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Risk Management

Heads or Tails?What does TRADE have in common with heads and tails? Well, many use simple randomness to define whether they should buy or sell and this is directly linked to heads or tails, but the point I want to address is the following: a coin with two sides has a 50% chance of falling either on one side or on the other, either heads or tails, but if you decide to toss the coin 10 times up, it could land 10 times heads or even 7 times, and at that moment you might wonder, but the probability is not 50%, shouldn't we have 5 times heads and 5 times tails? Yes, but the short-term randomness makes the low probability happen! Now if you toss that coin 10,000 times, the law of large numbers is likely to make the 50% probability dominate the outcome! But where does this fit into TRADE? Basically in all operating models, if you operate you have a hit rate allied with a ratio between risk and return, these two things are directly linked, many seek a higher hit rate, others seek more PayOff, but regardless of your profile, from your approach you have to know that a model in the short term does not become a winner or a loser, you need a historical basis of how your approach behaves and then, yes, decide to operate using this strategy. Many say that with a strategy with 2x your risk and a hit of 50% you will be profitable, statistically this is true, but are you willing to faithfully follow this model even taking CONSECUTIVE STOPS? We should be, but those who trade know that a sequence of Stops does not generate a pleasant feeling! And it's precisely that feeling that can leave you in the middle of the way! See below the SHARP index many do not know, but I will present here, what is the SHARP index? The Sharpe Ratio is used to show to what extent the return on an investment compensates the investor for taking risks on his investment. (I recommend using it in your models or in your performance reports). When using the formula you find a result called SQN See the example of heads or tails in practice, with a positive risk/return ratio See that only with time you will be able to validate a winning strategy, and in the middle of the way it is possible that you will have some Stops, and this should refine your way of operating, in order to find points to be adjusted, many books define that time takes you are the excellence, but the biggest illusion that the market generates is that of getting rich fast, contradictory isn't it, this makes the journey of a trader with frustrations and disbelief difficult. But few are willing to go through this journey, as if that were not enough, you will find that there are no facilities, many preach that you must choose between Access Fee or PayOff most of the time, these they are opposite characteristics in objective models, but the secret is simple! You need to find balance See this great example, most people who operate the market have already learned about the EMA 9 or MA 9 anyway, it's an easy model to learn that promises good profits, but when it hits, but what few told you is that it rarely hits ! Even so, it can be a profitable model in several assets. In my tests, the model has an average success rate of 31%, unfortunately few people have the emotional energy to use this, since they give up even before the model reverses the capital curve to the positive side. See this model in the same example of the difference between few trades vs many trades Here it is clear the importance of time and consistency in defining a model and faithfully executing it! So what do we learn from this? First: The law of large numbers rules the market. Second: As much as the PayOff is high, you may not have your emotions trained enough to withstand a losing streak, many will say "But in this model I'm losing with a spoon and winning with a bucket", that seems to make sense, but in reality practice, it's more painful than it looks. Third: Be willing to operate your way, know that your emotional profile is unique, so use techniques and refine your market reading, beware of false simplicity or the highest degree of complexity to operate the market, be willing to see the that makes sense to you and metric it to use with confidence. Fourth: Trading the market is like learning to walk, you need help at first, but then you need to fall over your falls and gain balance, it's the same here, you'll make mistakes, but that's the only way you'll learn. I hope I helped you with this topic, if you liked it, leave your BOOST to support this idea, and also leave it here in the comments if you are from the PayOff team or the Hit Rate.
BITSTAMP:BTCUSDEducation
by leandrosander_
How to double your small ($250) trading account trading Bitcoin How to Double your Small ($250) Trading Account Trading Bitcoin I started a degen account with $250 and almost doubled it in 4 days making about 6 trades. This strategy is not Financial advice and I'm only illustrating what I have learnt trading this way. This is the first video in the series and I'll be continuing the series , updating you on progress, winners, losses, my trading journal and some live trading, so make sure to Sub, like comment and share. I show you how I entered my current trade, where I am looking to take profits and show you my pnl on Bybit. Not Financial Advice. DYOR. Papertrade before trading with real money. Hope you have a profitable trading day! Shawn
BYBIT:BTCUSD.PEducation
by zartraderguy
2
How to auto-execute TradingView alerts on exchangeIf you have your own strategy in TradingView, you can set up opening trades on the exchange in a couple of clicks. Next, you’ll see an example of how we set up alerts in 5 minutes, and how orders were opened and closed on the exchange. To do this, we will create alerts and a bot for alerts on our platform. Step 1. Set the alert parameters. Go to our terminal, select the Algotrading section → Trading Robots → Add strategy button. You will see an interface for creating and customizing your bot, where you need to perform the Basic settings and proceed to setting the parameters for sending signals to the system. To do this, go to the Sending signals block. The TradingView signal source is already selected. Copy the Request URL. On the right side of the window, we see the code with the request parameters. You can add other parameters with checkboxes, we have added Stop Loss and Take Profit. Copy and save the code. Step 2. Launch the bot. Next, find the created bot in the All robots section and launch it in Work trading mode according to the manuals in the terminal. Step 3. Set up an alert in TradingView. Go to TradingView, open the Alerts section and set up an alert, for example, for opening an order (Buy) based on a simple indicator - in our case, Crossing. Paste the code that we got in Step 1 in the Message field. Paste the request URL we got in Step 1 in the Webhook URL field and Save. The alert has been successfully created and is active on TradingView in the Alerts section. Step 4. Monitor the orders. The alert triggers and ... Go to the Alerts log, where we see a notification about executed alerts from TradingView. We can check in the bot on our platform, open the Trades tab - we see open orders. And we see that alert orders are open on the exchange. Since we set Stop Loss and Take Profit, the orders were not only opened, but also closed. In the platform we can find deals, on the exchange we can find orders with the Sell parameter. We hope that now trading with TradingView will become even easier. We will release new and more detailed articles for you on using webhooks so that the strategy created here works 24/7 without your participation.
