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Risk Management

The Iceberg Illusion of Success in Trading 🏔️ When people see a consistently profitable trader they do not consider all the costs a successful trader has paid overtime (below the surface) to get to what they see (above the surface). So many things happen below the surface that nobody can see. Here are some of the below the surface things that compose the top of the iceberg that everyone sees: 🔰Dedication – you need to be loyal to your dream of becoming a pro trader. Your belief must be that strong so no one could dissuade you. You need an iron discipline to make it happen. 🔰Hard work – you should work day after day not letting yourself give up. Charts must be in front of you as much as it is possible. Trading terminal must become your best friend. 🔰Good habits – follow your trading plan, do not break your rules of risk management, avoid FOMO, etc. This is the set of habits that will be your satellite in your trading journey. Do them consistently and they will become a natural part of your life. 🔰Disappointment – it does not matter how hard you try. Occasionally things will fall apart anyway: you will face losing streaks and a strategy will refuse to work. It will hurt. "Stand up straight with your shoulders back". Treat disappointments as temporary things. 🔰Sacrifice – to become a consistently profitable trader you should pay the price. Losses, time, nerves. Your prosperous future will have a tremendous cost. 🔰Failure – while you are learning how to trade you will inevitably blow a couple of trading accounts, you will spend time on strategies and techniques that do not work. Occasionally you will fall. If so, stand up and keep going. 🔰Persistence – keep doing what you are doing no matter what. Do not let others persuade you that you can't make it. Even if things get tough, stay strong. 🔰Focus – always know what is your end goal, know where are you going, and what is your end destination. 🔰Flexibility – be prepared for sudden changes in the environment. Keep your focus on the goals that you set learning to adjust to the changing circumstances. 🔰Consistency – you will not get the desired results immediately. Be ready to do the same again and again, hundred times until the goal is achieved. Overnight success does not exist. If you want to become a consistently profitable trade be prepared for years of struggling and pain. And do not be afraid, it is worth it. ❤️Please, support this idea with like and comment!❤️
BITSTAMP:BTCUSDEducation
by VasilyTrader
15
Know When to Stop Trading⛔️ ✅Today we will talk about one of the most important things in trading, about what most traders around the world cannot do, even though they are well aware of the need for these actions. It will be about suspending and completely stopping their trading activities. ✅What to do if the trading system has failed, the market has changed, emotions fail or something has gone wrong. It is in this situation that the rules of action in extreme trading situations come to our aid. 1️⃣Three shots and you're dead — the rule of stopping trading within a day 🟢The main essence of this rule is contained in the title. And its essence is to stop trading if 3 consecutive losing trades were made during the trading session. No more deals are opened on this trading day. The trader has received a clear signal that something has gone wrong and the problem is either with the strategy or with the market or with the trader. 🟢Especially psychologically strong people who are sure that they will not be drawn to recoup, can continue to monitor the market, but it would be better to just close the trading platform and do something else, and after the trading session to analyze and find out what the problem was. 2️⃣Three volleys and you're dead — the rule of stopping trading for 2 days 🟢This rule is quite simple in formulation and just as complex in execution, in fact, as all the rules of risk management and capital management. 🟢If the three-shot rule has worked for three days in a row, then trading stops for 2 days. The principle is the same as in the previous rule, but in this case, the trader receives a signal that the problem is more serious than originally thought and it will not be possible to simply wait it out, serious measures need to be taken to analyze and correct the situation. 3️⃣The 30% trading capital rule 🟢If 30% of the trading capital was lost during trading, then trading stops completely until the moment when this loss is made up in any other way (of course legal). This rule will help to save your main working tool — trading capital and will allow you to relieve psychological stress because the trader will come out of a stressful state and realize that he has other ways of earning income, i.e. trading is not conducted with the last money. ❗️Observing these 3 simplest rules of stopping trading, you can be sure that you will never lose your deposit and even in the worst case scenario you will always be able to stop and beat the excitement that pushes many traders to return to the market again and again until zero remains on the account.However, all of the above is true only under one small condition — all three rules are strictly observed ❤️ Please, support our work with like & comment! ❤️
OANDA:XAUUSDEducation
by UnitedSignals
7
