2023too late with publishing this trade i took on nas100 but my reasons were as follows
- a double top formed last week at a significant resistance level
- market then broke the neckline of that double top
- waited for a retest of that neckline which occured at the london open and the new york open
- waited for a formation of a lower high on the M5 after the rejection than placed my sells
- take profits are at the 12187 level then we'll see what price does when it gets there
Learn Risk to Reward Ratio | Forex Trading Basics
Hey traders,
Planning your every trade, you should know in advance the profit that you are aiming to make and the maximum amount of money you are willing to lose.
In this educational article, we will discuss risk reward ratio - the tool that is used to compare your potentials losses and profits.
Let's start with an example. Imagine you see a good buying opportunity on EURUSD. You quickly identify a safe entry point, your take profit level and stop loss.
From that trade you are aiming to make 100 pips with a maximum allowable loss of 50 pips.
To calculate a risk to reward ratio for this trade, you simply should divide a potential gain by a potential loss:
R/R ratio = 100 / 50 = 2
In that particular example, risk to reward ratio equals 2 meaning that potential gain outperform a potential loss by 2.
Let's take another example.
This time, you decide to short USDJPY.
From a desirable entry point, you can get 75 pips with a potential loss of 150 pips.
Risk to reward ratio for this trade is 75 divided by 150 or 0.5.
Such a ratio means that potential loss outperform a potential gain by 2.
Risk to reward ratio can be positive or negative.
If the ratio is bigger than 1 it is considered to be positive meaning that a potential gain outperforms a potential loss.
If the ratio is less than 1, it is called negative so that potential loss is bigger than potential risk.
Knowing the average risk to reward ratio for your trades, you can objectively calculate the required win rate for keeping a positive trading performance.
With R/R ratio = 0.5
2 winning trades recover 1 losing trade.
You need at least 70% win rate to cover losses of your trading.
With R/R ratio = 1
1 winning trade, recover 1 losing trade.
You need at least 50% win rate to compensate your losses.
With R/R ratio = 2
1 winning trade recovers 2 losing trades.
You need at least 35% win rate to cover losses of your trading.
Trading involves extremely high risk. Risk to reward ratio is a number one risk management tool for limiting your risks. Calculating that and knowing your win rate, you can objectively decide whether a trade that you are planning to take is worth taking.
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Learn Why Do You Need a Stop Loss 🟥
Hey traders,
Talking to many struggling traders from different parts of the world, I realized that the majority constantly makes the same mistake: they do not set a stop loss.
Asking for the reason why they do that, the common answer is that
these traders consider the manual position closing to be safer, implying that if the market goes in the opposite direction, they will be able to much better track the exact moment to cut loss.
In this article, we will discuss why it is crucially important to set a stop loss and why it is the number one element of your trading position.
First of all, let's discuss what is a stop loss. By a stop loss, we mean a certain price level where we close our trading position in loss. In comparison to a manual closing, the stop loss should be set at the exact moment when the order is executed.
Stop loss allows us limiting the risks in case of unfavorable movements.
On the chart above, I have illustrated 2 similar negative scenarios: 1 with a stop loss being placed and one without.
In the example on the left, stop loss helped to prevent the excessive risk, cutting the loss at the beginning of a bearish wave.
With the manual closing, however, traders usually hold the negative positions much longer, praying for a reversal.
Holding a losing trade, emotions intervene. Greed and fear usually spoil the reasoning, causing irrational decisions.
Following such a strategy, the total loss of the second scenario is 5 times bigger than the total loss with a placed stop loss order.
Stop loss defines the point where you become wrong in your predictions. Planning your trade, you should know in advance such a point and cut your loss once it is reached.
Never trade without a stop loss.
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Amazon 20% Channel!!A solid move up could make you 20% if all goes according to plan.
Love it or hate it, hit that thumbs up and share your thoughts below!
Every day the charts provide new information. You have to adjust or get REKT.
Don't trade with what you're not willing to lose. Safe Trading, Calculate Your Risk/Reward & Collect!