Education
by Crypto_robotics
12
All Four ICT Killzones plus times on one chartJust wanted to put all four ICT Kill Zones to see: All are 2 hours in length, except London open kill zone which is 3 hours in length. AUDCAD 15 minute chart today worked out great related, all four kill zones could have made profits for a traders if done right, which Time & Price. I do not trade AC during London Kill Zone related to both sides not being in session- Sydney would have just closed & NY has not opened yet. The chart is just visually showing you exact time - all times or kill zones are NY session times ( you would need to translate them to your time- or like me I just put my charts on NY times (lower right), why? because you hopefully know the time it is, where you live... lol Wish you best, Keep forex trading as simple as you can, so you can enjoy life and keep in balance of body, mind & soul.
Education
by Anbat
Do That BEFORE You Start REAL ACCOUNT Trading Here is the list of thing that you should learn in advance before you start trading on a real account. 1) Open a demo (practice) account and learn to execute trades without making errors 2) Study the methods of great traders and financial minds throughout history - Jesse Livermore, W D Gann, Charles Dow/Dow theory, Paul Tudor Jones,Richard Wyckoff. Learn their methods and employ them. Learn their mistakes and avoid them. 3) Focus on learning, not winning. Forget about money and profits. Think about developing a winning strategy and a winning trading mindset. Always be open-minded. Observe. Be flexible. 4) I recommend reading the following books. These books will help you to start to think like a trader and realize what you are getting yourself into: a) "Reminiscences of a Stock Operator" by Edwin Lefevre b) "Art of War" by Sun Tzu (Not a trading book but an old book on rules of war and how to protect yourself from being outsmarted and defeated by your enemies) c) "The Trading Methodologies of W.D. Gann" by Hima Reddy d) "Time Compression Trading: Exploiting Multiple Time Frames in Zero Sum Markets" by Jason Alan Jankovsky e) "Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude" by Mark Douglas 5) Watch YouTube videos. Absorb all the info you can as the more you know, the more the pieces of the puzzle fit together later on. You can learn the basics of trading on your own and then when you are ready to take your trading to the next level. To win the game, you need to develop your thinking and how you participate in the game. You are in a market trading against professional traders. The beginning traders in the market are not your competition-they are incidental. You need to trade with the professional traders who run the market. I wish you luck on a battle field! Dear followers, let me know, what topic interests you for new educational posts?
OANDA:BTCUSDEducation
by SignalProvider
4
Learn The HIDDEN Costs of Trading In this educational article, we will discuss the hidden costs of trading. 1 - Brokers' Commissions Trading commission is the brokers' fee for opening a trading position. Usually, it is calculated based on the size of the trade. Even though most of the traders believe that trading commissions are too low to even count them, the fact is that trading on consistent basis and opening a couple of trading positions weekly, the composite value of commissions may cut a substantial part of our profits. 2 - Education Of course, most of the trading basics can be found on the Internet absolutely for free. However, the more experienced you become, the harder it is to find the materials. So you usually should pay for the advanced training. Moreover, there is no guarantee that the course/coaching that you purchase will improve your trading, quite often traders go through multiple courses/coaching programs before they become consistently profitable. 3 - Spreads Spread is the difference between the sellers' and buyers' prices. That difference must be compensated by a trader if one wished to open a trading position. In highly liquid markets, the spreads are usually low and most of the traders ignore them. However, being similar to commissions, spreads may cut the substantial part of the overall profits. 4 - Time When you begin your trading journey, it is not possible to predict how much it will take to become a consistently profitable trader. Moreover, there is no guarantee that you will become one. One fact is true, you should spend a couple of years before you find a way to trade profitably, and as we know, the time is money. More time you sacrifice on trading, less time you have on something else. 5 - Swaps Swap is the fee you pay for transferring a position overnight. Swap is based on a difference between the interests rates of the currencies that are in a pair that you trade. Occasionally, swaps can even be positive, and you can earn on holding such positions. However, most of the time the swaps are negative and the longer you hold your trades, the more costly your trading becomes. The brokers' commissions, spreads and swaps compose a substantial cost of our trading positions. Adding into the equation the expensive learning materials and time spent on practicing, trading becomes a very expensive game to play. However, knowing in advance these hidden costs, the one can better prepare himself for a trading journey. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
10
