"Is EUR/USD moving sideways?" by trader JimMakos — published May 20, 2014

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Euro / U.S. Dollar (FX:EURUSD)

FX:EURUSD Euro / U.S. Dollar

I'm betting EUR/USD has a better than 25% chance to climb back to 1.39.

I risk 1% of my capital to win 4%. If I lose, the stop loss will protect my capital and I can continue trading at least 99 times more!

That's where most traders fail: getting out when they are wrong and risking too much to win too little.

Don't do that!

Use a stop loss and aim high!

What is a stop loss? http://www.tradinggraphs.com/2012/10/16/trailing-stop-loss-orders-online-trading/

Set a generous Risk/Reward ratio for each of your trades and you'll do fine.

You got stopped too Jim?

renanc93

Unfortunately yes. Moving on...

I have seen more examples of traders failing because they use a stop loss that is based on their own desire for risk management instead of making sure their stop is correctly located and using the proper position size to keep the risk at 1% or less of their trading capital. What does that mean? Using a stop that is too close is assuring that you will fail through the death of a thousand cuts. What matters is that you have a positive equation of expectancy which means it is the combination of percentage of winners and the ratio of the average win to the average loss. Van Tharp's books on the topic are excellent. For example, you can win like the insurance companies if you win 1 or lose 100 if you win more than 99% of the time consistently.

timwest

Exactly! i couldn't agree more! That's why I don't swear by the common rule of 3:1 risk/reward ratio. If a trader can predict correctly the market 90% of the time, a 1:9 R/R ratio will still make them a profitable trader!

Risking 1% or less is also strongly recommended as you mention. Yet, upon confirming the strategy's profitability in an adequate sample using "flat stakes", traders should implement half-kelly to increase their capital's rate of growth.

I have this rule of not trading against the main trend but good analysis.

I'm doing the same trade, hope lucky to us!

double top has not failed yet... on a close over 1.3730 perhaps... but I still fear the bear move.....and the weakening of the euro...(mainly for macro reasons)

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