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Moneymanagement

How to trade in the Crypto Market - Trading TipsHello Crypto Family, Reading the charts and indicators is very important and helpful but without having a plan to manage your money, sooner or later you gonna lose money. It happens that you will find yourself on the wrong side of the trade and having the discipline to execute your plan (exiting the trade) is essential. “The four most dangerous words in investing are: This time it's different.” - Sir John Templeton Money Management 1) Never trade on your assumptions / be ready to change your opinion: We all like some Blockchain Projects more than others, but we are here to trade and make money. There are many interesting projects without liquidity and therefore not the best coin to trade. Never fall in Love with a Coin! Only because you think the price is very low, it doesn't mean that we could go lower / Only because we made x% up, it doesn't mean that we will reach all-time highs. Don't try to catch the falling knife, wait for the Volume and breakout. But once the confirmation is there, and it is not what you have expected, you need to change your mind very quickly and adapt, otherwise you will enter the market when others are already taking profit or when the market is crashing, you will sell your position with loses. “Everyday I assume every position I have is wrong.” – Paul Tudor Jones 2) Keep your emotions under control and never FOMO: Be aware, how much risk you are risking and what is the potential reward. Right now we don't have a reasonable Risk/Reward ratio to be invested in BTC. The safest way to trade is to stay on the sideline an wait for BTC to break the Support Line (Move Downside) or push above resistance Line. Missing on small moves isn't significant because you can always catch the wave 3. Never get emotional and invest 100% of your position, by laddering in / out, you reduce your risk of a bad entry point by having a good average price entry. And if you make a bad trade you don't lose all your money. It's like playing in multiple lotteries. “Frankly, I don’t see markets; I see risks, rewards, and money.” – Larry Hite 3) Reward yourself: If you have a successful trade, start cashing out your gains. Let's say you have made 100%, you could cash out your initial investment and leave the rest invested and play with the "house money". “Don’t focus on making money; focus on protecting what you have.” – Paul Tudor Jones
COINBASE:BTCUSDEducation
by Verethragna
Bitcoin in slight profit. Time to shift focus?The Bitcoin trade that I wrote up last week is ever so slightly in Profit and with the Inverted Head and shoulders now in it's maturity it won't be long before the conclusion of the opportunity starts to play out. Now I'd like to shift focus to Ripple (XRP) I have been long extolled the virtues of XRP by my Brother who has been hammering home the benefits of it for over a year now. For this reason alone I am duty bound to look at it as a potential long trade and consider whether it is a real buying prospect. I have to say, at this stage I can't quite see it. It has been aggressively sold since April and though I see some weak signs of a hold in this area I would need some decent signs of genuine interest to get me in to a trade. I have marked off a possible short term trade that I will possibly enter speculatively with tight stops to see if it can get through the upper line. I will keep a tentative eye open but am unwilling at to commit at this stage.
