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Risk Management

Learn TOP 5 Tips For Trade Management 📖 Hey traders, In this post, I will share with you my tips for trade management. But first, let me elaborate on what is exactly a trade management. Trade management is the set of rules and techniques applied for managing of an already active position. Trade management is a very important element of any trading strategy that should never be neglected. 1. Never remove a stop loss Being in a huge loss, many traders refuse to admit that they are wrong. Instead, watching how the price moves closer and closer to a stop loss, they remove stop loss hoping on a coming reversal. The alternative situation may happen when the price is going sharply in the desired direction. Watching the increasing profits, traders remove a stop loss, being afraid to miss bigger profits. Both situations may lead to substantial, higher than initially planned losses. Driven by many factors, the market can easily burn all gains and move against the desired direction much longer than traders stay solvent. For these reasons, never remove a stop loss. It must be always set. 2. Never modify your stop loss if a position is in loss Watching how the price moves closer and closer to a stop loss is painful. Instead of removing stop loss, some traders move it and give the market more space for reversal. Even though such a technique is safer than the complete stop loss removal, it is still a very bad habit. Each stop loss adjustment increases the potential loss, not giving any guarantees that the market will reverse. It is highly recommendable to keep your stop loss fixed and let the price hit it and admit the loss. 3. Know in advance your profit protection strategy Where do you take your profit? Do you have a fixed tp level or do you apply trailing stop? You should always know the answers. Coiling around take profit level but not being able to reach it, the price makes many traders manually close the trade or move take profit closer to current price levels. Another common situation happens when the market so quickly reaches the desired TP level so the traders remove TP hoping to make bigger than initially planned profit. Such emotional interventions negatively affect a long-term trading performance. TP removal may even burn all profits. Do not let your greed intervene, and always follow your rules. 4. Never add to a losing position Watching how the price refuses to go in the intended direction and cutting a partial loss, many traders add to a losing trade in hopes that the market will reverse and all the losses will be recovered. Again, such a fallacy usually leads to substantial losses. Remember, you can add to a position only AFTER the market moved in the desired direction, not BEFORE. 5. Close the trades manually only following rules Quite often, newbie traders manually close their trades because of some random factors: they saw someone's opposite view, or they simply changed their mind. Remember, that if you opened a trade following your trading plan, you should always have strict rules for a position manual close. Do not let random factors affect your trading. Following these 5 simple tips, your trading will improve dramatically. Remember, that it is not enough to spot and accurate entry. Once you are in a trade, you should wisely manage that, following your plan. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
5
🔔TRADING HACKS: Use alerts or go crazy🔔In my trading, I really like using alerts and recommend everyone to do the same. The main ways of using them for me are: 1. While waiting for a tap into my Area of interest. 2. After entry, for waiting at my breakeven level. 3. Also for waiting for the First partial level, the second partial as well of course. I use them in other ways as well, for example, it helps me while I'm waiting for confirmation to set up. It's great to install a Trading View app so that you can receive notifications on your phone.
Education
by Yelli_trades
9
Some helpful trading tips ✅✅Trading Advise from Richard Dennis who turned a $400 trading account into $200 million. 1. Whatever method you use to enter trades, the most critical thing is that if there is a major trend, your approach should assure that you get in that trend. 2. A good trend following system will keep you in the market until there is evidence that the trend has changed. 3. When you have a position, you put it on for a reason, and you’ve got to keep it until the reason no longer exists. 4. You should expect the unexpected in this business; expect the extreme. Don’t think in terms of boundaries that limit what the market might do. 5.  Trading decisions should be made as unemotionally as possible. 6. Trade small because that’s when you are as bad as you are ever going to be. Learn from your mistakes.
BITSTAMP:BTCUSDEducation
by cryptobrainbox
Stop Loss Alone is not Risk Management - What is Your SystemTo be successful, you must develop consistency in your trading. You can achieve this by creating a system to trade. One that provides an edge to fit your lifestyle and personality. Discipline is required to stick to your system so that you can measure results (wins and losses) over a large number of trades. A simple journal helps you to measure your trades. This provides edge and success unfolds over time, requiring a strong mindset to create, adhere and measure. Goals are achievable through steps that are part of the process. Things to consider when developing your system are: Market Phase, Price Structure, Areas of Value, Areas of Entries as well as Exits, Multi Time Frame Analysis, Trend Lines, Support and Resistance, Dynamic Support and Resistance etc. Pro Tip: Trade clean and don't clutter your charts. Trade around a couple of levels with a single indicator. Be PATIENT to let trades come to you once you have made a trading plan. And when the market enters your zone, be READY to take action and trigger your entry based on rules. If you're a new trader or a struggling trader, feel free to reach out and ask me a question. If you liked this idea or if you have your own opinion about it, write in the comments. The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations.
Education
by imr4nkh8n
ETH/USD Main trend. Accumulation/Distribution. Pivot pointsThe chart shows the main trend (most of it) of this cryptocurrency. The timeframe is 1 week. Most people "trade" and do not understand the profit values of the price from the real set zones (not hamsters). Also shown are the recruitment zones (horizontal channel) and partial reset zones (until the triangle decoupling) of previously gained positions of large market participants. The last video explained this in detail and showed it on the example of this coin. Even taking into account that this triangle (1.5 years) is a position reset. That doesn't mean that this formation must necessarily break down. But, this is something to keep in mind, especially the +3600%. Volatility narrowing, that is, the end of triangle formation is a “doubt zone”—the “market fuel” (small and medium market participants) for the impulse is clamped down. That is, the decoupling of the triangle and the direction of further trend development. The price is clamped into a triangle. A formation of this magnitude will only unravel due to future world shocks, especially financial ones. Who knows, maybe this time there will be no correlation at all, as the time of "coming out of the shadows" approaches. Always trade within your working range (for example 1 day), always understand where the price is in the main trend. Based on this understanding, limit the risks, and make a decision about reducing (partial liquidation) or, on the contrary, about adding to the position. Locally on the 1-day timeframe a wedge is formed on the decline. I've shown all the decoupling options for this trading situation in detail in this trading idea, as well as in the video. ETH/USDT Local trend. Channel. Wedge. Pivot zones. Under idea fixed my previous trading as well as training/trading ideas where I accompanied the price in updates for quite a long period. Note the exact values and more. You can use the material in them as educational, based on reality. Remember, the basis of trading is not guessing (that's what everyone wants to do), but your trading strategy and risk management based on your knowledge and experience. Those who want to guess tend to lose money. Do not be such characters in the market, that is, its fuel. I wish all smart people a big profit, and wish all stupid people to wake up from the dream of stupidity.
