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Riskreward

STOP LOSS more important than you think!Set STOP-LOSS and stop your loss! The Vital Role of Stop-Loss in Forex and Crypto Trading In the fast-paced realms of forex and cryptocurrency trading, where market volatility is the norm, the integration of a stop-loss strategy holds paramount importance. A stop-loss order acts as a critical risk management tool, shielding traders from excessive losses and preventing impulsive decision-making in turbulent market conditions. However, its significance goes beyond risk mitigation; stop-loss orders also play a pivotal role in guiding traders towards selecting optimal entry points. Let's delve into why incorporating stop-loss orders into your trading approach is essential for achieving long-term success. Fostering Discipline and Psychological Resilience One of the primary rationales for the necessity of stop-loss lies in its capacity to nurture discipline and psychological resilience among traders. By establishing predetermined exit points, traders not only manage risk effectively but also cultivate a disciplined mindset crucial for navigating the complexities of financial markets. Adhering to stop-loss levels compels traders to conduct thorough analyses of entry points, thereby refining their decision-making processes. This disciplined approach not only mitigates the influence of emotional trading but also fosters rationality and consistency, pivotal attributes for sustainable trading success. Empowering Effective Risk Management Practices Effective risk management forms the bedrock of successful trading endeavors. Without the implementation of stop-loss mechanisms, traders expose themselves to the peril of unchecked losses, which could potentially erode their entire trading capital. Stop-loss orders serve as a bulwark against such scenarios, capping losses at predetermined levels. By calculating appropriate position sizes relative to stop-loss distances, traders ensure that each trade aligns with their risk tolerance and overarching trading strategy. Moreover, the process of setting stop-loss levels inherently prompts traders to meticulously assess entry points, reinforcing the importance of selecting optimal trade setups. Optimizing Risk-Reward Dynamics An often-overlooked aspect by novice traders is the critical importance of maintaining favorable risk-to-reward ratios. Trading without stop-loss not only compromises risk management but also distorts the risk-reward dynamics of each trade. Well-placed stop-loss orders enable traders to define risk upfront, enabling them to seek out trades with favorable risk-reward profiles. By aligning potential losses with anticipated gains, traders can pursue asymmetric returns, where profit potential outweighs risk undertaken. This strategic alignment not only enhances profitability but also instills confidence in traders, empowering them to execute trades with conviction. Conclusion In conclusion, the integration of stop-loss orders into your forex and crypto trading endeavors is indispensable for cultivating discipline, managing risk effectively, and optimizing profitability. Beyond serving as a risk management tool, stop-loss orders nurture psychological resilience, refine decision-making processes, and uphold the principles of disciplined trading. Moreover, stop-loss implementation inherently encourages traders to scrutinize entry points meticulously, reinforcing the importance of selecting optimal trade setups. Therefore, traders must recognize the pivotal role of stop-loss in safeguarding capital and fostering long-term success in the dynamic world of financial markets.
OANDA:XAUUSDEducation
by traderstube
Defining Target for Risk Reward: Maybe you shouldn't?The trade plan is broken up into parts. We have an objective and consistent entry, stop, and exit plan. Here I will be talking about the exit plan and setting targets that will give you a particular risk/reward ratio. There are no absolutes when it comes to what risk/reward you should be aiming for, a lot has to do with how you handle risk and loss and your overall understanding of markets. Defining the stop (risk) is relatively easy compared to defining the target (reward). Mostly you need a clean set of statistics on an objective method. This will give you an average distance that the swing will run in relation to your method. The reward part of the equation is a function of how far your stop is to your entry. There is no one-size-fits-all when it comes to trading. For many, it may be best not to set a target, but instead use something simple and objective like a moving average to exit the trade. This way, you get what the market gives you while incorporating consistency and objectivity into your exit plan. Keep it simple, objective, and consistent, and learn as you go. In the video, I make something up on the spot that may give you some ideas. I use a 20ema as a profit stop only after price has made a new high. It's simple, principle-based, and it's objective. No matter what your method, knowing where you are in the swing cycle will help in defining entry, stop, and target, and this will directly influence the risk/reward ratio. Shane
