Get started

Moneymanagement

GBPUSD Short for week 22.8.2022Hello and Good week everyone. Last week was great in terms of market direction. every pair went the right direction. just didnt give us an entry. This week we are still shorting GBPUSD. weekly objective. you can take partials off (half off is recommended) at the TP level, and let the rest run while moving SL to break even ONCE price hits TP level. Plan your risk and trade position sizes accordingly. This is not trade advice, just an opinion on the markets. Trading can lead to excessive losses and complete loss of one's equity if not managed properly.
Short
by voxovFX
2
BASIC MONEY MANAGEMENT - LOT SIZE - REVERSAL - ACCOUNT SIZEHey Everyone, A repost to remind newbies of some basic money management fundamentals. We see too many new traders trade with random lot sizes with no understanding on the impact it has on account sizes, which result in not only losses but BLOWN accounts. This post is by no means a risk or money management strategy but more so just basics on the movement of reversals and how the lot sizes impact the value of your account during this reversal. Trading with the right lot sizes allows a trader to manage their account/money when the trade goes against them. The right size allows a trader to move a range without blowing their account and without seeing their account reverse to the point of no equity. This type of trading gives traders anxiety and in return this anxiety impacts trading psychology . This then has a ripple effect and impacts your trading decisions and analysis. The example we show on the chart is an entry of SELL that reverses by 380 PIPs. This movement happened in literally 2 candles (1hour candles) , so in two hours the price from entry reversed by 380 pips. This example then shows what this equates to in monetary value dependent on lot sizes. The example shows that anyone with a £500 account trading this movement with a lot size of 0.20 would have blown their account. Lot size usage should be based on the size of your account for example; £500 size account - we will only use 0.01 size lot sizes with maximum deployed total no more than 0.05. This will allow an account to survive volatile movements. Also using stop losses on top of this setup further strengthens the risk management. £1000 size account - we will use 0.02 lot sizes with maximum deployed total no more then 0.10 any given time. £2000 size account - we will use 0.03 lot sizes with maximum deployed total no more then 0.30 any given time. £5000 size account - we will use 0.06 sizes with maximum deployed total no more then 0.50 any given time. Basically 0.10 for every £1000, as the total deployed usage allows us enough flexibility of movement on the chart and then using stop losses on top of this, gives us further control of our money management. We hope this quick basic insight helps some of the newbies better manage their lot size usage. Please like, comment and follow us to support our work, we really appreciate it! GoldViewFX XAUUSD TOP AUTHOR
OANDA:XAUUSDEducation
by Goldviewfx
8
EURUSD Short 16.8.22Nice move yesterday in EU and GU. Good to see price moving the way we called it. 2 trade ideas for today. Scalp idea: trade 1. If we get stopped out of trade 1. wait for price to retrace more to trigger trade 2 in. 100% of your allocated risk/trade on this trade Weekly trade objective: Trade 2. reduce risk to 75% of your allocated risk per trade. Since now we are down for the day. 25% of allocated risk/trade for entry 1 50% of allocated risk/trade for entry 2 What would void this trade? if price went for the circled low first. We look for another entry. Plan your risk and trade position sizes accordingly. This is not trade advice, just an opinion on the markets. Trading can lead to excessive losses and complete loss of one's equity if not managed properly.
Short
by voxovFX
EURUSD Short33% of your allocated risk on entry 1. 67% of your allocated risk on entry 2. I like Entry 2 better. But will enter at entry 1 as well to avoid missing out a position. Thus more weightage on Entry 2. Smaller Position size on entry 1 due to larger SL. Simple money management ideas Plan your risk and trade position sizes accordingly. This is not trade advice, just an opinion on the markets. Trading can lead to excessive losses and complete loss of one's equity if not managed properly.
