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Risk-management

The 20 Trading Lessons from Top Traders I have read a lot of trading books since the time I started trading my own account and the one book that really helps me out and “I wish I’ve read this one first” – is Market Wizards Interview with Top Traders by Jack D. Schwager. Here’s the list that struck me most that I’d like to share: “Early trading failure is a sign that you are doing something wrong; it is not necessarily a good predictor of ultimate potential failure or success.” – Michael Marcus “If you don’t stay with your winners, you are not going to be able to pay for the losers.” – Michael Marcus “Liquidating positions is the way to achieve mental clarity when one is losing money and confused regarding market decisions.” – Michael Marcus “Being a successful trader also takes courage: the courage to try, the courage to fail, the courage to succeed, and the courage to keep going when the going keeps tough.” – Michael Marcus “Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose per contract. If the meaningful stop point implies an uncomfortably large loss per contract, trade a smaller number of contracts.” – Bruce Kovner “The times when you least want to think about trading – the losing periods – are precisely the times when you need to focus most on trading.” – Richard Dennis “Everybody gets what they want out of the market.” – Ed Seykota “It is a happy circumstance that when nature gives us true burning desires, it also gives us the means to satisfy them.” – Ed Seykota “Frankly, I don’t see markets; I see risks, rewards and money.” – Larry HIte “ I have two basic rules about winning in trading as well as in life: 1. If you don’t bet, you can’t win. 2. If you lose all your chips, you can’t bet” – Larry Hite “In my judgment, all traders are seekers of truth.” – Michael Steinhardt “The more disciplined you can get, the better you are going to do in the market. The more you listen to tips and rumors, the more money you’re likely to lose.” – David Ryan “When the market gets good news and goes down, it means the market is very weak; when it gets bad news and goes up, it means the market is healthy.” – Marty Schwartz “Learn to take losses. The most important thing in making money is not letting your losses get out of hand. Also, don’t increase your position size until you have doubled or tripled your capital. Most people make the mistake of increasing their bets as soon as they start making money. That is a quick way to get wiped out.” – Marty Schwartz “The best traders are the most humble.” – Mark Weinstein “You have to learn how to lose; it is more important than learning how to win.” – Mark Weinstein “Most traders who fail have large egos and can’t admit that they are wrong. Even those who are willing to admit that they are wrong early in their career can’t admit it later on. Also, some traders fail because they are too worried about losing.” – Brian Gelber “You are never really confident in this business, because you can always be wiped out pretty quickly. The way I trade is: Live by the sword, die by the sword. There is always the potential that I could get caught with the big position in a fluke move with the market going the limit against me. On the other hand, there is no doubt in my mind that I could walk into any market in the world and make money.” – Tom Baldwin “Clear thinking, ability to stay focused, and extreme discipline. Discipline is number one: Take a theory and stick with it. But you have to be open-minded enough to switch tracks if you feel that your theory has been proven wrong. You have to be able to say, my method worked for this type of market, but we are not in that type of market anymore.” – Tony Saliba “ How do you judge success? I don’t know. All I know is that all the money in the world isn’t the answer.” Tony Saliba There’s still a lot of golden information that I want to write in here – for ourselves and for everyday reading so as to keep us aligned with our trading goal, but I prefer to encourage you to read the book.
NASDAQ:QQQEducation
by blue039
2
Risk Management Guide for Beginner TradersHello traders. In this video, I delve into the fundamental principles of risk management tailored specifically for beginner traders entering the world of financial markets. I start by emphasizing the importance of understanding risk and its implications on trading outcomes. By setting clear goals and objectives, traders can align their risk management strategies with their investment aspirations. We explore practical risk management tools such as stop loss orders, which act as a safety net to limit potential losses on trades. Calculating position sizes based on risk tolerance and stop loss levels ensures traders are not overexposed to any single trade. Continuous monitoring and review of trading performance enable adjustments to risk parameters in response to changing market conditions. I also shared some tools that can be used to help make the process of calculating risk efficient and accurate. By mastering these risk management techniques, beginner traders can safeguard their capital and embark on their trading journey with confidence and resilience.
