|submitted by itglive to u/itglive [link] [comments]|
|submitted by VRCandy to protraders_bitcoin [link] [comments]|
|submitted by TopExpertreview to Make_Moneyblog [link] [comments]|
submitted by xrum to forex_trades [link] [comments]
|submitted by xrum to promote [link] [comments]|
|submitted by xrum to forexmaster [link] [comments]|
|submitted by judethegreat to Daytrading [link] [comments]|
|submitted by forexdost to u/forexdost [link] [comments]|
|submitted by tipskishan to u/tipskishan [link] [comments]|
|submitted by BitcoinTraderfx to CryptoNews [link] [comments]|
submitted by AlgobitForex to forexhome [link] [comments]
|submitted by WorldofWordPress to WorldofWordPress [link] [comments]|
|submitted by WorldofWordPress to WorldofWordPress [link] [comments]|
Hi guys,submitted by getmrmarket to Forex [link] [comments]
I have been using reddit for years in my personal life (not trading!) and wanted to give something back in an area where i am an expert.
I worked at an investment bank for seven years and joined them as a graduate FX trader so have lots of professional experience, by which i mean I was trained and paid by a big institution to trade on their behalf. This is very different to being a full-time home trader, although that is not to discredit those guys, who can accumulate a good amount of experience/wisdom through self learning.
When I get time I'm going to write a mid-length posts on each topic for you guys along the lines of how i was trained. I guess there would be 15-20 topics in total so about 50-60 posts. Feel free to comment or ask questions.
The first topic is Risk Management and we'll cover it in three parts
Why it mattersThe first rule of making money through trading is to ensure you do not lose money. Look at any serious hedge fund’s website and they’ll talk about their first priority being “preservation of investor capital.”
You have to keep it before you grow it.
Strangely, if you look at retail trading websites, for every one article on risk management there are probably fifty on trade selection. This is completely the wrong way around.
The great news is that this stuff is pretty simple and process-driven. Anyone can learn and follow best practices.
Seriously, avoiding mistakes is one of the most important things: there's not some holy grail system for finding winning trades, rather a routine and fairly boring set of processes that ensure that you are profitable, despite having plenty of losing trades alongside the winners.
Capital and position sizingThe first thing you have to know is how much capital you are working with. Let’s say you have $100,000 deposited. This is your maximum trading capital. Your trading capital is not the leveraged amount. It is the amount of money you have deposited and can withdraw or lose.
Position sizing is what ensures that a losing streak does not take you out of the market.
A rule of thumb is that one should risk no more than 2% of one’s account balance on an individual trade and no more than 8% of one’s account balance on a specific theme. We’ll look at why that’s a rule of thumb later. For now let’s just accept those numbers and look at examples.
So we have $100,000 in our account. And we wish to buy EURUSD. We should therefore not be risking more than 2% which $2,000.
We look at a technical chart and decide to leave a stop below the monthly low, which is 55 pips below market. We’ll come back to this in a bit. So what should our position size be?
We go to the calculator page, select Position Size and enter our details. There are many such calculators online - just google "Pip calculator".
So the appropriate size is a buy position of 363,636 EURUSD. If it reaches our stop level we know we’ll lose precisely $2,000 or 2% of our capital.
You should be using this calculator (or something similar) on every single trade so that you know your risk.
Now imagine that we have similar bets on EURJPY and EURGBP, which have also broken above moving averages. Clearly this EUR-momentum is a theme. If it works all three bets are likely to pay off. But if it goes wrong we are likely to lose on all three at once. We are going to look at this concept of correlation in more detail later.
The total amount of risk in our portfolio - if all of the trades on this EUR-momentum theme were to hit their stops - should not exceed $8,000 or 8% of total capital. This allows us to go big on themes we like without going bust when the theme does not work.
As we’ll see later, many traders only win on 40-60% of trades. So you have to accept losing trades will be common and ensure you size trades so they cannot ruin you.
