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Risk Management

The Fine Line Between Trading VS Gambling - Important LessonHi Traders. This is the video edition of yesterday's workshop. I genuinely believe this is one of the very important topic that we MUST all learn - identifying the distinct differences between trading VS gambling. Recap Most Traders put way too much attention on indicators. Indicators are supposed to assist us with our decision making process, but if at any point you feel like some of the indicators are burdening OR paralyzing the way you make effective decision, then its probably time for you to eliminate them, At certain of your trading journey, you'll need to focus on subtraction, rather than addition. Novice Traders come into the market with the mindset of "I want to learn and know as many things as possible" , all they're trying to do is to absorb like a sponge. Experienced Traders understand that less is more. The more you know what's not for you, the better you perform, and the better you're at avoiding distractions. Do you really think anyone can be successful purely through knowledge and experience? and does knowing more means you're more knowledgeable? What is the true definition of knowledge? The way i define a wise person is when they understand what's good for them and what's bad for them. The secret of trading success lies in Principles. The way you create a plan, rules and principles, then execute them relentlessly. Remember: The fine line between a Gambler and a Trader, is a plan. Gamblers gamble without a plan, while Traders gamble (anticipate the future) by having frameworks, plans, rules, and principles.
OANDA:XAUUSDEducation
by TraderNeoh
3
The Fine Line Between Trading VS GamblingMost Traders put way too much attention on indicators. Indicators are supposed to assist us with our decision making process, but if at any point you feel like some of the indicators are burdening OR paralyzing the way you make effective decision, then its probably time for you to eliminate them, At certain of your trading journey, you'll need to focus on subtraction, rather than addition. Novice Traders come into the market with the mindset of "I want to learn and know as many things as possible" , all they're trying to do is to absorb like a sponge. Experienced Traders understand that less is more. The more you know what's not for you, the better you perform, and the better you're at avoiding distractions. Do you really think anyone can be successful purely through knowledge and experience? and does knowing more means you're more knowledgeable? What is the true definition of knowledge? The way i define a wise person is when they understand what's good for them and what's bad for them. The secret of trading success lies in Principles. The way you create a plan, rules and principles, then execute them relentlessly. Remember: The fine line between a Gambler and a Trader, is a plan. Gamblers gamble without a plan, while Traders gamble (anticipate the future) by having frameworks, plans, rules, and principles.
OANDA:XAUUSDEducation
by TraderNeoh
3
What is Forex and How Big It Is?💱 Forex - foreign exchange market, is a location where international currencies are bought and sold by economic participants at various exchange rates. Forex market is the biggest market in the world, reaching on average 6 trillion dollars trading volumes daily. Forex market is a vital element for a global economy because it provides capital exchanges between the countries. The main market participants of forex market are central banks, commercial banks, commercial companies, hedge funds and investors. 🕰In order to grasp how big is that market, take a look what is happening on that just in 60 seconds: 📎Total transactions value reaches 3.52 billion US dollars. 📎 1.15 billion dollars of spot transactions. 📎 1.65 billion dollar of exchange swaps. 📎 Total transactions value involving USD reaches 3 billion US dollars. 📎 Total transactions value involving EURO reaches 1.1 billion US dollars. 📎 Just one single EUR/USD pair accumulates 812 million US dollars transactions value. It is hard to imagine how such big amounts are rolling with such a frequency and how insignificant are the orders of individual traders. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
6
Boredom Trading Could Be a Killer To Your ProfitabilityMost of the retail Traders are mainly day trading. And one of the trickiest part about short-term trading, is the amount of screen time we're putting in VS the amount of action we're taking. On most days, i spend about 12-15 hours everyday sitting infront of the chart. only 15 - 30 mins of them are spent on clicking the buy & sell buttons. So if you do the math 30mins/ 720mins = 4.2% Only 4.2% of my time is spent on taking action, the rest of 95.8% are spent on waiting, planning, testing, reviewing, assessing, studying, etc... So now ask yourself a few questions: 1. How much of a portion of your time is spent on taking action? 2. How often do you over-trade OR revenge-trade? 3. How does impulsive trades affect your consistency? I believe the best Traders have the highest ability to sit with their hands. The ability to look at a high volatility market environment and say "no", and yet only focus on your plan should be the end goal of us as a day trader. There are countless of market opportunities everyday, but how many of them are meant for you?
KRAKEN:BTCUSDEducation
by TraderNeoh
2
Risk:Reward Ratio. What is it?Risk to reward ratio. What is it? What does it mean and how do we use it? Now, if you made it to the point where you're here on TradingView, there's a good chance that you have heard about Risk to Reward ratio. Today, I want to dive into what it really means and how to actually utilize it. I see so many beginners missing out on huge profits and opportunities because of their risk reward ratio and I want to share my knowledge of this tool and how to actually use it in the future. Firstly, let's dive into what is the risk/reward ratio? The RR ratio is a tool that can accurately predict by expected returns based off of previous results. This tool measures how much reward you are estimated to gain based off of the dollar amount you risk. For example, if you have a risk to reward ratio of 1:3, it means for every $1 you risk, you will gain a return of $3 in the event of a positive trade. Using the same example in the FX market, let's say you're risking 10 pips on EURUSD, your take profit is at 30 pips. This means you gain 30 pips in the event of a win, lose 10 pips in the event of a loss, giving you a 1:3 risk/reward ratio. This is a very powerful tool because compared with the win rate and in correlation, you can actually predict based off of your previous results, you're expected returns on investment. Being able to predict what you're expected returns are are great way of giving you milestone targets, but also when you're looking at getting funded with prop firms, you also know what you are actually able to achieve in what time frame. Now, it goes without saying, the higher your risk to reward ratio, the less you need to win in order to maintain profitability. The opposite, the lower your risk reward ratio, the higher win rate is required to maintain profitability. But this is where we get into where I find beginners struggle. A lot of people will base their strategies on their risk/reward ratios, which is understandable if you're building the strategy from scratch. If you're using a prebuilt strategy or something that doesn't really correlate with risk/reward ratio. Then it makes it obsolete and just confusing. Going back to my first point, risk to reward ratio is a tool that you can use to estimate future potential returns based off of previous results. Let's say you have 100 trades worth of data. You can accurately have a look at what is your risk to reward ratio is and compare that with your win rate. From there you can make a decision whether or not that is a profitable strategy. On top of that, you can then start to look to improve either your win rate and risk to reward ratio, knowing that that is an area that needs improvement. When it comes to improving your risk to reward ratio, one thing that always grinds my gears with traders, is when they enter a trade, they'll set their stop loss and take profits based on their risk to reward ratio not based on the actual analytics of the trade. While I understand this and with some strategies, this can work. For most, they end up setting those take profits in areas that is just realistically is going to be really hard for the price to get to. What professionals do when trying to improve the risks of reward ratio is only take those setups where a good take profit is viable around that level of risk to reward. For example, in this chart, we are looking at buying the USDCAD over the next couple of weeks. We like this setup. We've had our entry signal and we're going to place a stop loss below that recent low, which was created early last week. We are not happy with our risk to reward ratio. We think we're leaving too much profit on the table and want to increase our overall results. So I'm only taking trades that have close to a three to one risk to reward ratio. But as you can see by this chart that dotted lines are areas of resistance which we are going to have to break in order to achieve that level of profitability. There are 5 different zones we are going to have to get through in order for my take profit to be hit, it is fair to say the odds are not in my favor. Now a beginner Trader will still enter this trade with the same take profit and the same stop loss and just hold on. The reason they'll do that is because they want the 1:3 risk reward ratio. They don't care where the profit target is. What matters is it is 3 times worth what they're risking. On the other hand, A professional trader will actually either let this trade go and not enter it, or look for another entry point later on on smaller timeframes to where you can fit that risk to reward ratio and you're not going to hit the high levels of resistance. To sum up what my point is, risk to reward ratio is a very powerful tool to understand what you are capable of the trader and also where you can improve. It is not a valid take profit selection strategy. Yes, it can definitely help with guidelines on where to set your take profit, but it should not be the sole reason your take profit is set at a certain price just because it is X amount whatever you are risking. Have a look at what the chart is telling you and what your analysis is telling you. Then, only take the trades which coincide with the risk to reward ratio. You want to achieve. I hope you enjoyed this insight and I hope it was beneficial to you. I recommend highly diving into your previous trading data. Have a look at your win rate. Have a look at your risk reward ratio and understand what your profitability expectation really is and base your future decisions off of that data. Have a fantastic trading we can I look forward to seeing your comments. - Jordon