IGNORE THE NOISE AND NEGATIVE EXTERNAL ENERGYTrading is a one big system that consists of various different components: technicality, psychology, money management and so forth. The most difficult one out of all the elements is definitely psychology. Human psychology is a perplexing system that studies our mental process and behaviour. Our behaviour and mood rely on multiple internal and external factors. In our everyday life, our behaviour towards something can easily change when being affected by negative energy. The very same principles apply to trading. Our decision-making process can easily get fogged and mood get ruined after experiencing some losses, opportunity misses and so on. Even worse, our desire and will to keep trading and striving for success can get intercepted by some negative opinions and attitiudes of surrounding people. It is totally acceptable to live a life that others do not understand. If you want something really bad, nothing can get in your way and stop you from achieving it. Block all the negative energy. Keep prospering, working towards your ambitions, and proving all the people that did not believe in you wrong! Investroy
BITSTAMP:BTCUSDEducation
by Investroy
19
What Traders Want vs What Traders Get"It is a marathon, not a sprint". One of the statements that perfectly describes trading. But what does this proclamation really mean? I quote William Shakespeare: "Go wisely and slowly. Those who rush, stumble and fall". Great things take lots of time. 90% of all people get false expectations about trading before they enter the industry. They think it is a "get-rich-quick" scheme. In reality, it takes months/years of practice, hard work and experience to reach the doors of consistency and profitability. Furthermore, consistency in trading does not necessarily imply that every trade will be a winning one. It just indicates that if you keep following your trading plan, be risk tolerant and disciplined, you will be profitable and successful in the long-run. We encourage you all to be patient and just ride with the trend as there is no need to rush anywhere. After all, Rome was not built in a day. Hope you all enjoyed this quick educational and informative post! The purpose of this publication was to give you all some guidance and keep you motivated so you can continue your journey to the top of the mountain. If you have any more suggestions and recommendations on what our next educational idea should be about, feel free to let us know in the comments section below. Investroy
BITSTAMP:BTCUSDEducation
by Investroy
19
HOW TO use asymmetric compounding 🧐📈The pair in question and four winning trades allows me to cover a subject I've wanted to touch on. That subject is asymmetric compounding. Asymmetric compounding is a money management strategy that can accelerate the equity curve of an account. But you need the right strategy and data available to back up using asymmetric compounding. Higher the win rate the more asymmetric will work wonders on that equity curve. In simple terms asymmetric compounding is best suited to strategies with higher win rates as you need consecutive wins to make it work. The main reason for using this NZDUSD chart is the four winners in a row make it easier to explain the concept of asymmetric compounding. You traders should know the full ins and outs of your own strategies and if this can be applied. It's not just win rate also RR along with max losing and max winning runs need to be factored in. For this example on the four winning trades I am explaining the concept basing it on risking 2% per trade on the initial trade. As this strategy is a 1:2 risk reward strategy risking 2% sees us gain a profit of 4% on one winning trade. This is where you can then use asymmetric compounding on your next trade. Instead of risking 2% again you now risk the 4% gained from the previous trade on this trade. If the trade goes on to win the 4% risked on that trade has just earned 8% in profit. At this point you go back to risking 2% on the next trade until you have a win and then risk the 4% gain from that winning trade. The chart shows four winning trades at 1:2 RR so lets test the concept in numbers. If we was to risk 2% per trade on a £1000 starting capital account the results are as followed. Trade one 2% risked 4% gained= £1040 capital. Trade two 2% risked 4% gained= £1081.60 capital Trade three 2% risked 4% gained= £1124.86 capital Trade four 2% risked 4% gained= £1169.85 capital Now if we apply asymmetric compounding to the same trade sequence staring back at original 2% risk after two winning trades Trade one 2% risked 4% gained= £1040 capital. Trade two 4% risked 8% gained= £1123.20 capital Trade three 2% risked 4% gained= £1168.13 capital Trade four 4% risked 8% gained= £1261.58 capital Using asymmetric compounding on these four trades see a capital increase of £91.73 more than just risking a flat 2%. Below is an example of using a 1:1 RR strategy risking 1% per trade. If trade is a winner then risk 2% on the next trade which is the profit and the risk from the previous trade. # If that trade wins go back to the intial 1% risk then risk 2% again if that trade wins. This is a great concept to grow small accounts or even pass funded challenges as with the trades shown on the idea chart you would pass most prop firm challenges in two trades using asymmetric compounding. However I can't stress enough you as the trader need to know you own risk appetite for this. You also need to factor in how good your win rates and how often your strategy has seen winning runs that would benefit this concept. One way to found out is to back test and forward test your strategy to see how asymmetric compounding could work for you. Thanks for taking time out your day to read over my idea. Ill see you on the next one 👍 Darren
Education
by pow_removetheguesswork