Education
by SpartaBTC
6
When to up your share size?Many traders have 2 or more trade set ups. It is important to know the following: 1)The risk of your trade must be in accordance with the winning percentage of the trade set up. 1)Your share size should increase or decrease in accordance with the winning percentage of the trade set up. * Share size increase must be in accordance to you account size (account management) These concepts are what separates really good traders from average traders.
BEducation
by UnknownUnicorn37963351
3
Why do most ppl fail as retail tradrers?I see two main reasons which complement each other for the high rate of failure. First and foremost, the media and the industry promote this idea that it’s easy to become a profitable trader and anybody can go it. This is, of course, not true. Theoretically, anybody can do it if willing to put the effort and approach it as a business. Practically almost nobody approaches trading with the same rigorousness as any other professional endeavor. Let’s put aside the first reason, about which there is not much we can do. A big chunk of the industry relies on peoples being naive and we’re not going to change that. On top of the first reason, we have a second reason related to people themselves. Most of those who try trading financial markets simply don’t manage their emotions and risk well enough to survive the learning curve. Managing your own emotions turns out to be a complex endeavor and constantly changing market conditions lengthen the learning curve. One of the things that makes this business so attractive is also the main thing that makes it so difficult to master. The direct and sometimes violent feedback you receive from the market, after each trading decision, has an astonishing impact on a human’s ability to keep his psychological well being in check and control his own reactions. It has the potential to disrupt executive functions and trigger instinctual “fight or flight” responses. This leads to emotional trading or trading on tilt which quickly generates more losses than any other mistake you could make in this business. Most other jobs have a protective buffer zone between usual day to day work decisions and the ultimate feedback — end of the month paycheck. This profession doesn’t. Every little call you make has an immediate impact on your capital. Every little mistake can take a portion of your capital away and every good decision can bring it all back and more. This kind of psychological exposure is heavily distressful and being aware of its mechanisms makes a huge difference. So … psychology differentiates the pro. Don’t get me wrong … professional discretionary traders are not emotionless but are much more aware and in control of their reactions. The successful pro deeply understands that trading is mainly about people's perceptions and the rest are just details. You may ask yourself how can such a level be reached? A starting point is to stay away from any market, financial instrument, time frame, trading technique, or any combination of those that doesn’t fit who you are deep inside. The least the exposure to triggers that can awake the demons within, the best. Always seek strategies that you understand and match your inner self. For example … if you are impatient trade shorter time frames, if you are very risk-averse don’t use huge margin, if you are risk-averse but you don’t have enough capital use margin with a tight risk management (maybe options), if you have a statistical mind try quantitative approaches etc. There are infinite possibilities to adapt to yourself and is a must to do it if you want to have a chance. It always amuses me to see the vast majority of educational resources geared towards what market does when most of the success in this business is knowing how you adapt to the market, whatever it may do. And, of course, the market is, more or less, the other traders. Best of luck! Mihai Iacob
COINBASE:BTCUSDEducation
by Mihai_Iacob
19
Trading Psychology | How to Perceive Your Trades 👁 Hey traders, In this post, we will discuss a common fallacy among struggling traders: overestimation of a one single trade. 💡The fact is that quite often, watching the performance of an active trading position, traders quite painfully react to the price being closer and closer to a stop loss or, alternatively, coiling close to a take profit but not being managed to reach that. Fear of loss make traders make emotional decisions: extending stop loss or preliminary position closing. The situation becomes even worse, when after the set of the above-mentioned manipulation, the price nevertheless reaches the stop loss. Just one single losing trade is usually perceived too personally and make the traders even doubt the efficiency of their trading system. They start changing rules in their strategy, then stop following the trading plan, leading to even more losses. ❗️However, what matters in trading is your long-term composite performance. A single position is just one brick in a wall. As Peter Lynch nicely mentioned: “In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” There are so many factors that are driving the markets that it is impossible to take into consideration them all. And because of that fact, we lose. The attached chart perfectly illustrates the insignificance of a one trading in a long-term composite performance. Please, realize that losing trades are inevitable, and overestimation of their impact on your trading performance is detrimental. Instead, calibrate your strategy so that it would produce long-term, consistent positive results. That is your goal as a trader. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
Education
by VasilyTrader
15
✍️WEEKLY QUOTE: How to be rigid and flexible at the same time?✍️ In what way does a trader have to learn how to be rigid and flexible at the same time? The answer is: We have to be rigid in our rules and flexible in our expectations 🟢We need to be rigid in our rules so that we gain a sense of self-trust that can, and will always, protect us in an environment that has few, if any, boundaries. We need to be flexible in our expectations so we can perceive, with the greatest degree of clarity and objectivity, what the market is communicating to us from its perspective. At this point, it probably goes without saying that the typical trader does just the opposite: He is flexible in his rules and rigid in his expectations. Interestingly enough, the more rigid the expectation, the more he has to either bend, violate, or break his rules in order to accommodate his unwillingness to give up what he wants in favor of what the market is offering. 🟢To eliminate the emotional risk of trading, you have to neutralize your expectations about what the market will or will not do at any given moment or in any given situation. You can do this by being willing to think from the market's perspective. Remember, the market is always communicating in probabilities. At the collective level, your edge may look perfect in every respect; but at the individual level, every trader who has the potential to act as a force on price movement can negate the positive outcome of that edge. To think in probabilities, you have to create a mental framework or mindset that is consistent with the underlying principles of a probabilistic environment. 💡 A probabilistic mindset consists of five fundamental truths.💡 1. Anything can happen. 2. You don't need to know what is going to happen next in order to make money. 3. There is a random distribution between wins and losses for any given set of variables that define an edge. 4. An edge is nothing more than an indication of a higher probability of one thing happening over another. 5. Every moment in the market is unique. From Trading in the Zone, by M. Douglas ❤️Please, support this post with like and comments!❤️
