ocaptain

Managing Risk using the Long and Short Tool

Education
NASDAQ:PTON   PELOTON INTERACTIVE INC
This is a companion video to my "Trade Like a Pirate" article showing how the Long & Short tool can help you manage your "aRRR" - Your Reward-to-Risk Ratio. Whether you are trading a Company, a Currency, or Commodity, you want to Consistently trade your positions in terms of Risk and Reward for consistent results and to not "blow up your account" with a bad trade.
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Comments

Even better explained that Tradingview does. Congrats, very easy to understand for rookies like me.
+1 Reply
ocaptain Samvill81
@Samvill81, thanks, Sam! :-)

Happy Trading!
Reply
Thanks for sharing this!
I have been reading all your posts so far, nice content.
Could you, by any chance, make a post about how to properly spot what you call a "demand Zone"?
Keep going, very cool content.
+1 Reply
ocaptain jonarod
@jonarod, Hey Jonarod! Thanks for your comment!

Yes, I will continue to share what I have learned, ... that's in the queue! ... Give me a follow & a like and you will stay up to date as I continue to share my insights... and we can all share in "Standing on the shoulders of giants" 🤠
+1 Reply
Excellent! Thank you
+1 Reply
Another helpful post - thank you!
+1 Reply
ocaptain nikiacodes
@nikiacodes, Thanks, Nikia! Much appreciated 😇
+1 Reply
Nice, but you don't need a premium to do that I assume. The question that I want to ask, you mentioned that you only risk 0.25% per trade, but how many trades you open at the same time? Also in Forex, how many simultaneous trades per currency? For example, if you see 5 good formations on JPY, how many of these you allow yourself to take?
Reply
@O_Fx, That is correct... The Long/Short tool is in the toolbar for all to use...

How many trades do I open at the same time? As many as I can, LOL...

The reason I set myself to .25%R is that when I used to do 1R, I would often find say 9 possible trades that were great opportunities, but I only had enough buying power (in Futures) to setup 3 limit orders at any one time. Inevitably, the trades I did NOT setup were the ones that hit, or I would choose the losing trade and not the winner... By setting my R to one quarter that, I can almost always stage *all* the opportunities I find, which would individually make me less money per trade, but overall I would come out ahead because I would be making more successful trades.

Hrm... sounds like I should write an article or video on that :-)

Re. your last question, it's not limited to Forex... You can place as many trades as you like in any asset but you can't go long and short on a particular asset at the same time... so if you saw a good level say, at 50-52 and 42-45, you could take both trades. Then if price was coming down into 52, it would enter the first level. If it worked and hit your target, great! if not, you would stop out and price would continue to the next position.

I have a colleague who sometimes sets up three trades in a row that way, especially if the potential for reward is great, say 10R... then he could easily afford to lose the first, lose the second, then win on the 3rd (and of course all he would need is for the last one to go 2R just to break even.)

There is a limit though... I wouldn't setup 5 trades because one of my rules is never to lose more than 3R per day... and if I lose 3 trades in a row, something's going wonky and I'll have reassess whether the market is reacting to a major news event that's out of my control and I should stop trading, or if I am somehow making trading mistakes. For example, last week I lost 3 trades in a row and thought "what the heck, they were perfect, the stars were all in alignment", and then I realized that my trend timeframe window got changed to the same timeframe as my trading timeframe window - both 15 minutes. When I changed the Trend window back to 60m I saw that indeed, I had no business being in any of those trades... User error!

So what did I do? I added "Verify Trade/Trend Timeframes" to my checklist! Not gonna make *that* mistake again!

Great question!
Reply
Too close SL never works in my opinion, SL means to protect account from any flash etc not to stop every trade so close
Reply
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