Similarly, like poker players, we should risk more on trades we feel confident about and less on trades that seem less compelling. However, this should always be subject to overall position sizing constraints.
For example before you put on each trade you might rate the strength of your conviction in the trade and allocate a position size accordingly:
To keep yourself disciplined you should try to ensure that no more than one in twenty trades are graded exceptional and allocated 5% of account balance risk. It really should be a rare moment when all the stars align for you.
Notice that the nice thing about dealing in percentages is that it scales. Say you start out with $100,000 but end the year up 50% at $150,000. Now a 1% bet will risk $1,500 rather than $1,000. That makes sense as your capital has grown.
It is extremely common for retail accounts to blow-up by making only 4-5 losing trades because they are leveraged at 50:1 and have taken on far too large a position, relative to their account balance.
Consider that GBPUSD tends to move 1% each day. If you have an account balance of $10k then it would be crazy to take a position of $500k (50:1 leveraged). A 1% move on $500k is $5k.
Two perfectly regular down days in a row — or a single day’s move of 2% — and you will receive a margin call from the broker, have the account closed out, and have lost all your money.
Do not let this happen to you. Use position sizing discipline to protect yourself.
Kelly CriterionIf you’re wondering - why “about 2%” per trade? - that’s a fair question. Why not 0.5% or 10% or any other number?
The Kelly Criterion is a formula that was adapted for use in casinos. If you know the odds of winning and the expected pay-off, it tells you how much you should bet in each round.
This is harder than it sounds. Let’s say you could bet on a weighted coin flip, where it lands on heads 60% of the time and tails 40% of the time. The payout is $2 per $1 bet.
Well, absolutely you should bet. The odds are in your favour. But if you have, say, $100 it is less obvious how much you should bet to avoid ruin.
Say you bet $50, the odds that it could land on tails twice in a row are 16%. You could easily be out after the first two flips.
Equally, betting $1 is not going to maximise your advantage. The odds are 60/40 in your favour so only betting $1 is likely too conservative. The Kelly Criterion is a formula that produces the long-run optimal bet size, given the odds.
Applying the formula to forex trading looks like this:
Position size % = Winning trade % - ( (1- Winning trade %) / Risk-reward ratio
If you have recorded hundreds of trades in your journal - see next chapter - you can calculate what this outputs for you specifically.
If you don't have hundreds of trades then let’s assume some realistic defaults of Winning trade % being 30% and Risk-reward ratio being 3. The 3 implies your TP is 3x the distance of your stop from entry e.g. 300 pips take profit and 100 pips stop loss.
So that’s 0.3 - (1 - 0.3) / 3 = 6.6%.
Hold on a second. 6.6% of your account probably feels like a LOT to risk per trade.This is the main observation people have on Kelly: whilst it may optimise the long-run results it doesn’t take into account the pain of drawdowns. It is better thought of as the rational maximum limit. You needn’t go right up to the limit!
With a 30% winning trade ratio, the odds of you losing on four trades in a row is nearly one in four. That would result in a drawdown of nearly a quarter of your starting account balance. Could you really stomach that and put on the fifth trade, cool as ice? Most of us could not.
Accordingly people tend to reduce the bet size. For example, let’s say you know you would feel emotionally affected by losing 25% of your account.
Well, the simplest way is to divide the Kelly output by four. You have effectively hidden 75% of your account balance from Kelly and it is now optimised to avoid a total wipeout of just the 25% it can see.
This gives 6.6% / 4 = 1.65%. Of course different trading approaches and different risk appetites will provide different optimal bet sizes but as a rule of thumb something between 1-2% is appropriate for the style and risk appetite of most retail traders.
Incidentally be very wary of systems or traders who claim high winning trade % like 80%. Invariably these don’t pass a basic sense-check:
How to use stop losses sensiblyStop losses have a bad reputation amongst the retail community but are absolutely essential to risk management. No serious discretionary trader can operate without them.
A stop loss is a resting order, left with the broker, to automatically close your position if it reaches a certain price. For a recap on the various order types visit this chapter.