AMEX:IWMEducation
by ShaneBlankenship
2
Setups, Planning and RISK: How to MANAGE your RISK vs REWARD📉Hi Traders, Investors and Speculators of Charts📈 For today's post, we're diving into the concept " Risk-Reward Ratio " We'll take a look at practical examples and including other relevant scenarios of managing your risk. What is considered a good risk to reward ratio and where can you see it ? This applies to all markets, and during these volatile times it is an excellent idea to take a good look at your strategy and refine your risk management. Let's jump right in ! You've all noticed the really helpful tool " long setup " or " short setup " on the left-hand column. This clearly identifies the area of profit (in green), the area for a stop-loss (in red) and your entry (the borderline). It also shows the percentage of your increases or decreases at the top and bottom. It looks like this : 💭Something to remember; It is entirely up to you where you decided to take profit and where you decide to put your stop loss. The IDEAL anticipated targets are given, but the price may not necessarily reach these points. You have that entire zone to choose from and you can even have two or three take profits points in a position. Now, what is the Risk Reward Ratio expressed in the center as a number.number ? The risk to reward ration is exactly as the word says : The amount you risk for the amount you could potentially gain. NOTE that your risk is indefinite , but your gains are not guaranteed . The risk/reward ratio measures the difference between the entry point to a stop-loss and a sell or take-profit point. Comparing these two provides the ratio of profit to loss, or reward to risk. For example, if you're a gambler and you've played roulette, you know that the only way to win 10 chips is to risk 5 chips. Your risk here is expressed as 5:10 or 5.10 .You can spread these 5 chips out any way you like, but the goal of the risk is for a reward that is bigger than your initial investment. However, you could also lose your 5 and this will mean that you need to risk double as much in your next play to make up for your loss. Trading is no different, (except there is method to the madness other than sheer luck...) Most market strategists and speculators agree that the ideal risk/reward ratio for their investments should not be less than 1:3 , or three units of expected return for every one unit of additional risk. Take a look at this example: Here, you're risking the same amount that you could potentially gain. The Risk Reward ratio is 1, assuming you follow the exact prices for entry, TP and SL. Can you see why this is not an ideal setup? If your risk/reward ratio is 1, it means you might as well not participate in the trade since your reward is the same as your risk. This is not an ideal trade setup. An ideal trade setup is a scenario where you can AT LEAST win 3x as much as what you are risking. For example: Note that here, my ratio is now the ideal 2.59 (rounded off to 2.6 and then simplified it becomes 1:3). If you're wondering how I got to 1:3, I just divided 2.6 by 2, giving me 1 and 3. Another way to express this visually: In the first chart example I have a really large increase for the long position and you can't easily simplify 7.21 so; here's a visual to break down what that looks like: If you are setting up your own trade, you can decide at what point you feel comfortable to set your stop loss. For example, you may feel that if the price drops by more than 10%, that's where you'll exit and try another trade. Or, you could decide that you'll take the odds and set your stop loss so that it only triggers if the price drops by 15%. The latter will naturally mean you are trading at higher risk because your risk of losing is much more. Seasoned analysts agree that you shouldn't have a value smaller than 5% for your stop loss, because this type of price action occurs often during a day. For crypto, I would say 10% because we all know that crypto markets are much more volatile than stock markets and even more so than commodity markets like Gold and Silver, which are the most stable. Remember that your Risk/Reward ratio forms an important part of your trading strategy , which is only one of the steps in your risk management program. Dollar cost averaging is another helpfull way to further manage your risk. There are many more things to consider when thinking about risk management, but we'll dive into those in another post. A little bit more in-depth explanation on Dollar-Cost-Averaging here: And Finally, the last tool I'll give away today is an absolute MUST for all traders . Here's how to successfully set-up your own portfolio ratios: If you found this content helpful, please remember to hit like and subscribe and never miss a moment in the markets. _______________________ 📢Follow us here on TradingView for daily updates📢 👍Hit like & Follow 👍 CryptoCheck