Education
by Pips4Breakfastx
Risk Management vs. Time ManagementHey! Have you been spending day thinking about mistakes you made and things you didn't do? Investors are knowingly comparing an exchanges to a casino. A gambler, losing, does not get up from the gambling table in the hope of winning back. He believes that the likelihood of winning increases with every lost bet. This phenomenon, called player mistake, is common among investors. The pioneers of the theory of behaviour finance Hersh Shifrin and Meyer Statman showed in 1985 that investors intuitively misjudge the likelihood of repeating random results - they hold unprofitable positions too long, hoping for a return in prices, and close profitable positions too quickly, fearing that the movement will end. The assertion that the market cannot fall for many sessions in a row is untenable. Short-term changes in asset prices are mostly random, notes analyst and author of several books on behaviour finance, James Montier, in his article Global equity strategy, gamblers fallacy. Tails does not become more probable after a series of heads, the coin has no memory - in the same way, the chances of success do not increase after a series of failures. The major problem in the trading when we trying to recoup from losses. Many people make this mistake over and over again. The reason of this mistake is the unwillingness to accept and calculate affordable losses and come to terms with the result, the wrong internal setting that you must end every trade and every trading session with a profit. But not every trade will be profitable. How can I avoid this mistake? 1. After loss trade, tell yourself: "Stop, I won't trade now, I will pause." 2. Analyze the failed trade and write it down. Thus, you will allow yourself to "cool down" and more intelligently approach the situation on the market. There will always be opportunities, don't be afraid to miss out on any movement and profits. 3. Calmly develop a new trading plan based on market changes. If according to the trading plan you need to enter, then enter and earn. Do not rush to enter the market immediately, because it is easy to enter, but it is difficult to exit, since it is no longer possible to change the initial price at which you entered. 4. Make sure you following your risk management and always trade with possibility to lose. Stay safe and good luck!
GEMINI:BTCUSDEducation
by ArtemFuturesTrading
69
3 Types of Stop LossesToday’s topic is going to be on three types of stop losses . This is a very critical topic because stop losses come under the category of risk management. Risk management is such a pivotal, important and critical topic. Why? Because professional traders and investors, the first thing that they always do and constantly think about before they get into a trade or investment is not how much profit they’re going to make, it’s how much they can afford to lose. The only control that you have when you enter into a trade and you’re in the trade is the risk factor because most of us will not have the capital power to control that trade. It’s a collective pool of people’s thoughts and a lot of other factors that come in which then determines how the price moves in the market, especially how smart money enters the market actually. So in light of all of that, the real power that you have, the real control that you have is your risk management. How much you can afford to lose. In terms of that, we’re going to be looking at the three types of stop losses and how to stop your loss when the market does something which is not favourable to you and not in line with the direction of the trade that you are taking on. The first type is what we call the technical stop . This is the one most people will be familiar with. That’s where all your different kinds of stop losses come under: moving averages, channels, trend lines and so forth. All these are summarised under technical stop losses. Even if you use tier based stop losses, they come under technical stop losses. The second one is called a money stop . A money stop is basically one where you write in your rules, and this is how you execute a trade as well is that you say, for example, you enter a trade and it is going well in profit. You tell yourself to trail your stop loss to break even as soon as the trade is 3% in profit. You don’t care what the moving averages are or where the price pattern is whatsoever, you would just move your stop loss to break even. So that is purely based on money. That is called a money stop because the stop loss is adjusted according to your profits or your losses. Usually it’s to your profits – that’s when you trail and adjust your stop loss. The final one is the time stop . As you’ve already guessed, the time stop is based on time. Especially for intra-day trading it’s very important because you know certain times of the day volume is really high and other times of the day volume starts to dry up. So especially if you want to capture a certain percentage of move, you want to capture it before a certain time and you usually know that after 5pm or 6pm the volume usually dries up. Price movement is not really that much especially towards 9pm. So you can have a rule saying, for example, at 5pm or 6pm you’ll look at exiting a trade if it’s not reached an objective. If you’re a swing trader you start saying things like you know if it’s consolidating for 10-15 days in a row I will possibly exit out of the trade. So all that is basically based on time. Let me ask you a question. Out of all the three stops I’ve talked about: technical, money and time, what do you think is the strongest stop of them all? I think, if my guess is right as we have