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Risk Management

How to Assess Your Trading Performance|Consistency & Perspective Hey traders, 👨🏻‍💻I am trading forex for more than 8 years. During the last 5 years, I am actively posting my analysis & trades on TradingView. Growing my audience, it was very peculiar for me to contemplate the reaction of my followers to my trading performance. (by the way, we must say thanks to tradingview where the posting system does not allow to delete the posted trades so that each and every author is easily backtestable). 👩‍👩‍👧‍👧👨‍👨‍👧‍👧Those who follow me at least a half a year know that occasionally I have winning streaks when 9 out of 10 of my forecasts play out nicely. Sometimes, however, I face the drawdowns and catch a sequence of losing trades. And sometimes the performance is mixed with the probabilities being on my side slightly. 🥇While the reaction to winning streaks is quite predictable: I am praised by the members and get nice tips. The reaction to losing streaks is worth discussing in detail. It turned out that quite a huge portion of a trading community has a completely wrong understanding of a trading nature. 🤬The single loss is considered by them to be a failure, a mistake. Facing the sequence of losses, they quickly become negatively biased to the person that they have just recently praised. With the continuation of a drawdown, they blame the analyst and launch a barrage of criticism towards him. 🔍Then they are in a search again. They are looking for a trader that will be constantly right. Catching the new one during a winning streak, the cycle repeats. At some moment such people become disappointed in trading and drop this business... ❗️Losses, losing streaks and negative days/weeks/months are inevitable. If you want to become a full-time trader, you must be prepared for the fact that trading won't give you a stable income. Your equity curve will be in constant fluctuation. Your goal in this game is simply to lose less than you make. You must become disciplined enough to keep following the rules of your trading strategy no matter what. You must learn to be consistent in your actions. You should learn to perceive losing trades not as a failure but simply as the moment when the market takes its share. Feeding you, giving you the opportunity to make money out of thin air, the market definitely has a right to claim its dividends from you. ⭐️Change your mindset, learn to lose and the magic thing will happen. ❤️Please, support this idea with a like and comment!❤️
OANDA:XAUUSDEducation
by VasilyTrader
28
High Impact Or Medium News? Use Patience I have seen high impact news strategies from 1 minute to 1 hour online, if you are interested in this kind of trading please investigate further. Always use great risk management and stop losses on every trades- when high impact news hits, that currencies BASE pair will determine what direction its goes, negative down and positive up. If I trade high impact news, wait for at least 5 minutes or maybe to end of that 1 hour or 4 hour candle that news is coming out on too trade. Like example of USDCAD on Friday high impact news was positive for the USD (base currency) NFE, Unemployment Rate while while CAD impact news was negative Employment Change and Ivey PMI. Per chart, for next 3 to 4 hrs price action was one sided with bulls controlling pair- it there a way for you to have gotten a piece of this? Per chart example: 13 pip stop loss 60+ pip target/profit with right risk management would have worked great. Please look on forexfactory.com for other high impact news events then look at Trading views charts and mark them up on how you could have made a news related trade and profited. Best way to trade medium or high impact news is wait at-least 5 minutes or until end of that hour or 4 hour candle is done, too set up a possible trade. When your set up is with right pair, price, session & time- trade it.
Education
by Anbat
The 5 Steps To Becoming A TraderThe 5 Steps to becoming a trader Step One: Unconscious Incompetence. This is the first step you take when starting to look into trading. You know that its a good way of making money because you've heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be? Price either moves up or down - what's the big secret to that then. Step Two - Conscious Incompetence This is where you realize that there is more work involved in trading and that you might actually have to work a few things out. You consciously realize that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit. Step 3 - The Eureka Moment Towards the end of stage two you begin to realize that it's not the system that is making the difference. You realize that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment. Step 4 - Conscious Competence You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it looses and when you're on a loser you close it swiftly with little pain to account. Step Five - Unconscious Competence Now we’re cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 200 pips in a day doesn't make you any more excited that getting 1 pips.