This is not financial advice. This is for educational purposes only.
Did Someone Say SUPPORT ZONE!?!Amazon is currently at support and there is a higher probability price moves up from here...
Love it or hate it, hit that thumbs up and share your thoughts below!
Every day the charts provide new information. You have to adjust or get REKT.
Don't trade with what you're not willing to lose. Safe Trading, Calculate Your Risk/Reward & Collect!
This is not financial advice. This is for educational purposes only.
How to do accurate entries using the 50% fib levelThis strategy will require you to be able to distinguish between the impulsive move and the retracement since we only apply the fib retracement tool to the impulsive move.
What you do is just lay your fib from the body to the body (not the wicks) then identify the 50% retracement level.
Now if you're an aggressive trader you can set a pending order or just execute an instant entry once price reaches your 50% retracement level.
On the other hand if you're a less aggressive trader, you will make a decision based on what price action will reveal at the 50% retracement level. I'll leave it to you to decide what kind of trader you are.
Learn How to Apply a Position Size Calculator
Hey traders,
In this educational article, I will teach you how to apply a position size calculator and calculate a lot size for your trades depending on a desired risk.
First of all, let's briefly discuss why do you need a position size calculator.
Even though, most of the newbie traders trade with the fixed lot, the truth is that fixed lot trading is considered to be very risky.
Depending on the trading instrument, time frame and a desired stop loss, the risks from one trade to another are constantly floating. With the constant fluctuations of losses per trade, it is very complicated to control your risks and drawdowns.
A lot size calculation, however, allows you to risk the desired percentage of your capital per trade, limiting the maximum you can potentially lose.
A lot size is calculated with a position size calculator.
It is integrated in some trading platforms like cTrader. If it is absent in yours, there are a lot of free ones available on the internet.
Step 1:
Measure a pip value of your stop loss.
It is the distance from your entry level to your stop loss level.
In the example on the picture, the stop loss is 290 pips.
Step 2:
Open a position size calculator
Step 3:
Fill the form.
Inputs: Account currency, account balance, desired risk %, stop loss in pips, currency pair.
In the example, we are trading with USD account. Its value is $20000. Trading instrument is EURUSD.
Step 4:
Calculate a lot size
The system will calculate a lot size for your trade.
0.069 standard lot in our example.
Taking a trade on EURUSD with $20000 deposit and 290 pips stop loss, you will need 0.069 lot size to risk 1% of your trading account.
Learn to apply a position size calculator. That is the must-use tool for a proper risk management.
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SPX500 - Points You Must Know You may already be aware what I am going to tell. But I suggest learn these points again!
Stock Market is in a Downtrend
US Stock Market is in a strong downtrend. This downtrend began in January-2022 when soaring inflation straddled the market. There is high volatility as evident by wide swings between down-trending channel. These wide swings show uncertainty, chaos and confusion - you'd know it more when you compare it with smooth long-term uptrend which followed post-Covid situation.
Stock Market is also Following a Long-term Up-trending Channel
Kick-Start since 2009 when financial crisis faded, US stock market has been lead and guided by a long-term up-trending channel. This channel has often provided support as well as resistance to the market except when Covid-19 occurred which caused a down-spike for a brief period. It is highly probable that the same channel will continue to guide the market.
There is a Point of Confluence
Past Long-term up-trending channel & current down-trending channel have a point of confluence shown by light red circle. At this point of confluence, SPX500 has a already taken support once. If the market comes down, it is possible that it again takes support somewhere near to the point of confluence.
PRECAUTIONS TO TAKE
1. Avoid high-debt stock unless a company shows drastically increasing profit-margin
2. Avoid a stock below 200 MA unless it takes a reversal
3. Keep cash in hand to add when dust is settled
4. Better to spend this time in learning rather than in trading
Expectations and TradingExpectations and Trading
When you trade, you look at chances that either come true or don't. You can't expect or demand anything from the market or from other people who take part in the market. No one owes anyone anything in this world, and trading is no different.