coached thousands of traders, most of them usually tell me it’s either the technical or the money stop. In fact, let me tell you Traders, the weakest one of them all is the money stop because there’s no basis for it. It’s just based on money and just trailing it. The strongest is the time stop because everything is determined on time and you’re time bound in everything that you do. If you look at daily activities: waking up, going to work, having meals, going to bed – your life is time bound. Here’s the final most critical point. If you actually want to make your risk management really strong, the trick is not to put emphasis on either one of them according to strength, but to make them sync with each other so that they can then adapt to market conditions. It’s basically a confluence of the types of stop losses that can help you to generate the rules which can adapt to market conditions. For example, when you start out if you put in your initial stop loss in a technical place and as time then moves by then you would then get more aggressive with your stop loss and as it’s nearing towards exit, if you’ve reached a certain profit potential as the market price is still hovering around, losing momentum, then you would then start to go into money stop. Money stop is especially useful if you’re in swing trading. For example, when we took the DOW Jones trade and we took that 2,000 point move on a mismatched strategy when it had already done 80% of the move we used a money stop because we don’t want to give back all that profit back to the market. So that’s when we start to us a money stop and a combination of time stop, initially starting with a technical. So that’s how you do it. Do have a good think about this because this is so critical Traders. If there’s only one thing you have total control of, it’s your stop loss, it’s your risk management. So contemplate this, revisit your strategy rules and see how you can optimise that for maximum performance of your strategy. I believe that you have really enjoyed this topic and have some amazing value from this. Until the next time, as we always say, stay disciplined, follow your trading plan and keep trading like a master .
Education
by masterthemarkets2010
Overtrading VisualizationThis diagram helps visualize the effects of overtrading. Overtrading is placing more trades than should be placed, typically resulting in unnecessary losses. There is a fixed number of trade setups that will occur with any trading system during any time period and ideally each trade setup will be traded to produce maximal profits. In general, trades that are not setups will result in losses. For simplicity, this diagram assumes the initial trades placed are all trade setups and that all trades placed beyond the # of trade setups are not setups. In reality, someone could place a number of trades that corresponds to the # of trade setups, but if half their trades were not setups, they will have losses. The resulting diagram may look something like this: Bottom line: Trade setups only and try and identify as many setups as you can. Identifying 100% of all setups that exist may be a tall order but trading 100% setups is possible with patience and discipline. Note: This idea was published primarily with day trading in mind, but it applies to any type of trading. Screenshot of main diagram:
AMEX:SPYEducation
by Skipper86
How to use news and data reports to make transactions profitableFrom central bank interest rate resolutions, non-farm payrolls, PMI indexes, inflation rates and other data reports, to geopolitical developments, and even natural disasters, these are major news that foreign exchange investors cannot ignore.Because the trend of the currency is always guided by these major economic events and news developments, it is accompanied by trading opportunities. Of course, not all news is worth trading, so we must be familiar with how economic events will affect currency market trends.For major transaction news and data reports, we can follow the following three steps: 1. Select news events that will cause price fluctuations Foreign exchange traders tend to pay attention to certain key economic data that have an impact on interest rate speculation. These economic data include: central bank decisions and speeches, gross domestic product (GDP) data, employment data, inflation rate and trade balance. 2. Choose the right currency pair Generally speaking, we will choose currency pairs with high liquidity. There are mainly the following 8 pairs: EUR/USD, USD/¥, AUD/USD, GBP/¥, EUR/CHF, and CHF/¥.The sufficient liquidity of currency pairs is conducive to us to use lower transaction costs to win huge profits through greater volatility. 3. Pay attention to the news release time and forecast results We have to trade based on data expectations, that is, the actual announced results are compared with the predicted values.For example, if the non-farm payrolls report is better than expected, the dollar will generally rise, and EUR/USD may fall. In addition, before the data is released, we need to check the price movement of the short-term chart (5, 10, 15-minute chart), and use the closing price to decide whether to trade the current data report.After the price trend is confirmed, open a position and set a take profit and stop loss. In order to facilitate everyone to continue to follow up on my analysis and sharing, you can like and follow me; in addition, I will share the daily real-time strategy in the channel. If you can't follow up in real time, you may make operational errors.You can use the following methods to enter my channel for free to follow the latest news and follow up on market trends in real time.