The valid concern with stop losses is that disreputable brokers look for a concentration of stops and then, when the market is close, whipsaw the price through the stop levels so that the clients ‘stop out’ and sell to the broker at a low rate before the market naturally comes back higher. This is referred to as ‘stop hunting’.
This would be extremely immoral behaviour and the way to guard against it is to use a highly reputable top-tier broker in a well regulated region such as the UK.
Why are stop losses so important? Well, there is no other way to manage risk with certainty.
You should always have a pre-determined stop loss before you put on a trade. Not having one is a recipe for disaster: you will find yourself emotionally attached to the trade as it goes against you and it will be extremely hard to cut the loss. This is a well known behavioural bias that we’ll explore in a later chapter.
Learning to take a loss and move on rationally is a key lesson for new traders.
A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; it doesn’t care whether you make money or not.
Bruce Kovner, founder of the hedge fund Caxton Associates
There is an old saying amongst bank traders which is “losers average losers”.
It is tempting, having bought EURUSD and seeing it go lower, to buy more. Your average price will improve if you keep buying as it goes lower. If it was cheap before it must be a bargain now, right? Wrong.
Where does that end? Always have a pre-determined cut-off point which limits your risk. A level where you know the reason for the trade was proved ‘wrong’ ... and stick to it strictly. If you trade using discretion, use stops.
Picking a clear levelWhere you leave your stop loss is key.
Typically traders will leave them at big technical levels such as recent highs or lows. For example if EURUSD is trading at 1.1250 and the recent month’s low is 1.1205 then leaving it just below at 1.1200 seems sensible.
If you were going long, just below the double bottom support zone seems like a sensible area to leave a stop
You want to give it a bit of breathing room as we know support zones often get challenged before the price rallies. This is because lots of traders identify the same zones. You won’t be the only one selling around 1.1200.
The “weak hands” who leave their sell stop order at exactly the level are likely to get taken out as the market tests the support. Those who leave it ten or fifteen pips below the level have more breathing room and will survive a quick test of the level before a resumed run-up.
Your timeframe and trading style clearly play a part. Here’s a candlestick chart (one candle is one day) for GBPUSD.
If you are putting on a trend-following trade you expect to hold for weeks then you need to have a stop loss that can withstand the daily noise. Look at the downtrend on the chart. There were plenty of days in which the price rallied 60 pips or more during the wider downtrend.
So having a really tight stop of, say, 25 pips that gets chopped up in noisy short-term moves is not going to work for this kind of trade. You need to use a wider stop and take a smaller position size, determined by the stop level.
There are several tools you can use to help you estimate what is a safe distance and we’ll look at those in the next section.
There are of course exceptions. For example, if you are doing range-break style trading you might have a really tight stop, set just below the previous range high.
Clearly then where you set stops will depend on your trading style as well as your holding horizons and the volatility of each instrument.
Here are some guidelines that can help:
For example if you stop understanding why a product is going up or down and your fundamental thesis has been confirmed wrong, get out. For example, if you are long because you think the central bank is turning hawkish and AUDUSD is going to play catch up with rates … then you hear dovish noises from the central bank and the bond yields retrace lower and back in line with the currency - close your AUDUSD position. You already know your thesis was wrong. No need to give away more money to the market.