Education
by Anbat
The 10 Golden Rules Of Forex TradingForex markets can be volatile and uncertain at the best of times, and inexperienced traders can easily end up chasing their losses. Yet it is precisely this volatility that gives you the potential for major profits. These 10 rules of Forex trading may give you the best chance of landing on the winning side. Please remember, however, that trading carries a high level of risk to your capital and profit is not guaranteed. The 10 Golden Rules Of Forex Trading: 1) Avoid Forex trading software that claims to guarantee returns. No Forex software can assure you of winning trades. 2) Always use a demo trading account. We have all heard that practice makes perfect, and it is true. 3) Forex trading can be highly stressful- avoid emotional trading. Whenever real money is changing hands, the risk of loss is ever-present. 4) Invest in a solid Forex education. Knowledge is power-we all know that. Forex tools will improve your trading performance. 5) You can learn to trade Forex successfully. Learn from reliable Forex strategist or mentors, you tubers, your success is far greater. 6) Manage your Forex capital wisely. Forex markets change hourly, session or daily characterized by high volatility. Use stop loss, entry and exits always. 7) Manage your investment-per-trade wisely. This is a crucial aspect of Forex trading. Never invest more than 2% of your account on one trade. 8) Use common sense. Strong currency against a weak currency. Major news. Use common sense when judging the effect of current/upcoming events. 9) Ensure you use risk management strategies at all times. Limit your amount you trade per position. Using knowledge, signals and technical strategies. 10) Be especially cautious about overextending yourself with leverage. Leverage is a two sided coin- can magnify profits and losses. By following these 10 golden rules to Forex trading, you should find yourself in a much better position over the long term. Your focus should always be on trading currency pairs that you understand, in a way that does not expose you to too much risk. Read up about market conditions likely to impact upon the currencies you’re trading, limit your leverage to an affordable amount, and use a demo trading account to understand the market dynamics.
Education
by Anbat
Compounding "Most Powerful Force"★ Compounding interest is a powerful investment tool. By reinvesting your trading earnings, you can significantly boost your returns over the long term. Compounding refers to interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the initial principal deposit. As a result, compounding accelerates returns as you are earning not only interest on your principal, but interest on your interest. Anyone can benefit from compounding interest. The longer your money compounds, the faster it grows. For example, if you had a $5,000 Forex trading account earn 2% per day for one year (260 business day) and just let account grow, you will make over $800,000.00 US within the 1st year. You can accelerate your earning power even more by contributing principal payments to your accounts periodically. Even small deposits will realize significant benefits with compounding over the course of time. This is just by trading Forex, if you contribute additional monies, then account will grow quicker. "Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't... pays it."- Albert Einstein Note: There are free daily compounding calculators online- for you too put your own account size in, % in, days for see how much compound interest would substantially and quickly increase your Forex trading account- just let your account account, with having a plan, risk management and patience.
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by Anbat
The 80/20 Rule (Work Less Make More)The 80/20 Rule: 80% of your Forex results (profit) will come from 20% of your setups (work). This is why in Forex you should only trade high quality setups with the right pair, at the right price, in the right session and at the right time. The 80/20 Rules applies to work, life, business and trading. Question is: In Forex scalping or day trading> What will make the largest difference for your increasing profits? Then do more of that in trading. The 80/20 rule can change your life! Focus on what give you the most results (80%) while not focusing on useless activities (20%). Here are some examples of The 80/20 Rule: (You can make your own 80/20 rules- which will help you in life, work, play and trading) 80% of the effects come from 20% of the causes. 80% of results come from 20% of effort. 80% of Forex profits come from only 20% of all trade setups. 80% of profits come from trading 20% of all setups in London NY overlapping session. Financial markets moves 80% are technical and 20% fundamental. If you have a plan, have a routine, have a journal, have right physical frame of mind (emotional, focus, discipline, patience control), use right risk management & only trade high quality setups in Forex, this will give you best risk reward and win rate% and give you more profit & time to enjoy life. Focus on trading only your best setups. It is a way of thinking about your time as well, it applies quite well focusing on time management. If you think about it, if you can work out what the most important 20% is for what you are trying to achieve you will probably get done 80% quite rapidly. Applying a simple tip to make bigger profits by applying the Paretto Principle or 80/20 Rule to increase profit potential and reduce risk. The rule is simple, works and helps you, focus on the best trade set ups for long term Forex trading success.