Education
by Short-term-king
Two methods to ensure no loss of principal There are only two ways to avoid losing capital: one is to have a small stop-loss space (reflected in the entry position), and the other is not to bet too much at once. For example, buying one lot with $10,000 can earn $1,000, and buying ten lots with $100,000 can earn $10,000. Although the probability is the same, the more you do, the more you earn, and the less you do, the less you earn. However, controlling losses should be the top priority. As discussed earlier, if you buy too many lots this time and get stopped out, it will result in a big loss, which violates the principle of capital preservation. Some traders become increasingly greedy after making profits and then add more positions. A typical behavior is adding positions. For example, if you bought 10 lots at first and then made a profit in the expected direction, the trader would blame himself for not buying more at the beginning. Then, he would begin to imagine that the market would continue to move in the expected direction and invest most of his capital in this product, let alone any correct practices such as taking profits in batches. After you add more positions, it means that the cost has changed. Once the market reverses slightly, you will go from being profitable to losing money. At this point, you panic, lose your ability to think, and greed slowly turns into hope. You hope that this is only temporary, but the losses increase every moment. Perhaps you will have some luck a few times, but it won't be long before there is a risk of a big loss or liquidation. It is important to understand that becoming rich cannot be achieved by just one market movement, so don't be obsessed with this one time. Greed makes people forget about risk, and don't always imagine that the market will move in the expected direction, ignoring the risk of the opposite trend. This is the key to keeping your capital out of danger. Follow me, and I will share more interesting ideas that will greatly help your trading.
FXOPEN:XAUUSDEducation
by EagleEyeStrategy
Trade setups I would take and how to manage riskJust like this. Buy and sell limits above and below structure, as in the most recent highs/lows, with your TP in general being a return to structure. Brutally easy way to scalp and make money. Few more examples... This one shows where the stop loss might be. In general, I go with a 2/3 or 3/4 type rule, where I'll have a wide cluster of limits, then a gap, then a hard stop that closes all of them. Just in case. Your order clusters should be wide enough with this strategy that it almost never gets hit. Regular market movement should not be hitting your stop loss. That kind of behavior should generally be reserved for news events that catch you off guard. Now as far as actual risk goes, this is entirely determined by you and no one else. There's no single correct way to do this. A lot of people are dead set on the idea that you should never risk 10% of your account, but how big is the account? Is it $10,000? Is it $100? If it's $100, why not risk $50+ when the odds of a loss are very low? On EUR/USD, you might have a hard stop loss of 50 pips with 15 tickets separated by 2 pips each. Each ticket would be 1k (0.01 lots). If 1 pip on a 1k is $0.10, then a 50 pip stop loss is $5. Your second ticket is 2 pips away, so that loss would be $4.80. Third $4.60, and so on. It's doable, right? Maybe the price dips 20 pips into your counter-trend limit cluster, eating 10 limits. Then the price returns to the support or resistance near your starting point, and you decide to close all of your tickets. The profits from that would be $2.00, then $1.80, then $1.60, and so on. That might not seem like much in comparison to the stop loss, but consider this: your stop loss will have a 0-5% chance of ever getting hit. It's straight profit. And it's constant, and consistent. I cannot stress that enough! You can be doing this all day long. So, what if you want to follow a trend in this manner? It's the same deal, really... just throw limit orders below (or above) trending wicks. Like this: It's all just structure. You bet with structure, and you bet against structure. At all times. You only require a 50% retracement from your starting ticket in order to break even. If you even feel