How to continue in trading during uncertainty timeHello traders: Recently I received many messages from traders about taking many losses during this uncertain time. What's going on globally right now may have a different impact on all the different markets. Many have told me of your frustration, stress, and negative emotion on losing money and continue to feel defeated. Today I will explain a few things that you can implement into your current trading plan, approach and perspective during this period of time. First, you must acknowledge risk management. Too many traders ignore this key important aspect of trading. Especially during this time where the market can be volatile and irregular. It's in your best interest to understand how to manage your risk. You should have a plan that lists out how your approach would be. For example for my risk management right now: -1% per trade of account capital. -No more than 1 trade on the same currency, unless the first trade is secure in profit. -No more than 2 trades open during a day, max drawdown 2% per day -10-15 trades per month -3 trades maximum per week -Minimum 3:1 RR allow before entry -Will Take profit on average when in profit 3:1 RR. Second, learn to control your mindset and emotions. More often when traders approach me these days, they are telling me they are taking too many trades, chasing profits and revenge trading their losses. All these arise from the mistakes of FOMO, get rich quick mindset, enter multiple trades. IF a trader can truly understand the fact that the market will always be there tomorrow, next week, next month..etc, then it's an easier thing to deal with on a psychological level. You will no longer stress about trying to enter too many trades, worry that the market may not be available tomorrow. Third, less social media exposure. In today’s world, unfortunately in trading, most of the things you see on social media are fabricated and fake. Their sole purpose is to sell you a dream, lifestyle, and easy money concept. ITs always during this uncertain time, you will see more and more of these “gurus” who will show you how much $ they made during this time. Now, I am not saying all are fake or scam, I am sure small # of them are doing well. But, most of the things you will see in your social media feed, are likely to be photoshopped, faked, fabricated to make you believe whatever you are doing is wrong, and you tend to “compare” your result with these people. This ended up becoming very negative and stressful to continue. ITs important to understand trading is one of the toughest professions out there. IT requires so much emotion control, clear mindset, and proper psychology on a regular basis. If you are struggling, it's usually not to do with your trading strategy, but rather your approach, perspective, and perception. So, eliminate as many unrealistic things you might see, and focus on yourself and your journey. Any questions, comments or feedback welcome to let me know. Thank you
Education
by jojofang0901
38
Stop Loss hunting: the whole truth and the logic behind itGood time of the day, dear TradingView family! Welcome on another educational post by Investroy. Today we are gonna be talking about Stop Loss hunting. We will scrutinise what it is, how it happens and what's the logic behind it, and how to possibly avoid being "liquidated". Have you ever had the price trigger your Stop Loss before impulsing all the way to your Target Profit and hitting it? If the answer is yes, then you have probably been a victim of Stop Loss hunts. But what is Stop Loss hunting? In simple terms, it is a strategy that forces some participants out of the game by driving the price to the level where they have set their Stop Loss orders. As we all know, retail traders always look for some sort of confirmations before entering a position. It can be a candlestick pattern, a moving average cross, a double top / double bottom formation and so on. They enter a position and set their Stop Loss a few pips above/below the local supply/ demand level . What happens 90% of the time is the price spikes up/down, hits the Stop Loss, liquidates so many positions and participants from the trade, and then continues moving alongside the trend. Why does it happen? Institutional traders know exactly what they need to do and which levels they need to buy/sell. Consequently, they set their buy/sell limit orders at places where they know retailers would set their Stop Losses, because they need to generate liquidity before jumping in the train. It does not necessarily signify that they track where retailers put their Stop positions, it is just they are more than sure which levels are crowded with Stop Loss orders. We have prepared some examples in order to better elaborate on the issue and scrutinise how the case looks visually. Of course, these are only simple exemplars. It does not unquestionably mean that the price will always behave this way as the market conditions change quite often. Looking at Example #1, we can see that the price spiked above the level of the right shoulder of the formed H&S pattern before continuing its downside movements. Now, which action do most retailers take once they spot these textbook patterns? They execute right away with their Stop Loss above/below the structure, which results in the positions getting wiped out. Example #2 shows how the price spikes below/above obvious levels of support/resistance before continuing movements in the deliberate destinations. Example #3 illustrates how obvious ascending/descending/sideways channels are, and how easy it is to get liquidated instantly, before the price carries on moving in the destined end. How to avoid being eliminated? Well, you won't always be able to run away from Stop Loss hunting, but if you develop a proper working strategy against it, you will be able to identify possible zones filled with Stop Loss orders and avoid setting one around that area. If you are not gonna think long and hard about where you are gonna put your Stop orders, you will easily get eliminated in a sea of Stop Losses. Thus, think outside of the box and have patience before jumping in a particular trade. Hope this educational idea is useful! If you have any comments or enquiries, do not hesitate to ask in the comment section below. Also, if you want us to make an educational post on a topic that interests you, feel free to drop your recommendations and suggestions in the comment box as well! Have a great rest of the week! Investroy