Education
by Anbat
Risk On-Risk Off (FX Retail Trader)Risk On Risk Off: This is often abbreviated as 'RORO': *Note: Every session can change from risk on risk off (Sydney-Tokyo-London-New York) What Is Risk-On Risk-Off? Risk-on risk-off is an investment setting in which price behavior responds to and is driven by changes in investor risk tolerance. Risk-on risk-off refers to changes in investment activity in response to global economic patterns. During periods when risk is perceived as low (greed), the risk-on risk-off theory states that investors tend to engage in higher-risk investments. When risk is perceived to be high (fear), investors gravitate toward lower-risk investments. 'Risk On':*GREED This refers to periods when there is more confidence in the general market and investors want to pursue more risky or progressive trading instruments. An example of such a currency in Forex is the EUR, NZD, CAD, GBP and the AUD. During periods of confidence investors will often sell their 'safe' USD to buy the more risky or progressive instrument, such as the EUR or NZD etc, in the hope that they will benefit from a surge the latter's value. Selling of the USD results in over supply and a fall in its value and the purchase of the AUD results in a demand and consequent rise in its value. In 'risk on' periods, USD usually declines in value relative to many other currencies such as the AUD or CAD. Risk Off':*FEAR This refers to periods when there is more fear in the market and investors want to pursue, or invest, in safe-haven type of trading instruments. Examples of a safe haven currencies include the USD and JPY. During periods of economic uncertainty the USD is viewed as a relatively safe-haven trading instrument and when traders buy the USD then the value of the USD increases. 'Risk Off' periods, USD usually rallies relative to most other currencies. As a consequence USD index, the USDX, increases as well. Euro dollar index, the EURX, usually declines in 'risk off' periods. Yen is viewed, as a safe haven instrument as is Gold. Knowing risk-on/off concept gives traders a competitive advantage. Very helpful when trying to avoid over trading, as correlations should help to do that.
Education
by Anbat
ATR indicator (Always Use This)The ATR (average true range) indicator is the single best indicator that all FOREX traders should be using for all trades (use it or lose it). You can put ATR indicator on your chart always and/or just glance at number (in upper left) and take it off your chart, just have it handy always. What is the ATR: (Default setting (14) works fine for me in FX trading. It tells you how many pips the currency pair has moved, on average, in the past X amount of candles. Why you should be using ATR 100% of the time on every trade: 1) The ATR is crucial for Money Management 2) Money Management is crucial to winning *Know that money management is what will separate you from the losing traders. How To Use ATR In Setting Up Trades: (Never Trade Without It) 1) To know how far back from entry price away your stop loss, which is either ATR x 1.5 (works mostly) or ATR x 2.0 (if you want larger stop loss) 2) To know where to place profit targets and/or targets, 1st target is same as risk or stop loss is and 2nd target is double what the stop loss is. When you are describing Forex RISK, instead of saying unit size or dollar amounts, instead say How much are you trading per pip? Using the ATR will prevent you from getting stopped out of more trades, will keep in more trades. The professionals use ATR for stop losses and targets. ATR can be used on any time frames, but look for other evidence like price action at support and resistance areas, fib ret (golden zone) 50%-61.8%, pivot points, doji candles, harami setups, and engulfing setups to use ATR indicator for possible trades.