uncomfortable with what's going on in front of you, it doesn't take much for you to get out safely and start over with a new cluster of limits. There is absolutely nothing wrong with closing out safely. You'll be trading so frequently you aren't even a little bit obligated to let things "play out". Maybe you don't like how quickly the momentum built into your cluster, and it retraces down to the 50% area so you wanna break even, but then you start laying more limits above and below because you believe that momentum is likely to slow down. I'm gonna tear down a phrase that I'm sick of hearing: the trend is your friend . The trend could be the worst friend you've ever had. Sometimes he's really cool, and he's the life of the party. But he really likes hanging out with you, especially when nothing is going on. He really likes to wait! He doesn't exactly value your time, and he's perfectly content sitting in a chair next to you watching paint dry. He smacks the remote out of your hand when you try to turn on the TV. This trend guy can be a real jerk sometimes. You also suspect he might be bi-polar, because sometimes when you get excited to do things with him, his mood shifts the moment you open your mouth and suddenly the fun has been sucked out of the room. That is the trend. On some pairs like USD/JPY, a trend can go on for a very long time, and there's a lot of money to be made. The problem is it is speculative . You don't know where that trend is going to end. Nobody is clairvoyant, and most people will make incorrect guesses. If you simply remove this requirement of speculation, where you have to be "correct" in your guesses in order to make money, you will do better in almost any market. If your goal in trading is to make consistent money, then the trend is not your friend. He's an acquaintance at best. You have to associate with him in business and that's about it. You spend just as much time associating with the counter-trend, because you should be doing business with both of them constantly. Now, on the other hand, if your goal is to invest (AKA gambling), that's a separate concept entirely. You're trying to grow a tree from a seed when you invest, and there's nothing wrong with that. But most people cannot live off of it. You can't even order pizza with your investments until they come to fruition. A trader can make consistent money every single day, without knowing or caring where the market is going or what it's going to do. Price continues trend, price retests, trader makes money. Price reverses, price retests, trader makes money. That's it . No waiting for retarded "key support levels", no waiting for "confirmation", no speculation, no technical analysis. Just raw risk management, getting in and out of the market quickly and constantly. Now, the one downside to being this kind of trader is you generally can't do this easily with the basic tools provided by your platform, meaning you would need scripts, EAs or whatever in order to quickly deploy limit clusters. The tool I'm working on allows me to drag a horizontal line on the screen, and I have a panel of buttons that do interesting things. I can click "Sell limits" and a whole bunch of sell limit orders appear just above the line. I can move that line again and click "Adjust TP", and the take profits for all of those orders will appear right below the structural retest point I'm targeting. I have buttons to close profits, to close pendings, close all tickets... it's just the bees knees. This is an MT5 EA, which most people won't be using, but I trade on CryptoAltum so that's what I use. I will leave it here for free. Lastly, have some limit order porn. Every single rectangle is a place where you could've had limits that got filled and made money. On really strong trends, you might notice that the retracement only returns to around the 50% point of your limit cluster, but you'll notice how uncommon that is and how easily you could've gotten out with little to no loss. A lot of the time, I won't even restrict myself to structure (swing highs and swing lows) even though that's the most reliable way to do it. I'll literally just put limits above and below any wick because I feel like it and I can make a profit in all likelihood. ...Anyway. I hope you enjoyed this write-up. Leave a comment if you did, or have any questions!
