joebrownFX

IS IT WORTH TAKING THE TRADE? THE FINAL DECISIONS

OANDA:NZDCAD   NZD/CAD
So you have the "perfect" setup; all the stars align and you feel utterly confident in taking the trade, but should you? I have a process that must be completed before I even think about pressing the trigger.

Fundamental analysis points me in one of two directions, then from there I'm either short or long. I then look if there is a technical entry point that lines up in the way I want to enter. The final step to take is too see what target will be and what my R:R is.

For those that don't know R:R is risk to reward. So if you have 1:1 R:R and you risk 1% of your capital on a trade, then you stand to gain only 1%. This is pretty much a 50/50 gamble, and we don't gamble in trading.

If all the stars align and the R:R is 1:1 DON'T TAKE THE TRADE, MOVE ON!

We win by having better winning trades than looser's. Ideally I want a 1:1.5 R:R, ideally 1:2 (So if i risk 1% and my trade reaches TP I gain 1.5% or 2%).

If I have a R:R less that this I stay away or risk 0.5% on a trade, but I advise you stay away from the trade and look for another opportunity. After all, there are infinite entries in the future.

Happy Trading.

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