BITSTAMP:BTCUSDEducation
by Investroy
16
Why Do You Need a Trading Plan?📝 If you want to become a consistently profitable trader you have two choices: 1️⃣strictly follow your trading plan or 2️⃣fail. Trading plan is essential for achieving your financial goals. It is a set of actions to follow for making trading decisions guiding you on how to react to certain events. It reflects your personality and characteristics. Moreover, its entire structure and content are primarily based on them. Your way to success will be full of obstacles. A lot of things will come in your way: losses, drawdowns, and losing streaks; mistakes, scams, and emotional decisions. Only your trading plan will show you a correct path, it ensures you will stay on track on your journey to your desired destination. When you make a wrong turn, it knows to make adjustments, and it points you back in the right direction. It is your guard from making any hurried decisions you could later regret. Trading without a trading plan wouldn’t be a smart idea. You wouldn’t know how to get to your destination and it’s highly likely that you get lost. Most importantly, if you suck at trading (and you certainly will in the beginning), you will know it is down to one of only two reasons: either there’s a problem in your trading plan or you are not sticking to your trading plan. Stick to your plan traders. "If you fail to plan, you plan to fail". ❤️Please, support this idea with like and comment!❤️
BITSTAMP:BTCUSDEducation
by VasilyTrader
23
3 Bar Inside Bar Trading StrategyBullish Example (Chart) Learn the 3 bar inside bar strategy or harami bar setup. Always trade during high liquidity and volume times of the session, which is end of Tokyo to end of London (12 hours). Look for all patterns to trade at resistant and/or support areas, which are at quarter theory lines on charts (see orange lines on charts). You can you tube or google Quarter Theory, for more information. This is one of the best strategies to scalp, day trade or longer on 15 minute or on higher time frames.
Education
by Anbat
3
Bearish Pressure Zone (3 Candles In Row With Upper Wicks)Chart example is of a Bearish Pressure Zone: 3 consecutive price bars with upper wicks (VERY strong/either bearish or bullish setups) Note: Make a zone from top of highest wick to top of highest close with one of the consecutive wicks, this is what you use as you risk or initial stop loss. Price Action is not about price, but more importantly about decisions other traders/big banks are making related to price action. Half of Forex trading is psychology (see Mark Douglas- You tube or google him)- might even read and/or buy his trading books. Wick Psychology: When we have three consecutive bars with overlapping lower or upper shadows, the traders undergo the same emotional cycle three times, all within a compact price range. But these wick bars can be in close area of each other, they do not have to be three in a row, see bullish pressure zone on the attach chart for an example.
Education
by Anbat
Elements Of Candlesticks (You Need To Know)Each Candlestick consists of four important elements: 1) The Body- Large bodies equals more liquidity and more volume involved in candlestick, smaller is other side which is smaller liquidity and volume. 2) The Length Of The Wicks- Larger wicks equals higher or lower rejection of price action, from the other side. Example: Pin bar candlestick at top of a bullish run up equals bulls are losing their strength and bears are starting to get control over current price action. 3) The Ratio Between The Body And The Wicks- Example: Doji or indecision candlestick generally has around same length of upper and lower wicks and bodies are small- so both bears and bulls are at a stand off with each one not winning at the moment... sideways price action. 4) The Position Of The Body- Look to left, what do you see? Where are the quarter theory lines on charts- you can plot all xxx000, xxx250, xxx500 and xxx750 lines which are the standard ones to either highlight or be aware of on any chart you trade from. Did current body make either a pin bar candlestick pattern, harami candlestick pattern or an engulfing candlestick pattern? You need to know that 12 hours a day in Forex is high liquidity and high volume times: End of Tokyo to End of London, this is when most big moves happen. You can google or YouTube more on Quarters theory which I strongly advise you implement in all of your trading, specially in this choppy price action. Do not be greedy and protection your profits- risk management is always #1. Understand each pairs ATR, lot size , pip value so you can only use 1% to 2% of account per trade, if you slowly grow account using compounding in Forex trading and be a successful trader. Good luck and Good trading.