OANDA:XAUUSDEducation
by Yelli_trades
4
Guide To Trading USD/JPY (In Top Five Most Traded Pairs)The USD/JPY currency pair is one of the more popular FX pairings available to traders. It’s represented by two of the world’s largest economies with the US (US Dollar) and Japan (JPY). USD/JPY ranks as the second most traded currency pair in the world, according to the Bank of International Settlement (BIS), which compiles statistics in cooperation with world central banks to inform analysis of global liquidity, among other things. Fundamental Aspects: Two of the world’s largest economies, USD/JPY is often a popular macro venue for traders – especially as a hedge for manufacturers and global importers/exporters. With the Japanese Yen being the most heavily traded currency in Asia, USD/JPY is often seen as a significant link between the Eastern and Western worlds. Because the pair represents two risk-averse currencies, volatility often lags behind the other G10 FX majors, which will tend to offer greater deviation in the represented economies (such as the UK and US or Europe and the US). As such, traders will often expect lower levels of volatility in the pair, which can open the door to more ranges or mean reversion as opposed to trends or breakouts that may be more common in other major forex trading pairs. The big focus is on the respective central banks for the possibility of even more unprecedented easing. The Fed and BoJ are two of the most extended central banks and the competing stances on monetary policy have continued to define the multi-year range in price. USD/JPY has traditionally seen strong correlations with U.S. Treasuries and as such, tends to be rather sensitive to broader shifts in interest rates and interest rate expectations. Also of note: the Japanese Yen, as well as the US Dollar, enjoys a ‘haven’ status during times of economic uncertainty. USD/JPY is extremely popular with larger institutional traders, banks and multi-national corporations. Often employed for hedging purposes, the pair can be used to offset currency risk for manufacturers as well as global exporters and importers. USD/JPY often trades on both USD flows and risk trends, depending on future interest rates expectations and risk appetite in broader financial markets. Range-prone price action and event risk volatility makes USD/JPY an attractive asset for retail traders as well as technical traders across the spectrum. How & When To Trade USD/JPY? With such a high market volume, USD/JPY is often a favored FX pair for technical traders. Adherence to psychological levels and potential for sharp inflection moves off support and resistance levels tend to make the pair more amenable for reversal/breakout approaches and shorter intra-day trends. USD/JPY trading trends evolve quickly and over the past five years, the pair has been a popular product for near-term and swing traders. Price action in this pair is notorious for aggressive reversals and fast breakouts, making it ideal for short-term scalping as well as event risk traders looking to take advantage of the sharp spike in volatility during key data releases or macro-economic developments. In practice, this can mean shallower targets and tighter stops. Finally, it is worth paying attention to the psychological price levels, as there is a propensity for sharp inflections off big-figure thresholds. When To Trade?: London/New York overlap is best time (4hrs) even if Tokyo is not open.
Education
by Anbat
📖 STEP 3 to MASTER TRADING: WHAT’S YOUR TRADING EDGE? 📖The topic of trading edge in the market is highly underrated, in my opinion. That’s why today I propose to discuss it, and I hope it can help you to shift your perspective on this matter. So let’s think about this together. What parts does your trading edge consist of? 🟩 THE BIG FILTER For me, the first part of any trading edge is its filter. So your trading system tells you very clearly when you should NOT be in the market. It protects your capital - both $ capital and emotional capital - from poor market conditions, and low-quality and low-probability setups. And what it actually means when you execute your edge is that most of the time, you will stay out of the market. 🟩 YOU WILL “MISS” THE MOVES That’s really tough topic for many of us, me included because very often you’re looking to enter the zone, but the price can either turn right before tapping into it or tap and doesn’t give any confirmation for entry. And that could be very emotional. However, the fact is simple - such “missed” moves are also part of our edge. Why? Because if you tested one set up, one pattern, and you know it’s profitable the way it is, then you need to execute it the way it is. Keep in mind, when I say profitable, I don’t mean crazy profitable. Today, with access to prop firms, we need a very low % of profitability to earn for living. We can scale the $ amount relatively easily if we are profitable consistently. So again, we don’t need every move, and we don’t need the whole move. We just need some part of some moves - and a good edge will make consistent profits out of this. And only then, if you want, you can tweak, refine and step by step make your system even more profitable. 🟩 THE PATTERN This part is actually your entry pattern. Notice again, this is just a part of your system, not the whole system. If you really understand this, you’ll be much more relaxed in the market. This part should include a written checklist for your entry - just like a pilot has a checklist before his flight. A checklist, in its turn - is a part of your trading plan, it’s the essence of your trading plan. You will refer to it before every trade. 🟩 MANAGEMENT, LOSERS AND BREAKEVENS When you executed your edge in the market, now you need to manage the trade accordingly, based on your checklist. So take partials, accept breakevens and losers. If you entered into a high-quality setup, which turned into a BE or a loser - it’s the part of your system, and usually, it doesn’t make sense to overthink it and try to find flaws in your system. But that’s flexible, and of course, you can analyze what happened, and maybe even find something to tweak, but very often a loser is just a normal loser, and breakeven is just a normal breakeven. 📖To recap, any edge will include: 🔹“missed” trades 🔹trades, where price didn’t tap into your entry order just a bit 🔹trades where you were stopped out for several pips and price then went to profit (if it repeats constantly, maybe consider having a bigger stop loss) 🔹full TP 🔹partials 🔹losers 🔹breakevens 🎁If you’re still here, here’s a BONUS trading hack for you. Ask yourself and try to answer honestly this question: “During all the time I’m trading, what is the maximum amount of days in a row, when I followed my rules to the T, honestly?” You will be surprised, but the usual answer is 3-10 days. Yes, people can trade for 2-3 years, but never manage to follow their rules (whatever they have at the moment) for at least a month in a row. It all leads to catastrophe, of course. Thank you for your time! If you want to see more educational materials, please hit the BOOST button and leave your comments below. Dima
FOREXCOM:XAUUSDEducation
by Yelli_trades
7