FOREXCOM:XAUUSDEducation
by the5erstrading
5
The mathematical model of Hugh Math IndexThe mathematical model of Hugh Math Index ✅ What is Hugh Math Index? It is a rule-based indicator designed to measure the overall growth of the crypto market by the market capitalization of passive investors ✅ Fund Manager 🔹 Mo'men Mohammad Jaradat ▪️ Institutional investor and developer of trading algorithms and investment research ▪️Has more than 7 years of experience in many financial markets ▪️ Worked on many scientific researches on financial mathematics and quantitative methods in investment decision making ▪️ He holds many professional certificates, the most important of which are EPAT, CFA, FRM ▪️ Previously worked with several research teams to develop machine learning algorithms for kaggle trading strategies ♻️ The main criteria for selecting the components of the index 🔰 Safety Standards ▪️The original must have more than 85 points by accredited security audit agencies 🔰 Liquidity Standards ▪️The asset must be listed on three central exchanges with a security rating of more than 7 points ▪️The weighted average monthly trading volume of the asset must be more than $100 million 🔰 Subtraction Criteria ▪️The asset must be publicly traded for a period of no less than 3 months 🔰 Exclusion Criteria ▪️ Stable Token ▪️Tokens (don't have their own blockchain) ▪️Coins under attack 51 ▪️ Coins that have litigations with the US Securities and Exchange Commission (SEC) ✅ The investment methodology has been designed based on numerous academic researches by an independent working team, Mo'men Jaradat. ✅ More details will be shared to copy the investment at the time of the launch of the fund.
CRYPTOCAP:TOTALEducation
by Mr_Jaradat
4
How to spot and avoid Stop Loss hunting: a complete guide Stop Loss hunting happens every trading day, and it's not something you would want to let fly under the radar. We have carefully orchestrated some examples on the graph to give a clear picture of what this phenomenon really is, and listed some tips on how to avoid getting into this mouse trap. In basic terms, Stop Loss hunting is the strategy of the price action spiking above/below key levels to enter the pool of Stop Loss orders and take the masses out of their positions before moving the price in the destined direction. Looking at the first example, we can observe that a nice double top pattern has been formed. This is one of the clear indicators that the price might potentially drop after failing to rise above and forming a new top. Thus, a trader would most likely go short and set his Stop Loss a few pips above the freshly formed area of resistance. What happens next is obvious - a trader gets liquidated. Why? because him and tens of thousands of other market participants had set their Stop Losses at a very obvious key level - above the local zone of supply. After successfully spiking up and grabbing some liquidity, the price peacefully continues its bearish movements in the predetermined direction. The second example is a similar one as well. "What a beautiful ranging market. Let's buy at support and sell at resistance." Only if it was that easy... What happens next, the price spikes below the lower boundary of the sideways-moving range and grabs liquidity before moving in the upside direction. Stop Loss hunting scenarios will always happen, and to be honest, we cannot really avoid them all. However, there are some tips that we can follow in order to evade these traps. Firstly, you should never rush into entering positions. Eventually, the price will come to your levels and develop into some patterns (Double Top, Head&Shoulders etc.) before starting its big moves. With that being said, no FOMO either. There will always be fish in the sea, just like there will always be opportunities in the market. Be patient, cold-blooded, and wait for your time. Do not set a tight Stop Loss, because you will most likely get taken out immediately. Either set a wide one so you can escape hunting in case the price starts spiking up and down, or wait for cases of a fake breakout a.k.a liquidation before entering a position. Last tip is a pretty smart one: set your entry orders at levels where masses would put obvious Stop Loss orders. Then, you will notice how many times the price goes in that direction. Hope you enjoyed this Educational Post, dear TradingView community members! If you have any suggestions or recommendations for the next educational idea, feel free to let us know in the comment section below.
BITSTAMP:BTCUSDEducation
by Investroy
50
Are You Ready to Trade Full Time? 4 Essential Signs ⭐ Hey traders, Once you mature in trading and become a consistently profitable trader, the question arises: are you ready to trade full time? Becoming a full time trade is a very significant step and my things must be taken into consideration before you make it. ✨Becoming a full time trader implies that you quit your current job, that you give up a stable income - your salary. In contrast to classic job, trading does not give guarantees. Please, realize that such a thing as stable income does not exist in trading. Trading is a series of winning and losing trades, positive and negative periods. For that reasons, remember that in order to become a full time trader, your average monthly trading income must be at least twice as your monthly expenses. ✨Moreover, even if your trading income is sufficient to cover two months of your life, that is still not enough. You must have savings. Trading for more than 8 years, I faced with quite prolonged negative periods. One time I was below zero for the entire quarter. For that reason, supporting a family and living a decent life will require savings that will help you not to sink during the losing periods. ✨Another very important sign is your correct and objective view on your trading. Please, realize that if you bought Bitcoin one time and made a couple of thousands of dollars, it does not make you a consistently profitable trader. Please, do not confuse luck with the skill. Your trading must be proven by many years of trading. ✨You must be emotionally prepared for the living conditions that full time trading will bring you. Being a full time trader implies that you are constantly at home, you work from home from Monday to Friday. You do not see your colleagues, your social life will change dramatically. I know a lot of people who started to trade full time and then realized that they can not work from home for different reasons. ⭐So what are the necessary conditions for becoming a full time traders: you should have savings that will cover the negative trading periods, your average monthly trading income should be at least twice as your monthly expenses, your trading efficiency must be proven by objective, consistent results, and you must be psychologically prepared for working from home. When these conditions are met, you can make a significant step and become a full-time trader. Are you ready to become a full time trader? ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
44
Risk Control - Think Beyond The BasicsHi Traders. Let's talk abit about Risk Control/ Risk Management today. I believe most Traders may be thinking that Risk Management/ Risk Control is about - Having a pre-determined risk (% Risk-per-Trade) - Having a Stop Loss Well, that's correct to a certain extent. But if you really think about Risk Control, do you think its really all about that 1 - 2% risk per trade? Look, most of us got the meaning wrong. Let me share some examples: 1. You took 3 losses on GBPJPY, all 3 of them are shorts with the same trade setup. Yes, even if you are only risking 1% per trade, but aren't you now risking 3% on the same setup? 2. You took 3 positions (GBPUSD Long, AUDUSD Long, EURUSD Long). All 3 of them are positive correlated, so if one of it goes wrong, it is likely that all of them will be wrong. 3. You took 5 positions at the same time. Why do you have to expose yourself to that amount of risk? The point I'm trying to tell you is, often we really do not have to put ourselves at that high level of risk to generate a decent return. The way i do it, is i enjoy taking one trade OR maximum two trades at a time. So instead of having the frustration to worry about all those correlation. I make sure the positions I'm involved are almost non-correlated. Then if any of my position goes well, I can always scale into it. In that way, I maximize my winner, minimize my loser. If you enjoy the content, make sure you follow my profile and click the like button. Take care and trade safe. All the content I've posted are for educational purposes, please perform your own research and only take it as a reference.