Education
by Anbat
Busy Signal - Gamblertrading is not gambling and gambling is not trading , but like expert gamblers the best traders must think of trading as a numbers game and probability to produce consistent results. Probability may suggest inconsistency but it can still produce consistent results over a large sample of trades if the edge is good enough and is applied consistently. there is no such thing as ''prefect science'' in trading but there are occurrences in the market that are critical to understand and these can only be discovered by research and experience. It just takes practice and a lot of screen time to master this art, so be patient, your mind and eye need training, and lots of screen time till it becomes second nature to you. “"Easy money" means only one thing when it means money that has come easy: It means money goes even more easily than it came.” Edwin Lefevre
TVC:USOILEducation
by currencynerd
1
Being a weekend trading warriorYour results on Monday will be influenced by the work that you do on the weekend, specifically Sunday. As an intraday trader I constantly think about my trading. Here are a few points which every trader should focus on, 1 - Mapping our mental weaknesses We all have mental challenges, some of us have a lot of FOMO, while others oversize and over trade, you know what is holding you back as a trader... FIND IT AND WORK ON IT! 2 - Reviewing trades (winners & losers) Search for the plays where you can add size, search for patterns that you can exploit next week, review your best trades. What trades worked best for you? more of these on Monday. What trades are not working for you? Eliminate them. 3 - Checking for key levels & patterns The best in every industry practice and train... yet probably 90% of traders never really do any kind of practice, they search for a strategy and then cannot wait to apply it to the markets... real traders work on their trading hence they create REAL SKILLS!
BITSTAMP:BTCUSDEducation
by PrimedGroup
5
The Journey of a Trader 🛣🚶 Hey traders, Why 95% of traders fail? In this post, we will discuss the trader's road to success and why most of the traders give up at the halfway point. On the chart, I was trying to portray the journey of a trader: most of the traders start this game with gambling. They randomly buy and sell the market relying on their intuition and with a high degree of probability end up with nice cush.💰 However, as they proceed they realize that the profits that they made were the product of luck, not skill. 🍀 The more they trade, the less they win. At some moment losing trades start to outperform winners. Trying different things, jumping from one strategy to another, one comes to the conclusion that nothing seems to work.🙅‍♂️ He goes broke, he is panicking. At that stage, the majority blame the market for their failure. Forex, stocks, gold trading is complete scam. Making profits on the market is not possible. They give up and leave.👣 Only 5% are persistent. Only 5% are blaming themselves not the market for their failure. They start following a strict trading plan, they follow risk management recommendations of pro traders and at some moment they start making 0.📝 Buying and selling the market, at the end of the day, they don't lose anymore. That is the most important milestone in a trader's journey. Realizing that the one stopped losing, a trader starts polishing and improving his rules in order to achieve better results. He trains and works with his psyche.💪 After years of struggling, one finally contemplates a consistent account growth. He became a pro trader.🏆 I wish you to be persistent, traders and don't give up. Patience pay and at the end of the day winners win. ❤️Please, support this idea with like and comment!❤️
BITSTAMP:BTCUSDEducation
by VasilyTrader
252
The Power of a good Risk-to-Reward ratio. Reality of tradingRisk Management, alongside with discipline, experience and skillset, is one of the keys to unlock the doors of successful and profitable trading. As it can be inferred from the table, even with as low as 40% win rate, it is more than possible to stay consistent and make nice returns, as long as risk management principles are followed. *We used 30 pips Stop Loss and 60/90/120 pips Target Profits as a projection. It does not necessarily signify that 1% risk equals 30 pips Stop Loss, as different pairs have different pip values, price differences etc. Moreover, we determine our Stop Loss based on the amount of capital we are willing to risk on a particular trade, price action, intuition and other factors.*
BITSTAMP:BTCUSDEducation
by Investroy
19
Finding Effective LeverageKnowing the link between leverage and equity is important. Now, you have to decide how much you are willing to risk and set your trading capital accordingly. To find effective leverage, consider two inputs: trade size and equity. Use effective leverage of 10:1 or lower. Only risk 10% or less of your account balance at any given time. Add the cash value of your entire exposure to the market (all your trades), and never let that amount exceed 10 times your equity. To calculate leverage of a single trade, divide your trade size by your account equity.