STEP 2 to MASTER TRADING: what to do with the NEWS. NEWS BRING TERRIBLE TRADING CONDITIONS During release, spread is all over the place, in addition you can easily miss the fill. So actually worst time you can enter a position is on a release itself, hoping price will rise or fall. But usually, price will make massive moves up and down, liquidating hopeful "news traders" before going in either of direction. So next time when you will regret you were not involved in the news move, just remember that you would not have a good entry point anyway. PRICE CAN GAP BELOW YOUR STOPLOSS Another really important thing to keep in mind is that very often during red news, price can momentarily and significantly gap, and now instead of your breakeven or usual -1RR, you'll have -2 or -3RR, and what's worse - you'll have a big drawdown in your emotional capital. ILLUSION OF UNDERSTANDING Sometimes beginners, and even advanced traders, fall into this illusion. Someone reads 5 articles about a specific news type, and now begins to think they understand how the news will effect the market. In reality, each trading instrument is effected by hunderds of factors, and anyone who wants to understand them, should spend months, even years with that one instrument, learning literally everything about it and what effects it. Everything else is just gambling or being naive. EFFECT HAPPENS BEFORE THE RELEASE If you've being familiar with smart money or institutional trading, ideas of Wyckoff, you'll know that institutions position themselves long time before news release, during accumulations and distributions. Market structure gets established long before actual realease, and what news do are just producement of sporadic moves, grabs of liquidity and easy manipulations. But only 0.01% of news actually change pre-established structure and starts a new trend, big picture doesn't change because of news. What actually starts a move and a trend are accumulations and distributions, and news really can be a part of it, but only a small part. SO WHAT TO DO ABOUT THE NEWS? 1. Check red news releases during your day. Don't enter 15-30 min. before and after the news. 2. If you're already in a trade, and price came relatively close to your entry, it's better to close out the position now, because remember that price can gap below your stoploss. 3. If you're positioned in profit significantly away from the price, leave the position open. So to recap everything above, you need to trade YOUR SYSTEM, YOUR EDGE - for me it's structure, SnD and confirmations - but also we need to acknoledge the short term chaotic news effect, and use our knowledge to manage risk and that's all. Hope this post give you better understanding what should you do in order to become a successful trader. I will be grateful if you support this post by smashing the BOOST button and sharing it with other traders. Thank you! Dima
BINANCE:BNBUSDEducation
by Yelli_trades
1
Advanced limit order swing trading strategySo if you haven't read my other writeups first, you probably should. Non-speculative limit orders are the basis for this trading style. Now, the idea behind this system is simple. You're using a script, EA or bot to create dozens of limit orders very quickly, with predetermined stop losses and take profits, to capture swings against active trends. See a trend. Any trend. Are the candles going up? It's an uptrend. Are they going down? Downtrend. In this trend, you want to identify momentum candles that have a wick. I'm not talking about hammers, I'm talking about candles that close with momentum in the direction of the trend, but just happen to have a wick that's at least 5% the length of the candle body. When you see this, you're going to place a limit order cluster above (or below) that wick to counter-trend it. As the trend continues upward, you might see more wicks like this, and you're going to do it again. And again. And again. The pic above shows an 18 pip range of limit orders getting filled, with limit order grids being stacked on top of wicks. This can definitely be considered Martingale-like, so you obviously want to be careful with how much you're risking. If 12 orders are each valued at 0.01, and your stop loss and take profits are both set to 30 pips, then that means each individual limit order is worth $3 and totals to $36 profit or loss. Your take profit structure can be greater or lower than the 1:1 ratio, as this is just an example and it's something you would have to backtest and figure out for yourself. However, stacking grids to catch a swing can be highly rewarding. It's possible every ticket of your lowest grid hits its SL (although I'd say pretty unlikely as long as you're spacing is good for the currency pair), but every grid you stack up on top of that will greatly increase your odds of winning. i.imgur.com i.imgur.com This is how it would look in practice. The limit orders are based off of these wicks: i.imgur.com Every time I see a wick in that uptrend, I'm selling into it. My limit orders start 5 pips away from the top of the wick. I click "Sell limits" and I'm ready to go. I'll leave a link to my EA (for MT5) at the bottom. I cannot stress enough that you would have to really backtest this and get comfortable with whatever currency pair or asset you're trying to trade, because it's important. And always bet small when you do this! This is about trying to make money regardless of market conditions, not trying to bet big and win big. If you have a $1000 account, maybe risk $20 per grid (grid meaning every individual cluster of limit orders). No one can tell you how to manage your risk obviously, but losing shouldn't be a big deal. My MT5 EA: mega.nz My settings for a 3 minute EUR/USD char
Education
by WinkleTrades
The Truth About Trade AccuracyA critical component relating to trading success is the relationship between your win percentage and your bottom line. Many new traders hold some extremely inaccurate views when it comes to what kind of win percentage is required to generate net profit, including the notion they need a 70% or higher win percentage to achieve success. This notion is wrong and misleading. The relationship between your win percentage, your risk management, and the profit you generate from each trade are intricately related. The beauty of this post is that the backtest logic in our Olympus Cloud indicator showcases the concepts covered with real trades, which is shown under this post in the data section. The Positive Win Percentage A win percentage over 50% is regarded as a probable edge or edge. Yet, even with a 60% win rate, you can generate a net loss. How? If your average loss is $100, but you are in the habit of falling prey to your emotions and prematurely selling your winners so you only generate an average of $50 when you win, you will lose money regardless of your 60% win rate. No trader goes into a trade thinking, “Hey, I’ll lose $100 if I’m wrong and I’ll make $50 if I’m correct.” Nevertheless, random wins of $75, $25, $60, $40, $90, and $10 will average out to $50 per win. No one purposely tries to win half of what they lose, but random trading combined with random emotions produces random results. We all desire winning and making good profits when we take a trade, but as emotions come into play, things quickly change. You may take a trade that reaches $75 in profit and then decide the move looks gassed out, so you sell. On another trade, you might get scared by some volatility, or notice a resistance you neglected to spot initially and sell for $25 of profit. It is all too common to fall prey to your emotions and behave in a way you didn’t plan to. The irony is, that you will regard the $25 trade as a winner, and it will raise your trade accuracy. Let’s look at a simple example: Example: 100 total trades with 60% trade accuracy 60 winning trades at an average of $50 per win = $3,000 40 losing trades at an average of $100 per loss = $4,000 Net loss of $1,000 In the example above, your break-even point is a 67% win percentage for a whopping $50 in profit. With this type of random risk and profit management, any meaningful net profit requires a win percentage upwards of 75-80%. The psychological damage of having a higher average loss than an average win is hard to quantify, but it’s easy to feel frustration when one loss wipes out two wins. While this sounds like common sense, many, many new traders fall into