In trading, you have complete freedom of expression; you can do almost anything and however you want. This freedom will show you how irrational people are and how they can't just control their thoughts, feelings, and actions.
All traders lose money because they take too many risks and don't have enough self-control. How long does it take for a trader to lose control of himself? A feeling of being left out It all starts with the idea that money has been lost. This feeling is exactly what makes people want to take more risks.
You open the chart and see that the price of your favorite asset has been going up for more than a day. Then you start thinking about how much you could make and where you could spend that money. This makes you want to buy an asset with a larger volume so you can make more money. You make a trade that is set up to have the best possible outcome, but you have no idea or acceptance of the possible consequences.
Revaluation
Take a look at what you have done so far. Are you ready to put everything on the line? If the answer is no, you should ask yourself, "Why do I want to put everything I have at risk?" Most likely, you feel this way because you want to make a big change in your life. But do you really know what's at stake?
"Filter of perception" or what are the risks of expectations?
What happens after you have set up the expectation that the trade will go well for you? When you go into a trade with more money than you need, you somehow set yourself up for a good result. Your mind starts to ignore information and signals from the market that don't fit with what you already think, as if you were wearing blinders. You won't know for sure how this filter works until you close the deal and stop having false hopes.
Is trading something that everyone can do?
Trading is not something that everyone should do. To get good at this craft, you have to work on yourself all the time, get over your emotions, control your thoughts, and question your own decisions while always following the rules. Don't give up on trading if you think it's not for you. You can be successful if you only do what you really want and work to improve yourself and show off your inner potential.
What is it to trade?
Trading is a game of chances, and you should have the right mindset for it. You shouldn't feel bad when a stop loss happens, because if you use a method that has a certain chance of working, you know that in the end, you'll still have made money. It's just a matter of time. You can survive and put off the so-called "trader's cycle" only if the trading process makes you feel good.
System trading
System trading means that you only make a trade under a certain set of rules. Your system could include chart patterns, candlestick formations, indicators, a certain astrological date, and more. No matter what, it's important that the chance of success and the risk vs. reward are both high. As soon as you make your own trading system, start keeping a trade diary, write down the rules of your trade, and answer when you enter a trade, you will be in the big leagues of traders, and nothing can stop you from making money on the market. If you stick to your own rules, you'll be happy with both your take profit and your stop loss, knowing that you did things in a planned way. It is not your fault that the stop loss worked or your credit that you got a take profit.
Worry and concern
Before making deals, many traders are afraid and have doubts. These feelings are bad for you, so don't give in to them. They will only get in the way. You might be scared to open trades because the amount of money you risk in each trade is too high. Let's draw an analogy. You and a friend make a bet on the flip of a coin. The coin is strange, so it comes up heads 70% of the time. If it comes up heads at least once, you lose. If it comes up heads twice in a row, you win. Can it happen that heads come up twice in a row by accident? What's four? Yes, it sure can! Your task is in increasing the number of coin flips to win the bet as often as possible over time. The same is true of the business you do. When you act in a systematic way on the market, you might get four stop losses in a row. But at the same time, you shouldn't lose a lot of money that will change the way you live. One to two percent of your capital is the best amount to put at risk in a single trade. Getting a stop loss only won't throw you off your emotional balance and let you fall into the "trader's cycle" if you have so much used volume. If you don't think this is enough, ask yourself, "Is the goal of your trading to try to increase the size of your capital no matter what, or to keep it and grow it?"
How often you trade ?
Overtrading, which leads to "trading burnout," is not a small mistake made by new traders. Your job is to wait in a humble way for a new system to set up on the chart. You don't have to look at the chart every ten minutes. Instead, decide on your own what timeframes you will use to trade, and keep in mind that the longer the timeframe, the more reliable the signal.