UEducation
by francisrv
Things you should consider in trading to make it as a career Hello everyone: 6 points I like to share on what you should consider in trading to make it as a career. 1. Trading is not a get rich quick scheme Contrary to what social media, scammers, fakers and fake trading gurus want you to believe, trading is NOT a get rich quick scheme. Those who believe such usually end up over trading, over leverage, blow accounts and give up. (Trading is actually a reasonable method to yield money return. It is how consistent traders make a return on their original investment/deposit with proper risk management, strategies and methods. ) 2. Technical/Fundamental Analysis dont work all the time. Trading ANY sort of strategy, method or style will always have a percentage of failure and losses. Its probability, not right or wrong. The main goal in trading is to make sure you have proper risk management, good Risk:Reward ratio, and look for consistency, sustainability in the long run. (Sometimes traders blame their strategies, method, style, mentor and other things due to their trades not working out. Not trading strategies can yield 100% strike rate, if there is, there will not need any risk management, and anyone trader should get rich) 3.Limit your risk per trade Proper risk management is super crucial to a trader’s success. Many traders often risk way more than their accounts can handle, after all what's 10%-20% of a $100 to many people ? But would you risk 10-20% on a $100,000 account ? and lose $10,000-$20,000 in one trade ? (Too many new traders deposit a small amount of money hoping it can double and double and double. But they often over risk, over leverage the account. The result is it only take a few trades to totally blow the account up.) 4.Must use stop loss It may have worked out for you a few times where you remove your SL, and the price reverses and you close with profits. But what if the price goes against you more and more? Can you stay mentally sharp enough and continue to hold the trade when the losses pile up more and more ? You more likely can not, which will end up resulting in a margin call and/or blow the account. (In the past I had a trader who approached me and showed me his losses on OIL where he removed his SL and price continued to go against him. IT has come to a point where he reaches margin call, and the broker actually open opposite positions to “hedge” his losses) 5. Don’t over analysis and combine multiple trading strategies, methods and style Over analysis and complicating your charts may lead to confusion and is not necessarily efficient. Most trading strategies do work on their own, but when combined with so many other strategies, it creates conflicts, contradiction and confusion for traders. (Often traders combine too many random indicators, S/R, trendlines…etc all on one chart. It makes it hard to analyze, and have a bias of the direction of the market) 6.Always use a top-down analysis approach. Multi-time frame analysis is key. Always start from the higher time frame to the lower time frame. The higher the time frame the stronger and noticeable the price action it is. Understanding a higher time frame can give you a possible direction and bias. While the lower time frame will be your confirmation and entry. (Have seen many new traders jump onto the 1 min chart to trade. While there are successful scalpers with proper years of experiences, good trading psychology and emotion, most newcomers will not be able to handle the stress and pressure from it. ) Don’t give up
OANDA:XAUUSDEducation
by jojofang0901
35
Don't put all your portfolio in a single trade -why?I was reading about maths and came across this very nice explanation, that we can apply to especially trading and also to investing in a very obvious way. We all know and are told not to put it all down to a single trade. Too risky. Crazy. But you can bet it all and get rich! Well, just look at these numbers below: [adapted from towardsdatascience.com ]. Imagine that we are playing the following game: I use a random number generator to produce a number. If the number I generate is greater than or equal to 40, you win (so you have a 60% chance of victory) and I pay you some money. If it is below 40, I win and you pay me the same amount. Now I offer you the the following choices. We can either: Game 1 — play 100 times, betting $1 each time. Game 2 — play 10 times, betting $10 each time. Game 3 — play one time, betting $100. Which one would you pick? ... ... ... Outcome Distribution of 10,000 Simulations for each Game: (this is a super-crude and inexact approximation to the plot you can see on the website I linked above, but you see the gist). The "---" are the 100$ 1-time bet, followed by the 10$ 10-time and the 1$ 100-time ones. (ignore the plot frame, just look at the text box within the plot. This was the only way I could figure out to introduce formatted text in this post!) Seeing this, now which game would you pick? Game 3 offers the chance to win big money, and to lose it all, at a flat 60% chance of winning. In Game 1, however, you win less money, but look at the consistency... you traded 100 times and you make money in 97% of them (believe the numbers, otherwise check the above link)! Note that this example assumes a 60% winning chance, so you are not opening a position at random but based on indicators that increase your chance of a win. You can run your own numbers for a 50% winning chance. Happy trading!
Education
by molbioinfo
1
Engulfing-Harami-Pin bar (only setups you need to trade)Only Three Candlestick setup you need to totally understand to trade Forex - Successfully!!! 1) Engulfing- An engulfing pattern is a 2-bar reversal candlestick pattern. The first candle is contained with the 2nd candle. A bullish engulfing pattern has a red candle engulfed within a green candle. A bearish engulfing pattern has a green candle engulfed within a red candle 2) Harami- The Harami candlestick is a Japanese candlestick pattern that comprises of two candles which indicates a potential reversal or continuation in the market. The word ‘Harami’ is derived from the Japanese word for ‘pregnant’ which is representative of the Harami candlestick pattern. The Harami candlestick pattern can signal both bullish and bearish indications as charts notes. 3) Pin Bar- The pin bar is a candlestick pattern that has a long tail up or down and represents the price rejection at support or resistance level in Forex trading. The pin bar is the most powerful and effective candlestick pattern in technical analysis. It gives a reversal signal but there are many other ways too to use pin bar in technical analysis like it is also used to draw SR flip level. If you thoroughly understand how to trade Engulfing, Harami and Pin Bar candlestick setups on 1 hour or higher is better- you will succeed in Forex. Always trade Price Action (just chart price) and maintain proper 1% to 2% risk management per trade (use total of trading account)- then you can set stops, lot sizes and targets of trade. Good Luck!!! Keep trading Forex trading as simple as possible- no need to complicate this endeavor. Look at quarter levels on charts or ex: 000, 250, 500 and 750, as noted on chart 000, 0000 and 500 were great levels of these candlestick patterns and reversals. Have Plan & Trade Plan.