the habit of random profit management and find themselves in this undesirable situation. The same theory holds true even if you let your winners play out, but you also let your losses escalate and take a few big hits to your account. In either scenario, your 60% win rate means nothing. The Negative Win Percentage In the case of a negative win percentage, you can produce a net profit even if you are correct less than 50% of the time. In this scenario, your advantage over the market is getting into trades that consistently provide large gains when you win, and by letting those winners play out fully. Furthermore, you can’t hesitate to cut your losses and keep your drawdown controlled. With this kind of win rate, you must not sell early or your entire business model falls apart. You must understand that the big winners will make up for any profit you leave on the table. Let’s look at what happens if you are correct 40% of the time, but your average win is $100 and your average loss is $50: Example: 100 total trades with 40% trade accuracy 40 winning trades at an average of $100 per win = $4,000 60 losing trades at an average of $50 per loss = $3,000 Net gain of $1,000 It is now clear that win percentage is not everything. You can make money even if you are correct on 40% of your trades as long as your average win is double your average loss. The smaller your average win compared to your average loss, the higher your accuracy must be to make a net profit. Of course, if you can maintain a win percentage over 50% while also having proper risk and profit management you will end up far ahead. Putting It Together Clearly, the best approach is to combine a reasonable win percentage of over 50% with proper risk and profit management. You must consistently let your winners play out regardless of the emotions you feel in the moment and ensure you don’t take losses beyond a certain threshold. Furthermore, scaling out of trades – selling portions of your position as the market moves in your favor – will increase your accuracy and ease your mind. By dividing your position into two or three tranches you can lock in a certain amount of profit at predefined targets and then let the final portion ride out the trend with a trailing stop-loss. Revisiting our example, let’s put these concepts together with a reasonable win percentage: Example: 100 total trades with 55% trade accuracy 55 winning trades at an average of $100 per win = $5,500 45 losing trades at an average of $50 per loss = $2,250 Net gain of $3,250 Now, that’s what you want to see! It’s more important you behave in a consistent manner and follow a predefined game plan than it is to have 80% trade accuracy. It is wise to strive for reasonable trade accuracy – 50% to 65% – and remain consistent in order to fulfill your trading potential. After you have mastered your emotions with a consistent strategy, perhaps you can raise your win percentage to mythical values like 80%. As we have covered, though, such accuracy is not required for great trading results.
AMEX:TANEducation
by Level8Trading
1
STEP 1 to MASTER TRADING: Hindsight trading. Train your eyes.A common mistake that traders make after learning any kind of trading setup is jumping into backtesting using a replay tool, or even live trading. However, if you think about it, trading is very much about pattern recognition. And when you force yourself into live trading without a proper understanding of what your patterns look like, most likely you’ll need much more time to succeed. A different approach and much more effective would be using hindsight, that’s when you see what actually happened. During this process, try to find at least 50 high-quality setups, that represent your trading system. So you actually see everything that happened and find situations, where your edge played out, document it in your journal. That’s great training for your eyes and brain. You don’t need to guess, you will not feel anything, because you already see what happened, you’ll notice that sometimes your edge, your system doesn’t give you entries and price goes without you, sometimes, you’ll see a loser or a breakeven after your entry, start to get used to this, as it’s all part of your system. After that, you'll have a much better understanding and vision for your setup - and that could be the time to try some backtesting and forwardtesting. I’ll talk more about a different kind of backtesting in future posts. Meanwhile, take care, send your questions, and comments, will be glad to chat with you. Dima
Education
by Yelli_trades
1
Trading Insights #1: Probability & Random DistributionDebriefing In this mini-series, we take a look at what it takes to become a successful trader. The Trading Insights series focuses on concepts rather than analysis and will attempt to get you on the proper path to your trading goals. We believe the ideas contained in this series are the proper base to help you become a professional trader. We define a professional trader as an individual who makes consistent profits month after month, only takes controlled losses, does not succumb to momentary emotions, and does not experience outsized account drawdowns. In the shown example, controlled risk and consistent profit management ensures success. Intro Probability combined with random distribution is an important and often overlooked concept when it comes to trading. Mark Douglas brought the idea of random distribution to many retail traders with his book “Trading In The Zone'', but he is certainly not the originator of a concept rooted in data science and statistics. Our goal is to compress and synthesize these ideas so you’ll have a good understanding after reading this post. Traders who say things such as, “you need to make a large number of trades to make money”, or “don’t let the losses deter you from making more trades”, are ungracefully or unknowingly referring to probability and random distribution. Probability To understand how random distribution relates to trading we must first cover some basics of probability. If we flip a fair coin there is always a 50% chance the coin lands on tails. Each time we flip a coin the likelihood of landing on tails is identical, despite the fact we could flip heads five times in a row. This means the possibility of heads or tails turning up is unrelated to the previous flip. The result of each flip is random relative to the last flip due to circumstances we cannot control, such as the pressure applied to the flip, the airflow in the room, the landing spot, and numerous other factors. Let’s now pretend we rig the coin and change the likelihood of flipping tails to 55%. The same rules govern our new rigged coin – the result of each flip is unrelated and random in relation to the last flip. By rigging the coin in favor of tails we have not changed this fact, but we have tilted the outcome in our favor over many flips. In other words, if the rigged coin is flipped enough times, we will get more tails than heads. The increased probability of flipping tails is reflected over many flips of the coin, not on each individual flip. Random Distribution Once we understand the basics of probability, random distribution is simple to comprehend. If the result of flipping a rigged coin is unrelated to the last flip then the flips that produce tails are randomly distributed throughout a set of flips. For example, a sequence of flips could go: H,H,T,H,T,T,T,H,T,T – there is no discernable pattern in relation to tails turning up. Over a set of flips, however, our rigged coin lands on tails more often than heads. The increased likelihood of the coin landing on tails is reflected over many flips, not on each flip. What does all of this mean in real terms? Individual random events have a consistent outcome over a set of events when the odds are tilted in one direction. Relating The Concepts To Trading 1. Over a series of events where many unknown forces influence each event, the outcome of each event is unrelated to the previous event. In trading, this means the outcome of each market pattern is not related to the last instance of that same pattern. If a pattern results in a winning trade it does not mean the next instance of the pattern will also produce a winner, or vice-versa. 