Education
by CryptoCheck-
Mastering Risk Management: Guide from TOP investorWelcome to the comprehensive guide on mastering risk management in cryptocurrency trading. In this detailed tutorial, we'll walk you through the essential principles of calculating stop losses, determining risk percentage per trade, and strategically placing stops for optimal risk mitigation. Whether you're a novice or an experienced trader, understanding and implementing effective risk management is paramount for sustained success in the volatile crypto market. Opening a Position on TradingView Brief overview of TradingView and accessing the "projection" section for long positions. A step-by-step guide on how to initiate a long position using TradingView. The 5 Fundamental Principles: Introduction to the five key principles of effective risk management. 1: Trend Following 2: Not Gambling but Trading 3: Entry after retest 4: Stick to your strategy 5: Don't overtrade Calculating Stop Losses 2.2 Risk Percentage Per Trade: Explanation of the concept of risk percentage per trade (e.g., 0.5% of the trading capital). Position sizing is the process of allocating a specific percentage of your crypto assets for trading, with the goal of managing risk effectively. To calculate your position size: Determine Your Risk Per Trade: Decide the percentage of your total account value you're comfortable risking on a trade. Typically advised to risk 1–3% of your trading balance per trade. For example, with a $5,000 balance and a 2% risk, you'd only lose $100 per trade. Set Your Stop-Loss: Determine your stop-loss level, the point at which you exit a trade if it moves against you. The stop-loss helps control losses and is crucial for risk management. Consider Position Size: Use your risk percentage and stop-loss to calculate the position size. Position size varies based on the distance of the stop loss; it's smaller for wider stops and larger for tighter stops. Proper position sizing ensures consistent risk, regardless of the trade amount. By following these steps, you can strategically size your positions, balancing risk and potential rewards in your crypto trading endeavors. Strategic Placement of Stop Losses Hiding Behind Local Lows: The rationale behind placing stop losses just below local lows for effective risk containment.Beneath Manipulation Zones: Strategic placement of stop losses under zones susceptible to manipulation. The importance of avoiding regions where price is unlikely to return if manipulation has occurred. Practical Examples The Anatomy of a Good Stop Loss: Visual representation of a well-placed stop loss using real-life chart examples. 4.2 Pitfalls of Poorly Placed Stop Losses: Analysis of common mistakes in stop loss placement and their consequences. Conclusion: Empowering Your Trading Journey As we conclude this in-depth guide, remember that effective risk management is the cornerstone of successful trading. From understanding the basics of stop losses to strategically placing them based on market dynamics, each step contributes to minimizing potential losses and maximizing gains. Implement these principles in your trading strategy, adapt them to your risk tolerance, and embark on a journey of informed and calculated trading decisions. 💡 Mastering Risk | 📊 Setting Stop Losses | ⚖️ Calculating Risk Percentage | 🎯 Strategic Placement | 📈 Empowering Your Trades 💬 Engage in the discussion: Share your experiences with risk management, ask questions, and join a community committed to fostering intelligent and secure trading practices. 🌐✨
Education
by Yaroslav_Krasko
🔥 WorldCoin [WLD] Perfect Bounce Area: Huge Risk-Reward!In this analysis I'm going to make the assumption that WLD is trading in a parallel channel in order to construct a trade with a very high risk-reward. Remains to be seen whether WLD is actually going to trade like this, but the trade allows us to take riskier bets with a high pay out potential. The fact that WLD is a relatively young coin makes me believe that this token can see a lot of growth over the next 1-2 years during the bull-run.
Long
by FieryTrading
3
24-01-30 update AUDUSD Long Entry: Trade Management 24-01-30 update AUDUSD Long Entry Entry Price: 0.65700 Stop Loss Price : 0.65300 / 40 Pips Take Profit: 0.66300 / 60 Pips Risk To Reward : 1 for 1.5 Trade Grade: b + -Tagged into trade at same price levels above * Trade Management* A. Risk entry (pending order) B. Take Profit at levels above B2: I might scale the risk off if the market trends in the direction of the trade. Cut losses quickly and let the winners ride is a big part of my trading style If anyone wants to know when I reduce risk please message me
Long
by Trader_Miles