KRAKEN:XRPUSD
by DollarsNSense
What makes a good breakout trade? I have found out that the best breakout trades occur when a trader does the following things: 1. Finds an area of consolidation under and area of significant support if you are selling and or above resistance if you are buying. 2. Split your position sizing into 3rds so you would be able to enter at least three times because there is a very big chance for false breakouts. For example, lets say you see a breakout trade oppotunity and would like to trade a micro lot at .01 lot with 25 pips. Instead of placing the whole trade as a .01 lot, take it and divide it by three so you would be able to trade .003 lot at 25 pip stop loss and still risk the same amount as the .01 lot. 3. Time your trades!! I only place breakout trades when the market closes (its possible to do so when you have Oanda) because that is where I notice breakouts are more powerful and less choppy. OANDA:EURUSD
Education
by ElieTheForexTraitor
EUR-USD analysis, and the correct POSITION SIZING in ForexFor the next three weeks, I will be on vacation but before, my analysis on EUR-USD and a little lesson about opening the correct POSITION SIZING in a trade. If EUR-USD closes above the blue trendline, there will be a bullish signal with the target area at 1.1883/1.1892 and the stop loss at 1.1560/1.1565. Before click on "BUY" or "SELL" you have to decide not only the stop loss and target (as you can see in the chart above) but also the maximum loss you are willing to suffer, in the case your operation doesn't go as you have analysed. This is a fundamental aspect because you must always to put yourself in the best condition to do trading and a loss never have to give you stress and cause problems to your account. There are different ways to calculate the position size depending on the type of market. Following, you will see the calculation for the Forex market. So, I will show you how to open a proper Forex position based on your risk appetite. In such a way, even though the currency pair reaches the stop loss, this will not create any problems for your account and stress for you. I do that, by taking as an example the analysis above on EUR-USD. Let's say you buy the currency pair at 1.1730 with, as you have seen, the stop loss at 1.1560. Your maximum loss bearable is $ 200. How much do you have to invest in this trade? You obtain the position to open with this formula: Position Size = / value 1 pip Where: MAX LOSS is your maximum bearable loss you ($ 200); PIPS OF STOP is the distance in pips between the entry price and the stop loss; VALUE OF 1 PIP is the minimum value of a pip for $ 1,000 of purchase/sale of EUR-USD. For the last parameter, for calculating the value of 1 pip of a currency pair, I don't want to insert link to my or other websites. On Google, you can find several tools for getting this value. Returning to the example, the position size to open is as follows: Position Size = / 0.10 = $ 11,764 If you establish the maximum loss not with a fixed amount in dollars (or in your currency) but with a percentage, the formula varies as follows: Position Size = / value 1 pip Where CAPITAL is the amount of money in your trading account, and %OF MAX LOSS is the maximum percentage of your capital you are willing to lose in the trade. If for example, you have a capital of $ 50,000 and your maximum loss is 0.75% of your capital. The position size to open is: Position Size = / 0.10 = $ 22,058 This aspect of trading is as simple as little used and is the first step to become profitable. I hope this brief lesson help you to improve your trading. Good summer everybody!!
by TradingwDavid
1
When to add to a trading set-up/plan and when to leave it alone.It can be a very daunting task to create a trading plan/strategy that fits you without conflict. There are a lot of obstacles that inhibit the average trader from leaving a profitable trading plan or strategy as it is. Even I struggle with this which is why I have decided to publish this article. After much reflection, I have come with a few metrics you can use to determine if you should change your trading plan or not. Mental Capacity Mental Capacity, to me, is perhaps the most important aspects of trading. It easily differentiates traders that are absolutely determined to become successful and traders that are bound to become scam traders and losers (no pun intended). Mental capacity resonates itself in a traders ability to deal with traumatic trading experienced such as drawdowns and losing trades. A lot of traders don’t understand that trading is a game of probability so you have to make a lot of money when you’re right and lose a little when you’re wrong. If you make 4X the money you lose, you’ll have to lose more than 80% of the time to not be profitable. Understanding and having mental capacity allows a trader the ability to ignore irrational phobia of thinking that their strategy is not working. If your trading plan/strategy fits you mentally then you should have the mental capacity to accept all the things that can happen to you trading wise. If not, then it’s time for you to change it. Trading is a mental game, always. Objective As much as I love the mental side of trading, I do have to admit that objectives are very important in trading as well. If you’re trading a strategy that is not fulfilling your objective (based on reasonable probabilities) then it’s time to switch components of your strategy. I hate to admit this as I am a big believer in having a “Mind like water.” When it comes to trading but if you have an ever burning passionate desire to make 4X what you risk and also to follow the trend then it’s not recommended to deny yourself of this desire as it will one day influence you to give