Take profits and stop losses in a row
The most important thing to remember is that you must keep acting according to your trading system, no matter how many stop losses you get in a row, and you must keep not acting against your trading system, no matter how many take profits you get in a row. The market can be irrational, and technical analysis may stop working at those times, but that doesn't matter. What matters is whether you are acting in a systematic way and whether you are in control at this moment. We can get several stop losses in a row if we only follow our trading system, but we don't have to worry about losing a lot of money or feeling bad about ourselves because we know that over the course of a few years, we are statistically certain to succeed if we trade on system entry points that have a 70% chance of working out and a ratio of possible profits to possible losses of at least 2:1, which guarantees us a profit even if we lose.
Conclusion
Real traders trade probabilities based on market signals in the moment instead of building expectations, because they know that expectations lead to unfulfilled expectations and missed opportunities. You can only make money with a system, self-control, and time.
GOOGL - Similar to MSFT, R/R makes this worth a tryBuyable
But consider buying on an intraday pullback maybe to improve R/R a bit.
MSFT - Good R/R on the long sideA bit too extended from entry point for my liking so try and get in on an intraday pullback similar to GOOGL.
R/R worth it considering I'm going for ~290$.
JS-Masterclass: Risk Management #1JS-Masterclass: Risk Management #1
Risk Management in Trading – What does it mean ???
Risk management in trading is following a set of principles for minimizing losses. It’s an essential part of a trading plan that helps to minimize the losses and capture sustainable profits.
One of the biggest mistakes traders make is focusing on maximizing profits while overlooking the potential for loss. Unfortunately, that’s the best way for losses to get out of control. Traders need to leave this notion of greed behind them and always think risk first. Once a trader has mastered this principle, the successes will follow.
Implementing risk management techniques into your trading strategy can mitigate your risk when the market moves in the opposite direction.
Fundamental risk management principles for minimizing losses
Whether you are new in trading or an experienced trader, you always need to consider the following principles. They need to be a central part of your trading plan and strategy.
The 1% rule
The 1% rule in trading is a crucial principle of position sizing. It refers to risking no more than 1% (absolute max. for pro-traders is 2%) of your capital on a single trade.
For instance, if you have $50,000 in your account, applying the 1% rule would mean you won’t risk more than $500 on a single trade.
Some traders use the 2% rule to increase potential profits, but that amplifies potential losses, too. Sticking to the 1% rule will limit your risk on any given trade and help you preserve your equity. New traders should start with even lower risk levels.
Stop-Losses
Stop-loss orders are sell orders that trigger automatically when a traded security’s price reaches a lower, pre-specified price. They can help you mitigate losses on trades that don’t pan out the way you hoped.
For instance, if you buy a particular stock at $32 per share, you could put a stop-loss order at $30 to close the trade if the price drops below $30 per share.
Amateur traders should work with stop loss orders that will automatically trigger when your pre-defined stop-loss is being hit. This avoids a mistake that every trader tends to do – go in with a stop-loss plan but then deviate from it when things go against you.
Using stop-loss orders is key to having complete control over your positions, particularly when engaging in day trading.
The risk/reward ratio
The risk/reward ratio is a measure for calculating expected returns for every dollar you risk on a particular trade. For instance, if your risk/reward ratio is 1:2, you could earn $20 for every 10 dollar you risk.
It’s crucial to calculate the ratio after you’ve decided on your stop-loss and take-profit orders. If the ratio doesn’t match your requirements, you need to wait for a more profitable trade.
Here’s how to calculate your risk/reward ratio:
RRR = (Entry price – Stop-Loss) / (Profit Target – Entry price)
If dividing the potential risk with the possible reward results in a value below 1.0, your potential profit is more significant than your potential loss.
Make sure you maintain a favorable risk/reward ratio and look for ways to improve it consistently. IN order to be able to do that, you need to have a trading log book.
The Batting Average
The Batting Average helps you compare your winning and losing trades. Dividing your total number of wins by the total number of trades will help you analyze your past performance and identify areas for improvement. A ratio above 0.5 (or 50%) shows your trading strategy is working.
Suppose you had 60 winning trades and 40 losing trades. Your Batting Average is 60%, which means you have more winners than loosers.
Combining your Batting Average with your risk/reward ratio will help you manage potential losses more effectively.