KRAKEN:BTCUSDEducation
by TraderNeoh
Consistent Profitability, how long does it take?How long does it take to become consistently profitable as a trader? This is one of the most searched questions in the Internet when it comes to trading and the beauty is there's no right answer. When you do receive an answer, it's miss leading to beginners and everyone gets confused. There's a solid chance that you've looked at this before, or perhaps you just seen the title of this post and clicked on it. How long this is going to take you to master the arts of the market. There's a good chance you sat there and questioned, "what am I doing? how long are we going for? What should I be goal setting in terms of time with trading?" if you see yourself in this position or you've seen it previously, I finally have the answer you need to hear. How long does it take you to become consistent and profitable trading? As long as it takes. There's so many different sources which claim so many different time limits that it takes to master Forex trading or crypto trading or industry, trade, whatever it might be your embarking on. All of them say the same around two to three years to become a consistent and experienced professional. Yet, where are they getting this data from? I know traders that master trading within six months. I also know other traders that traded for six years and couldn't get the look of it. There's no time frame to put on trading in terms of success and consistency. It isn't a university course, we don't sit down and do all the course procedures and even if we do, the bare minimum, still graduate in three years. That's not how trading works. The question you should be asking isn't how long is this going to take me to master, but rather how many hours are you going to put into it. Day in, day out, how much work are you going to do? That is what will determine how long it takes you to become successful in this industry. There's so many people that will see 2 and a half years to become successful trader, then they trade half heartedly as if it is a hobby. They don't concentrate too much. They just trade here in there. Two and a half years pass and they'll call themselves seasoned professionals because they have been in the market for 2 1/2 years. Yet they couldn't show a single piece of consistency within their trading. Then there's other traders that put in hard work. I'm talking 8 hours a day of pure grueling backtesting, trade management, risk management, analyzing everything, and they put an exponential amount of work in and in six months they can outperform anyone else who's ever step foot in the market. Time is not an important factor. The amount of work you are putting in is the important factor. Yes, time will tell whether or not you can be successful in this industry, but if you're measuring time based off of when you've been interested or when you've been trading a little bit and rather than the actual hard, grueling hours that you're putting into trading. Then you will never get to that level you want to get too. You have to put in the hard yards. This industry is very advertised as easy, simple and the money making machine. There's a number of different factors in which we can blame for that, but we're not going to dive into that today. What I want to share with you is this is not easy. This is actually one of the hardest professions you could ever do, because work doesn't just stop, we don't just clock off and get paid the same amount every week. It's all dependent on the amount of time and effort you put into the market. Do you want to be profitable and consistent in trading? Then put in the hard work. Stop Googling how long it's going to take. Stop having a look at other people's success stories. Knuckle down and put in the hard work. Then in two years, three years, six years, 10 years, whatever it's going to take. Look back and be proud. When someone asks you how long did it take you? Don't answer about six years or two years, be honest. How many hours did you have to invest? How hard was the work?
Education
by the5erstrading
75
Shocking Truths about Trading no one talks about EP1.After 5 years of self-educating myself in the art of trading while undergoing brutal consistent losses, these are the truths that set me on the path of surprising consistency after internalizing them.....I hope it will for you guys and give more inspiration to the already consistent ones. Shocking Truths no one talks about in trading: 1. You may have the best strategy, signal provider or learned everything about trading, but what counts is what happens to that knowledge 5 seconds before pressing the buy/sell button. 2. What is Mathematically optimal is Psychologically impossible. If you have a strategy that gets wins of 25R but has like 12 losses in a row, DUMP IT. Mathematically, you will make money at the end, Psychologically you will quit before you take trade 13. 3. You start winning in trading when you believe you can lose (Trading Paradox). Consistently profitable traders have one thing in common: they place their next trade like it was already a loser. 4. Extremely good analysts are most often bad traders....you can be right about the direction but fail in the critically important aspect of Entry timing and still lose the trade. 5. IT IS THE SIMPLE THINGS THAT WORK!. Most people will tell you to look for complex strategies that look for "Random walk algorithmic discrepancies that rhyme with Chaos theories....and all that blah..." But I have been on that path and I hate to break it to you that a guy/girl using only support and resistance and simple moving average crossovers with a verified and bactested edge and discipline will most likely be more profitable. 5. THE MORE OBVIOUS A TRADE IS THE GREATER THE CHANCES YOU LOSE IT. Most people think that if a trade has soooo many confluences it is more likely to work....well that might be true to an extent after which it is a blatant fallacy. From historical data and my own personal LIVE trading results, the probability of a trade working out reduces DRASTICALLY when the number of confluences crosses 5. I theorize that this happens because market makers will see all the orders placed at that point is soo much(cause everyone will see the opportunity with their different approaches) and take them all out. 6. No one can sell a money printer, cause it has no price. If someone offers to sell you a robot or STRATEGY that triples your money every month, laugh and pass, if you don't and end up buying that....you deserved to be scammed. Think about it the person can just take $100 and apply his/her magic to it and print out Elon Musk's networth in lower than 3 years using compounding......and he/she will sell you that for $2000?, you must be kidding me!. 7. Your consistency has nothing to do with your strategy but your mind. I can bet you my life's earnings, that there is someone out there, using your exact entry and exit rules but is profitable and you are not. A better strategy brings in more profit, but any random edge with the right mindset and risk management MUST be profitable. 8. Almost everything in life is a pyramid-scheme, & survival of the fittest and trading is not left out. No matter how much we desire to the contrary, it is IMPERATIVE THAT TRADING HAS MORE LOSERS THAN WINNERS. The winners in trading have to be relatively fewer cause they win a lot and hence they need soo many losers to give them that money. There is no bank that hands at money to you when you win, your job as a trader is to outsmart some other fellow and TAKE his/her money and once you come to terms that every dollar lost by you trading, is a dollar gained by someone else in this zero-sum game, you will realize only YOU has got your own back. 9. You can NEVER completely eliminate emotions in trading but you can set rules that allow you trade only when you are at your optimal state, and gives you a day or two vacation when you are down. 10. Reading this article will definitely NOT HELP YOU, it is remembering it the moment before you place your next trade that will. Pls LIKE and Subscribe, I want to know what you think about this article and which point you agree with the most or disagree with. Tell me whether it helped you in any way and if we get 50 likes and 20 comments I will consider making the next episode.