2. Over a set of events, the events that produce a favorable outcome are randomly distributed throughout the set. In trading, this means any attempt to predict which instance of a pattern will produce a favorable outcome is a waste of time. When you attempt to predict which instance of a pattern will produce a winner, you are saying you know what will happen next, which begs the question, if you can’t read the minds of the people who have the financial ability to move prices, how exactly do you know? Hint: you can never know exactly, despite the fact you can guess correctly from time to time. 3. Over a set of events, tipping the odds in one direction means the increased likelihood of a certain outcome is only reflected over many instances of the event. In trading, this means you need a pattern or strategy that tips the odds in our favor, but you must view many instances of your pattern or strategy to see the desired results. In other words, you must not view your trading exploits from trade to trade, but rather, over a sequence of many trades.
Education
by Level8Trading
2
A simple trend-following strategySo I like to trade without speculation, but if I do decide trade *with* speculation, then this is a way that I like to do it. This is my version of the Turtle trading strategy. I really don't know or care what their specifics are, because I just don't have the patience for anyone who unironically trades daily timeframes. My version of this strategy is all about finding momentum candles that breach support and resistance and then giving them room to grow. So... first thing's first. Once you've decided on your level of risk, then under *no* circumstance can you break that during this process. I cannot make this any more clear! If your risk is $15, then it's $15 from start to finish. If it's $1000, then it's $1000 from start to finish. This way, as you follow the trend, you create a scenario for yourself where your wins (which will in all likelihood be less frequent than your losses) will be very big wins. We're talking like 15:1 ratios on a 1 minute chart wins. Now, because you have to stick to your level of risk, that means you have to get your math right when you're dragging around your stop losses on multiple tickets. If you have 4 buys in different positions, you have to get your exact stop loss level correct for all of them so that your total risk doesn't exceed what you risked when you started this trade setup. So the rules: 1) You enter on the close of a momentum candle (and a momentum candle *only*) that breaches a recent support or resistance. This is a break of structure and is indicative of a potential reversal. It does not mean the price is reversing, and it is likely you will lose this trade. You stop loss goes underneath the momentum candle, and that's how you'll measure your risk for the first ticket. 2) You only add to your position on momentum candles that come after a pullback. You're not looking for Fibonacci numbers or anything, but just look at the exact candlesticks. You want to see a conscious effort from your opposition trying to drive the price down, preferably with some consolidation candles that follow afterward. Then, when you see a momentum candle following the trend you're trying to ride (preferably with little to no wick in the trend direction), you add to that position. 3) You repeat step 2 until you have a ratio that you're happy with, or if you see a break of structure, as in a pullback pivot point being exceeded. That's it. That's the entire strategy. It's simple and effective, but it will only make you money if you're disciplined and stick to the rules. With that said, let's have more examples... I think I messed up in this picture actually - there's a break of structure right at the top of that first wave, so I probably would've seen the writing on the wall and would get out. The only reason one might stay in on this logically, is because the downward pressure isn't momentous. Identifying momentum is extremely important to this strategy. I would highly recommend mixing my non-speculative strategy in with this one so that you're not losing money by waiting (missing out), getting frustrated and entering on bad setups, or having to feel like you've taken a loss simply because you were wrong. My non-speculative limit order trade plan fuels my account to make these kinds of trades.
Education
by WinkleTrades
2
HOW TO SET STOP LOSS | 3 STRATEGIES EXPLAINED 📚 Hey traders, In this post, we will discuss 3 classic trading strategies and stop placement rules. 1️⃣The first trading strategy is a trend line strategy. The technique implies buying/selling the touch of strong trend lines, expecting a strong bullish/bearish reaction from that. If you are buying a trend line, you should identify the previous low. Your stop loss should lie strictly below that. If you are selling a trend line, you should identify the previous high. Your stop loss should lie strictly above that. 2️⃣The second trading strategy is a breakout trading strategy. The technique implies buying/selling the breakout of a structure, expecting a further bullish/bearish continuation. If you are buying a breakout of a resistance, you should identify the previous low. Your stop loss should lie strictly below that. If you are selling a breakout of a support, you should identify the previous high. Your stop loss should lie strictly above that. 3️⃣The third trading strategy is a range trading strategy. The technique implies buying/selling the boundaries of horizontal ranges, expecting bullish/bearish reaction from them. If you are buying the support of the range, your stop loss should strictly lie below the lowest point of support. If you are selling the resistance of the range, your stop loss should strictly lie above the highest point of resistance. As you can see, these stop placement techniques are very simple. Following them, you will avoid a lot of stop hunts and manipulations. How do you set 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
86
1% risk per trade is too much, try this insteadHello traders, Remember when you just started trading, almost everywhere you could hear about the 1% per trade risk rule? While this is not too bad, I think in most cases 1% risk is too much. Here's why: 1. If you're trading a 100k prop firm account, 1% is $1000. Imagine you have a very usual losing streak of 3-4 trades. Now you've lost 3-4%, and $3-4k in dollar amount. If you're a day trader, it could happen in one day easily. Ask yourself honestly, how would you feel about it all and if you will be capable of executing your edge? 2. Most prop firms will have a 5-10% drawdown breach rule So again, a very usual losing streak will take you halfway to account termination. 3. 1% risk leaves almost no room for days where you executed poorly or traded emotionally. We are all humans and we make mistakes. Something goes wrong and you trade the setup you were not supposed to be trading. And instead of stopping after 3 losers, you continue to trade more. So what can we do about it? My suggestion is very simple: risk no more than 0.1-0.25% per trade. If your average winner is 3-7RR, then with a good account size a 1% winner is just huge and more than enough. And if you're going through the evaluation process, such a small risk will keep your equity curve in control and still will allow you to grow it to profit targets. Hope it helps!
