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However, I am happy for any thoughts and updates.
Yes - totally agree with you. Very difficult to predict exact turning point. However - the 1 hour chart MACD have crossed, so believe we soon will see the downturn.
if you guys have a small account and feel like "uff, with 20$ earnings on each trade my account will never grow and it is not worth the work" you might want to take yourself a pen and paper or an excel sheet and look what a 1000$ account is nicely growing when only risking 2% each trade but always reinvesting the won money.
it is a bit of future dreaming and you have to be careful about it, but an average account size gain of 2% per trade over a time where you do 100 trades (only! remember there might be winners and losers but you will lose max 1% and aim for a gain of more than 1%, and you have entrys where you may expect high properbility...so average +2% only!) you will have a 7000 trading account! you guys manage go do 100 trades in maybe 1 or 2 years? is this only a dream or is it possible?
but you dont think that way because you cant imagine. thats a human problem. you think of your lousy 1000$ account and think that after the same 2% average 100 trades you have 3000$. thats right but you have more than double when reinvesting (kind of exponential growth).
by the way: after 200 trades you may find yourself with a 50000$ account (or with a 5000$ account if you stick with investing 1% of 1000 only and taking the money out of your account for cinema....)
consistent trading! 200 trades with average 2% gain. is it worth trading it for maybe pessimistic 5 years and have 50k in the end when starting with a 1000$ account only?
consistent trading! 200 trades with average 2% gain. is it worth trading it for maybe pessimistic 5 years and have 100k in the end when starting with a 2000$ account only?
consistent trading! 200 trades with average 5% gain. is it worth trading it for maybe pessimistic 5 years and have 25 million dollar account (!) in the end when starting with a 1500$ account only?
so why risk 15% per trade? are you in a hurry? ;)
given you have a 1000$ account and want to risk no more than 1% of your 1000$ for each trade.
means you dont want to lose more than 10$, right? (because 10$ is 1% of 1000$)
knowing that you only want to lose a maximum of 10$ you now can calculate your stopploss, but that is not a good idea. because your stopploss should not be dictated by the max amount of $ you want to lose. your stopploss should be placed at a price level where the initial idea is no longer valid. even more accurate: you want to place it at a price level where your idea is no longer valid from your expectations / timeframe / time you like to hold the trade. all this basically is part of what i just above called "initial idea".
now lets have a deeper look. initially in this tradingview trading idea mr. jack's idea was to sell at the 0.618 fib retracement of that last downmove. this as a strategy should tell us that this idea is no longer valid when the last high (at 45.92, the 100% or 0% of the downmove depemding on how you like to express it....) is broken to the upside. why? logic, when a retracement retraces more than 100% of the move it is no longer a retracement, right? simple. so you want your stopploss level placed some 10-20 or something pips above that top / behinning of the downmove you are messuring the retracement of.
this placement of stopploss would allow the price to form a bearish doubletop and go down without taking you out. attention: jack uses a way tighter stopploss level right above his box he painted in the chart, but that is way more risky because price may easily first go to 78.6% retracement and then turn down again. find your strategy. i stick for the example with the big top at ca. 46
stopploss could be 46.30
entry as discribed by jack maybe 44.49
difference is ca. 1.8 points.
from that i can calculate that i may open ca. 0.06 contracts (at least that is what my broker's (ayondo) unitsize is here.
good at ayondo is that this calculation is automatically displayed in the order form. i cant really see why not every broker and software does that.
anyone knows how this can be implemented in metatrader, please let me know!!
(another broker that had this kind of automated profit / loss preview in the order form is the old webtrader version of etoro but i CANT recommend these guys. Stay away! But maybe wanna practice with their (or ayondo's) demo account and the order form...
back to topic: you now may lose 10$ on that trade
jacks first target is 43.79 which would give you a profit of some 4.60$
if you think or your stragegy says that this first target is your only target then you dont want to enter the trade. your reward is only half your risk. stay away.
if your expectations are around 42.20 (reasonable, its the old low before retracement started) you may earn some 13.70$.
in my opinion still not a trade you should do because risk to reward is nearly the same. better have at least a reward expectation twice or triple of your risk.
hope that helps!
writing that down takes a bunch of time but in daily routine with a proper order form or a selfmade excel sheet for the calculation it takes seconds...
risk 2% of your total forex account money.
you have a trading account of 1000$ then risk 20$ (2%) max.
the leverage has nothing to do with that.
if you have a small account like 1000$ you need a broker that allows you to open trades in micro lot size or smaller (ayondo allows that...)
