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Risktoreward

A Trading Plan MUST Include A Sound Risk Management StrategyOne of the biggest mistakes a trader can make is to neglect the aspect of risk management. In this video, I divulge the most pivotal lesson I’ve gleaned from my experience in trading. During the initial years of my trading journey, I disregarded the importance of risk management, which proved to be detrimental in a significant way. The watershed moment of my trading career came after incurring substantial financial losses. This experience was a stark revelation of the imperative nature of a robust risk management strategy for trading success. It was an excruciatingly costly lesson. Should you have bypassed dedicating time to understand risk management, you might be on the brink of a potential calamity. By watching this video, I hope you can sidestep the blunder I once made in the nascent stage of my trading endeavors.
Education
by tradingwithanthony
10 EMA strategy ^BEST TREND-FOLLOWING STRATEGY^Welcome! Today, I'm excited to share with you one of the most effective trend-following strategies that is adaptable to any timeframe and asset class ( OANDA:XAUUSD , NSE:NIFTY , FX:USDCHF ), boasting a remarkable risk/reward ratio of up to 1:10. Let's dive right in. As mentioned, this strategy revolves around the Exponential Moving Average (EMA), specifically the 10-period EMA. For those unfamiliar, the EMA places greater emphasis on recent price data compared to a Simple Moving Average (SMA), providing a dynamic view of market trends. When the price on your chart is above the 10 EMA, it signifies a bullish trend; conversely, when the 10 EMA is above the price, it indicates a bearish trend. Let's illustrate with an example: Imagine a bullish trend with four consecutive green candles followed by a red candle. Our entry point occurs when this red candle, the trigger candle, fails to touch the 10 EMA. Subsequently, when a green candle crosses above the high of the trigger candle, we enter the trade. Setting our stop loss (SL) just below the EMA line beneath the trigger candle, we establish our take profit (TP) based on a risk/reward ratio, starting at 1:2 and potentially reaching an impressive 1:10. Trailing the 10 EMA line allows us to stay in the trade longer, albeit experiencing initial stop-loss hits. However, perseverance reveals the strategy's efficacy over time. Now, for short positions, such as during a downtrend characterized by three red candles followed by a green candle, our entry occurs when the low of the green candle is breached by the subsequent red candle. Setting the SL just above the EMA line above the trigger candle and TP based on the risk/reward ratio, we execute the trade. For those interested in trailing stops, there are two options: firstly, trailing along the 10 EMA line; secondly, utilizing the Average True Range (ATR) for algorithmic trading enthusiasts. With this strategy's flexibility and potential for significant returns, it offers traders a robust approach to navigating diverse market conditions. ***Here are 2 examples of Long & Short: Long position in BINANCE:SOLUSDT www.tradingview.com Short in FOREXCOM:EURCAD It's crucial not only to grasp the concept of this strategy but also to put it into practice. 💼 Start by implementing it with small capital or utilize paper trading, which platforms like TradingView offer. 📝 Additionally, don't hesitate to experiment. For instance, try using an 11-period EMA and assess its effectiveness. You might find that it better suits your trading style and objectives. 🧪💡 Remember, trading is a journey of discovery! 🚀 Don't be afraid to explore new strategies and techniques along the way. 🌟 Like (boost), follow, comment, and share this strategy to spread the knowledge and empower fellow traders! 📈🚀👍 For the optimal TradingView experience, upgrade now to unlock the platform's full potential: www.tradingview.com
NASDAQ:TSLAEducation
by smarttrader012
My Trading Strategy in 3 Steps 📊As per @TradingView 's previous post, in this article, I am going to share my trading strategy in three steps. 📌 Step 1: First, start from the higher timeframes like Daily/Weekly to identify the current long-term trend. Is it bullish, bearish, or stuck inside a range? If the price is sitting in the middle of nowhere, then it is a NO trade zone, as the price has a 50% chance to go either up or down. Thus, there's no edge! Remember: No trade is also a trade. 📚Wait for the price to approach the lower bound or upper bound. Then proceed to Step 2. 📌Step 2: Zoom in to lower timeframes like H1 and M30 to look for any reversal setups. A basic approach would be to wait for a swing low to be broken downward around a resistance as a signal that the bears are taking over. In parallel, wait for a swing high to be broken upward around a support for the bulls to take over. This would be the confirmation to enter the trade. Just like a sniper waiting for the perfect shot! 📌Step 3: Target at least a 1/2 risk-to-reward ratio. This way, even with a 50% win rate, you can still be profitable. Remember: We are risk managers, not traders. We can't control the market; the only thing we have control over is our risk. 📚Always follow your trading plan regarding entry, risk management, and trade management. Hope you find the content of this post useful 🙏 All strategies are good; if managed properly! ~Richard Nasr
Education
by TheSignalyst
51