Education
by Anbat
4
15 Min Chart (ATR + BB indicator) Part 4 of 4Please practice using the Forex position size and risk calculator on all trades you make. Noted on EURUSD 15 minute chart are: Four possible entries into a sell trade on Friday - Low volatility EurUsd has last 5 weeks or 56 ATR [er day. (Hard to scalp or day trades with low volatility pairs) - I used minimum of 10 stops on low volatility pairs, but consult with ATR and either use 10 pip stop loss and/or X 1.5 to get stop loss to use This is a scalping or day trading trading strategy, quick trades. Please practice using position size and risk calculator to get: 2% risk, trading lot size, stop loss and target(s) on 15 minute time frames, I look for 1:2 risk reward over higher, how much profit you made and how much one pip move is worth? You need to know this so you can manage risk and set appropriate stops and targets for low volatility and high volatility pairs in Forex. IF you have a need to be part of the masses and trade EURUSD, then put your efforts into when both London session opens to London session ends. Why, this covers Tokyo/London overlap and highest most liquid and volume 4 hour time which is London/New York sessions overlapping period.
Education
by Anbat
2
1 Hour Chart (ATR + BB indicator) Part 3 of 4On 1 hour and 15 minute time frames, I would be looking for minimum of 1:2 RR setups. Both noted examples on EURUSD chart of 1 hour charts you both: 1) Setup at end of Tokyo session (use last 1 hour red candle open) for entry into buy trade of next candle, using ATR x 1.5 for stops and targets, risk 18 pips vs 36 pip reward setup. 2) Setup at end of Tokyo session (use last 1 hour red candle open) for entry into buy trade of next candle, using ATR x 1.5 for stops and targets, risk 12 pips vs 24 pip reward setup. These trades are either scalp and/or day trades, using both BB indicator and ATR indicator for timing purposes and stops and targets. If price is above BB 20 ema (yellow line), then look for buying trades and if price action is below BB 20 ema (yellow line), then look for selling trades. NOTE: From Chart set up of both trades: Please find a position size and risk calculator: Your account size, 2% risk- using noted stop losses and targets- How much profit did you make? What is your trading lot size? How much USD money is one pip move worth? Do this on all trades you do for risk management. PRACTICE on Sell trade noted on right side of chart, using 10 ATR, find stop loss, targets, RR setup, trading lot size, 2% of your account, etc...
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by Anbat
4 Hour Chart (ATR + BB indicator) Part 2 of 4On daily and 4 hour charts, I would only be looking for 1:1 Risk Reward setups using ATR and Bollinger Bands. This is if you are day trading or swinging within the same week time period. 1st example trade (on chart): Uptrend/Bullish trend this past week 1) Look for price action to swing low (make a 4 hour red candle) that hits BB center 20 ema line (yellow), set up a 33 pip stop loss at open of that red candle related to a 22 ATR x 1.5 pips = 33 pip stop loss, entry would be at open of that same red candle and exit/target would be 33 pips above enter. 1:1 RR set ups are great, especially because they win get you high win rate %. This trade would have been done in same day for a 33 pip profit. 2nd example trade (on chart): Uptrend/Bullish trend this past week 2) Look for price action to swing low (make a 4 hour red candle) that hits BB center 20 ema line (yellow), set up a 36 pip stop loss at open of that red candle related to a 24 ATR x 1.5 pips = 36 pip stop loss, entry would be at open of that same red candle and exit/targets would be either at 1st target of 36 pips next day or during two days 2nd target at 72 pips (noted on chart). 1:1 RR to 1: RR set ups are great for 4 hour and daily time frames, because they will get you a high win rate %. 4 Hour Time frames are mostly for swinging at least for one to three days, if you close out all of your trades within the same trading week. Your should practice calculating lot sizes and risk on these two noted trades, using your account balance, 2% risk and atr/pips noted on trades.