EURUSD Short Trade 24-01-29: Trade Signal EURUSD Short Trade 24-01-29 *Trade Price Levels* 1. Risk Entry (Pending Order) Pending Order Price : 1.08700 Stop Loss Price : 1.09100 Take Profit : 1.08100 Risk to Reward Potential -1 units of risk for 1.5 units of gain -Note: Needs a win rate or 41% or above to be a profitable trader -Will Track Feb Signal Win Rate A. Will track risk entry win rate and confirmation entry model win rate B. Based on data that will determine risk profile for Prop Firm Funding (More Aggressive Risk Profile) Cons For Trade A. Price is in the discount of the swing range (should sell from premium and long from discount) B. Price could use the demand zone from the daily to drive (hawkish) Price through zone above making higher highs and lower lows C. Price broke key price level of 1.0800 (more neutral) Pros A. Double zone supply zone coverage with stop loss being big enough to let the trade breathe a bit B. The first Mitigation of a zone often fails leading to price moving up and then going deeping (bearish) towards the strong swing structure below C. The overall trend is more bearish than bullish Fundamental Drivers A. Price Broke 7 week low of 1.0800 B. Central Bank rates remained unchanged C. President Lagarde is more dovish than hawkish
Short
by Trader_Miles
2
GBPUSD Post Trade Analysis 2024-01-29 : Valid LossGBPUSD Post Trade Analysis 2024-01-29 *Loss* 1. Valid risk entry loss for a valid loss A. Entry Valid B. Point of Interest Valid - 4H A.3 C. Valid Exit 2.What can I improve ? A. - I can input trade concept into Edgewonk Advance Journal Section. - I can add all info, pre trade screenshots, fundamental news - I can improved my fundamental analysis - First Mitigation Failed - will track and possible add no first mitigation to trade plan What would be my entry model Price Levels ? 1. Entry Price : 1.26750 2. Stop Loss : 1.26450 3. Take Profit : 1.27200 Could I take this Trade ? - Would set alert and have 1 hour to place trade - Valid Entry and Win Lessons - First mitigation is lower probability and Entry Model is a more valid Trade
Long
by Trader_Miles
24-01-26 EURUSD Long Entry - Trade Management 24-01-26 EURUSD Long Entry Trade Management Price Levels A. Move Stop loss to a take profit support level on a lower time frame Price: 1.08450 Locked In Risk to reward: + 0.25 % Going to the weekend * Left a bit of breathing room for spreads for sunday opening and to cover my risk if any large news happens this weekend * Signal Price Info Entry Price: 1.08350 Stop Loss Price : 1.07950/ 40 Pips Take Profit: 1.08950/ 60 Pips Risk To Reward : 1 for 1.5 Trade Grade: A-
Long
by Trader_Miles
24-01-24 AUDUSD Long Entry Signal on 4H Chart 24-01-24 AUDUSD Long Entry on 4H Chart Entry Price: 0.65700 Stop Loss Price : 0.65300 / 40 Pips Take Profit: 0.66300 / 60 Pips Risk To Reward : 1 for 1.5 Trade Grade: b + CONS: - Momentum more bearish + upside down v-shape (price usually likes to continued in the 2nd leg) of the V) PROS: - The price levels have made a solid support zone - Could be lots of Buy Side Liquidity in the stop loss area - For every Buy order there needs to be a sell order A. this is critical for the trade due to the potential shift in the market to bullish B. The lows have a higher probability to hold due to large Central Banks, Hedge Funds , ETC wanting to hold the lows. So they can buy against the trend to fluid enough liquidity C. They might Induce market participates into selling in order to produce enough liquidity to cause a bullish leg of momentum to the upside. D. I accept the risk and I will place a pending order. Main Goal: -Increase Win Rate this Quarter. Currently at 44%- I have Placed a pending order. If anyone needs ideas with trade management please leave a comment.
Long
by Trader_Miles
AUDUSD: Daily Long Signal tagged In on 24-01-23 : UPDATEAUDUSD: Daily Long Signal - 24-01-18 Tagged In on 24-01-23 Entry Price: 0.65700 Take Profit: 0.66780 125 PIP gain Stop Loss: 0.65100 50 PIP Stop Loss Risk To Reward: 1 % For a 2.0 % Return -Placed Pending order and tag into the trade Trade Management - Steps if you taken the trade A. Place Take Profit at * 0.66555 * Risk To Reward is 1 % for 1.5% B. Place Stop Loss at * 0.65055 * * Max risk of Capital * 1 % MAX ... I Suggest 0.25% due to taking a random guys trade signals C. Wait Patiently and FULLY ACCEPT THE RISK
Long
by Trader_Miles
EURUSD - Update Jan 23rd #1 Short Trade Update Jan 23rd #1 Short Playbook 4H C.3 No Huge Fundamental News Trade Data: Entry Entry Price: 1.08842 Exit Take Profit: 1.08162 or 68 Pips Stop Loss: 1.09242 or 40 Pips Trade Management Step 1: Reduce Risk Once a old low was broken I moved my stop loss to follow the trend. Reduced Price: 1.09192 Pips : 5 PIPS Percentage Reduced: 0.05 Open Risk On trade from original: 0.95 % Take Profit 1: Take Profit: 1.08826 / Breakeven Percentage Gain: Trade at breakeven locked in with a stop loss in place *See Previous Analysis for more trade data* 1. Currently price is moving down with momentum and I am waiting for a higher Probability Trade Entry Scale In or to move my Take Profit for more percentage gain on trade once the lows are broken 2. Waiting for the price action to show its hand.