you cant really trade 1 lot or 0,1 lot wehen your max loss can not exceed 20$, right?
you open a sell trade in fantasy-oil.
your opening price is 1000 and your stopploss level (invalidation point of trading idea) needs to be at 1200.
every 1 digit against you costs you 1$, meaning that at a price of fantasy-oil of 102 you have a open loss of 2$.
every 1 gigit in your direction gives you a profit of 1$, meaing at a fantasy-oil price of 97 you are 3$ in profit zone.
placing this sell trade ( 1 contract worth 1000$) without any leverage (x1) you need to invest 1000$ in that one trade to own the fantasy-oil contract.
and as mentioned above you lose 1$ with every digit this fantasy-oil price rises.
placing this sell trade (again 1 contract worth 1000$) with a leverage of x10 you only invest 100$ in this one trade (which allows you to open other trades while this one is open) but still as mentioned with every digit the price of fantasy-oil moves against your direction you lose 1$.
placing this sell trade (again 1 contract worth 1000$) with a leverage of x100 you only invest 10$ in this one trade (which allows you to open other trades while this one is open) but still as mentioned with every digit the price of fantasy-oil moves against your direction you lose 1$.
in this example (no matter what leverage) you will lose 2% ( = 20$) of your 1000$ trading account when fantasy-oil price hits 1020, right?
if your broker would only allow you to trade x1 (without leverage) the moneymanagement and risk would be easy to see and to handle but with x10 or x100 the inexperienced trader is able to open a 100 contracts trade of fantasy-oil (investing all 1000$ he has) and if price now moves just from 1000 to 1001 he/she would lose 100$ and if prices goes to 1020 he/she would lose 20 * 100 dollar = 2000$ = margincall.
again. i am not talking about a loss of 1-2% of the currency / oil value (which would be 50 - 0.5(1%) = 49.5 when oil was 50 in the beginning)!!
i am refering to a 1-2% loss of your whole trading money in your account. e.g. you deposit 1000$ to fxcm broker and 1% of that is 10$. simple.
10$ are 10$ and 1% of 1000 is 1% of 1000 and the leverage is not of any interest in that. you simply dont want to lose more than 10$(1%) or maybe 20$(2%) of your 1000$ account.
from your accptable loss of 10$ (1%) you calculate the lots / minilots / microlots trade size.
"Often currency or index may move in opposite direction of 1-2% to take out stop losses before continuing on in their planned direction" yes, the market seems to do so but you have to live with that. if market takes you out and reverses then your stopploss level was wrong or a little bit to tight. but the big guys know exactly where the small fishes place their stopps. before a big move down you will very very likely see a spike up that is exactly killing all the other small sell trades because the big guys like to ride the bus alone why should they accept other passengers when it is eas for them to kick you out of the bus before the journey starts? they dont want to share their icecream and their softdrinks with you ;)
i wrote for example: "knowing that you only want to lose a maximum of 10$ you now can calculate your stopploss,...." (that is refering to a max loss of 1% at a 1000$ account).
so by "1% plus leverage of x 100" you could refer to your investment in the trade. but that is not the risk and maximum loss per trade.
1% of 1000$ account is 10$ and you dont want to lose more on one trading idea. full stop. basta. ende. fin.
(or maybe 2% ... i think that is ok too)
regarding the 2% max loss rule (which is discussable of course...):
you lose 10% of your account in a trade - you need to make 11% in the next trade so be at initial level again.
you lose 20% of account in a trade - you need to make 25% the next trade to be +/- 0 again.
you lose 50% of account in a trade - you need to make 100% in the next trade to.....
you lose 90% of account in a trade - you have o make 900% (!!!) to be at the initial account size again.
the smaller the % of loss the easy to recover.
100 times a 1% loss and out of money.... how likely is this to happen in a row ?
10 times a 10% loss and out of money .... much more likely, right? dont do that, dont risk 10% of your trading accoutn in just one idea!!!
that may be right. still this is a good moneymanagement. show me a proper money management that works on a 1000$ account and with a broker where you have to trade 0.1 lots minimum. nearly impossible. small trading accounts are always tend to be overexposed and underfunded.
i have one little experimental tradinga account where i just recently entered a buy gbpjpy at 128.16
i considered to idea/ reason for the trade to be invalidated at a level 124.40 (the bigger low) and given that i was only able to open a buy trade of 0.0625 lots.
very very small trade size but now is 137.22 and my account gained ca 2%. find a excel sheet that calculates this for you.
you may wanna google "myfxbook prostion size calculator"