Education
by Anbat
2
Use ATR (To Set Stop Losses & Targets)ATR (average true range) is I think the best indicator(period)- related to setting your stop losses and targets. This ATR indicator should be part of your plan, trading edge and strategy to utilize on every trade you do. This is 1st article of four articles related to this subject: Note: Will be doing three more articles on using ATR on lower time frames: 4 hour, 1 hour and 15 minute in the future. Using ATR On Daily Chart (see example here) On chart notice the following: 1) Doji (undecided daily candle at support, low volatility candle) - happened on a Friday 2)Notice 9 day bearish trend prior to daily doji candle 3) This daily doji candle had an ATR of 60 rounded up (fyi). On daily I keep ATR and Stop Loss & Target the same for any daily trade setups 4) Stop Loss/Risk: 60 pips 5) 2% of $5000 account is $100 USD risk on trade 6) $1.66 PER PIP MOVE on EURUSD or trading lot size is: 0.16667 6) This trade would have made you from $100 to $200 USD within this last week (conservatively), by Thursday and/or Friday. (4 to 5 days). Can you wait? Do you have patience to trade daily? Larger time frames are easier to trade then lower time frames, but it is all relative to personality.
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by Anbat
How To Use Position Size & Risk Calculator (On All Trades)Use Position Size and Risk Calculator to easily calculate recommended lot size, using live market quotes, account equity, risk percentage and stop loss. What are Lots: Standard 1.0 Lots: 100,000 Units Mini 0.10 Lots: 10,000 Units Micro 0.01 Lots: 1,000 Units Nano 0.001 Lots: 100 Units In Forex a Lot defines the trade size, or number of currency units to be bought or sold in a trade. One Standard Lot is 100,000 units of base currency. Most brokers allow trading with fractional lot sizes down to .01 or even less. Fractional lot sizes are sometimes referred to as mini lots, micro lots and nano lots. How To Use Position Size & Risk Calculator: (Select and/or impute your particular details of any pending trade)* THEY ARE FREE ON LINE!!! Currency pair: Traders can select from Major Forex crosses, Minor pairs. Stop loss (pips): Traders should input the maximum number of pips they are willing to risk, or lose, in a trade, to protect the account equity in case the market goes against their position. Account balance: Pretty straight forward, traders just need to input their account equity. Risk: The crucial field of this Position Size and Risk Calculator! In this field traders can select from a risk percentage or any amount of their account base currency ($2, $20, $40, etc). As a guideline, professional traders do not risk more than 2% of their account equity per trade. This technique will allow for traders to last longer with their trading careers, and eventually, also to recoup from previously losing trades. Now Hit the "CALCULATE" button The results: The Position Size and Risk Calculator uses a market price live feed with the current inter bank rate (in a 5-digit format) and it will display the selected currency pair price Calculator displays the amount of units that that a lot represent; how many trade units and finally the portion of the account equity at risk, or the value of the position, in this case $100 USD.
Education
by Anbat
5
What Is A Bankers Candle? How To TradeBanker candles happen on all time frames, with Forex trading- banker candles are stronger and more reliable on higher time frames. Happen a lot at support and resistance, demand or supply and or bearish or bullish order block areas, Fib areas (50%-61.8%), zone areas, etc... What Are Banker Candles: They are the opposite move, before large move into other direction. Bullish daily trend, last RED candles before move upwards. - see Doji candlestick (1st candle- happens during London session) - see Engulfing two candlestick setup (2nd candle setup- during London/NY overlapping session) Only people that have capital and can move Forex markets are: hedge funds and big banks This is mostly called the manipulation phase or fakey area (going into wrong direction of trend of day) if you are scalping or day trading. Look for big swing moves on 1 hour, 4 hour or daily going wrong direction of major trend on chart, last candle going against trend is bankers candle. How To Trade: Make this part of your trading edge, strategy and/or plan 1) Set new trade on open of bankers candle excepting next candle to reverse back into major trend direction. 2) Set stop and targets (via ATR x 1.5)<- you can you tube video this concept for information. This is so that you do things same way over and over.