BITSTAMP:ETHUSDEducation
by LexyenHille
3
RISK MANAGEMENT [TAGALOG]As I always say, napaka importante ng risk management. I have explained it all in tagalog para mas maintindihan. I really hope marealize nyo ang importance neto sa magiging trading journey ninyo. STOPLOSS IS A MUST, BUT STOPLOSS ALONE WITHOUT RISK MANAGEMENT is not a good habit and still you'll end up wondering with a negative PNL in the end. FORMULAS are in there also. Try doing the mathematics for your self. I REALLY HOPE THIS HELPS! Love, Coach Dynati
INDEX:BTCUSDEducation
by traderdynati
12
The 5 Crashes That Shook The Markets.A very brief look at 5 of the most significant market crashes to date, using the Dow Jones Index. Content taken from various online sources. Great Crash 1929 Many factors likely contributed to the collapse of the stock market. Among the more prominent causes were the period of rampant speculation (those who had bought stocks on margin not only lost the value of their investment, they also owed money to the entities that had granted the loans for the stock purchases), tightening of credit by the Federal Reserve, the proliferation of holding companies and investment trusts (which tended to create debt), a multitude of large bank loans that could not be liquidated, and an economic recession that had begun earlier in the summer. During the mid- to late 1920s, the stock market in the United States underwent rapid expansion. It continued for the first six months following President Herbert Hoover’s inauguration in January 1929. The prices of stocks soared to fantastic heights in the great “Hoover bull market,” and the public, from banking and industrial magnates to chauffeurs and cooks, rushed to brokers to invest their liquid assets or their savings in securities, which they could sell at a profit. Billions of dollars were drawn from the banks into Wall Street for brokers’ loans to carry margin accounts. The stock market stubbornly kept on climbing. That is, until October 1929, when it all came tumbling down. Catching on to the market's overheated situation, seasoned investors began "taking profits" in the autumn of 1929. Share prices started to stutter. They first crash on Oct. 24, 1929, markets opened 11% lower than the previous day. After this "Black Thursday," they rallied briefly. But prices fell again the following Monday. Many investors couldn't make their margin calls. Wholesale panic set in, leading to more selling. On "Black Tuesday," Oct. 29, investors unloaded millions of shares — and kept on unloading. There were literally no buyers. The rapid decline in U.S. stocks contributed to the Great Depression of the 1930s. The Great Depression lasted approximately 10 years and affected both industrialized and non industrialized countries in many parts of the world. When Franklin D. Roosevelt became President in 1933, he almost immediately started pushing through Congress a series of programs and projects called the New Deal. How much the New Deal actually alleviated the depression is a matter of some debate — throughout the decade, production remained low and unemployment high. But the New Deal did more than attempt to stabilize the economy, provide relief to jobless Americans and create previously unheard of safety net programs, as well as regulate the private sector. It also reshaped the role of government, with programs that are now part of the fabric of American society. Black Monday 1987 Many market analysts theorize that the Black Monday crash of 1987 was largely driven simply by a strong bull market that was overdue for a major correction. 1987 marked the fifth year of a major bull market that had not experienced a single major corrective retracement of prices since its inception in 1982. Stock prices had more than tripled in value in the previous four and a half years, rising by 44% in 1987 alone, prior to the Black Monday crash. The other culprit pinpointed as contributing to the severe crash was computerized trading. Computer, or “program trading,” was still relatively new to the markets in the mid-1980s. The use of computers enabled brokers to place larger orders and implement trades more quickly. In addition, the software programs developed by banks, brokerages, and other firms were set to automatically execute stop-loss orders, selling out positions, if stocks dropped by a certain percentage. On Black Monday, the computerized trading systems created a domino effect, continually accelerating the pace of selling as the market dropped, thus causing it to drop even further. The avalanche of selling that was triggered by the initial losses resulted in stock prices dropping even further, which in turn triggered more rounds of computer-driven selling. A third factor in the crash was “portfolio insurance,” which, like computerized trading, was a relatively new phenomenon at the time. Portfolio insurance involved large institutional investors partially hedging their stock portfolios by taking short positions in S&P 500 futures. The portfolio insurance strategies were designed to automatically increase their short futures positions if there was a significant decline in stock prices. On Black Monday, the practice triggered the same domino effect as the computerized trading programs. As stock prices declined, large investors sold short more S&P 500 futures contracts. The downward pressure in the futures market put additional selling pressure on the stock market. In short, the stock market dropped, which caused increased short selling in the futures market, which caused more investors to sell stocks, which caused more investors to short sell stock futures. A key consequence of the Black Monday crash was the development and implementation of “circuit breakers.” In the aftermath of the 1987 crash, stock exchanges worldwide implemented “circuit breakers” that temporarily halt trading when major stock indices decline by a specified percentage. For example, as of 2019, if the S&P 500 Index falls by more than 7% from the previous day’s closing price, it trips the first circuit breaker, which halts all stock trading for 15 minutes. The second circuit breaker is triggered if there is a 13% drop in the index from the previous close, and if the third circuit breaker level is triggered – by a 20% decline – then trading is halted for the remainder of the day. The purpose of the circuit breaker system is to try to avoid a market panic where investors just start recklessly selling out all their holdings. It’s widely believed that such a general panic is to blame for much of the severity of the Black Monday crash. The temporary halts in trading that occur under the circuit breaker system are designed to give investors a space to catch their breath and, hopefully, take the time to make rational trading decisions, thereby avoiding a blind panic of stock selling. The Federal Reserve responded to the crash in four distinct ways: (1) issuing a public statement promising to provide liquidity, as needed, “to support the economic and financial system”; (2) providing support to the Treasury securities market by injecting in-high-demand maturities into the market via reverse repurchase agreements; (3) allowing the federal funds rate to fall from 7.5% to 7.0% and below; and (4) intervening directly to allow the rescue of the largest options clearing firm in Chicago. Dotcom Bubble 2000 The dotcom crash was triggered by the rise and fall of technology stocks. The growth of the Internet created a buzz among investors, who were quick to pour money into start-up companies. These companies were able to raise enough money to go public without a business plan, product, or track record of profits. These companies quickly ran through their cash, which caused them to go under. The Internet bubble, grew out of a combination of the presence of speculative or fad-based investing, the abundance of venture capital funding for start-ups, and the failure of dotcoms to turn a profit. Investors poured money into Internet start-ups during the 1990s hoping they would one day become profitable. Many investors and venture capitalists abandoned a cautious approach for fear of not being able to cash in on the growing use of the Internet. With capital markets throwing money at the sector, start-ups were in a race to quickly get big. Companies without any proprietary technology abandoned fiscal responsibility. They spent a fortune on marketing to establish brands that would set them apart from the competition. Some start-ups spent as much as 90% of their budget on advertising. Record amounts of capital started flowing into the Nasdaq in 1997. By 1999, 39% of all venture capital investments were going to Internet companies. That year, most of the 457 initial public offerings (IPOs) were related to Internet companies, followed by 91 in the first quarter of 2000 alone. The high-water mark was the AOL Time Warner megamerger in January 2000, which became the biggest merger failure in history. As investment capital began to dry up, so did the lifeblood of cash-strapped dotcom companies. Dotcom companies that reached market capitalizations in the hundreds of millions of dollars