in and break your trading plan. The solution to this, in my opinion, is to take your objective and create your plan/ strategy around it. For example, if I have a goal of making at least 100 pips per 25 pips that I risk then maybe I should trade on a higher time frame while using psychological support and resistance levels. The moral of this part of the article is to exemplify the fact that any undesired occurrence a traders mental capacity can’t handle can easily be resolved by having an objective ( not having a 30% DD) and a solution (maybe I should hedge my trades or buy options) that can help you acquire that objective. The solution in return will let you know that it’s time for you to change your strategy, but if it doesn’t resolve the objective then keep it as is. Compatibility I’m going to try to keep this part simple mostly because it’s somewhat related to the objective side of this article but at the same time is a very important part to keeping and tossing your trading plan. No matter how much money you are making in trading, if you aren’t compatible with your trading plan then it will all be in vain. It isn’t logical for a trader who loves waiting to be a scalper and vice versa because when this happens it makes the trader feel that they have to change instead of the trading strategy. It has to be the other way around! Trust me, I learned this the hard way because I always got jealous of high leveraged scalpers making 1k days while I was making 2% per month if I got lucky. When I tried copying them it forced me to change into timeframes/trading strategies that I was not compatible with. My advice to any trader struggling with this is to love yourself and you’re trading because it’s your decisions and perspective that determine profitability. OANDA:EURUSD
Education
by ElieTheForexTraitor
How to trade with ESMA new regulations on leverage ?Hi everyone, Some of you may or may not know that big changes will take place on august 1st 2018 on Forex and CFDs market especially for retail clients. ESMA for European Securities and Markets Authority decided to ban binary option and apply a drastic decrease on leverage on all financial instruments including forex, CFDs and crypto. All UE regulated brokers are affected by these changes. Even non-UE brokers (I mean serious ones) are applying these changes. All clients from UE or not are affected by these changes. This a worldwide earthquake on trading planet. New rules, new attitude... how to deal with these changes ? First find below the new leverage : Major FX: 30:1 (USD, JPY, CAD, GBP, CHF) Minor FX: 20:1 (ALL OTHERS including AUD, NZD) CFDs: 20:1 Stocks: 5:1 Crypto: 2:1 Before, a trader could start trading with $100 with leverage up to 400, a micro lot (0.01) required $4 margin average. Starting august 1st a trader with a $100 account will need a required margin of $30 ON EURUSD for a micro lot (0.01). EURUSD new magins on august 1st: 0.01 lot: $30 0.1 lot: $300 1 lot: $3000 Of course this post is not dedicated to criticize this new law but to provide ideas to deal with it and continue making money. Normally I recommend using 0.01 lot per trade with a $1000 account but this rule can be adapted if we reduce drastically the number of opened positions simultaneously. For example, if you take only 1 trade a week in swing looking for 80 to 150 pips, you can obviously increase your lot size from 0.01 to 0.05 or even 0.1 for experimented traders. Selecting carefully trading opportunities The first consequence of the low leverage is the fact that you cannot open several trades simultaneously. You really need (and you won't have choice anyway) to be selective on trading ideas. Choose only opportunities with the best configurations and in which you have a really good confidence. Strategy 1: If you have a $1000 account, you can decide to keep up to 4 trades opened at the same time with a reasonable stop loss. If you risk 2% of your capital per trade , you could use 0.05 lot at $150 margin with a stop loss of 40 pips ($20). If you apply a risk/reward ratio of 2 or more then you can expect 80 pips ($40) on each trade. With this strategy you must lose 20 trades in a row ($700 loss at 40 pips stop loss) before not being able anymore to place 4 trades simultaneously at 0.05 order. You need to win 35% of your trade to be flat because of the risk/reward ration of 2 minimum. (See the attached post about risk reward ratio) Strategy 2: If you have a $1000 account, you can decide to keep only one trade opened at the same time with a reasonable stop loss and with a bigger leverage. Assuming that you risk 5% of your capital per trade , you could use 0.1 lot at $300 margin with a stop loss of 50 pips ($50). If you apply a risk/reward ratio of 2 or more then you can expect 100 pips ($100) on each trade. With this strategy you must lose 14 trades in a row ($700 loss at 50 pips stop loss) before not being able anymore to place a 0.1 order. You need to win 35% of you trade to be flat because of the risk/reward ration of 2 minimum. (See the attached post about risk reward ratio) Strategy 3: For scalpers, if you have a $1000 account, you can decide to keep only one trade opened at the same time with a reasonable stop loss and with a bigger leverage. Assuming that you risk 2.5% of your capital per trade, you could use 0.1 lot at $600 margin with a stop loss of 10 pips ($20). If you apply a risk#reward ratio of 0.5 then you can expect 5 pips profit ($100) on each trade. With this strategy you must lose 20 trades in a row ($400 loss at 10 pips stop loss) before not being able anymore to place a 0.2 lot size trades simultaneously at 0.2 lot size. Obviously you really need to get a high winning rate to stay alive. Hope you enjoyed this post. Happy trading!