Education
by Anbat
1
Your Trading Style and Holding Period ⌛ ⌛ ⌛ How long to hold your trading position? Everything depends on your trading style. In this post we will discuss the preferable holding period for your trading positions. First, Let's define 4 main trading styles: Scalper, intraday trader, swing trader and investor. One of the core differences between these styles is the time horizon of their predictions of a market behavior. 1️⃣Scalper attempts to predict minor price fluctuations. His goal is not to pursue the waves, rather a minor moves up and down. For that reason, pro scalpers tend to hold their position minutes, sometimes even seconds. Expanding the time horizon they are risking to be stopped out from their positions. 2️⃣Intraday traders operate on intraday time frames. They are trying to predict the price movements within a day or even a trading session. The average holding period of a pro intraday trader is ranging from minutes to hours. 3️⃣Swing traders are aiming to catch swing moves - the waves. Typically by a wave we call a trend following movement. Pro scalpers usually close their positions once the market starts retracing (correcting itself). Following such a strategy, scalpers tend to hold their trades days to weeks. 4️⃣In contrast to a swing trader, the investor does not care about the retracements and pullbacks. The investor is trying to pursue the entire movement within the trend. Usually he hold his position till the trend lasts and closes that only when the market starts reversing. Investors tend to hold their positions months, even years. Recognizing an average holding period is crucially important for a selection of your trading style. Which one do you prefer? ❤️Please, support this idea with like and comment!❤️
BITSTAMP:BTCUSDEducation
by VasilyTrader
24
Are Losing Trades Still Winners?Alright, before I show you the “light at the end of the tunnel,” we need to create a fictitious system so I can logically demonstrate my point. I want you to bear with me here— it may seem a little ridiculous, but trust me, there’s a solid point I’m going to make. Let’s face the facts here: It’s easy to blame the market and commiserate with other traders, but it’s a lot harder to think for yourself and look for the silver lining after a bad trade. I know, “Are Losing Trades Still Winners?” sounds like a crazy question, right? Read on and you may just find that it’s not really an irrational thought once it’s put into perspective. Let’s list some trading rules to start: 1. You can only trade between the hours of 07:00 a.m. and 10:00 a.m. (UTC) London 2. You can only trade with the current trend of the market (up or down) 3. You must base your entries and exits using only support and resistance 4. You must have had a good night’s rest (no trading on 4 hours of sleep) 5. You must be drinking a Coffee while trading (just to be ridiculous) Some trading rules to set for yourself, Right? I know, it’s a little silly, but what can I say? I like Coffee. For this example, we’ll use an unrealistic stop for the EURUSD of 10 pips Looks like we have a winner! You followed the rules by only trading during the established hours, you entered as the price breaks the support, you took the trade (SHORT) in the direction of the current trend, and your still in the trade right now as you hold trades over the weekend or youv exited at a round no level of 1.09 for a neat 1:11 RR come 14:30 p.m. , as planned (all while sipping your Coffee)! We’re good, right? Wrong: you broke a rule! By “widening” your stop, as you can see from the chart above the price surpassed your 10 pip stop loss set at 1.10200 reaching 1.10242 give or take a few pips (spread) before resuming the freefall, but hey your still in the trade or youv closed the full position for a healthy 110 pip gain, you violated one of your day trading rules; does this send you to the traders naughty corner? Well, this is a losing trade (there will be losses, sorry), but you stuck to your guns and you've even created an opportunity to learn from your loss. I’ll be honest here, a 10 pip stop on the EURUSD with as much volatility as there is these days isn’t only too tight, it’s not realistic. Do some back-testing and you may find that the initial break of your rules (adjusting to 15 or 30 pips) may be what you need to set your stops at to weather the volatility and stay in the trade. If this is true, then make it a rule and stick with it. For starters, I want you to know how important trading rules are and how important it is to stick to them. I mean, what if you widened the stop to, say, 50 or 100 pips and got stopped out?! You’d be mad at yourself! There is ofcourse different ways of deciding how many pips risk you are are happy to risk per individual trade as stop loss doesn't have to be fixed number you can adjust accordingly depending on the trade type/where price is when you reach your charts but this is an interlinked-subject that is beyond the scope of this idea Another reason is that you can take a bad trade where you did stick to your rules and learn something from it. Who knows? Maybe you can even improve your day trading strategy. Last but not least, your rules can help keep you on track. What if you did do the back-testing and you discovered that, more often than not, “that” particular rule held true? If that’s the case, why change it? After all, in trading, you’ll have some losses— it’s just part of the business. And remember: Don’t beat yourself up if you have a bad trade. If you stick to your rules, you’ve made the best decision you can. Give yourself an A! Stay cool, drink Coffee, and trade well. FX:EURUSD 👍