Education
by WinkleTrades
Position Size Calculation - Example 11. INPUT PE = Capital($) = 1000 RP = Risk (%) = 2 % EP = Entry Price = 1719.78 XP = Exit Price = 1733.75 2. OUTPUT (Goal) PS = Position Size = ? LEV = Leverage = ? IM = Initial Margin = ? 3. CALCULATION RD = Risk ($) = 1000 * (0.02) = 20 SLD = |EP - XP| = |1719.78 - 1733.75| = 13.97 SLP = Stop Loss (%) = (SLD / EP) = (13.97 / 1719.78) = 0.0081 PS = Position Size ($) = RD / SLP = 20 / 0.0081 = 2469.13 CPV = Current Price Value = EP = 1719.78 QNT = Quantity = PS / CPV = 2469.13 / 1719.78 = Roundup(1.435) = 2 4. Assumption and Final Calculation LEV = {3, 5, 10, 20} IM = PS / LEV = 2469.13 / {3, 5, 10, 20} = {823.04, 493.826, 246.913, 123.4565}
BINANCE:ETHUSD.PEducation
by yaser_rahmati
Risk Management ‼️‼ Survival rules in trading for newbies, if you respect those rules i can make a bet you wound't lose your account as the majority of traders are. ‼ The key word there is IF YOU RESPECT ✅ 1. Always trade with a stop loss ✅ 2. Have a pre-determined risk on each trade no more then 1% ✅ 3. Don't move your stop loss if the price is not going in your favour ✅ 4. Don't add to losing positions, only viceversa. Add to your winning positions ✅ 5. You have to increase your risk only if you are in profit on your account, decrease your risk when you are losing and increase it when you are winning. Hope that was usefull for your trading plan.
Education
by Snick3rSD
Visualizing Risk ManagementI would like to save people from getting burned so after 3.5 years of being in this space here is my advice: 1. It is easy to fall in love with an investment, especially when you believe it could make you rich. Have belief, but don't be blinded by it. Consider that you could be wrong, late, or even too early. 2. Price can remain irrational longer than you can stay solvent. Getting chopped up in the range will dwindle your capital that can be very hard to recover. 3. If everyone knows it, the market will no longer follow that path. The moment you determine a certainty is the moment you're destined to learn some lesson. 4. Doing nothing is hard. It feels good to be all-in, but this pushes emotions to the brink for new investors that can't stop looking at the screens. Trading/investing can be as simple as drawing one horizontal line on a chart. Price goes above and you're in. Below and you're out. Numbers don't lie. Develop a plan and cut the emotion.
Education
by Bohrbtc
Liquidation Levels Trading FuturesI've seen lots of people getting liquidated on there longs on this BTC dump. This is why I think people never take into consideration risk management or don't know how it actually works. Maybe this can help a lot of people and help them clarify things. YES, the getting rich quick by leveraging is a probability, but if you ask me, I would consider it luck in the 25x to 100x than in lower leverage positions. I think the getting rich quick scheme in crypto or FX is never talked enough and should always be addressed with proper risk management. This analysis is considering you long your whole portfolio with leverage (which most people do). If you want to long with high leverage, use 1% or 2% of your portfolio, try it out in Isolated mode first and see what it is all about. Your losses will teach you how to be a better trader, but never ever lose your ammo in your first try. I'll do a follow up of this chart with potential gains by leveraging.