Education
by Traderscope
2
How to find high probability trends on any currency pair.This is a very descriptive example on how a trader can find high probability trades that are very unlikely to reverse. The markets are full of fractals so this strategy should be good for any timeframe but I highly suggest you use these timeframes as follows. If you place trades using the 4hr, use the daily for trend (example on the chart). If you place trades using the daily time frame (recommended) use the weekly time frame for the trend by using the same exact method but on the open, high, low, and close, of the weekly charts. Please leave a lime and comment as this encourages me to create new content for you guys every Friday. Feel free to message me. FX:EURUSD
Education
by ElieTheForexTraitor
1
Three things Mark Douglas taught me. (Pt2) Risk & Money Management Risk management, in my opinion, is equal in importance to psychology because it allows your trading strategy/edge to play out by keeping you in the market equity wise. There really isn’t much to risk management other than its number one rule, never risk more than 1% per trade. Risking one percent per trade allows your trading system to take losses and have drawdowns but not enough to the point that you won’t be able to get out of it. I’m actually not a big fan of risk so I place trades using less than 1% of my capital. A lot of traders would think risking .75% per trade based off of my trading strategy is ludicrous but to me, it makes a lot of sense. As a trend follower, I take multiple small losses and few big winners that make double, triple, or quadruple, the loss. Trend following is very difficult because of the multiple small losses but definitely pays off because it lets your winners run. Big winners and small losses are definitely a trader’s best friend because it allows you to have a high risk reward ratio. If you risk $1 per trade, your goal is to make at least $4 back. If you constantly trade looking for 4x your risk all you need to do is win more than 20% of the time to be profitable. (Ex: Win 1 trade=$4 Lose 4=$4=0) .To be profitable you have to win more than 1/5 trades or 20%. With that being said, risk management gets even better when you use money management. As you can tell from the title, money management and risk management are two different things in my opinion. This wasn’t always true though. The old me would've said risk management and money management are the same exact thing but now that I know what I know now, I completely disagree. Money management to me is where you spread your risk to give yourself an even bigger edge. To illustrate, let’s look at the example shown here. According to my trading strategy my risk would be .75% of my equity on this trade but I would "spread the .75%" by taking it and dividing it into six trades instead of placing it on one. Let’s say I have $1000 in my trading account with .75% of $1k being $7.5. I would take the $7.5 and divide it into six or $1.25 per trade. My trading system would've told me to take buy limit trades at 1.66308 and 1.66815 at .005 lots (possible through Oanda) at 25 pips stop loss. Unfortunately the trades would’ve been a loss of $2.50 total or -.25% but because I'm spreading the risk I would still be able to enter four more trades. The remaining four would be a buy stop at 1.6654, 1.67068, and two at 1.67980 in anticipation of price closing at 1.68300 for us to take profit. If we were to follow our trading plan and disregarded negative psychological energy, our end profit would be as follows: -$1.25, -$1.25, +8.73, $5.90= Total profit $12.13 or 1.2% gain.
