There is a well known term to traders and that is bulls make money, bears make money and pigs get slaughtered! Trading is a portability's game and you are never 100% right, you can make 5 good trades then lose it all in 1 bad trade with poor risk management, if you have good risk management you can be wrong on you trade %70 of the time and break even.
To be in the trading game for the long run you need to have a good risk management strategy where you protect your capital. We are looking for the most probable trades with planned win to loss risk ratios using a calculated stop loss so we only risk a small percentage of our capital.
Know where your invalidation is before you enter a trade. Knowing where you are wrong is just as important as where you are correct.
It is normal to take losses when trading, do not be scared to take a loss in a trade, don't let your emotions control your trades, you stick to the plan and if you lose the trade then move on to the next one.
At some point in your trading career you will start taking more wins then losses and that's where we want to get to.
Always place a stop loss as it is there to protect your capital. Always place a take profit as it is there to stop you from being a pig and getting slaughtered.
Position size
Before we calculate our position size we make sure our trading plan has at least a 3-1 win loss ratio.
With a standard trade we want to risk 1% of our capital, if we have a really good trade set up that we are confident on we can risk 2% of our capital. And that is the maximum amount of loss we will take ever in a trade.
I hope this can help anyone willing to learn, I cant stress enough the importance of risk management.
This is just for educational purposes and is not an actual trade set up, I will not be taking this trade and nether should you, do your own TA and trade your own plan, that's the only way to become a successful trader.
To be in the trading game for the long run you need to have a good risk management strategy where you protect your capital. We are looking for the most probable trades with planned win to loss risk ratios using a calculated stop loss so we only risk a small percentage of our capital.
Know where your invalidation is before you enter a trade. Knowing where you are wrong is just as important as where you are correct.
It is normal to take losses when trading, do not be scared to take a loss in a trade, don't let your emotions control your trades, you stick to the plan and if you lose the trade then move on to the next one.
At some point in your trading career you will start taking more wins then losses and that's where we want to get to.
Always place a stop loss as it is there to protect your capital. Always place a take profit as it is there to stop you from being a pig and getting slaughtered.
Position size
Before we calculate our position size we make sure our trading plan has at least a 3-1 win loss ratio.
With a standard trade we want to risk 1% of our capital, if we have a really good trade set up that we are confident on we can risk 2% of our capital. And that is the maximum amount of loss we will take ever in a trade.
I hope this can help anyone willing to learn, I cant stress enough the importance of risk management.
This is just for educational purposes and is not an actual trade set up, I will not be taking this trade and nether should you, do your own TA and trade your own plan, that's the only way to become a successful trader.