Here is a table which helps you better understand the relationship between the risk/reward ratio and the Batting Average:
The table shows that you should have a minimum batting average or 40% or better. Many traders would consider themselves as so called ’2:1’-traders. This means they always try to have a profit of their winners at least 2x their pre-defined risk (stop-loss). As you can see in the table, ‘2:1’-traders have built in failure in their trading strategy as they can be wrong more often than right and still make tons of money – a ‘2:1’-trader can be incredibly successful at a batting average of only 40%. This means the ‘2:1’-trader can only have 4 winners out of 10 trades and still be highly successful.
TRADING - TRUTH VS LIE 📉📈
A financial background can be useful for understanding how forex and other markets work. However, more beneficial are skills in math, engineering and hard sciences, which better prepare traders for analyzing and acting on economic factors and chart patterns. It doesn’t matter how much awareness you have about financial markets – if you can’t process new data quickly, methodically and in a focused manner, those same markets you thought you knew so well can eat you alive.
ANSWER: LIE
EXPERT TIP: To prepare for trading, focus on developing analytical skills rather than boning up on financial knowledge.
Trading is like running a business. In order to be successful, you need to learn from mistakes and have rules in place to help protect your capital. Like a business, it’s crucial to have appropriate strategies on hand for varying market conditions. Setting up a business is easy, and similarly, trading is easy too. Developing successful strategies and making money? That’s the hard part.
ANSWER: TRUTH
EXPERT TIP: It will seem easy if your early trades go well, but long-term profitability is a different matter altogether. Make your life easier by researching your trades, using the right position size, setting stops and keeping a handle on your emotions.
Can you be successful with a small trading account? It depends on your definition of successful. An account needs to be large enough to accommodate proper risk parameters. But success is relative; a high rate of return is based on percentages and not on monetary amounts.
For example, a 20% return is a 20% return regardless of the account size. However, if your 20% return isn’t worth enough in hard cash, it might be hard to incentivize yourself to improve as a trader.
ANSWER: IT DEPENDS
EXPERT TIP: Your account size will depend on your goals and your prior success. Naturally, experienced traders will have a larger account but to begin with, concentrate on that rate of return percentage.
Bragging rights be damned: the number of trades you win is irrelevant. Profitable traders simply make more money than they lose.
Say you win five trades and make $5,000, but lose one trade and lose $6,000 – you have won more trades than you have lost but are still down overall. Profitable traders will set rigid risk-reward parameters for a trade – for example they might risk $500 to make $1,000, a risk-reward ratio of 1:2.
If a trader makes five trades using this method, loses three of them and wins two of them, the trader is still $500 in profit ($2,000 profit-$1,500 loss). Don’t be afraid of taking a few hits: if your process is sound, one big winning trade can reverse your fortunes.
ANSWER: LIE
EXPERT TIP: Many successful traders will be losing more trades than they win, but oftentimes it won’t bother them. Focus on getting the right setups rather than worrying about the ones that got away.
How much time you spend trading, and monitoring trades, will depend on your trading style. Those employing a scalping strategy, for instance, will make a large number of transactions per day, entering and exiting many positions, and will need to pay close attention to their trades on the shortest timeframes.
However, position traders won’t need to spend as much time monitoring, as their transactions may last weeks, months or even longer – meaning long-term analysis will account for short-term fluctuations.
ANSWER: IT DEPENDS
EXPERT TIP: Ask yourself what type of trader you are. Shorter timeframes will mean monitoring and analyzing constantly – being ‘always on’. If you favor a more relaxed approach you may be suited better for position trading.
Some traders advocate a ‘mental stop loss’ when the market gets tough – that is, relying on oneself rather than a computer to set a level at which to exit a losing position. The problem is, a ‘mental stop loss’ is just a number that makes you worried about the money you’re losing. You may fret about the direction of the market - but you won’t necessarily be compelled to exit your trade.
A fixed forex stop loss is completely different – if your stop loss price trades you are out of the position, no ifs or buts. Exercising proper money and risk management means setting solid stops. Period.