Education
by AdamsLibrary
8
The Only Proven Way To Success in Trading 🥇 Hey traders, Like any discipline, consistently profitable trading requires many years of practice. In this post, we will discuss the only proven way to become successful in trading. 🔰First, let's start with the axiom: there are no inborn traders, trading is a skill, a skill that can be learned. Though talent may help you in some manner it does not guarantee your success. One more axiom that is logically derived from the first one is the fact that trading is a complex skill. The one that can be split into dozens of subskills. Making that statement we may assume that our success in trading directly depends on mastering each subskill, each domain that it consists of. But how do we master these skills?🤔 The only way to do that is to practice. Practice means doing something regularly in order to be able to do it better. With your first attempts, you are doomed to fail. Inevitable you will suffer and you will feel miserable because of your incompetence. Trying and doing the same thing again and again, at some moment you will feel the progress and growth. Your perseverance will bear fruit. Knock, and it shall be opened to you. And as a consequence, with some attempt, you will feel that finally the skill is mastered, that one more stage in your journey is passed. Polishing the entire set of subskills and learning to apply that as a single unit will make you a consistently profitable trader. Just stipulate the domains properly, name them and be ready to work hard. ❤️Please, support this idea with like and comment!❤️
BITSTAMP:BTCUSDEducation
by VasilyTrader
20
Risk/Reward trade setups are more important than Win RateIf you told somebody new to trading that markets can only go in one of two directions, it would be natural for them to conclude that even a beginner could be right half the time. That’s not the reality because traders don’t make a binary up/down calls on their outright positions. What traders do is say, “I think it’s going to go up to point x (target) and in the process NOT hit point y (stop).” Markets do only go up and down, but the trades we place aren’t a binary call. Our target is “where we think the market will go” and our stop should be “I’m wrong if it hits this point.” It's not a binary decision, it is a decision on the direction and the amount of 'wiggle room' it needs on the way. Don’t Be Fooled by Trading Strategy Win Rate When novice traders come to the markets for the first time, they are bombarded with ads for magical trading systems offering extremely high win rates. It plays on the logical (but false) assumption that a higher win rate is always better. It ignores the cost of the higher win rate, what did we do to achieve it? For example, it's unlikely the S&P 500 Futures will ever hit 0.00, so you could go long S&P 500 over and over and have a 100%-win rate. In the process, you will no doubt sit in trades for extended periods with massive drawdowns. In the event of a market correction, you could quickly draw down $40-$50k per futures contract and sit in for years waiting for a recovery. A high win rate alone is not a measure of success. Should it be a goal? Not in absolute terms. Instead, a trader should chase a decent win rate relative to the break-even point of any specific opportunity. How Traders Think About Risk Reward Let's say you have an opportunity where you believe a price in the market is a key trading level. You think the market will rally higher from current prices 40 ticks. You enter the trade with a 10-tick stop. You risk 10 to make 40. Can you do this and be right every single time? Probably not but you could be right 50% of the time and make great money. This is where confusion creeps in. People associate a 50%-win rate with no edge, with a coin toss. In this example, our win rate is way above the break-even rate for this setup, and so 50% is excellent. It represents an edge. If you combine this with more active trade management, such as scaling into positions that go your way, you change the equation again. Your losers might be 2 lots but your winners 8 lots. This is of course what a lot of 'outright' proprietary day traders are doing — looking for an opportunity with a low break-even point, where they can beat the odds. They don’t care if the actual win rate is 40,50 or 60%. It doesn’t matter. Trading Strategy Win Rate and Run of Losing Trades One other important consideration is the ability to survive the inevitable run of losing trades. Let's say you use an artificially large stop to help achieve a 90%-win rate - an 8 tick stop and a 2-tick target. The moment your win rate dips below 80%, you will start to lose. Take 5 or 6 losers in a row, and you are looking at a drawn down account and the NEED to maintain a high win rate to stop the bleeding. Keep on down that road and the next thing you know they'll be calling you "the new Nick Leeson". Trader Takeaway The ability to exceed the break-even rate is where profits lie. Focusing on trading strategies with a low break-even rate will help you thrive and survive as a trader. BINANCE:BTCUSD 👍
BINANCE:BTCUSDEducation
by AdamsLibrary