became worthless within a matter of months. By the end of 2001, a majority of publicly-traded dotcom companies folded, and trillions of dollars of investment capital evaporated. The bubble ultimately burst, leaving many investors facing steep losses and several Internet companies going bust. Companies that famously survived the bubble include Amazon, eBay, and Priceline. The US government would date the start of the dot-com recession as beginning in March 2001. And by the time of the economic shock from the terrorist attacks of September 11, 2001, there was no longer any doubt. In that tragic month of September, for the first time in 26 years, not a single IPO came to market. The dot-com era was over. Global Financial Crisis 2008-2009 The crisis, often referred to as “The Great Recession,” didn’t happen overnight. There were many factors present leading up to the crisis, and their effects linger to this day. The foundation of the global financial crisis was built on the back of the housing market bubble that began to form in 2007. Banks and lending institutions offered low interest rates on mortgages and encouraged many homeowners to take out loans that they couldn’t afford. With all the mortgages flooding in, lenders created new financial instruments called mortgage-backed securities (MBS), which were essentially mortgages bundled together that could then be sold as securities with minimal risk load due to the fact that they were backed by credit default swaps (CDS). Lenders could then easily pass along the mortgages – and all the risk. Outdated regulations that weren’t rigorously enforced allowed lenders to get sloppy with underwriting, meaning the actual value of the securities couldn’t be established or guaranteed. Banks began to lend recklessly to families and individuals without true means to follow through on the mortgages they’d been granted. Such high-risk (subprime) loans were then inevitably bundled together and passed down the line. As the subprime mortgage bundles grew in number to an overwhelming degree, with a large percentage moving into default, lending institutions began to face financial difficulties. It led to the dismal financial conditions around the world during the 2008-2009 period and continued for years to come. Financial stresses peaked following the failure of the US financial firm Lehman Brothers in September 2008. Together with the failure or near failure of a range of other financial firms around that time, this triggered a panic in financial markets globally. Many who took out subprime mortgages eventually defaulted. When they could not pay, financial institutions took major hits. The government, however, stepped in to bail out banks. The housing market was deeply impacted by the crisis. Evictions and foreclosures began within months. The stock market, in response, began to plummet and major businesses worldwide began to fail, losing millions. This, of course, resulted in widespread layoffs and extended periods of unemployment worldwide. Declining credit availability and failing confidence in financial stability led to fewer and more cautious investments, and international trade slowed to a crawl. Eventually, the United States responded to the crisis by passing the American Recovery and Reinvestment Act of 2009, which used an expansionary monetary policy, facilitated bank bailouts and mergers, and worked towards stimulating economic growth. Covid Crash 2020 The 2020 crash occurred because investors were worried about the impact of the COVID-19 coronavirus pandemic. The uncertainty over the danger of the virus, plus the shuttering of many businesses and industries as states implemented shutdown orders, damaged many sectors of the economy. Investors predicted that workers would be laid off, resulting in high unemployment and decreased purchasing power. On March 11, the World Health Organization (WHO) declared the disease a pandemic. The organization was concerned that government leaders weren't doing enough to stop the rapidly spreading virus. Investors had also been jittery ever since President Donald Trump launched trade wars with China and other countries. Under both the Trump and Biden administrations, the federal government passed multiple bills to stimulate the economy. These included help directed at specific sectors, cash payments to taxpayers, increases in unemployment insurance, and rental assistance. These measures further soothed investors, leading to additional gains in the stock market. Investors were also encouraged by the development and distribution of multiple COVID-19 vaccines, which began under the Trump administration. The driving forces behind the stock market crash of 2020 were unprecedented. However, investor confidence remained high, propelled by a combination of federal stimulus and vaccine development.
TVC:DJIEducation
by bL1TZZ
9
4 Rules every successful trader should follow📈😎1. Trade according to the system. 2. Keep statistics. 3. Have strict risk management. 4. Adapt to the market. Trade according to the system When you trade without a system, it's gambling. Usually, when you ask a beginner why he has opened a position, he uncertainly begins to refer to the fact that someone gave him a signal, or that he thinks it's time for the coin to go in his direction. Trading is a job in which discipline is rewarded. That is why every trader has his own trading system, which he follows in every trade. It's like with the road rules, you can drive car without knowing them, but then you are almost guaranteed to get into an accident. Keep statistics Professional athletes constantly watch recordings of their performances and practice all the movements in front of a mirror, paying attention to every detail. It is vital to get better. For a trader, statistics is a riddle that helps him learn from his mistakes. You should write comments on each trade, filter them by reason of entry or closure, track the average risk, average profit, percentage of successful trades and analyze each trade in detail on a tradingview chart. Have strict risk management Sometimes the market goes against you and you feel the full range of emotions – hope, anger, disappointment, despair. On such days, you will lose all your money if you do not have clear rules. Set yourself a clear limit – no more than 3% of the deposit lost per day. For example, you have a deposit of $1000. You can't lose more than $30 a day. In this way, you no longer risk falling victim to a spiral of negative emotions, you will begin to be more responsible in the trades you open, and you will be able to create financial stability. Adapt to the market Institutional players are always coming up with new ways to entice young players to invest in their coins, and technicians are developing increasingly sophisticated robots. That is why our responsibility as traders is to develop faster than them and to not stand still. To do this, you need to monitor the market and watch which setups work best and which end up as traps. An obvious example: during a bull market, breakouts work upwards, and downward breakouts are usually false. The same is true for the bear market – downward breakouts are cool, upward breakouts are deception. In addition, you need to experiment with your trading algorithm and identify its weaknesses. Add new rules, test them, evaluate the difference. Follow these rules and I guarantee that you will earn much more from trading, and the process itself will give you more pleasure than ever. Good luck with your trades and see you in the DOM ✌️
Education
by Artem_Dishel
1
RISK MANAGEMENTRisk management helps cut down losses. It can also help protect traders' accounts from losing all of its money. The risk occurs when traders suffer losses. If the risk can be managed, traders can open themselves up to making money in the market. It is an essential but often overlooked prerequisite to successful active trading. After all, a trader who has generated substantial profits can lose it all in just one or two bad trades without a proper risk management strategy. So how do you develop the best techniques to curb the risks of the market? This article will discuss some simple strategies that can be used to protect your trading profits.
COINBASE:BTCUSDEducation
by traderdynati
2
THE UGLY TRUTH BEHIND RISK TO REWARD RATIOThe risk-reward ratio plays a vital role, although a good R/R ratio does not ensure PROFITABILITY ‼️ Financial trading requires a systematic approach to increase the potential reward. Besides setting a reasonable take-profit level, you have to learn how to maximize your profits and minimize your losses. SIMPLE MATHEMATICS! Don’t be fooled by the risk reward ratio — it’s not what you think. You can look for trades with a risk reward ratio of 1:6 - 1-10 and remain a consistent LOSER😏 You can look for trades with a risk-reward ratio of less than 3 and remain consistently profitable! Instead, you must combine your risk-reward ratio with your winning rate to know whether you’ll make money in the long run (otherwise known as your EXPECTANCY) and QUANTIFY YOUR EDGE! And the way to do it is to execute your trades CONSISTENTLY.
