The most important part of trading is risk management. A correctly calibrated risk management system helps a great deal in reducing emotions and increasing returns . There are two elements that allow a trader to control the risk of his entry: the maximum risked amount of equity per entry and the stop loss. In the example above, we are assuming that we are about...
NYSE:AEP People like to use indicators or oscillators many times to predict the next trend. Actually they can help you, but they will always be late. And above all, what do you do if they are in contrast with each other? Most importantly, do you have a backtest that proves in the long run that their use is profitable and valid on multiple markets and assets? We...
Heyaaaa As promised, here's the video tutorial showing in silence/muted how to use the new indicator published today Risk-Reward-InfoPanel/ I'll try from next week to buy a microphone and you'll all hear how nice is my french accent.... I can imagine the complains I'll receive saying no one understood anything. Will be fun for sure Anyway, please let me know...
Hello, so first of all I mentionned in this idea what I think are the most important rules to keep in mind, and a guideline on how to build a system / a career: In this idea I would like to show what I think is the end goal, and how I would advice someone getting there. I saw a nice chart on the internet "How traders think versus How trading actually works", I...
First let me say that this risk to reward they talk about is not the risk to reward ratio. It is like they have been holding books upside down their whole lives. It is the reward to risk ratio. If they call it "riskreward" for short it's fine I guess, but specifically calling in the risk TO reward is so wrong. There are ways to see if someone lies without the...
This is a short informative video as I briefly breakdown Risk Management and give an example of how you can be a profitable trader winning only 40% of the time.
what happens if you have a 1:1.5 risk reward ratio(means if you win you won 1/5% of your balance if you lose you lost1% of your balance) and doing 2 trade via any strategy that you prefer in a day (means your open trades should not be more than 2 at the same time). at the end of the month, you do 40 trades so we see below what happens(20 days * 2 trades = 40...
If you have been trading or interested in trading for some time, I am sure you have heard some online "teachers" say that you MUST have a 1:3 or 1:5 R/R in order to be profitable.. That is absolutely FALSE! If you hear a "professional trader" say that, odds are they are not truly a trader.. A professional trader understands that R/R & win % are correlated. The...
Education post 20/100 – How to trade better using good Risk-Reward Ratio? Day Trading Win-Loss Ratio Most day traders focus on the win-rate or win/loss ratio. The allure is to eventually reach that stage where nearly all their trades are winners. Don't be fooled, having a high win rate doesn't mean you'll be a successful trader or even a profitable one. Your...
Most beginner traders aswell as even some that have been around for a while always get tricked into the psyche that a profitable trader is one who caps the most pips in a month. This is only not true but substantially misleading especially to new traders as they hardly think in the negative direction when thinking pips, all focus is always on the PIPS they...
In part 1 we discussed how to identify a trend and the importance of understanding the time horizon. Please start with that post so that you understand how I identify trends. Rules of Thumb The longer the time frame = the lower the risk The shorter the time frame = the higher the risk The higher the leverage = the higher the risk The lower the leverage =...
This chart show a beautiful example of what I describe as "spreading the trade" when it come to money management. OANDA:EURNZD
G'day Cobbers and Shobbers, How are we this morning, did many of you manage to make so profit yesterday? I will start with a quick talk about Edges and trading strategy and how to be profitable from your charts. First if you take a look at the chart linked below from yesterday you will notice I flipped outlooks as the day progressed, I also traded on these...
Keep this in mind. Only one trade without stop loss can burn your capital. A stop loss is an indispensable tool allowing you to limit your losses. It is also a level from which you feel that your scenario will not happen anymore. It is mandatory on every position if you want to keep your money safe. See it like an insurance policy. In case the trade is going...
Tradingview makes it easy to plot out risk reward if you can't intuit it the correct price level to exit at. In general, you want to make trades that have greater than 1:1 risk:reward. If your risk of loss is equal to your risk of gain then it's not worthwhile to make a trade as your probability based profit will be zero. Looking here at the recent dip, assuming...
Top 5 Risk Management Rules: 1. Only Trade with Risk Capital -Risk Capital is the amount of money you are willing to lose and do not include your living capital into your trading account! 2. 2% Risk Management -The 2% Rule prohibits you from risking more than 2% of your account equity on each trade you are entering. 3. 6% Risk Management -The 6% Rule prohibits...