Education
by Goldenperro
Risk ManagementAs I promised, I publish the post about risk management. There are different types of risk management, but I will share one of the best in my opinion. When you trade futures you have no control over what is happening in the market, the only thing you can counteract is your stop orders and it depends on the volume of your position. Nothing more depends on you. You can try to control the market with your thoughts, meditations, prayers, you can try anything, but it doesn't work and it's not surprising :) What is under your control is stop loss. Don't overdo with your trades - it's when you trade too big contracts or when you trade too often. Here too, there is the considerable cause that pushes you to trade too often: you look at small timeframes and afraid to miss a profitable trade. Your problem is likely to be that you have a large number of open positions, so I will tell you how big your position should be. One simple mathematical method will help you. You have to determine the amount you are willing to risk. Say your trading account is $100,000. And you need to decide what part of that amount you want to risk on one deal. Someone might say I'm a very risky guy, I'll risk 20%, the other - 15%, and the other only 2-5%. The more percentage of your deposit you use in a deal, the better chance of zeroing out your deposit. You have to determine your risk factor. Usually, in an aggressive strategy, the risk is 10-12%. You always need to understand what percentage of your money you are willing to risk. If you know exactly what your maximum possible loss and use the appropriate stops, then you can't lose more than you have specified. Of course, you need to take into account some possible slippage. Let's assume that you set for yourself a maximum loss of $500 on a trade and don't risk more than 10% of your capital. Then the risk factor of my $100K trading account is $10K. So you only risk $500 per trade and be able to make 20 failed trades straight. After 3 unsuccessful trades, as a rule, I close the terminal and go out for a walk or drive a car, after an hour I return and make no more than 2 trades Formula: Your balance multiplied by risk percentage(e.g. 10%) and divided by your maximum possible loss (stop, e.g. $500) and as a result we get the number of contracts that you can trade. 100,000$ * 10% =10000$ 10000$ / 500$ = 20 Number of traded contracts You can see the formula on the chart It's all about money management, once you earn more money you can open more positions, and when you get a loss the contract volume decreases too. Fact of life, if you bet big you are guaranteed to lose big. Money management must begin before you enter the trade. You should know how many trades you can trade and how much you can risk for each of them. Never invest more than 20% of your capital if you are experienced, and 10% if you are new with trading. Don't trade more than six markets at a time. When you feel sure that you can't lose, it's time for the biggest risk of losing everything. Fear allows you to be careful. You must risk no more than 5% of your capital per trade, regardless of your experience. Remember, the markets aren't sweet candy, they're brutal, and many people, without realizing it, lose their deposits. The market is a puzzle without instructions. I hope I a little bit helped to put your puzzle together. Respect the market he is your teacher With respect, EXCAVO.
BITSTAMP:BTCUSDEducation
by EXCAVO
44
Bankroll and Risk Management, Risk to Reward Ratio - EDUCATIONALIn this example I am showing you how important is RIsk Management in your trading system. You could be the most talented trader in the world with a natural eye for investment opportunities, and still blow your account with one bad call without proper risk management. No matter how good you are, or how experienced you are, you’re still going to incur losses. Even the best traders in the world suffer losing trades - it’s part and parcel of trading. That’s why risk management is so important to your trading. One way that you could strike the right balance between reward and risk is to stick to a reward:risk ratio such as 2:1 or even 3:1, where your targeted profits are always double that of your maximum losses. So even if you suffer three losing trades, you’ll only need two profitable ones to ensure your total profits outnumber your losses if you stick to this reward:risk ratio. Although it’s not a general rule to follow, it can help you to visualise a specific approach to risk management. "It's not important whether you are right or wrong. It's about how much money you make." That means that you can still win 4/6 trade and you are still loosing money. In the example showed you can see that investing different amount of money in each trade can drive to a negative ROI even if yours winning rate is over 66% .
Education
by wolf-lamb
5
Core rules to trade with Sinewave & MomentumHope this educational content will help you make a better use of the indicators. Remember that these rules are just ground rules. Positions sizes and stops positionning will depend on your own risk profile. This is up to you to find your comfort zone on these parameters. Indicators used in this video are : PRO Sinewave & PRO Momentum Don't forget to hit the like/follow button if you feel like this post deserves it ;) You can check my indicators via my TradingView's Profile : @PRO_Indicators Kindly, Phil
BITSTAMP:BTCUSDEducation
by PRO_Indicators
25