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PRINCIPLES OF DRAWING UP A TRADING PLANHello traders! Today we will talk about WHAT should be in the trading plan of any self-respecting trader. Many, as it turned out, do not know the basic principles of building a trading plan. This article will help beginners understand WHAT should be added to their trading arsenal. 1. Timeframe. The first stage of drawing up a trading plan is to determine the timeframe. Every trader should know in what time interval he is going to look for entry opportunities and build a trading strategy accordingly. As a rule, timeframes are divided into three types: 2. Risk management. Risk control is probably the most important issue in any trading plan. The ability to control risks and follow principles distinguishes a professional from a beginner. In this section, the best rule is rule 1-3% 3. Market structure. Every trader should have a trading strategy even before opening a position during periods when the market is trending or in a sideways movement and, of course, be able to correctly determine when the market is moving from one phase to another. 4. Markets. Each market has its own characteristics. Not every trader, for example, can approach the forex market. You need to know where you are trading and use the appropriate tools. It may be worth trying all the markets to understand what is right for you. Study the markets, gain experience. 5. Entry conditions. The entry point must be chosen by the trader according to the rules prescribed in the strategy. A trader should know when and under what conditions to enter a position. Strategies can be different: based on a pullback or a breakout of the level, or maybe you want to trade according to the intersection of the indicator lines. And, yes, no one forbids using all strategies at once, the main thing is not to get confused. 6. Stops. Placing stops is an important part of the strategy. A properly placed stop can protect you from premature closing of the transaction. Failure to place a stop order may result in the loss of all capital. In any case, the strategy of placing stops should be in every trading plan. You can set a stop according to some percentage you have chosen, or you can set a stop for the maximum or minimum, it's up to you, but you need to decide before entering the position. 7. Target. A correctly set goal and a set take profit helps a trader to take profit and not stay in a position until it turns from profitable to unprofitable. There are different ways to fix profits: fixed - the value you have chosen according to your trading strategy. Trailing stop is a slightly advanced method, the essence of which is that the stop will move along with the price at the distance you choose and will close when the price goes against you too much. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
Education
by Lingrid
37
Principles Of Risk Management One of the main topics, and perhaps the most important, is the topic of risk management and risk reward. Beginners often do not take this topic seriously, trying to hit the jackpot in every transaction, risking all or almost all of the capital and not realizing what the consequences of such actions may be. Whatever trading style you use, whether it's day trading or scalping, the way you manage risk will still be decisive in the question of whether you will be profitable at a distance or not. Margin trading gives a lot of advantages, but most often it ruins newcomers who open deals with a large volume and quickly lose money when the price goes against them. The ability to manage risks correctly will help you stay in the game for a long time and be profitable at a distance. Focus on protecting what you have. In the pursuit of profit, traders forget about risks, forget about capital protection. It is important to remember that after each loss, the percentage of profit that needs to be returned to breakeven increases exponentially, depending on how much you lose. Fundamentals of Risk Management The market is changing every second and at any moment there may be news that will make the price go against you. The desire to risk everything in one transaction leads to the closure of novice accounts, instead, it is better to manage risks and stay in the game for a long time, making a profit. Anything can happen in the markets and it is simply unwise to risk everything in one transaction. You must remember: 1. You should not risk more than you can afford to lose. 2. Each trade must be opened with the correct risk reward ratio. (RRR) The Risk Reward Ratio (RRR) is how much you are willing to lose, compared to the expected profit in each trade. You should strive for a ratio of less risk / more profit. One of the best ways to manage risk is the 1% method. This method of risk control means that in each transaction a trader risks 1% of his capital. This is correctly used even by managers of large hedge funds and they do it for a reason. Do not think that only 1% of the capital can be traded. You can use at least all your capital for trading, but your stop loss should be no more than 1% - this is your risk. You can use leverage if you need to, but don't lose more than 1% in one trade if you want to become a professional. The Best Risk-Reward Ratio For Trading Before opening a position, you should know how much you can lose and how much you expect to win, and the ratio should not be lower than 1:1. A ratio below 1:1 means that you lose more than you can win, and this is an extremely dangerous activity that can eventually lead to the loss of the entire account. If the ratio is 1:1, you will be at breakeven, even if 50% of your trades are unprofitable. If the ratio is higher than 1:1, then you will be in the black, even if more than half of your trades are closed in the negative. Do not forget that it is impossible to win in every transaction and without proper risk management, such a game will lead to big losses. Do not forget about the rules of risk management, use a profitable strategy and act according to the rules, do not give in to emotions and then success awaits you. ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support!