COINBASE:BTCUSDEducation
by traderdynati
2
50 dollar challengeHere I provide a trading challenge. It's not a easy challenge, discipline is needed to meet the goals. The goal is to start with only $50 and increase this to $10.000 (200x) in 2 months time. Every trade always need a 1:4+ RR in order to not devalue your portfolio quick after making some losing trades. Total trades to be taken is around 80 - 100 with a trader who has an average 50% - 75% winrate. Ofcourse leverage is needed in order to increase the account value in a shorter time. Stoploss stays the same as what I have recommend. I will do this challenge on my own to improve myself and give myself more confident in trading. Goodluck if you give this challenge a try! 50 dollar challenge
BYBIT:BTCUSD.PEducation
by Chahin073
How to remain consistent while trading the financial marketsToday is a big day for us, as two years ago, on the 6th of June in 2020, we launched our company in attempts to be a valuable contributor to the trading industry and help all types of traders: beginners, advanced traders, those who are lost in the journey and so on. However, our personal trading experience goes way back, as we have been trading for more than five years. Throughout this long and interesting journey, we have had many ups and downs. After all, nothing in life is easy, and you have to overcome some obstacles in order to become consistent in what you are doing. Reaching the doors of consistency is the main aim of every beginning and practising trader. Although many individuals may think of consistency as an upward-sloping straight line, years of practice and experience show us that it is rather an ascending channel. Being consistent does not necessarily signify that every trading day/week/month must be a winning one. You will always have losing streaks, unsuccessful trades and so forth. Instead, it indicates that by having a working trading strategy and obeying it, you are gonna be profitable in the long run. Below, we have listed and scrutinized some of the rules that you can implement in your trading that can give you a hand in becoming and remaining consistent: 1. Have a clearly identified trading plan and stick to it This may seem like a pretty basic rule, but believe me, most people never go past this pretty fundamental stage. It is really straightforward and crucial that you need to have a backtested trading strategy, and it could be anything you feel comfortable with. Whether you like to open positions once two Exponential Moving Averages cross each other, or once specific patterns are formed and the price is ready to move according to your bias and so forth. 2. Stop changing your trading strategy every time you encounter losses and feel frustrated Trading is a game of numbers. Yes, you will experience many losing days. Yes, you will feel frustrated and angry to the stage that you might smash the screen of your computer. After all, emotions and psychology play a huge role in trading. Believe me, changing your strategy every week and trying to do something new will never be an option in this case. I see many people make this mistake and get perplexed on why they are not profitable yet. The right thing to do is to stick to one single trading plan and ride along till the end. At the end, if you are risk tolerant and patient, you will always be profitable in the long run. 3. Manage your risk This can’t be said enough. I see people trade the markets like a casino in attempts to be profitable and successful in the long run. Just because you think the setup is perfect, or that you have seen your favourite author’s technical analysis nicely align with yours, you should not be risking big portions of your account on a single position. You should have a well-defined risk management plan. Whether it is risking 1% on all positions, or risking 5% per position on Friday afternoons in order to drink lots of champagne on the weekends. Bottom line: whatever you do, do it with a plan and keep things consistent. Personally, we have always been risking 1-2% per single position, as this is something we are comfortable with. If you feel like you are not mentally ready to trade a live account, you can start even smaller (0.5% per trade) and then gradually go bigger. 4. Do not overtrade and learn to stay off the markets when necessary Many people think that opening more trades will generate them more profits. However, less is always more, and quality will always be over quantity. Depending on what type of a trader you are and what your trading strategy looks like, there should be an average number of trades that you enter every day/week. If you are a swing traders that tries capturing nice long-term waves, 3-5 trades per week would most likely be more than enough. If you are a scalper that loves sitting in front of the charts for hours, your strategy would probably consist of entering 15-20 short-term positions per day. Long story short, have a predetermined range and do not go off the barriers of it. The above stated points are some of the tips and strategies that could help you in remaining consistent in the markets. They may seem pretty simple, but remember that beauty lies within simplicity. There is no need to make things more complicated when you can simply stick to basic principles and succeed in this industry. Have a great trading week, family! Investroy
BITSTAMP:BTCUSDEducation
by Investroy
17
How much leverage should I be using?Understanding how to trade forex requires detailed knowledge about economies, political situations, all the individual countries, global macroeconomics, the impact of volatility, it goes on and on. But the reality of the situation is this isn't what makes most new traders fail. What makes most traders fail isn't the lack of knowledge or understanding of what it is they're actually trading. It's the lack of knowledge and understanding on leverage. As most of us would have heard, there is very obvious statistic out there that majority of retail traders fail. Now, most people will see this as a lack of competence and just purely not willing to put in the effort to be successful. But a lot of the time it is people not understanding the risk their undertaking and what it is they're actually doing with their money when they enter the market. It really highlights this when traders come to a firm like ours, and question leverage or they have so many questions about leverage that even though they've been trading for three to four years, they still don't fully understand the actual risks that are at hand when they are opening certain positions that they really can't afford to open. Today I wanted to jump into leverage. Let's really dive into depth what it is, why we have it, how we can use it. Then, finally touch on what is the right amount of leverage for you as a trader. So you can be exponential in maximizing your profits, but also ensuring that you're not damaging yourself long term. LEVERAGE RISK Firstly, I think it's important for us to have a look into leverage. Leverage is the process in which an investor or trader borrows capital in order to invest or purchase something. Typically we borrow capital from a broker and we buy into positions with money that we didn't have in order to be able to gain more profit from those positions. Most traders are blindsided and constantly think the more money I have, the more profit I can make, which is true, but they fail to recognize that the more risk it carries. Carrying higher leverage is an exponential increase in risk. Most brokers out there will probably offer you something like 50:1, 100:1 or even 500:1 leverage. This giving you a buying power of 50, 100 or even 500 times whatever the amount of money you have in your account. Which means a trader with just $100 in a brokerage account could open a position with $50,000 in the market. Now, while that may sound advertising, believe me, that's a trap and we're going to chat about that today. HIGH LEVERAGE EXAMPLE So let's dive into an example. Let's imagine we have a trader who has a $10,000 account. They decide to use 100:1 leverage, which now means with that $10,000 cash, they can trade up to $1,000,000 in the forex market. Let's assume that the trader opened a position with the full available capital which would relate to 10 lots, and they opened the position on a currency with the USD being the quote currency. That means that each PIP movement is equal to $100. So for a simple equation, if they were to enter a trade and that trade went against them by 50 pips, they would have lost 50% of their account because that 50 pips would have been equal to $5000. So in one wrong trade they lost 50% of their account. So many people in this industry is so quick to look at what the realized gains could be, but they rather tend to ignore the actual risks that come with that. If you don't have sufficient evidence that your investment strategy is going to provide consistent and stable gains long term, do not look to trade with higher leverage, as you will be gambling and it is extremely risky. LOW LEVERAGE EXAMPLE Now let's use the same example, but in a lower leverage situation. The trader has $10,000 cash only this time he is trading on an account with 5:1 leverage, resulting in a buying power of $50,000. This means on a pair with the US dollar as the base currency that you can open a maximum size of 0.5 lots. Let's go ahead and take the exact same trade, only this time with a 0.5 lots, each pip is equal to $5. Should the investment or trade fall the same 50 pips this time the trader will only lose $250, which is a mere 2.5%. Same trade, different leverage, one lost 50% the other lost 2.5%. It is a common trick out there that traders feel they require more leverage to really make money in the market. It's not true. Yes, it can help you get more profits from those smaller moves. Yes, it is really beneficial if you have a proven strategy. If you are still coming to grips with trading or you're fairly new and you haven't achieved consistency and profitability yet, focus on lower leverage. What it will actually do is make you focus on long term goals. Focus on the process this giving you more sustainability in the market and therefore more maturity. CHOOSE THE RIGHT LEVERAGE Choosing the right leverage is a very important step in Forex trading. You can be tapered in by fancy numbers and big brokers trying to get you in, Or, you can realistically dive into what it is you actually need and what's going to benefit you more in the future. There's no right answer to how much leverage you need each strategy in each individual require different things, but what I will do is share some tips and some knowledge on how to choose the right one that benefits you. 1. Always try and maintain the lowest leverage you possibly can for your strategy. If you manage to pull it right the way into where you can only just open the positions on the risk you have allowed yourself, and you can't open more than, lets say three positions, what you actually do is limit yourself to focus on only the good positions. You've prevented over trading from occurring and you can really focus on your risk management. 2. When you open positions or you talk about opening positions instead of going to people saying, "yes, I opened 0.35 lots." Use the actual dollar value when you open a 0.35 lot position. Instead, say "I opened a $35,000 position." Talking in that language that you have placed your bets with $100,000 or $1,000,000 will make you realize how much risk you're actually exposing yourself to and the capacity of what it is you are trading. 3. Limit your overall risk, at absolute Max, I risk 0.25%. This allows me to go into large drawdowns and it not be an issue. I can still manage it accordingly in it actually keeps me nice and calm and focused on the analysis rather than the running profit and loss. The bottom line is selecting the right Forex leverage depends on the traders experienced risk tolerance and comfort when operating in the market. You want to ensure that it's not out there to harm you, but rather it's there to help. You do not want be trying to get really high leverage so you can make large profits, when you know realistically, there is no evidence to prove that you will make those high profits. Start small, gain consistency, gain exposure and gain experience, and then you can start looking to expand your equity and buying power.