Answer: TRUTH
EXPERT TIP: It can be so easy to neglect your stop loss. When a trade is going your way, the dollar signs can blind you - but you should protect yourself against the market turning.
Spreads may represent the primary cost of trading, but they aren’t the be-all-end-all when it comes to choosing your market. You may find an asset that has a wide spread but represents a strong opportunity due to its volatility. Similarly, you may find an asset with high liquidity and a tight spread, but that isn’t showing much trading potential. Above all, you should let your trading decisions be governed by setups presented by the market, not the size of the spread.
Answer: LIE
EXPERT TIP: The spread can represent a significant cost to traders – but don’t let it be the sole factor dictating your choice of asset.
The economic analysis key to a fundamental approach helps give traders a broader view of the market. Sound knowledge of the underlying forces of the economy, industries and even individual companies can enable a trader to forecast future prices and developments. This is different to technical analysis, which helps to identify key price levels and historical patterns, and provides conviction for entering/exiting a trade.
It’s true to say that expertise in economic analysis is important. However, so too is expertise in the technicals. Many successful traders will look to combine fundamental and technical analysis so as to be in a position to draw on as wide a range of data as possible.
Answer: TRUTH
EXPERT TIP: It may be worthwhile to devise a strategy accounting for the nuances of both technical and fundamental analysis.
News can create big moves in the market, but that doesn’t mean trading the news leads to the biggest opportunities. For a start, the volatility of important news events often makes spreads wider, in turn increasing trading costs and hitting your bottom line. Slippage, or when you get filled at a different price than you intended, can also hit your profitability in volatile markets. On top of these drawbacks, traders could get locked out, making them helpless to correct a trade that moves against them.
ANSWER: LIE
EXPERT TIP: ‘Trading the news’ can seem like a fashionable thing to do, but market movements can be unpredictable at the time of major releases. It’s often best to steer clear during such high volatility.
Excluding emotions from trading is an impossible endeavor. It can lead to more internal conflict than benefits, which is why managing emotions is a better way of looking at it. You have negative emotions like fear and greed that need to be managed without suppressing positive ones like conviction that help drive you towards the best opportunities.
Answer: TRUTH
EXPERT TIP: Even the most experienced traders feel emotion in the heat of the markets, but how they harness that emotion makes all the difference.
Source: DailyFX
CORRECT AND INCORRECT RISK MANAGEMENTHello everyone!
Today I want to remind you about the risks!
Risk management is very important in every trade , but most traders are too lazy to act according to the rules, so I decided to remind the basic rules.
They look simple, but following them will greatly reduce losses and increase the win rate.
Let's go!
Correct calculation of possible losses
Beginners are AFRAID to think about losses.
And even more so to count them!
But it must be done, otherwise you will lose much more than you should.
Even BEFORE opening a position, you should know how much you are willing to lose under unfavorable conditions.
Cut losses and let your profits grow
It's strange, but people are ready to quickly fix a profit, but not fix a loss.
Premature profit-taking is a normal phenomenon, as is overexposure of unprofitable transactions.
why?
Because traders are afraid of losing profits and hope that the loss will decrease and even turn into profit.
Don't move your stop loss
If you followed the first advice and calculated the stop loss, and after placing it you started moving, then you did not understand the essence!
Stop loss is very important and it is important not to move it.
In each trade, you risk a certain percentage and should not increase this indicator by moving the stop loss.
Monitor your drawdowns
It's unpleasant to lose, it's unpleasant to analyze your losses, but you have to do it.
Without loss analysis, you will not get better as a trader.
You have to keep track of losses, you have to analyze trades to improve your trading and not repeat mistakes.
Opening positions without risk management
Most traders don't think about risk at all, much less risk management.
Most of them open trades without risk management and therefore most of them lose all their money.
Trading without stop losses
The fear of losses and the fear of being wrong leads to the fact that the trader does not set a stop loss.
If you do not set a stop loss, know that the stop loss is still set, how?
It's simple, in this case your stop loss will be equal to your capital.
The position will close when your account is 0.
Is it easier this way?