Think Before You Short: AMZN EarningsTraders need to check weekly charts when considering selling short stocks at this time. Many times there are strong support levels close to the current sold down price action. The weekly charts also provide more data for day and swing traders to determine the all important RUN GAIN POTENTIAL. This must be calculated before any trade to determine the Risk versus Profit Potential for that trade, regardless of whether the hold time is a few minutes or several days for swing trading. For many stocks, the recent selling down is not due to weaker earnings expectations but due to an overall reaction to retail news regarding international conflicts, US government uncertainties and regional wars. The key element for trading stocks short-term is to understand where support will kick in and halt a sell short trade. Understanding the functionality and the strength or weakness of a support level is crucial to attaining a high-profit trade. It is also a factor if you are waiting on the Dark Pool Buy Zone levels for getting into the stock for a run up from support levels. Below is a chart of AMZN, which reports earnings on Thursday this week after the market close. It shows that support is strong near the current price level. This indicates that the Dark Pool Buy Zone is within that technical price range. Selling short is inherently higher risk as the support level is a long-term trend strong support. Why is it so strong? 1. There is a several-week price range that held the stock up. 2. Highs are a support mechanism when the stock market is not in a long-term downtrend. ALL traders should know that this is not a bear market. Indexes are in a Trading Range. 3. The length of the candles is significant and relevant to the strength of the support.
NASDAQ:AMZN
by MarthaStokesCMT-TechniTrader
⚠️ Risk Management Examples Showcase📍What Is the Risk/Reward Ratio? The risk/reward ratio marks the prospective reward an investor can earn for every dollar they risk on an investment. Many investors use risk/reward ratios to compare the expected returns of an investment with the amount of risk they must undertake to earn these returns. A lower risk/return ratio is often preferable as it signals less risk for an equivalent potential gain. 📍Consider the showcased example: An investment with a risk-reward ratio of 1:3 suggests that an investor is willing to risk $100, for the prospect of earning $300. Alternatively, a risk/reward ratio of 1:4 signals that an investor should expect to invest $100, for the prospect of earning $300 on their investment. Traders often use this approach to plan which trades to take, and the ratio is calculated by dividing the amount a trader stands to lose if the price of an asset moves in an unexpected direction (the risk) by the amount of profit the trader expects to have made when the position is closed (the reward). It is very important to calculate your R:R before entering a trade. Sometimes the trade might not be worth the amount you're risking vs the reward you can get. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
2
USDJPY!!!! It's Time to Short!!!!USDJPY is currently in a longer uptrend on weekly and monthly timeframes. I only believe in multiple timeframe analysis because trends are more obvious on bigger timeframes and we can anticipate the market conditions on 4 to 6-factor lower timeframes than what will be the next move of the market in the next one or two weeks probably. On weekly timeframe there is a bearish candle and 20 period moving average has touched the big red candle. History says when this happens the next candle moves downward. If I see the situation on daily timeframe the market has touched the resistance 137.077 and currently last candle is bearish engulfing pattern candle that adds more fuel to the cause. Second thing on daily timeframe confluence is that market is far away from 20 period moving average that shows market will retrace or breath before going higher. On my entry 4H timeframe, I am anticipating that market will move a little higher or breath a little before continuing the ride downwards. A little upward movement and I will go short for possibly 1:2 Risk to reward in next one to two weeks.
Short
by mahmad01
2
Risk-to-Reward > Win RateWe have mentioned it in a list of our previous educational posts and we will state it again: your risk-reward plan is much more important than your win rate. You can have a 90% win rate and still be losing in the long-run. On the contrary, you only need a 35% win rate to be a consistently profitable trader on the longer term. Beginners mainly focus on winning as many trades as possible and it is totally understandable, because we have all been there. "The more trades I enter, the more money I will make" principle has destroyed many trading careers. The explanation to the "Why?" question is pretty simple: when we are new to trading, every win gives us euphoria and makes us think we are the rulers of the market. Guess what happens next, the market hits back, puts us in a position where we are stuck in a losing streak, and humbles us enough to quit trading and think it does not work. As we get more experienced, we lean towards the "Less is more" principle and believe that quality will always be over quantity. As an instance, we have orchestrated 2 scenarios on the graph. The example on the upper side of the screen shows how our trader has a 80% win rate but has yet failed to remain in profits due to the fact that he does not have a solid risk management plan. On the opposite side of the road, we have Trader B who is able to remain in consistent profits by winning only 20% of the executed transactions. All those minor losses that he made got covered by one big win, and as long as he keeps following the current risk management policy and strategy of his, he is sure that he will be consistently profitable in the long run.