London Kill Zone Close (ICT concept) 4 of 4London Kill Zone Close (ICT concept) 4 of 4 Hours are from 10am to 12pm New York Time/EST 1) London session is closing, so one more pump or dump mostly happens before liquidity and volume to end of session gets lower 2) Trade majors with USD pairs 3) Look for 10-20 pips on a short scalp during this time 4) Don't be greedy- get your little piece of pip pie and then turn off computer and get some fresh air. Balance is key to life- not staying indoors always. 5) Look at what that pair has been doing for last few days or week and see or visualize what this LKZC wants to do- get on short trade train. 6) Do your homework with all of these Kill Zones noted in this series, take notes, practice what you would do in live trading if you see certain setups. With you best in trading and life- Stay Safe Always
Education
by Anbat
2
New York Open Kill Zone (ICT concept) 3-4New York Open Kill Zone (ICT concept) 3 of 4 Times are from 7 am to 9 am New York Times/EST 1) You see a lot of both liquidity and volume with overlapping sessions of both London & New York 2) Better to use only majors or pairs with USD in them, like: EU, AU, UJ, GU, UC & NU 3) Nothing happens always in Forex, but one or more of the noted pairs above will have a setup to trade during this time, to give you 20-30 pips. 4) New York Open Kill Zone will do either two things during the session: Either be a continuation from London and go same way and/or be a reversal in direction and make a low for the day. 5) During this NYOKZ- a lot of economic news releases happen which will either pump or dump a USD pair, so be cautious around news times. 6) Noted on chart is EU 15 mn chart, which you could have set up a 12 to 20 pip sell trade or scalp during this time period. 7) Look at bigger picture then noted 15 mn chart, higher TFs give you marco perspective so you do not get tunnel vision when trading on 15mn or 5mn Tfs. You need to be able to read structure, price action, support and resistance areas, round numbers- Always remember time and price of day. Stay safe, wish you best in Forex & Life. Always on every trade control Risk and Reward by using only 1% to 2% of your account maximum per trade- related to a sound strategy and/or plan.
Education
by Anbat
1
London Kill Zone (ICT concept) 2 of 4London Kill Zone (ICT concept) 2 of 4 (2am to 5am NY time) This happens at start of London session, 1st three hours of session 1) Look at all EUR and GBP pairs, from daily down to trading charts 15mn (noted on attached chart) and/or 5mn charts for entry 3) Look for set ups related to fib ret 50%-61.8%, trend continuations, trend reversals 4) Look for imbalances in price action, support and resistance, round numbers (ones with alot of zeros, like 139.00 or quarter numbers< you can You Tube. 5) Look for price action before this possible trading area in London kill zone, what happened previous? last couple days or this week? 6) Do you have a buy or sell daily bias? If you do, which you should have- then only take trades in that direction today. It is easier. 7) London kill zone has a lot of liquidity and volume- so with right pair and set up you should expect 25-50 pips + in profit 8) Always on all trades control your RISKS, but adjusting lot sizes on each pair you trade to 1% to 2% of your total account balance. Be smart. Trade wisely, control all you can by only trading during best times during each session- you do not need to spend all day on computer trading Forex. If you think Forex will give you time freedom to do what you want to do in life- then be serious & focused to make trading a lifelong journey. Wish you best, stay safe
Education
by Anbat
1
Asian Kill Zone (ICT concept) 1 of 4 PartsAsian Kill Zone (ICT concept) 1 or 4 Parts: Look At First Two Hours Of Tokyo or Asian Session 1) Look At Noted Jpy pairs on chart, on 15 mn timeframe 2) First two hours of Tokyo or Asian session with one or more Jpy, should give you a set up for 15-20 pips or more, attached UJ chart gives you 50 pips in 2 hrs. 3) Yes, look at previous session. Is there a buy or sell trend on 15 mn timeframe. Is there a fib. retracement set up (50%-61.8%)? 4) Yes, you could have held noted UJ trade today (Friday) for 200 pips, but never trade with emotions or fear. 5) You need to understand completely what the Asian or Tokyo session wants to do and what happen a few days before current price action, so you can formulate a plan or strategy for trading the Asian/Tokyo session for the 1st, 2 hours or more- if you do trade it. 6) Asian Session has the lowest liquidity and volume each day and is before London and NY sessions (You need to understand, what big banks are doing during this session (accumulation? or...) 7) Remember that price action moves in waves- like the ocean- so trading the right pair, at the right price, during the right session & at the right time is paramount- when you are trading Forex, as a retail trader. Yes, ICT is on YouTube- been trading 30 plus years. If you keep an open mind and review his free material you will be 100% better Forex trader. Wish you best, stay safe Your homework, if you trade Tokyo session is to study all Japanese pair and what they do related to price action within the 1st two hours of session and how you would have gotten into trade (in hindsight). Where you would have place Entry, Stops & Target). Are you conservative trader or aggressive trader? How long do you let trade run if you are in profit?