Let the losses run
Why don't traders close unprofitable positions?
As mentioned above, it's all about hope .
do you think that the price will sooner or later go in your direction?
Perhaps.
But by that time, most likely you will already be closed by margin call.
Ignoring drawdowns and other important indicators of risk management
Ignoring is a favorite thing of novchikov.
They think that they have understood everything, they think that the market will spare them.
Unfortunately, the market doesn't work that way.
Risk management was invented long before you and will be and will be used after you.
And all because it works and without it YOU CANNOT BECOME a SUCCESSFUL PROFESSIONAL TRADER .
And then it's up to you who you want to be.
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
Great mentors I have found (Trading)Hello.
I'd say 95% of investment/trading content out there is crap.
I said I can make a list of good mentors who have truly helped me on my journey.
So here they are.
Bob Loukas (You can find him on twitter and some videos from youtube). Would have put links but it's not allowed.
" Intermediate time-frame swing trader but also takes shorter scalp trades when there is an opportunity. He has been trading 25 years , and some of that time as a full-time trader. He is recognized as an expert on trading market cycles and places a significant importance on risk management . I like to consider myself an educator on trading and investing, along with being a passionate entrepreneur".
Focuses on calmness, market cycles, psychology, mindset, market trends, key levels, breakouts and moving averages.
I remember when I found Bob Loukas from youtube. He had a video back in 2019 january when BTC was around 3,6k and he said "if you panic sell now, you are going to regret that for a long time. This is time to accumulate."
Mitch Ray (Twitter and youtube).
"Technical Analysis with Mitch Ray is your #1 Source for Trade Setups and Market Updates"
I think Mitch has best free trading content what I have found from youtube. It amazes me that he doesn't have more visibility when there is these moon boys everywhere. (I guess people like to believe that they can get rich overnight)
He's making live market updates and technical analysis almost every day on youtube.
Focuses on harmonics, fibonacci, channels, key levels, market trends, candlesticks, breakouts, fundamentals.
Peter Brandt (Twitter) Legend
"World renowned veteran Trader of classical charting principles for over four decades and #1 author on Amazon with trading book Diary of a Professional Commodity Trader. A man dedicated to helping others in the world of market speculation".
Focuses on classical charting, key levels, moving averages, breakouts, channels, parabolas, psychology and patterns.
Big Cheds (Twitter and youtube).
"Author of best selling book "Trading Wisdom". CMT level 1 and trained in Classical Charting and Japanese Candlesticks. Accomplished trader and educator of more than ten years , he is dedicated to helping new traders avoid the early mistakes most make when getting started. Cheds enjoys sharing his knowledge of risk management and trader psychology ".
Focuses on classical charting, key levels, fake outs (traps), breakouts, psychology, market trends, candlesticks, moving averages and patterns.
Gareth Soloway (Twitter and interviews about markets on youtube)
"Chief Market Strategist Gareth Soloway has been an avid swing and day trader since his days at Binghamton University where he studied Economics. After college, Gareth quickly excelled as a financial adviser but his heart was always in swing and day trading. He had this long standing belief that he could help investors make more money by advising them on shorter term investments (holding a stock for days to weeks) than the buy and hold crowd who lost 50% of their money during every market collapse. “Why not profit during the bear markets just like the bull markets”, he said. While helping others gain financial independence during the day, he spent his nights studying charts and price action, developing a unique market trading system that put his profits on a rocket ship. Some nights he would barely sleep when he found a new technique that was proven, once back-tested".
Gareth has quite a track record .
There's ofc big list of things I forgot to mention that these traders focus on. You better check them out yourself.
Someone said it well . Learning to trade profitably takes thousands of hours . Why would it be any different than studying a degree which takes 4 years / 5000 hours? (The hardest easiest way to make money.)