Education
by DeGRAM
1
UNSUCCESSFUL vs. SUCCESSFUL TRADERUnsuccessful Trader You are trading without a Specific Trading Strategy The main reason for opening positions for you is not clear strategy rules, but your own intuition. And even after several failures, you continue to repeat your mistakes due to the lack of discipline and the lack of a trader's trading journal. You often over-trade and get Margin Calls Your instincts make you trade too much, open new positions again and again, forgetting about the risk and thus getting frequent margin calls. Because of such disorderly market entries, you become very emotional, lose control and lose money quickly. You get attached to Open Positions Following your own emotions, you often hold on to an open position for too long, hoping that the profit will become even greater, while forgetting about the take profit that you set yourself. As a result, a profitable position becomes unprofitable, and you begin to believe and expect that it will become profitable again, overstaying the unprofitable position. You're Too Emotional Your mood changes with every price reversal. Forgetting about the analysis, you often open new positions and lose more than your risk management can afford. Successful Trader You have an Effective Trading Plan You have written on a piece of paper a strategy of actions for any market situation and always follow the rules prescribed in the strategy. You often analyze your trades in a trade journal and always remember your mistakes and hits. You Understand What Risk Is You have clear rules of risk management. Even before opening a position, you know how much you can lose in this trade and do not lose more than allowed by the rules of risk management. You don't move your stop loss and you don't act emotionally. You Control Your Emotions You clearly follow your strategy, leaving no room for emotions. Even before opening a deal, you have analyzed everything and know exactly what to do – you have a plan of action. You always fix a part of the profit You do not forget to protect your capital, so you close part of the position in plus or zero, and let the rest of the position grow further. Now you will not only not lose your money, but you can also earn. ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support!
Education
by DeGRAM
2
TRADING PRINCIPLES THAT EVERYONE SHOULD KNOW. PART 1.Hello traders! For a long time, the Forex market has created a large number of trading methods. Finding your strategy that suits you specifically is one of the main steps in achieving success in the Forex market. And it is worth remembering that successful traders do not use anything magical in their trading. Everything has been invented for a long time for both a novice trader and a successful trader. The main task of beginners is to choose a fairly easy strategy and strictly follow its principles and rules. So what does a beginner need to know in order to trade profitably? Price levels. It is difficult for a beginner to determine price levels and trade them correctly. There are no specific rules in this topic, since the price does not draw clear points, but forms zones. Many traders use support and resistance levels in their trading and for beginners, the main task at the beginning of the journey will be the concept of selling from resistance and buying from support. There are three types of trading systems based on price levels. 1. If the price moves within the framework of a sideways movement, the trader can sell from resistance and buy from support. 2. If there is a prevailing trend in the market, for example, bearish, a trader can sell from resistance and expect support to break through. 3. The same rules work in the bull market, only in a different direction. If the price breaks through the resistance, then this zone becomes a support from which you can buy. Consider the principles of trading from price levels. #1 Understanding the market context. The key to profitable trading from the levels is the ability to correctly understand the market context. Bearish pressure leads the market movement through an impulse movement that breaks through support and creates new lows – in this context, selling strategies will not work well. That is why it is so important to follow the concept of the market context: When the market falls, creating new highs and lows, we are talking about an impulsive bearish context. The correction is created by an impulse that is weaker than the main trend. A sideways movement occurs when both demand and supply are approximately equal and the price cannot move in a certain direction. As soon as the bulls or bears take over, the price will make an impulse in the direction of the strong side. #2 Top-Down Analysis The market is ruled by big money, which pays great importance to large timelines. And it is vital for an ordinary trader to know where smart money is pushing the market. To do this, it is worth noting strong levels on the monthly-weekly-daily timeframes in order to know exactly where the price is most likely to rebound. On the other hand, if the price is above the key levels, then the market is bullish. #3 Candlestick Patterns Almost every trader uses candlestick patterns in his analysis, which are a very strong analysis tool. Reversal candlestick patterns