Short
by Trader_Miles
Update GBPUSD: 4H Long Signal - 24-01-20 Long Set-up 4H A.2Update GBPUSD: 4H Long Signal - 24-01-20 Long Set-up 4H A.2 Entry Price: 1.26650 Take Profit: 1.27250 60 pips Stop Loss: 1.26350 30 pips Risk to Reward: 1:2 Trade Notes: -I didn't place swing trade due to being stuck at work (Improvements- Set Email Alert so I can quickly analysis current Market Conditions to place trade) 1. Trade Entry: Risk Entry (Pending Order with previous price entries) -Current Max Downdraw: 4 pips then impulsed upward with 2 momentum 4h candles - Using 15m Market Structure would be a locked in 0.42% take profit stop loss going into monday session - I would likely drop that level to 0.2% take profit stop loss - to give the trade a bit of breathing room for sunday opening session 2. Trade Entry Management: Confirmation Entry On Lower Time Frame Entry Price: 1.26694 Potential Take Profit : 1.27114 / 3.5% gain for 1% risk Stop Loss: 1.26574 / 12 pips from entry Trend Following Risk Management Strategy: Take Profit Following Market Structure: Take Profit Stop Loss Price: 1.26776 (Locked In percentage gain 0.68% ) 3. Scale In Trade Price Levels: Since all risk is off the table I will scale into the trade... Let the winners ride and let the losers go Potential Trade ideas: (Using Lower time Frame Confirmation Entry Model) Steps 1. I would wait to see how the market reacts to opening hours 2. I would look at fundamental upcoming news (helps with directional bias of the trade) 3. If those two items match up with the trade concept then I would place trade Entry Price: 1.26920 Take Profit: 1.27160 / 2% gain / 24 PIPS Stop Loss: 1.26800 / 1% risk / 12 PIPS If you got this fair then thank you for your time and support. If you want any more info or asset classes analysis please let me know. Safe trading and remember always use a stop loss and proper risk structure.
Long
by Trader_Miles
Update: EURUSD 24-01-18 Short Trade 1 Short Playbook 4H C.3Trade 1 Short Playbook 4H C.3 -I am in the trade short on a regulated broker (CMC Markets) - Lot size is 0.01 lots until I am consistently profitable. - My Entry prices are the same as below. - I have a take profit in place but I will reduced risk if the market structure present with breaking new lows on the Lower Time Frame - Grade of trade : c+ (with reading price action and with the current fundamentals news being more bullish than bearish plus it's a friday and they are usually lower probability trading days) Entry Price: 1.08842 Exit Take Profit: 1.08162 or 68 Pips Stop Loss: 1.09242 or 40 Pips 4. Price has shifted to the downside on the lower time frame 5. A valid entry model was formed 6. I placed A confirmation entry on the 15m Chart 7. I am waiting to reduce risk or place a take profit with a dynamic trend following risk management strategy -If you read this far then I really appreciate your support and drive to become a better trader or analysis. -If you would want me to include more info or a different asset class to trade please let me know. I Love analysing charts :) -Please follow or like my stuff or don't lol.... just trade safely and include a stop loss with a MAX RISK OF 1%. You can't blow an account in a day if you trade with the well thought out risk structure.
Short
by Trader_Miles
2
Update: EURUSD short 4h c.3 Trade 1 Short Playbook 4H C.3 Trade Idea 2 1. Price Has hit my area of value. I currently see no downward momentum. The fundamental news are also bullish. CPI: Positive 2. I will wait for a confirmation liquidity model to present on a lower time frame before placing a short trade. 3. If that happens I will place my trade with a decent size stop loss. 4. If price fully mitigates this resistance zone then I will change my bias to long Trade Idea 1: Entry Price: 1.08842 Exit Take Profit: 1.08162 or 68 Pips Stop Loss: 1.09242 or 40 Pips
Short
by Trader_Miles