Education
by Yelli_trades
Weekly Quote | 7 Rules of a Consistent WinnerHello trader, here's a quote from the great book "Trading in the Zone". Hope you'll find some inspiration or maybe even practical advice here. I'm a consistent winner because: 1. I objectively identify my edges. 2. I predefine the risk of every trade. 3. I completely accept risk ($ risk, risk of not being right, not being perfect, being wrong, losing money, missing out, and leaving money on the table). If not - I am willing to let go of the trade. 4. I act on my edges without reservation or hesitation. 5. I pay myself as the market makes money available to me (take partials). 6. I continually monitor my susceptibility for making errors (emotional pain or euphoria). 7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them. Best Regards, Dima
OANDA:XAGUSDEducation
by Yelli_trades
2
Trade setups I would take and how to manage riskJust like this. Buy and sell limits above and below structure, as in the most recent highs/lows, with your TP in general being a return to structure. Brutally easy way to scalp and make money. Few more examples... This one shows where the stop loss might be. In general, I go with a 2/3 or 3/4 type rule, where I'll have a wide cluster of limits, then a gap, then a hard stop that closes all of them. Just in case. Your order clusters should be wide enough with this strategy that it almost never gets hit. Regular market movement should not be hitting your stop loss. That kind of behavior should generally be reserved for news events that catch you off guard. Now as far as actual risk goes, this is entirely determined by you and no one else. There's no single correct way to do this. A lot of people are dead set on the idea that you should never risk 10% of your account, but how big is the account? Is it $10,000? Is it $100? If it's $100, why not risk $50+ when the odds of a loss are very low? On EUR/USD, you might have a hard stop loss of 50 pips with 15 tickets separated by 2 pips each. Each ticket would be 1k (0.01 lots). If 1 pip on a 1k is $0.10, then a 50 pip stop loss is $5. Your second ticket is 2 pips away, so that loss would be $4.80. Third $4.60, and so on. It's doable, right? Maybe the price dips 20 pips into your counter-trend limit cluster, eating 10 limits. Then the price returns to the support or resistance near your starting point, and you decide to close all of your tickets. The profits from that would be $2.00, then $1.80, then $1.60, and so on. That might not seem like much in comparison to the stop loss, but consider this: your stop loss will have a 0-5% chance of ever getting hit. It's straight profit. And it's constant, and consistent. I cannot stress that enough! You can be doing this all day long. So, what if you want to follow a trend in this manner? It's the same deal, really... just throw limit orders below (or above) trending wicks. Like this: It's all just structure. You bet with structure, and you bet against structure. At all times. You only require a 50% retracement from your starting ticket in order to break even. If you even feel uncomfortable with what's going on in front of you, it doesn't take much for you to get out safely and start over with a new cluster of limits. There is absolutely nothing wrong with closing out safely. You'll be trading so frequently you aren't even a little bit obligated to let things "play out". Maybe you don't like how quickly the momentum built into your cluster, and it retraces down to the 50% area so you wanna break even, but then you start laying more limits above and below because you believe that momentum is likely to slow down. I'm gonna tear down a phrase that I'm sick of hearing: the trend is your friend . The trend could be the worst friend you've ever had. Sometimes he's really cool, and he's the life of the party. But he really likes hanging out with you, especially when nothing is going on. He really likes to wait! He doesn't exactly value your time, and he's perfectly content sitting in a chair next to you watching paint dry. He smacks the remote out of your hand when you try to turn on the TV. This trend guy can be a real jerk sometimes. You also suspect he might be bi-polar, because sometimes when you get excited to do things with him, his mood shifts the moment you open your mouth and suddenly the fun has been sucked out of the room. That is the trend. On some pairs like USD/JPY, a trend can go on for a very long time, and there's a lot of money to be made. The problem is it is speculative . You don't know where that trend is going to end. Nobody is clairvoyant, and most people will make incorrect guesses. If you simply remove this requirement of speculation, where you have to be "correct" in your guesses in order to make money, you will do better in almost any market. If your goal in trading is to make consistent money, then the trend is not your friend. He's an acquaintance at best. You have to associate with him in business and that's about it. You spend just as much time associating with the counter-trend, because you should be doing business with both of them constantly. Now, on the other hand, if your goal is to invest (AKA gambling), that's a separate concept entirely. You're trying to grow a tree from a seed when you invest, and there's nothing wrong with that. But most people cannot live off of it. You can't even order pizza with your investments until they come to fruition. A trader can make consistent money every single day, without knowing or caring where the market is going or what it's going to do. Price continues trend, price retests, trader makes money. Price reverses, price retests, trader makes money. That's it . No waiting for retarded "key support levels", no waiting for "confirmation", no speculation, no technical analysis. Just raw risk management, getting in and out of the market quickly and constantly. Now, the one downside to being this kind of trader is you generally can't do this easily with the basic tools provided by your platform, meaning you would need scripts, EAs or whatever in order to quickly deploy limit clusters. The tool I'm working on allows me to drag a horizontal line on the screen, and I have a panel of buttons that do interesting things. I can click "Sell limits" and a whole bunch of sell limit orders appear just above the line. I can move that line again and click "Adjust TP", and the take profits for all of those orders will appear right below the structural retest point I'm targeting. I have buttons to close profits, to close pendings, close all tickets... it's just the bees knees. This is an MT5 EA, which most people won't be using, but I trade on CryptoAltum so that's what I use. I will leave it here for free. Lastly, have some limit order porn. Every single rectangle is a place where you could've had limits that got filled and made money. On really strong trends, you might notice that the retracement only returns to around the 50% point of your limit cluster, but you'll notice how uncommon that is and how easily you could've gotten out with little to no loss. A lot of the time, I won't even restrict myself to structure (swing highs and swing lows) even though that's the most reliable way to do it. I'll literally just put limits above and below any wick because I feel like it and I can make a profit in all likelihood. ...Anyway. I hope you enjoyed this write-up. Leave a comment if you did, or have any questions!