Short
by voxovFX
6
EXIT STRATEGIES: Money ManagementHey traders, Today I wanted to dive into exit strategies. A lot of you will already have a very clear understanding of what an exit strategy is and how you usually go about it. Most of you are probably automatically thinking of stop losses and take profits, which is fair enough. Today however, I wanted to dive into some more advanced techniques. I want to have a look at what you need to be thinking about prior to entering a trade, during the trade, and then finally when it's time to get out. Yes, we use stop losses. Yes, we use take profits. But I know from my experience personally, it's very rare that I actually get my full stop loss hit. I'm usually out of the position prior to those levels. This all falls under money management, which is by far the most important aspect of your trading ability that you need to understand. We are money managers as traders. When we are risk on, we have money live in the markets. It is our job to manage it accordingly. Win or lose, the success comes down to if we are managing position and risk correctly. Now, this blog is a little bit more directed to our day traders or people who are constantly having positions with the whole idea of set stop losses and take profits. For investors, it does differ a little bit and I'll touch on that now. When it comes to buying a stuck or an asset, it is very easy come up with a trade idea. You find the idea, you buy, simple. What makes it really difficult is actually finding the appropriate time to sell. That's what actually makes the good investors. Because equity, yes, it is still extra cash in your pocket, but you don't get that cash actually in your pocket until you have hit that sold button and realized your profits. My biggest outlay to anyone in any type of investing is have an exit plan prior to entry. Have a minimum requirement, have a maximum requirement, and what to do in those scenarios. I've seen it many many times before, especially with the recent cryptocurrency boom that people just get in expecting it to go up with no exit strategy, so they never exit because it's constantly moving up. Then, Unsurprisingly, the market pulls it back in and they lose all of their equity profit. They find themselves trying to close out of their position before it's a big loss. Always have an exit plan. Now lets dive back into more of the day trading market. When it comes down to exits of the market. Most people use stop loss orders or take profit orders. These are orders you can set on your brokerage platform, which essentially, when that asset reaches a certain price, the server will read that and automatically pull your position at your requested price. These are the most common ways to manage risk. It's a very beginner friendly. It's very easy to find an area where to put your stop loss, put your stop loss, put your take profit, walk away and let the trade unfold. However, today, let's get a little bit more advanced. There are a few questions you need to ask yourself prior to entering a position. Regardless of looking at the profit potential (which is the biggest pull). Start associating yourself with the risk you are taking in order to open this position. The first question I want you to ask yourself is, how much are you willing to risk on this trade? Risk is an important factor when investing right to determine your risk level. You need to understand what is not going to affect or hurt you, but still generate enough profits to make it worthwhile in your eyes. Finding that medium balance of what you can handle when you go and drawdowns is going to be highly beneficial to risk the right amount and not go emotionally insane every time you're in a position. Once you understand what dollar value you're willing to risk, then you just position size accordingly and have a stop loss on your chart and there you will know your maximum risk. That is what you are going to lose if all goes against you on this position. Once you have the basic understanding of how much you're risking per position, you want to try and avoid hitting that stop loss at all costs. So while you're managing your position (this is something I like to do personally) if everything is going against you, it's usually a sign that it's going to continue that way. Yes, statistically, there's going to be sometimes it may be reverses. That's the beauty in backtesting your strategy so you have an in-depth understanding on what it is capable of. I look to start scaling out of my position, which means selling off my position size as we move towards the stop loss. As I mentioned above, it's very rare that I actually hit my Max loss stop loss statistically. Looking back at my journal, I've actually scaled more than 75% of my position out prior to hitting a full stop loss if not all of the position. This is giving me an incredible advantage when it comes down to statistics, because while I can still hit a full take profit and a full position in profits. But I am not hitting a full loss, so my risk to reward has actually rapidly increased, even though it's still very similar when I'm entering the trade. The second question I want you to ask yourself is, where do you want to get out? Where is your take profit? Where is your stop loss? But also look within those areas where realistically are key indications on where this price is going to move. Do you have to get through four or five support levels to reach your take profit? Should you start looking at scaling out some of the position in the profits around those levels? The more you have to go through, the harder it is going to be to actually achieve the profit. Have an exit plan. Where are the levels you want out? And finally, and this is probably the biggest one, how long you are planning on being in the trade? If you're trading down on the five minute chart, do you really want to hold this trade for two days? If it takes that long, do you only want to be trading during this market hours? Where do you want to cut this trade? This is really important because most people, especially the set and forget traders, they don't have a time limit on their trades. They allow it to just run over multiple sessions. But The thing is, the longer it runs, the less than analysis becomes true. Have a look at the time frame you're trading. If you're investing, look at the yearly outlook. How long do you really want to be holding this stock before it actually does something? I know we're not options traders. Some of you, maybe, but it is a good idea to have kind of a time scheme that you don't want to be holding any longer than. I personally look to start scaling out of the position, taking risk off the longer the trade takes, especially if I'm trying to trade on volatility. These are three questions to ask yourself and a little bit of tips and tricks when it comes down to scaling an managing risk on a more advanced level. Remember, as traders and investors, we are risk managers. We are money management specialists. Our job is to not lose money. When we stop losing money, profits will come in. Focus on your risk, focus on what you can afford to lose, and then focus on your positions and try and stop yourself from ever hitting that Max stop loss that you give yourself. I wish you all success! -Jordon Mellor
Education
by the5erstrading
8
NIFTY 50 is testing important resistance now.Hello Everyone, This is the first time i am sharing my idea on NIFTY 50, Indian Index. Past 3 days were very good for NIFTY. rise of more than 700 points. But now i see downward wedge pattern in Daily chart. Possible scenarios i see here are; 1) Strong resistance at 16000 . We should see profit booking here. we may test 15600 again for good pump. 2) If we continue trend above 16000, (possibilities are slightly high) next strong resistance is between 16150 to 16300 . we should see strong pull back from this levels to 15800 . American market is following the same trend. So trade carefully. #IndianExchange #NIFTY50 #StockMarket