Education
by Anbat
5
🗡Your first line of defense against committing an error🛡If producing consistent results is your primary objective as a trader, then creating a belief (a conscious, energized concept that resists change and demands expression) that "I am a consistently successful trader" will act as a primaiy source of energy that will manage your perceptions, interpretations, expectations, and actions in ways that satisfy the belief and, consequently, the objective. The first step in the process of creating consistency is to start noticing what you're thinking, saying, and doing. Why? Because everything we think, say, or do as a trader contributes to and, therefore, reinforces some belief in our mental system. Because the process of becoming consistent is psychological in nature, it shouldn't come as a surprise that you'll have to start paying attention to your various psychological processes. The idea is eventually to learn to become an objective observer of your own thoughts, words, and deeds. Your first line of defense against committing a trading error is to catch yourself thinking about it. Of course, the last line of defense is to catch yourself in the act. If you don't commit yourself to becoming an observer to these processes, your realizations will always come after the experience, usually when you are in a state of deep regret and frustration. Observing yourself objectively implies doing it without judging about yourself. This might not be so easy for some of you to do considering the harsh, judgmental treatment you may have received from other people throughout your life. As a result, one quickly learns to associate any mistake with emotional pain. No one likes to be in a state of emotional pain, so we typically avoid acknowledging what we have learned to define as a mistake for as long as possible. Is it possible that, for the great athletes, their past positive experiences with respect to mistakes caused them to acquire a belief that mistakes simply point the way to where they need to focus their efforts to grow and improve themselves? With a belief like that, there's no source of negatively charged energy and consequently no source for self-denigrating thoughts. However, the rest of us, who did grow up experiencing a plethora of negative reactions to our actions, would naturally acquire beliefs about mistakes: "Mistakes must be avoided at all costs," "There must be something wrong with me if I make a mistake," "I must be a screw-up," or "I must be a bad person if I make a mistake." Remember that every thought, word, and deed reinforces some belief we have about ourselves. If, by repeated negative self-criticism, we acquire a belief that we're "screw-ups," that belief will find a way to express itself in our thoughts, causing us to become distracted and to screw up; on our words, causing us to say things about ourselves or about others (if we notice the same characteristics in them) that reflect our belief; and on our actions, causing us to behave in ways that are overtly self-sabotaging. If you're going to become a consistent winner, mistakes can't exist in the kind of negatively charged context in which they are held by most people. You have to be able to monitor yourself to some degree, and that will be difficult to do if you have the potential to experience emotional pain if and when you find yourself in the process of making an error. If this potential exists, you have two choices: 1. You can work on acquiring a new set of positively charged beliefs about what it means to make a mistake, along with de-activating any negatively charged beliefs that would argue otherwise or cause you to think less of yourself for making a mistake. 2. If you find this first choice undesirable, you can compensate for the potential to make errors by the way you set up your trading regime. I define self-discipline as a mental technique to redirect (as best we can) our focus of attention to the object of our goal or desire, when that goal or desire conflicts with some other component (belief) of our mental environment. The first thing you should notice about this definition is that self-discipline is a technique to create a new mental framework. It is not a personality trait; people aren't born with self-discipline. In fact, when you consider how I define it, being born with discipline isn't even possible. Each time I experienced a conflicting thought and was able to successfully refocus on my objective, with enough conviction to get me into my running shoes and out the door, I added energy to the belief that "I am a runner." And, just as important, I inadvertently drew energy away from all of the beliefs that would argue otherwise Beliefs can be changed, and if it's possible to change one belief, then it's possible to change any belief, if you understand that you really aren't changing them, but are only transferring energy from one concept to another. (The form of the belief targeted for change remains intact.) Therefore, two completely contradictory beliefs can exist in your mental system, side by side. But if you've drawn the energy out of one belief and completely energized the other, no contradiction exists from a functional perspective; only the belief that the energy will have the capacity to act as a force on your state of mind, on your perception and interpretation of information, and your behavior.