Education
by Anbat
2
Is Trading Forex Gambling? DependsIs Forex Trading Gambling? Depends Notice a common theme? “Risk” and “losing”. If there are two things a Forex trader knows, it’s that there’s always risk and you will lose money at some point. It’s simply the cost of doing business as a Forex trader. What is the truth? The truth is that even the large banks and hedge funds gamble every time they sit down at their trading computer. But (and it’s a BIG but) there’s an inherent difference between how they gamble and how 99.9% of retail Forex traders gamble. It’s a little thing called “probabilities”. Learn to Think in Probabilities It all comes down to putting on trades where the probable win is higher than the probable loss. In other words, stacking the odds in your favor. Use price action and confluence. The more “Confluence Factors” you have in your favor on any one trade, the higher the probability is that the trade will make you money. Different types of probabilities: Price action pin bar on the daily chart. Price is rejecting a key level.The trend is up.The moving averages are providing dynamic support. No immediate resistance to the upside (there are several more probables, you might use for your edge, plan or in your strategy). Let’s go back to the casino example for a second. We can learn something from casinos. The goal for any Forex trader should be to trade their account like a casino owner runs his/her business. Casino owners know they’re going to lose money on some customers, it’s the cost of doing business. But they also know that by the end of the year, they’ll turn a profit because the odds are stacked in their favor. So start trading account like casino owner runs his/her business by using price action and confluence, and begin stacking the odds in your favor.
Education
by Anbat
Top 10 Things 2 Look 4 On ChartFocus on larger price movement. Lesser but reliable signals. Bigger stop losses & profit targets. Market noise greatly reduced. Smaller position sizes. Use 1 hour, 4 hour and daily for yes, scalping, day trading instead of lower time frames under 1 hour which have more signals but less reliability. Please refer to (attached AudUsd 1 hour chart example chart) for Top 10 Things 2 Look 4 On Chart: 1) Price action by main daily pivot point (red line) 2) Risk Reward set up is at least 1:1.5 or larger on trade (ex: 20 pip stop vs 30 pip reward, per this trade) 3) Tokyo session is in a 20 pip sideways or ranging price action 4) Large big banks and or institutions for two hours (blue candles) quickly bought market (manipulation phase), thus clearing out all the retailer sell traders. 5) Large big banks and or institutions suddenly with double or triple money sold market, during London & NY sessions (too end of London/9 am PST/USA) 6A) Two psychological numbers noted on chart, 0.74000 and 0.73500 (50 pip range)-why? triple 000'sand/or 500's act as magnets for both stops/targets. 7) Noted 50 pip range area for price action for the day 8) Breakout one hour candle (Red candle), with momentum which should have been used to enter a new sell trade, with correct risk management. 9) Daily Trend (of 30 pips) 10) Target or take profit exit for trade at 0.73500 (which happen at London close, Friday and last day of month to trade)- after low liquidity/volume
Education
by Anbat
3
How To Identify Imbalance (Forex)If you are scalping or day trading- this bearish or bullish imbalance mostly happens at end of Tokyo session and/or start of London session. This is when big banks and/or institutions quickly do a FAKE move (like chart bearish/Red candles) then with double, triple money reverse price action (like chart bullish/Bull candles)- in direction of trend of day. What happens is this combined move is so quick and has high liquidity and volume that price action leaves an area with only one sided trading (not area on chart where only sellers were and zero wicks filled area)- the arrhythmic computer does not like that this area is only one sided, so will push price action back into this area or close to get price action back in balance. Note: on chart that price action did a bearish push back almost into the buyer only area during last 1 candle of the London session (doji on chart). Things to look for to find imbalance on a chart: 1) One sided buying or selling only 2) Large candles on 1 hour or 4 hour charts 2) No candlesticks right or left of imbalance candle (its all alone) 4) Price action leaves either a buy only area and/or sell only area , where zero wicks or price action into area before trending away. 5) Forex computer does not like this imbalance and will push price action towards this one sided tradings to get buying/selling back in balance. This imbalance happens after manipulation phase of Forex Master Chart pattern- which is mostly at end of Tokyo and/or start of London session. Look for areas on chart with only buyers only or seller only areas (no candlesticks right and left of this imbalance)- price action will want to come back to area.
Education
by Anbat
4