NSE:NIFTY
by Mr_Mainra
When you should use leverage in your trades?When you should use leverage in your trades? I’m going to answer this question, but first, we have to mention two other questions to be answered. Q1: What is a reasonable trade? An order in which the entry point, stop loss, and take profit are already pre-defined based on a good return strategy or rules. Q2: What is money management? Money management is to determine the percentage of risk on the total balance in each order and to know what your position size will be and how much your potential loss will be. We need to do some calculations to answer the first question. Let’s suppose your account balance is $100 and the maximum risk on your balance for each trade is 5%. This means that on a reasonable trade, your loss will be $5 at most. Besides that, you have a good trading opportunity with an entry point at $10, stop loss at $9, and profit point at $12, i.e. 10% potential risk and 20% potential reward for the position. Since we cannot lose more than $5 of our balance, we need a position size where the potential loss will not exceed $5. Which we can calculate with this formula: (Max risk on balance / position risk * 100). Which would be $50 in our case.  This means that we are only allowed to include $50 out of $100 in this trade; this would be $5 after a 10% loss.  Everything is normal and we can afford it, so we will do the trade. Now, let’s increase the max risk on balance to 20%. It means our potential loss would be at most $20. By doing the same calculations considering the same reasonable trade with 10% risk, our position size will be $200 while we do not have more than $100, so where do we get $200 from?! Yep! Leverage would help you in this case. So benevolent, isn’t it?  In this case, your leverage would be 2 and you can open a $200 position, but don’t forget you increased your account risk from 5% to 20% already. Note that the risk will be applied to your real asset. If your balance is $100 and the leverage is 10, the exchange will give you about $1000 to buy or sell. While the 5% of $100 is $5, the 5% of $1000 would be $50, which is 50% of your real asset. So calculating the risk on leverage balance is practically meaningless! What if we had 10 orders simultaneously? It means $100 will be split between 10 orders. For ease of calculation, we consider every 10 trades to be the same as what we had above, while each trade would have 10% of $100. In these conditions, each trade would again have a $50 position, but leverage will be 5! Having said that, we can conclude that leverage alone is meaningless and finds meaning alongside reasonable trade opportunities and money management. In the above explanations, for the ease of calculation and context understanding, I used rand but not necessarily correct values. For example, a risk ratio of 5% on balance is a really high risk or in the example of 10 trades at once, it is wrong to consider your balance as $100 at the start of each trade. In the worst-case scenario, you should deduct the loss of the previous trade from your balance for the next trade. From the link below, you can access the tool I prepared to calculate the position details. bit.ly Feel free to give your constructive feedback.
Education
by bhnmzm
2
Money management strategiesWhen developing your own trading strategy, you can’t ignore such a question as a money management strategy. You should start working only after deciding on the budget - its size, acceptable risks and money management rules. The main rule: the risk of any transaction cannot exceed 1-2% of the capital. That is, if you have, for example, $25,000, it is permissible to lose no more than $250-500 on one position. Leading traders are usually limited to 1%. This money management strategy is a priority when making decisions about entering or exiting a position. If the probable loss exceeds the level determined by the trader, then the transaction should be abandoned. As the balance increases, both risk and reward will increase. And vice versa. With a decrease in balance, these indicators will decrease accordingly. However, no matter how trading develops, the established percentage of risk cannot be changed without a reason. The larger the trader's balance, the smaller percentage he prefers to use. With a million dollars in your account, it is not very justified to invest $10,000 in each trade. This is why high rollers prefer to define risk as a fixed amount rather than a percentage. In addition to the risk limit discussed above, money management strategies often include other limits. For example, it could be setting a loss limit for a trading session. The presence of such a barrier will allow you to "jump" in time if the indicated period of trading is not very successful. A fairly common technique is to limit the loss of a profit share. Trading stops immediately after a certain part of the money earned during the session is lost. Thus, the trader protects his profitable day from too minor completion. Trading on multiple positions Opening several positions at the same time is a fairly common phenomenon for most traders. The capital management strategy provides for the mandatory regulation of such trading. The presence of a scenario of behavior when opening several positions at once will greatly simplify trading and save valuable time To formulate recommendations for each specific situation, of course, is unrealistic. However, some general provisions can always be formulated. For example, if there is a correlation, it is permissible to open two positions, setting a risk of 1% for each, but at the same time one should refuse transactions involving third assets, with which this pair also has a stable relationship. As for determining the percentage, here experts recommend using the same 1% of the total balance, regardless of the number of positions. This amount of risk rarely allows you to open more than five transactions at the same time when it comes to stock trading. In the case of futures, currency pairs and options, their number may be higher. It is worth calculating 1% of the initial balance even if there are already open positions. Active trades change the size of the deposit, so 1% will not be a static value. Let's look at an example of a fairly standard trade. Let's say you start out with a starting capital of $25,000. The maximum risk in this case is $250(1%). When you analyze the market, you find crypto priced at $20 that match the entry rules you defined. Let's say the stop loss for this position should be fixed at $17. To make sure that the risk is justified, the profit potential should be assessed. If your target is $26, then you risk $3, while the profit in case of successful completion of the transaction will be $6 per share. Thus, we have a ratio of 2 to 1. It's easy to calculate how many coins you can buy to meet your risk tolerance of $250. In this particular case, 83 shares could be purchased for a total of $1,660. With a stop loss of $17, the risk is $250, not counting commissions. If exiting a position upon reaching the target profit is used, immediately set a take profit. These are the simplest money management rules, but by using them you can improve the profitability of your trading strategy and limit yourself from unwanted losses. We wish you successful trading on the markets!
COINBASE:BTCUSDEducation
by Crypto4light
2