FOREXCOM:XAUUSDEducation
by the5erstrading
40
📌Position Sizing AND Stress CurveTry to find where your current stress level is on the diagram. If you are a trader and already have taken position , how much is your position size % ? Do you think there is a correlation between your stress level and your current position size , then subsequently your performance ? If you are in red level, now is a good time to seek some serious change. Trading in itself is a very stressful job, especially when we are not proficient in the psychology of trading and do not pay much attention to the important rules of risk and capital management. maybe Slipping only one 1% of these rules has terrible consequences for us. WHAT IS STRESS (in general)? Everyone experiences stress at different points in their life, and in small doses it is essential to motivate us. Too much stress, though, can be overwhelming and leave us burnt-out, filled with anxiety or anger, and unable to act. Stress is a feeling of emotional or physical tension. It can come from any event or thought that makes you feel frustrated, angry, or nervous. Stress is your body's reaction to a challenge or demand. In short bursts, stress can be positive, such as when it helps you avoid danger or meet a deadline Stress causes wear and tear of our bodies due to demands made by our life. The Public Health Services estimate that there are one million premature deaths in America each year. In this, 75% of the people were suffering from stress-related disorders. Americans are suffering from various problems. The number of Americans suffering is high in number. The various problems are: 30 million blood vessel diseases 1 million heart attacks 8 million cases of ulcers 12 million cases of alcoholism WHAT DOES IT FEEL LIKE? Problem stress can manifest in many different ways: wanting to relax but being unable to let go feeling prolonged anxiety or worry feeling depressed and unmotivated sleep problems increased use of alcohol / drugs to self-medicate Stress can also cause a variety of physical symptoms: change in appetite tightness and pain in shoulders, neck and back increased use of alcohol / drugs to self medicate digestive problems autoimmune problems (eczema, arthritis, ulcers) Trading-Specific Stresses: In the above paragraphs, we have seen the different stress subsequences in our social life. But there are also many stressful situations in trading that traders perceive. Trading is inherently a job full of anticipated and unforeseen risks. .Each of which can cause stress on the trader and affect his performance! Even Being idle and not doing anything can also be stressful. The fact that you could make money if you were present in the market is itself very stressful. You can watch your position double overnight sometimes if you don’t do anything. Similarly, you may sit on a losing trade while it goes down in value. This loss situation is stressful, which is a result of doing nothing. As a trader ,we trade the risk to make money , it sounds very exiting and enjoying when we can control our risk and profit ! there is a tiny distinction and span between successful traders and unsuccessful traders ! When they can manage their position size and risk/reward in such a way that they can have the most profit and the least loss with maximum performance. abnormal Stress limits our ability to handle a large amount of information in trading. Which is why we are not successful most of the times. For some traders who use to trade with big position size( more than1%- 5% of their total net) , stress is equivalent to losing. If they suffer a lose In these cases, because a large amount of position is involved and it is difficult to control it can be the Biggest in the speculative loss, which is a trading-specific stress. Since losses are unacceptable for many, they tend not to close their position in the hope of recovering their losses , so their losses will get bigger and bigger . The psychological impact of a large loss upon an average trader can be devastating, because Daniel Kahneman in the book of Thinking, Fast and Slow by , he says that for human- being the impact of any loss is bigger than impact of equivalent profit ! -In a pessimistic scenario ,Suppose you open an average of 10 positions a day, and if all your positions are closed at a loss >>With a risk of 1% per trade; You do not lose about 10% at the end of the day >>But with 5% per trade, you lose more than 37% at the end of the day >>And with 10%,you lose more than 60% of whole capital after 10 unsuccessful trade per day . So in the same proportion; Size position can greatly affect our stress level and disrupt our performance! In this situations, our brain can no longer make any right decisions and emotions overwhelm us especially when we are at a loss, and then the likelihood of committing human error is greatly increased. Conclusion So in this article, we can figure out what can greatly affect our stress in trading is the amount of volume in a trade especialy in perpetual future markets , Why does a trader increase the position size with thoughtless, recklessness and carelessness, maybe it is due to ignorance or maybe it is high self-confidence. Anyway, if one can 100% predict the future trend of a trade, one might be able to earn hundreds or thousands or even millions of dollars in a short time with the Leverage X100, but the problem is that we are in the trading and financial markets with probabilities. We are dealing and no one can predict even 10% of the next moves with confidence. So It's so important to control the exact amount of your risk ,loss and possible profit in each trade by choosing the right amount for position size and then the risk /reward ratio. Every person reacts to stressful events differently. What might be stressful for one person might not be stressful for another one or maybe a pleasurable game . All these together produce fear and anxiety in people. The purpose of this article is not to let you know various types of stresses in trading , It was more about the stress of position size in particular and how it can affect your trading style. But the result being in high stress level for all is loss in trading. You can at least now realize how dominating stress can be. In coming articles, we will help you protect from its effects. You can self-evaluate yourself on parameters like stress susceptibility, stress exposure and stress protection. In general, we will try to reduce general stress and trading specific stress. Later we will also discuss stress prevention techniques, relaxation procedures, and how not to allow stress to affect your trading performance. (The reason that inspired me to write this article was mostly because of a friend who is a trader and he had invested in Luna and was severely bankrupt and now more than his financial problems he is struggling with a lot mental and psychological problems , and was asked me for help. Maybe it was his bad luck but his problem was when He was optimistic for a immediate recovery after any Luna's downfall , he traded in a large position and with every further reduction he bought again at a lower level in the hope of a return to compensate, but we all saw how far Luna decreased . although this strategy( DCA ) may work well sometimes , but if he had considered the position size and risk measurement , he didn't lose more than 200k overnight.) Source: lifehack.org- wetalktrade.com- phil-hills.com
Education
by PRO_SMART_Trader
3