BITSTAMP:BTCUSDEducation
by Yelli_trades
10
Are you prepared to lose? (and what to do if you are not)A new trader, let's call her Sarah, has just started trading in the crypto market. She has been reading articles and watching videos about trading, but hasn't taken the time to develop a solid trading plan, or to gain a good understanding of the markets and underlying assets she is trading. Sarah sees bitcoin's value is going up, she doesn't do any further research or analysis, she doesn't set a stop loss or take profit level, she just buys bitcoin, with the expectation that she will make a quick profit. Unfortunately, the value of bitcoin doesn't perform as well as Sarah had hoped, and instead of going up, it starts to go down. Sarah gets anxious and starts checking the bitcoin's value frequently, and since she didn't set a stop loss, she watches as her position continues to lose value. Eventually, the bitcoin loses so much value that Sarah is forced to sell it at a large loss. Feeling disheartened, Sarah starts to second-guess herself and her abilities as a trader. She didn't have a plan or a strategy, didn't manage her risk properly, and didn't have a clear understanding of the markets and the underlying asset. She didn't prepare for the possibility of losses and didn't have a plan for exiting losing positions. 😭😖😞Unfortunately, the story above is very common in trading, so how can we prepare for losing trades? ☝🏽 Preparing for the possibility of losses is an important part of risk management and can help traders to minimize the impact of losses on their trading capital. Some ways to prepare for the possibility of losses include: 1️⃣ Setting realistic trading goals: Traders should set realistic goals that take into account the inherent risks of trading and the potential for losses. By setting realistic goals, traders will be better prepared to handle losses when they do occur. 2️⃣ Establishing a risk management plan: This includes determining the appropriate size of each trade, placing stop-loss orders, and evaluating the potential reward relative to the potential risk. This can help to limit potential losses and protect trading capital. 3️⃣ Maintaining a proper risk-reward ratio: This means that the potential reward of a trade should be greater than the potential loss. This helps ensure that the potential reward justifies the potential risk. 4️⃣ Diversifying the portfolio: By spreading capital across a variety of different markets and instruments, traders can reduce overall portfolio risk and minimize the impact of losses in any one market or instrument. 5️⃣ Building a trading cushion: This means keeping a reserve of capital that can be used to absorb losses and maintain the trader's ability to continue trading. This cushion should be large enough to withstand a series of losses, but not so large that it affects the trader's ability to trade effectively. 6️⃣ Emotionally preparing for losses: It's important to remember that losses are a normal part of trading and to not let them affect you emotionally. By preparing emotionally for the possibility of losses, traders will be better able to handle them when they occur. 7️⃣ Have a plan for exiting losing positions: Having a plan for exiting losing positions will help to minimize the impact of losses on the portfolio. This could include setting a stop loss or taking profits at predetermined targets. ⚠️ Remember, it's important to accept that losses are a normal part of trading and that they are not a reflection of the trader's ability. By preparing for the possibility of losses and implementing a solid risk management plan, traders can minimize the impact of losses and increase the chances of long-term success. I hope this has been informative to you, and if it was, please leave a like or a comment below. 👇🏽👇🏽👇🏽 Thanks for your visit!
BITSTAMP:BTCUSDEducation
by Profit_Through_Patience
34
Managing Risk Using Probabilities 3 In part 2 of this series, we discussed the probability of a coin flip and how the odds that you land on heads "x" number of times in a row significantly decreases each time the coin is flipped. Therefore, it is important to understand the difference between "the probability the chart goes up or down" and "the probability that you (the trader) find yourself in a winning trade." The brings me to my next point of gathering your data. There is a difference between gathering data to calculate the probability an asset will rise or fall versus gathering data on a specific trade set-up and determining whether or not it will win or lose. Backtesting and forward testing are both excellent methods to calculate probabilities. In my honest opionion, backtest at least 100 trades in order to best calculate probability. Ask yourself if you are okay with losing more than 3 times in a row. If your set up loses more than 4 times in a row, it is very likely your odds of being in a losing trade are worse. Please take the time to think and meditate on this matter. If there are no questions concerning this, I may begin to go into details of my own personal trading set ups on the next article. Be blessed! Handy
BYBIT:BTCUSD.PEducation
by DelusionalRams8
2
Learn Why Do You Need a Stop Loss 🟥 Hey traders, Talking to many struggling traders from different parts of the world, I realized that the majority constantly makes the same mistake: they do not set a stop loss. Asking for the reason why they do that, the common answer is that these traders consider the manual position closing to be safer, implying that if the market goes in the opposite direction, they will be able to much better track the exact moment to cut loss. In this article, we will discuss why it is crucially important to set a stop loss and why it is the number one element of your trading position. First of all, let's discuss what is a stop loss. By a stop loss, we mean a certain price level where we close our trading position in loss. In comparison to a manual closing, the stop loss should be set at the exact moment when the order is executed. Stop loss allows us limiting the risks in case of unfavorable movements. On the chart above, I have illustrated 2 similar negative scenarios: 1 with a stop loss being placed and one without. In the example on the left, stop loss helped to prevent the excessive risk, cutting the loss at the beginning of a bearish wave. With the manual closing, however, traders usually hold the negative positions much longer, praying for a reversal. Holding a losing trade, emotions intervene. Greed and fear usually spoil the reasoning, causing irrational decisions. Following such a strategy, the total loss of the second scenario is 5 times bigger than the total loss with a placed stop loss order. Stop loss defines the point where you become wrong in your predictions. Planning your trade, you should know in advance such a point and cut your loss once it is reached. Never trade without a stop loss. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
9