Education
by ElieTheForexTraitor
5
Three things Mark Douglas taught me. (Pt1)Psychology Psychology, like anything in life, plays a big role on how humans function. It affects the way we think, act, talk, and so on but when it comes to trading it affects us, oddly enough, in only one way and that’s through our emotions. Any experienced (or shall I say inexperienced) trader knows and understands the waves of overwhelming emotions that resonates based off of a trade that’s a loser. These emotions range from sadness, depression, anger, and the list goes on. The reason for this, if I’m not mistaken, is because of the pure fact that the money we use to trade with is hard earned and even when it’s not it’s something that rightfully belongs to us. Human nature is something that’s extremely difficult to change because it's part of our genetic make-up that has allowed us to stay for so long by encouraging us to stay away from things that we don’t understand or that will hurt us. Trading psychology is definitely the hardest thing to master when it comes to trading because your psyche works against you when you're being hurt mentally (losing trades) and works for you when you're euphoric (winning trades). As if this couldn’t get any worse, a hurting mentality will tap you into a pool of past failures or misfortunes that have happened to you in life and convince you to think you're not any good as a trader and that your strategy is useless. This baffled me when I learned this from Mark Douglas because it wasn’t something that I realized. This fact is very important because it means you and only you alone are able to break this cycle of assuming a bad trade means a bad setup. A losing trade has absolutely no correlation to you as a person so you shouldn’t assume that you're the reason why you have a losing trade. According to Mark Douglas, it only takes one person around the world to negate your edge. This basically means that when you're buying, someone around the world is selling. When there are more bears (sellers) than buyers (bulls) you're long trade is no longer able to be profitable and stops you out depending on your risk. The markets are full of newcomers and unprofitable traders that agree on the wrong thing together and thus makes the impossible or improbable possible. This gets even more tricky because it makes you, the person on the other side of the trade, feel unsuccessful. This is not true! A losing trade does not represent a bad setup but because our phycology wants to protect us from losing money (what hurts us) it tricks us into thinking that we are unsuccessful as traders. The solution to this is to simply accept the risk of the trade by trading a strategy or setup that is profitable through backtesting. Mr Douglas implored that back testing should be done through 20 trade sample size to give accurate results. When I first started trading back in late 2016 I would always hear profitable traders talk about trading psychology and not trading strategies. I never knew why until I tool Mark Douglas’ principals into consideration and for that I am grateful. (see pt2)
Education
by ElieTheForexTraitor
AUDUSD buy ideaFrom bigpicture, Longterm investment We choose buy side as our main strategy in Zone C, TP in Zone D, E or All time high Major resistance 0.8 Major support 0.7 When to buy, Price action - pullback signal (H4/D1) in buy zone Buy zone : 0.76 or lower Short term - long term trading : TP, next resistance 0.8, 0.9 Stop loss (Short term) 0.68 or lower Stop loss (Long term) 0.6 or lower money management : Use 2% rule with leverage - margin that match with your trade setup.
Long
by investorresource
[Strategy-1] AUDCHF Big-Picture Big picture for investor whom believe in AUD > CHF and want to long AUDCHF ZONE A : Buy zone - advantage, Target zone B Action plan - Position : at 0.755, Try to move average cost down below this point - Cashflow from Grid in zone A1 0.755 - 0.715 and A2 0.715- 0.68 Money management with 2% rule Assume you have 10000 usd investment portfolio , 2% = 200 usd 1 order use 25 usd margin * SL = 0 or 0.65 - 0.6 (ALL time low) up to your strategy It's mean : you have 8 bullet can fire buy position Simple plan A1 = 4 bullet A2 = 4 bullet by Price action / pullback signal in H4 / D1 or Grid in Grid
Long
by investorresource
BCHUSD waiting recover sign in buy zone 1200-600Major Resistance 1800 Major Support 600 Retracement from 1800 after recover from downtrend at support line 600 Chance to invest : Below 1200 to 600 when Price action (H4-D1) show recover signal Buy with 2% of overall margin, SL=0 TIPS for FOMO We could seperate 1 position to x position and grid it for make average cost still around 1200 lower Ex. instead buy 1 with 100% size of order at 1200 We could buy first order with size 50% at 1400 and second order with size 50% at 1000 : average price of investment still 1200
BLong
by investorresource