create an excellent opportunity to enter a trend reversal. The higher the timeframe on which the pattern was formed, the stronger its signal will be. Knowing candlestick formations is a very important part of a trader's professional growth. #4 Risk Management Any trader should be aware of the risks and be able to control them. Although this topic goes beyond the definition of the market context, it is still very important. There are many ways to control risks. An important rule is to set a stop loss and risk in each position, as recommended, no more than 2% percent. Hedge fund managers risk an even smaller percentage in each transaction, sometimes 1% or even lower. It is better to grow slowly than to fall quickly. If you lose 2% of the capital, in the next transaction, in order to get your money back, you will already need to make 4%, which in general is not difficult to do. But if you lose 50%, you will need to make 100% profit already, which is almost unrealistic. Conclusions Summarizing the above, you can make the following sequence of actions: Identify the key support and resistance levels. Wait for the candle to form in the desired direction. Stop loss above or below the candlestick pattern. Take profit is placed at the following support or resistance levels. Always make sure to use proper money management for each trade, and never take on a risk that exceeds the return. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
113
USDJPY | PSYCHOLOGICAL LEVEL REACHED CAN IT BREAK IT?Hello Traders, The USDJPY 112.000 has been reached and as expected the market fell short and bears kicked in. Now whether the market will decide to continue its bearish movement is hard to say, if it breaks the upcoming support level and we have a nice bearish engulfing candle with a push-exhaustion-push cycle then we will head further down likely to daily moving averages. I personally entered this trade yesterday on the 5-minute timeframe and kept it open, since it had a nice squeeze on the 5 minutes and a break off support I knew it will go down.
Short
by FX-TradingLions
EURUSD | A GOOD SHORT TRADE BUT NEED PATIENCE! Hello traders, EURUSD is trending towards the downside heavily, but it's reaching a monthly/weekly support zone marked in blue. This zone could definitely have a lot of buying orders ready to play the game, so I would expect a pullback towards the 25-50 moving averages before a push towards the downside to re-test and potentially break the zone. EUR - fundamentally looks much weaker and hedge funds are decreasing buying power comparing to USD or GBP. It also feel fairly very sharply so the RSI indicator is very much oversold, which suggests a pullback, I would wait for better entry zone before entering short.
Short
by FX-TradingLions
2
History of Forex | From Ancient to the Modern Day TradingWe have come a long way from the previously practiced barter system to the modern-day system of trading currency. Following is a brief summary of the evolution of currency and how it gave rise to Forex Trading. Here are the main stages that are illustrated on the chart: 1️⃣The Ancient system of Trading - Trading with Gold As early as 6th century BC , the first gold coins were produced, and they acted as a currency because they had critical characteristics like portability, durability, divisibility, uniformity, limited supply and acceptability. 2️⃣Bank Notes Originated - Deposited Gold in banks in exchange for banknotes 3️⃣Role of Geography - Various banks of different regions printed different currencies Gold Standard - Currency pegged to gold In the 1800s countries adopted the gold standard. The gold standard guaranteed that the government would redeem any amount of paper money for its value in gold . This worked fine until World War I where European countries had to suspend the gold standard to print more money to pay for the war. 4️⃣Bretton Woods System - Currency pegged to USD The first major transformation of the foreign exchange market, the Bretton Woods System, occurred toward the end of World War II. The Bretton Woods Accord was established to create a stable environment by which global economies could restore themselves. It attempted this by creating an adjustable pegged foreign exchange market. An adjustable pegged exchange rate is an exchange rate policy whereby a currency is fixed to another currency. In this case, foreign countries would 'fix' their exchange rate to the US Dollar . 5️⃣Birth of Floating Currency - Currency that is not pegged to any assets or other currencies is known as a 'floating currency'. And what will be next? Very hard to say but blockchain technologies will make the system change again.
Education
by fxpremiere
AUD-USD Will Go Up From Support! Buy! Hello,Traders! AUD-USD has finally hit the support cluster Which I described in my previous analysis of AUD-USD And even though the cluster is broad And current level is the higher boundary of it I think there is a decent chance to see at least a local pullback With the retest of the falling resistance line But this long can potentially be a great entry for the greater swing trade as well In case we see a bullish breakout and a strong confirmation Buy! Like, comment and subscribe to boost your trading! See other ideas below too!
Long
by TopTradingSignals
8