Is it your strategy or you???What is your strategy? If asked, could you explain it to one of your friends or family members? More importantly, does it make sense? Is it clear? Teaching or Sharing your thoughts & methods leads to a deeper understanding of the content. If nothing else, speak aloud and hear your reasoning out of your own mouth before taking a trade. My current strategy is to take a defined structure from Swing High to Swing Low or Swing Low to Swing High and use it as the basis for my analysis. Naturally, the structure will indicate a trend, and I would need to decide if that trend is in alignment with or contrary to the broader market. Either is fine, but this distinction is essential when assessing targets and risk. I have to constantly remind myself that I don't know what the market will do. Since I don't know what the market will do, it follows that I should be open to changing my mind and also safeguarding against my ignorance. With this being said and firmly in mind, there are three levels that I like to pay attention to. They are: Breakouts of previously established key levels. The .618 Retracement & 1.618 Extension (current and previous structures) Between the .786 & .886 Simple enough. I'm sure that your strategy for entry can be explained in layman's terms as well. The issue typically doesn't lie in the analysis it lies in the trader's ability to follow said analysis and follow it consistently. Does this sound relatable? You spend hours or maybe even days conducting your analysis, waiting for the market to make its move and give you some indication of what might happen in the near future. As time passes, things seem to become more clear, and you see your opportunity coming. Sure there are a few unexpected movements that happen along the way but that's just how markets move. Price approaches your entry but not yet. Hell, it may not actually reach the level at which you established as a good entry. So you enter early and let the candles fall where they may. If you have fixed stops, now your levels are thrown off. If you don't, then any concept of risk that you had in your mind has been altered and you now bear the task of making mental adjustments to compensate for a completely different trade. Because that's exactly what it is, a completely different trade, with new numbers, figures, distances, R&R ratios, and new implications of risk. The market moves in your favor, possibly even nearing your predetermined target. If it's a fixed number of pips, then that number has changed. If it was a fixed target then your projected profits have changed. This may not seem like a big deal but for beginning traders who are establishing their system, this means everything. Every decision you make against yourself has future implications on your equity curve, but also on your confidence and understanding of what you are doing in the market. In order to be consistent and profitable in the market we must learn to trade in a consistent manner with a strategy that will prove to be profitable over time. The market continues to move but it has taken a sudden turn against you, whatever profits you had are quickly erased and price action now edges toward your stop loss. You've been stopped out only to learn that if you had been patient at entry and kept your original strategy in place, you wouldn't have been stopped out, and price action would have ultimately gone in your favor reaching your target. The point of all this is to illustrate that we unconsciously make changes to our strategies as we are deploying them. These changes have a compounding effect on the outcome of our trades. Even if you are made a winner by these changes you've made, you will have reinforced a bad habit that will undoubtedly lead to many losses in the future. There is power in understanding the unique set of tendencies and preferences that make you the type of trader you are. If you continue to ignore this, you will rightfully take your place amongst the other 90% of failing traders. When you start to pay attention to your own uniqueness and figure out what concepts, ideas, strategies, tools, and methods resonate with you, then you will be on your way to developing a system that you can trade consistently. Losing is a part of the game. You may as well lose in a manner that produces feedback that can be learned from. Are you losing because your strategy needs adjusting or are you losing because your psychology needs adjusting? It should be stated that any given trade, from start to finish, can be, and typically is, more nuanced than what I've just described. Its simplicity should not overshadow its intent. The chart attached to this post shows that there are multiple opportunities for entry for mine and, quite possibly, your strategy. All a trader needs to do is be patient and allow the market to tell you what it is doing. Along with entries are maintenance and exits. Targets are just as important as entries if not more so. Your unique perspective as a trader will heavily impact the decisions you make in all three phases of trading. Levels of Development LLC is providing this material for this site and any other related sources (including newsletters, blog post, videos, social media and other communications) for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and may not represent specific trades or transactions that we have conducted. In fact, we may use examples that are different or the opposite of transactions we have conducted or positions we hold. All investing and trading in the securities market involves risk. Any decisions to place trades in the financial markets, including trading in stock or options or other financial instruments, is a personal decision that should only be made after thorough research, including a personal risk and financial assessment, and the engagement of professional assistance to the extend you believe necessary.
BLACKBULL:US30Education
by LevelsArchitect
Sizing & how to manage riskThe easiest part, if everything's perfect you just trade as much as the market allows before the diminishing returns hit hard. However usually everything is not perfect at the beginning, so continue reading. Logically, in order to operate successfully & continuously (you can't market make much you if loose money aye?), your equity chart should represent a smooth movement from down left to the top right corner. What factors affect an equity chart? 1) Market activity itself; 2) An operation principle (strategy/system); 3) An operator(s). So our potential sizing formula/algorithm should, lol, contain these 3 factors. Makes sense? 