But if you find good mentors this learning curve gets much faster . That I noticed after I invested some money to study TA
If you liked this. Tell me
-Jebu
ELIMINATING RISK BEFORE PROFIT! EURUSD BREAKDOWNJust a bit of a breakdown on EURUSD.. We are still in a long term downtrend so my radar is still on short positions! I want to see what price does where it is at the moment and see if I can get given the opportunity for another short. We should get a big move down if price action respects this long term downtrend. RISK MANAGMENT personally I never risk more then 2% of account balance but like I've explained, once I move straight into profit I move stops to eliminate risk.. if price returns to that area more then likely price will not go our direction.
vite/usdtvite/usdt looking good for short trade
buy at 0.02874
stoploss 0.02986
take profit will be 0.02650 almost 8% profit
Successful traders think like chess playersEvery day I get many questions from traders and more than half of them are: "What will X asset do today, will it rise or fall" or "Do you think X asset will reach Y price?"
With very few exceptions, I say "I don't know". Surely my interlocutor will think that I don't want to tell him/her or that I'm an idiot.
In fact, the correct answer is another: "I don't care"
And now, dear reader, you will think not that I am an idiot, but a complete one.
But bear with me a little more and let me explain using a real trading example on EurUsd
Let's say we consider taking a trade on this pair so, we ask ourselves what do we know about it?
1. Fundamentally the USD is favored
2. The trend is down for more than a year.
So, we want to trade in the direction of the trend and sell this pair
Looking closely at the chart we see that EurUsd is contained in a downwards channel and recently found support in the 0.99 zone.
Last week, the pair corrected and reached a high at 1.0150 and reversed exactly from the channel's resistance, leaving a nice and strong bearish engulfing on our daily chart.
Going further with our judgment, where do we want to sell this pair?
Now, considering my approach, I see a good place to sell in the 1.0030-1.0050 zone.
So we set a sell limit order in that zone (Remember, professional traders use pending orders)
We also consider at this moment the point where our bearish outlook is negated. We get 1.0150 for our stop loss.
Now, using again my personal trade, let's say we set the selling order at 1.0030, with a stop loss at 1.0150 we have a potential loss of 120 pips.
We know that every pip move on EurUsd represents 1usd for 0.01 volume, so 12usd potential loss on 0.01 trade for our trade.
Now, let's consider volumes.
What potential loss are we "comfortable" with?
For the sake of example let's say 120 USD, so a 0.1 volume.
Now let’s see where we can take profit.
0.97 zone is the falling channel's support, so there.
Looking at such a trade we have 120 pips or 120 USD potential loss with 330 pips or 330 potential profit. This gives us a close to 1:3 risk-reward ratio, a very good one.
And now, maintaining the analogy from the title is the market’s “move” turn
And the market can do only 2 things at this point: fill our pending order or not.
Considering that I don't hold pending orders after NY's close, if the market doesn't reach my level by then, I will remove the order, and tomorrow I will start over again by analyzing the market.
The second is to trigger our limit order as is also the case for my trade, and we are in a running trade now.
Now, with a trade running is again the market's move.
So, what are the possible scenarios?
1. The market rises and hits our SL. Although an undesirable scenario, we knew from the start that it’s a possibility and like every trade, this also carries a risk. We considered it and assumed it from the start and didn't trade more than we could afford to lose in a trade.
So, we take it like a stoic and move on to the next trade and market analysis
2. The lovely scenario in which EurUsd breaks 0.99 support and falls to our target.
So, our reasoning was correct and we now have a trade that brought 330usd in our pocket, but more importantly we traded disciplined with a good R: R
3. The market falls below 0.99 but reverses. Now we can also consider some action
- Move SL in BE and let the trade run
- Close half to get some money off the table and move SL into BE
- Close all trade
In conclusion:
As you can see, you don't need to be Gary Kasparov to be a good trader, the market's "moves” being in fact just a few. All you need to do is to be aware of these moves and have a plan for each of them.
This way you will not end up wondering every minute "where will EurUsd go, it will rise, it will fall", you will not trade emotionally or recklessly.
As Benjamin Franklin once said: "Those who failed to plan, plan to fail", but it is not your case, because, as a good trader you always trade with a plan and know from the beginning all that the market can do.
Best regards!
Mihai Iacob