When you should use leverage in your trades?When you should use leverage in your trades? I’m going to answer this question, but first, we have to mention two other questions to be answered. Q1: What is a reasonable trade? An order in which the entry point, stop loss, and take profit are already pre-defined based on a good return strategy or rules. Q2: What is money management? Money management is to determine the percentage of risk on the total balance in each order and to know what your position size will be and how much your potential loss will be. We need to do some calculations to answer the first question. Let’s suppose your account balance is $100 and the maximum risk on your balance for each trade is 5%. This means that on a reasonable trade, your loss will be $5 at most. Besides that, you have a good trading opportunity with an entry point at $10, stop loss at $9, and profit point at $12, i.e. 10% potential risk and 20% potential reward for the position. Since we cannot lose more than $5 of our balance, we need a position size where the potential loss will not exceed $5. Which we can calculate with this formula: (Max risk on balance / position risk * 100). Which would be $50 in our case.  This means that we are only allowed to include $50 out of $100 in this trade; this would be $5 after a 10% loss.  Everything is normal and we can afford it, so we will do the trade. Now, let’s increase the max risk on balance to 20%. It means our potential loss would be at most $20. By doing the same calculations considering the same reasonable trade with 10% risk, our position size will be $200 while we do not have more than $100, so where do we get $200 from?! Yep! Leverage would help you in this case. So benevolent, isn’t it?  In this case, your leverage would be 2 and you can open a $200 position, but don’t forget you increased your account risk from 5% to 20% already. Note that the risk will be applied to your real asset. If your balance is $100 and the leverage is 10, the exchange will give you about $1000 to buy or sell. While the 5% of $100 is $5, the 5% of $1000 would be $50, which is 50% of your real asset. So calculating the risk on leverage balance is practically meaningless! What if we had 10 orders simultaneously? It means $100 will be split between 10 orders. For ease of calculation, we consider every 10 trades to be the same as what we had above, while each trade would have 10% of $100. In these conditions, each trade would again have a $50 position, but leverage will be 5! Having said that, we can conclude that leverage alone is meaningless and finds meaning alongside reasonable trade opportunities and money management. In the above explanations, for the ease of calculation and context understanding, I used rand but not necessarily correct values. For example, a risk ratio of 5% on balance is a really high risk or in the example of 10 trades at once, it is wrong to consider your balance as $100 at the start of each trade. In the worst-case scenario, you should deduct the loss of the previous trade from your balance for the next trade. From the link below, you can access the tool I prepared to calculate the position details. bit.ly Feel free to give your constructive feedback.
Education
by bhnmzm
2
How the higher time frames help you to avoid unnecessary losses Hello everyone: Today I want to discuss the importance of higher time frame analysis. Doesn't matter what type of trading strategy, method or style you use, the higher time frame often will help us to strengthen our bias overall and give us a good perspective of the possible direction for the price to go. In addition, it helps traders to avoid unnecessary losses and mediocre entries that will eat up your profits. More often I hear traders will execute trades on the lower time frames, and not factor the overall higher time frame bias and perspective. Although entering on the smaller time frame can potentially give you more Risk:Reward, it's often more risky and trades can easily reverse, then hit the stop loss. This often creates stress, negativity, and revenge trading psychology for traders which ended up blowing accounts. I want to give a few examples of higher time frame analysis, how they can help traders to avoid “traps” on the lower time frames, avoid unnecessary losses, and keep the emotion at bay to trade another day. When having a bullish bias on the HTFs, its good risk management to not consider any short term, bearish sell setups. These sell setups may form on the LTFs, but they can easily not continue to your desired target, and reverse up before you have time to react. In addition, traders hate to see profit come and go. So if a trader has a short position running in some profit, but decides to hold onto the trade, and once the position reverses, traders don't want to exit, and then end up holding a losing position to its SL. Examples: AUDUSD: HTF: Overall bias and perspective in bullish LTF: Many LTF bearish setups/development, but due to going against the HTF, they ended up with losses NZDUSD: HTF: Overall bias and perspective in bullish LTF: Many LTF bearish setups/development, but due to going against the HTF, they ended up with losses AUDCHF: HTF: Overall bias and perspective in bullish LTF: LTF bearish setups/development, but due to going against the HTF, ended up with loss NZDCHF: HTF: Overall bias and perspective in bullish LTF: LTF bearish setups/development, but due to going against the HTF, ended up with loss NZDCAD: HTF: Overall bias and perspective in bullish LTF: LTF bearish setups/development, but due to going against the HTF, ended up with loss SILVER: HTF: Overall bias and perspective in bullish LTF: LTF bearish setups/development, but due to going against the HTF, ended up with loss
Education
by jojofang0901
19
Three pillars of trading success 📈💲It's time for my mid week educational post. Today I want to talk about the three pillars needed by all traders for success in the markets. This isn't just the forex market either this applies to trading all financial markets. Be it forex, crypto or stocks, so lets get into the the three pillars of success. PILLAR NUMER ONE- STRATEGY You MUST have an edge before entering the markets. When will you enter the market? When will you close? What % per trade will you risk? What pairs will you trade? What timeframes will you trade? If you don't have any answers to the above you are entering the markets blind and it will end in tears. In trading, edge is your ability to select trades that perform better than random. You can think of edge as the process used to generate and execute entry and exit signals. Do not enter the markets until you are working a strategy with a proven edge. The stronger your edge, the more profitable you’ll be. PILLAR NUMBER TWO- RISK MANAGEMENT We can't avoid the white elephant in the room on average 80% of trader lose money or fail in the markets. Some say its even more and you will become one of the stats if risk management isn't applied to your trading. Some of the reasons losses like these exist in trading is down to the fact that aspiring traders don’t put any thought into their risk management tolerance. We only ever see the upside when we start out and many never do anything to protect themselves from potential losses. If you never made any money as a trader before or entered the markets before ask yourself the question below before starting out. How much money am I comfortable losing? Your first priority with trading is to stay in the game So manage your risk per trade and total risk at anyone time. Understand probability and ensure you are comfortable with your maximum exposure at any one time. Understand the maximal draw down in your testing when finding your edge. That way it will help you see what a potential losing run you could experience. PILLAR NUMBER THREE- TRADING PSYCHOLOGY We need good trading psychology to keep a balanced mind whilst trading, this stops your emotions leading the trade. The trade outcome cannot be controlled and you MUST detah yourself from each trade outcome. You will know when your trading emotions are nailed on when you do not 'FEEL ' anything when trading. If you have 'emtions' with your trades or when trading simply reduce your risk further. Two emotions that need particular attention are GREED and FEAR. You need discipline in controlling these two emotions or you are going to end up making losses as a trader. We all been there we make a few profits confidence kicks in and then greed before you know it your in whole world of pain. We all be there at some point with fear to and not executing trades due to a fear being in our trading game say from a poor run of form. Emotions will always be there we are emotional beings, but they will need controlling in order for you to be a successful trader. Practice developing the emotional control needed to trade successfully. FINAL THOUHGHTS Trading requires 100% commitment most see it as a hobby to start with but this can be costly hobby if commitment to trading is lacking. The sole reason most get into trading is to make money. One purpose of a business is to make money. Treat trading as a business at the end of the day it's your personal money that's on the line. Every trader needs to have a disciplined approach to the markets. Following these three steps will help you. In order to be a successful trader and run a profitable account, it is essential that you have these three pillars in your trading. Thanks for taking the time to read my idea. Darren 👍
Education
by pow_removetheguesswork
1