1) If market activity is too narrow we increase size, if market activity is too wide we decrease size, otherwise if its normal we don't change anything; 2) After a systemic loss we decrease size, after a systemic profit we increase size, otherwise after a +- breakeven we don't change anything; 3) If there's real confidence about what's coming you increase size, if there are doubts you decrease size, otherwise you don't change anything. Number 3 needs a lil clarification, I didn't say "you're confident/have doubts", I said "there's confidence & there are doubts". It's not only you and quality of your operation, what you also need to feel is whether all of us, as the collective, whether the market itself is confident. And there you can use all the available info, all the other assets, all the non-market data. Understand that we are all the market, you're part of it when you trade. Every1 looks at the same data. The Collective. The Feedback loop. Ok, so how to increase/decrease exactly? First you need to calculate the maximum size. 1) Come up with the maximum tolerated loss in money for one trade (more on that later); 2) Look at the chart and find the maximum distance between the entry & exit-at-loss points; 3) Find out the maximum size that won't allow you to loose more than max tolerated loss in case of passing the distance you've just found out. These numbers should be reevaluated when there's a change. Don't forget that a change can be seasonal, just like volatility on ES futures changes after US open. Imagine you ended up with 70 lots. Divide it by 7 equal chunks. Why 7? Because of number of factors, we had three, 3*2 + 1. So now one chunk is 10 lots. One decrease/increase = 10 lots. Then you start trading at 4 chunks (40 lots) (3 + 1) (this way you got more freedom, you can both increase and decrease after the first trade). Then you just and increase/decrease according to the plan. For example, you made a profitable trade at 4 chunks, and the next level is very tight, so you have 2 systemic increases, so you increase by 2 chunks (20 lots). If you hit zero chunks you make a imaginary trades and then come back to the real account when your size becomes one chunk, if you hit 7 chunks you don't go higher (maybe couple of 8 chunks trades might make sense tho). You're free to fine tune this adjustments live, you can eg see a serious vola increase and decide to decrease by 13-16 contracts instead of 10. Calculating these things precisely won't magically turn a loosing operation into a profitable one, but will make you focus on the wrong thing & steal your energy. Don't calculate, trust yourself & let your brain approximate and feel da thing. Let's come back to the maximum tolerated loss in money. Making it 1% or 2% or 37565476% of deposit doesn't make any sense. First of all, a deposit can be financed externally, with a credit line, with a prop shop etc. You deposit should never be touched, only the risk capital above this deposit. Second, what you care about 4 real is how much risk capital do you have. For example let's say $10k, that's actually a good amount of money. Third you divide the risk capital by 7, and end up with max tolerated loss in money for one trade. No, consecutive loss streaks have nothing to do with coins & binomial distributions, so number 7 is not worse, but better cuz it's simpler. I think 4-5 consecutive losses are "OK", but 10 is too many. P.S.: if you've lost you risk capital/thing ain't going, you just stop, evaluate, fix the problems, test on simulator & start fixing another risk capital, and go again, until the victory!
CME_MINI:ES1!Education
by gorx1
Why do you need trading plan? If you make a mistake while trading on the market, you will be punished very quickly. The market doesn't like mistakes or carelessness, so the price will be a minus from your DEPO. This is just how things work. Because of this, planning is an important part of successful trading and not just a feature of an option that doesn't help you reach your goals. Today, we'll talk about what a trading plan should look like and lay out a clear set of rules that a trader can rely on in his work, no matter what the market is like, how long the investments are, or how much money they have to invest. If you don't have a plan, you're setting yourself up to fail. Remember this simple rule and stop trading based on how you feel. The market is not the place to make hasty decisions. If you have a clear trading plan that includes all possible ways to respond to changes in the market, you won't doubt the rightness of your trading decisions, and you'll be much less likely to make emotional trades that hurt your trading account. A trading plan and a trading diary will help you become a more disciplined trader and use your time, money, and nerve cells more wisely. In trading, what is a trading plan? If a trader doesn't have a plan for how to trade, he or she is likely to lose money in the market over time. As a broker, I have seen dozens of examples of this rule being true. This was also clear when I opened my first trading accounts. Most traders who consistently lose money on the financial markets do not have a trading plan. They open and close trades on a whim, or if they do have a plan, they ignore it when it would be best to follow it. Keep in mind that one of the hardest things about this kind of business is to stick to a trading plan. Just ignoring it once is enough to erase the trading results from the last few weeks or months. Trading is based on discipline, but it won't make sense if you don't have a clear plan of what can and can't be done. In trading, what is a trading plan? There must be at least five parts to a trading plan. Also, each of them could be a possible answer to the question: Can you trade on the market right now? Which way should you trade? (if it's a directed trade) How to figure out the right time to enter the market? How to define the goal and limit the risks? How to figure out the best size for a position? This is the "skeleton" of a trading plan. Each part needs to be written in detail on its own, based on the trading method, risk tolerance, and details of the markets being traded. Not every part of a trading plan is as important as the other parts. Some of them need to be changed to fit your trading style (Points 1, 2, and 3),while others should never be ignored or changed in a big way, or trading on this account will end very quickly and tragically (Points 4 and 5). To sum up what has been said, the following can be said: In the trading plan, you should list all the ways you could react to a change in the market. If this happens, you won't have to worry about "force majeure" anymore. Sharp market movements and losing trades will definitely happen, but the risk of negative trends will be taken into account in the trading plan and will not be able to cause a trading account default. Most of the time, the market is just like any other place. And if a trader loses money because the market went up or down by 5–10%, the problem is probably with the trader's plan and the fact that he or she didn't follow money and risk management rules, not because a Fed official said something. The most important thing for new traders is to learn how to work with a trading plan and risks. They shouldn't think about how easy it is to get into the market, how many Xs they can have, or how carefree their life could be. You can only stay in the market and start to fully grow and develop as a trader if you stop making rash decisions that cost you your deposit. Hope you enjoyed the content I created, You can support with your likes and comments this idea so more people can watch! ✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes. * Look at my ideas about interesting altcoins in the related section down below ↓ * For more ideas please hit "Like" and "Follow"!