Education
by WinkleTrades
The easiest way to make money tradingI'm going to show you one of the simplest, and most effective ways to trade. Period. Just about every other type of trading is speculation; this is not. This is making money regardless of where the market goes, and you don't even have to have a clue as to what the market is going to do next. I repeat: you do not need to know where the market is going to make money . In these pictures, every rectangle represents a cluster of small limit orders getting filled, with the anchor point (starting place) being a wick rejection. That's it! You'll notice that in almost all of those cases, the retracement from the limit block exceeds 100%, meaning 100% of the limit orders in that block are profitable. You only actually need to see the price retrace by 50% of that block to break even. This is why I laugh when people say "the trend is your friend". The counter-trend is your friend too. The market is your friend. You don't have to know where the price is going, and you can make money in either direction as long as you're placing your limit orders in a way that goes with the flow. You're trying to capitalize on liquidity 100% of the time, and liquidity is really, really common. You can literally place trades based on every single candle if you want to! If there is a wick, you can trade it. Even if you're wrong, having tiny limit orders spread out through a cluster based on that wick means your hard stop loss would be hit rarely. You should still definitely have a hard stop loss, just in case a doomsday scenario comes. So imagine you have a $2000 account. On a 1k (0.01 lot size), 10 pips is $1. Let's say you have 100 limit orders, separated by 1 pip each. 50 of your limit orders get hit, and then the price retraces by 50 pips. Given that your average entry point would be 25 pips (the halfway point), you would have made 25 pips profit on a 50k, meaning $125 profit on a very high probability trade. In those pictures, even the big moves don't hit all 100 of your limit orders, not at once. Not even 50 all at once. I'm not saying that doesn't happen obviously, but the probability of it happening is very low in relation to how frequently you'd be making profitable trades. So what you do is you either commission a script or write your own to deploy all these limits very quickly. I'm currently having one commissioned for me in MT5 which works very well. I can drag a horizontal line that serves as an anchor point, deploying x amount of limit orders with y distance between each other, z order sizes (0.01). I can even have them all share the same stop loss and take profit, or have SL/TPs a specific distance from each individual ticket. I'd show this stuff here, but TradingView doesn't like pictures coming from the outside. If you use metatrader 5 and would like my tools, feel free to message me. I'm not sure if I can edit this later, but I hope I can... I tend to rethink things a lot and hate having to finalize something. Anyway. I hope this helps.
FX:XAUUSDEducation
by WinkleTrades
10
Guide To Trading USDCADIf you are an investor interested in any currency pair during NYSE trading hours, the USDCAD should be among your priorities. Ranked among the top 5 most traded currency pairs on the platforms, the USDCAD represents a significant volume in Forex trading. Such a pair offers excellent profitability possibilities because the daily trading volume is considerably high. Learning about the technical and fundamental aspects that make this currency pair move price is a must for successful trading. Essential information related to the USDCAD. Once you acquire the knowledge, you will put it into practice and profit from it as soon as possible. Fundamental aspects Like other pairs in the FOREX market, the USDCAD is firmly anchored to international commodity prices, especially oil. Canada and the United States are among the countries with the highest oil production levels in the world. In addition, Canada’s leading oil export destination is the United States. Therefore, a rise in oil prices will hurt the US dollar and positively affect Canadian dollar. Conversely, if oil prices fall, the pair will tend to rise. Canada is also a significant exporter of materials and commodities, such as wood, grain, and minerals. Being so close to the US has strengthened the import/export industry in Canada. In addition, it helps the currency maintain a stronghold in the foreign exchange market. Changes in interest rates and policies to help increase the employment rate are other aspects to take into account. The announcements are made by the Central Bank of Canada and the Federal Reserve of the United States. Changes in interest rates and policies targeting the increase in the employment rate are other aspects to consider. These announcements are made by the Central Bank of Canada and the Federal Reserve of the United States. The essential thing in this aspect is to be attentive to the dates when they will meet because, during those days, the volatility of the USDCAD pair increases considerably. Because they are firmly related economies, data on economic growth (GDP), industrial production (PMI index), and consumer demand for goods are highly relevant. As a result, it can cause significant volatility spikes in the pair. Profiting from the wrong policy decisions of some countries is possible. One of the examples is the fall of the US stock market and real estate market in 2008. In addition, the banks’ recklessness in lending non-stop throughout the 2000s resulted in a crash. However, Canadian banks were spared because they did not follow the same policies as American banks. Different strategies can be applied based on technical analysis since it is a very liquid pair, especially during the hours of higher volume. Typically, during the opening hours of the NYSE, a more significant number of transactions takes place, thus increasing the volume in the pair. Canada and the United States have different economic structures. While Canada leans toward more liberal economic policies and strict immigration regulations, the US depends on the economic boost of educated and talented immigrants to enhance the workforce. The USD benefits from a much larger volume of trading activity, as well as the presence in virtually every primary global industry. It may seem that the US and Canada are very different. Still, their geographic proximity helps traders, making trading USDCAD easy. Performing back testing and analyzing all the aspects we have mentioned will give you a better view of the market and increase the probability of success in your trading.
Education
by Anbat
8