BITSTAMP:BTCUSDEducation
by Investroy
11
Bearish bat Usdjpy has created a bearish bat pattern in h4 chart, we see the XA leg as an impulsive leg because the swing in A broke a previous low and this thing is really positive because shows that the sellers are becoming stronger and it could be a first signal of a Change of Character (market changed from bullish to neutral now). We have fundamentally 2 possibilities to trade this kind of setup , the first one has the imbalance as target, that specific zone is really intereasting because there is an orderblock whereas the second opportunity can let us make big money if price breaks the lat low and starts a mean reversion. Send me a message if you want to be updated and trade with me and my team! Enjoy your trading and apply solid MONEY MANAGEMENT RULES!! tHE ITALIAN TRADER!
Short
by Dragon_Investments
2
Whats the difference between Risk Management & Money Management?TLDR: Risk management generally is determining what portion of your capital you are willing to risk in a trade and staying true to that. Money management is how you would spend the money earned (in this case through trading) . Eg : Rather that withdrawing all the profits from your account you can let it be there and compound it, or rather than spending it on unnecessary luxuries you can save it for a rainy day . _________________ Full: This is something I usually get asked many times by new starters in trading as they are both common terms that you will hear as you learn about trading and investing. They are both vital concepts but it's important that you know the difference between them. Money management refers to the processes of budgeting, saving, investing, spending, or otherwise overseeing the capital usage of an individual or group. The term can also refer more narrowly to investment management and portfolio management. Money management broadly refers to the processes utilised to record and administer an individual's, household's, or organisation's finances. Financial advisors and personal finance platforms such as mobile apps are increasingly common in helping individuals manage their money better. Poor money management can lead to cycles of debt and financial strain. In the financial world, risk management is the process of identification, analysis, and acceptance or mitigation of uncertainty in investment decisions. Essentially, risk management occurs when an investor or fund manager analyses and attempts to quantify the potential for losses in an investment, such as a moral hazard, and then takes the appropriate action (or inaction) given the fund's investment objectives and risk tolerance. Risk is inseparable from return. Every investment involves some degree of risk, which is considered close to zero in the case of a U.S. T-bill or very high for something such as emerging-market equities or real estate in highly inflationary markets. Risk is quantifiable both in absolute and in relative terms. A solid understanding of risk in its different forms can help investors to better understand the opportunities, trade-offs, and costs involved with different investment approaches.
Education
by JoelWarby
USD Retracement Incoming!! Must Watch Hello traders! Please see our breakdown and opinion of the current Usd index. Breakdown - Price has been respecting this bullish dynamic support since late October and we have seen multiple tests of this area as it ascends. We have identified what we think is some 4hr exhaustion in the orange box. It is also apparent from the daily time frame that may have ran out of steam and at the very least a correction is about to be forthcoming. We have a bearish bias for the Usd Index for W/C 06/12. There is some additional confluence factors we however would like to see : - : - we would like to see price break and close below our ascending trend line. : - we would like to see price retest our trend or our structure area. Note the analyses from this index will be used to add confluence to any Usd currency pairs that we are monitoring next week. Let me know in the comments below what your thoughts are on the Us Dollar just now and if you like the content and want to see more like this hit the follow button and give me a thumbs up! The Fx Charist
FX:USDOLLARShort
by TheFxChartist_
GBPUSD LONG Please see above our analysis of Gbpusd. We posted a long set up last week for this pair however it appears we were slightly pre-mature with the set up. This should of been identified with the descending daily channel that we are currently in and the bearish flag we identified last week but we missed the descending channel. After identifying this we can clearly see we should expect some bullish pressure with the top of the channel in sight. Plenty opportunities will arise to get in on this pair along the way back to the top of the channel. You can look for entries now on lower time frames with stops below the recent low or wait for further confirmation with some new 4hr structure again with stops below the new low. As always let me know your thoughts on this pair and where you think were headed in the comments below. Have a brilliant week! The Fx Chartist
Long
by TheFxChartist_