BITSTAMP:BTCUSDEducation
by Crypto4light
DON'T TRADE ON HOLIDAYS | 4 Crucial Reasons Explained In this educational article, we will discuss why is it recommendable not to trade during the holidays season. 🏦 The main source of problems comes from the fact that the big market players like banks, hedge funds and investing firms are absent. Similarly to ordinary people, bankers and investors prefer to spend the holidays with their relatives and friends instead of staring at charts on Christmas Eve. But how does it affect the market? Big players are the main source of the market liquidity. The liquidity itself is the measure to which an asset can be quickly bought or sold in the market at a price of its quotes. Therefore, when the big players are missing, the market liquidity drops. 1️⃣ That fact instantly reflects in the market spreads. They become substantially bigger, directly increasing the costs of each trade and making it problematic to open a position at a desired price. 2️⃣ Secondly, low liquidity leads to a decrease in volatility. The market becomes weak and indecisive. As traders, we make the money on market moves. Our goal is to catch a bullish or a bearish wave. Their absence deprives us of profits or, at least, dramatically decreases them. 3️⃣ Thirdly, when the liquidity is low, even small market participants can move the market. It dramatically increases the probabilities of false signals. Relatively low trading volumes may manipulate the market, substantially decreasing the efficiency of technical and fundamental analysis. 4️⃣ The increased costs of trading, low volatility and manipulations should have convinced you to stay from charts during the holidays season. However, the main reason to not trade on holidays is much simpler. Holidays give you an opportunity to stay with your family, to take a break, to recharge and relax. Even a part-time trading is very exhausting and requires a constant attention. Let yourself be distracted and return after holidays. I wish you a great holidays season, traders! ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
17
The Importance of a Trading PlanIntroduction One of the most overlooked parts of trading is the simple act of having a plan. Having a well-defined trading plan is crucial for traders looking to improve their chances of success. A trading plan helps traders make informed and disciplined decisions and can serve as a roadmap for navigating the market. A trading plan can also help traders stay focused and avoid making impulsive or emotional decisions, which can be detrimental to trading performance. Defining your trading goals and risk tolerance Before developing a trading plan, it's important to define your trading goals and determine your risk tolerance. Setting clear and realistic trading goals can help you stay focused and motivated while understanding your risk tolerance can help you make decisions that align with your financial resources and risk appetite. For example, if you have a low-risk tolerance, you may choose to focus on more conservative trading strategies that aim to generate steady, consistent returns rather than styles that aim for big returns with high risk. Identifying your trading style There are many different types of trading styles, each with its own unique characteristics and potential benefits. Some common types of trading styles include day trading, swing trading, and news following. Identifying the trading style that aligns with your goals, risk tolerance, and personality can help you develop a trading plan that is suited to your needs and preferences. Developing your trading plan Your trading plan is a set of rules or guidelines that define how you will approach the market. Components of a trading strategy may include entry and exit rules, risk management techniques, and position sizing. It's important to fully develop and test a trading strategy before implementing it in the live market. This can help you identify any potential weaknesses or problems with the strategy and make adjustments as needed. Managing your emotions Emotions can play a significant role in trading and can impact decision-making. One of the great benefits of having a trading plan is that it can reduce the impact of emotions on your decision-making. It's important to manage your emotions and stay disciplined in the face of market volatility. Strategies for managing emotions in trading may include believing in and sticking to your trading plan, taking breaks to clear your head, and seeking support from a mentor or trading community. Improving your plan over time It's important to regularly review and adjust your trading plan to ensure it is still aligned with your goals and risk tolerance. This may involve evaluating the performance of your trading strategy and making adjustments as needed. You should analyze both winning and losing trades to find strengths and weaknesses in your plan. Nearly all strategies will work better under certain conditions, and it’s your job to determine what that looks like for your plan. Conclusion Having a well-defined trading plan is essential for traders looking to improve their chances of success. A trading plan can help traders make informed and disciplined decisions and serve as a roadmap for navigating the market. By defining your trading goals and risk tolerance, identifying your trading style, developing a trading strategy, managing your emotions, and regularly reviewing and adjusting your plan, you can improve your chances of success and achieve your trading goals.
Education
by TrendFlowIndicator
1
THE FOREX SUCCESS PYRAMID What is your recipe for success in trading? Developing traders often don’t understand, when you are asking to be a successful (or professional) trader, you are asking not just to build a pyramid, but to sit on top of it. What most forget is the base is the biggest part of the pyramid and the foundation for building higher levels. As the pyramid continues to grow higher, it gets a little more complicated, but you have a base (foundation) and structures in place to carry the stones up to the higher levels. But just like a pyramid, there are more stones at the base and this takes more time to build. Also like a pyramid, there are more traders at the base (not making money or breaking even) then there are at the top. However, with structures and rhythm in place, the fruits of your labor will result in a steady conditioning of your muscles (discipline, diligence and psychology). This will allow you to take on greater and greater heights, challenges and climb the pyramid of trading. Having forex trading discipline, diligence and psychology will give you a sense of confidence and a feeling of mastery over the process. This is the pyramid of trading and the attributes needed to climb to higher levels. While most traders spend time trying to find profitable trades, or the next great system, make sure you take time out to build the attributes which develop your trading muscles (discipline, diligence and psychology). By yourself this can be a very difficult task so it helps to create mechanisms in your life to build these habits. Please, like this post and subscribe to our tradingview page!👍
OANDA:BTCUSDEducation
by EliteTradingSignals
4