Coming up in part IIEDIT: part II here
Letting stops breathe
When to change a stop
Entering and exiting winning positions
Coming up in part IIISqueezes and other risks
Crap trades, timeouts and monthly limits
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
The 10 Best Forex Trading Strategies you ever seen: Best Forex Trading Strategies (English Edition) Forex Trading Strategies Revealed: Most Successful Forex Trading Strategy for Beginners and Advanced (English Edition) The Truth Behind the Charts NOOR Abdeckplane Profi 140g/m2 Grün I 6X 10 m I Allzweckplane für Schutz vor Witterung I Ideal geeignet für Gartenbereich I UV-stabilisiert ... Best Forex Brokers 2020. Forex is one of the most liquid financial markets that attract more investors year by year. By 2019, the total daily turnover is equivalent to $5 trillion, having grown from $1 trillion twenty years ago. This knowledge makes it one of the most liquid and attractive financial markets with 24/7 availability. For successful Forex trading, a trader needs to choose a ... The Top 10 Best Forex Trading Strategies that Work. If you’re constantly searching for the Holy Grail or the ultimate system that just never lose, I hope that by now you realized that there is no perfect system. Realistically, as a trader you need to accept that the markets are changing all of the time, it’s never the same. That’s one of the reasons why you need a strategy that fits into ... Welche Faktoren es vorm Kaufen Ihres Best forex trading strategy ever zu beachten gibt. Um Ihnen zu Hause die Wahl des richtigen Produkts ein wenig abzunehmen, haben unsere Tester außerdem das Top-Produkt dieser Kategorie gewählt, das zweifelsfrei unter allen Best forex trading strategy ever in vielen Punkten auffällt - insbesondere im Testkriterium Verhältnis von Qualität und Preis. Our Top 10 of the best forex brokers it’s right for you then. Over time we have created several lists and comparisons on the best forex brokers in every category (find them at the bottom of this post). But here we have gathered the very best of the best, the biggest trusted forex brokers in the world, with peaks of excellence in the quality of services. This order is not necessarily a ... 10 Best Forex Trading Apps for 2020. These are the forex trading apps you should consider using for trading purposes and to evaluate potential business opportunities, and to keep yourself updated with key market trends directly from your fingertips: eToro. eToro is the most beginner-friendly and go-to destination for any Forex trader. One of the best about it is that there are more than 200 ... Top 10 Best Forex Brokers Accepting Bitcoin 2020. Post Author: david; Post Category: Best Brokers; Cryptocurrencies have been grown during recent years rapidly and more people are now using them either as a way of transaction or trading them. That’s why I decided to find the best top 10 forex brokers accepting Bitcoin for deposit and withdrawal. Although there are some forex brokers apply ... 10 Best Forex Brokers – Our Broker Reviews. Since the global foreign exchange market is the largest in the world and most actively traded, there are different ways to rate each brokerage. One type may be the best forex broker for beginners while others are better for advanced users. The most important factors include fees for spreads and commissions, trading platform software, charting tools ... TOP 10 BEST FOREX BROKER AFFILIATE PROGRAMS. Here are the best forex broker affiliate partnership programs with highest CPA, CPL, RevShare. All affiliate programs are tested and fully reliable. All forex broker in this list are not only regulated in the european union. If you are looking for an international partnership you will also find the one for you. START HERE. Most Lucratives Forex ... Top 30 Ranking – Best Forex EA's – Expert Advisors – FX Robots. Dear fellow Forex trader, View the Best Forex EA’s, reviews and proven results and select the best FX Expert Advisors for Metatrader 4 (MT4) or Metatrader 5 (MT5) trading platforms for your needs.. This is our Top 30 Ranking of the Best Forex Robots, which will earn you lots of money!
[index]          
This is the best forex scalping strategy i ever use. scalping forex trading is good for short trade. Parabolic Sar Indicator forex trading strategies is the ... @FxEliteMMTrend fallow me on Instagram and telegram contact me there or email me [email protected] to be added to my groupThe best strategy you will ever... Top 10 Online Forex Brokers 2019-20 - YouTube. Watch later. Share. Copy link. Info. Shopping. Tap to unmute. New Blitz Alert. blitztrackersummit.com/. https://rebrand.ly/theconversionpros3 Get More Info Now 10 Best Forex Affiliate Programs Of 2020 - Authority Hacker Things To Know Before You Get This , mark... #Mt4 #AutoTradingSignalSoftware #Binary #IQ option #best ea free download I hope you video help you in your trading... Please Subscribe http://bit.ly/2DBZhzv... All about Trading in Forex and Binary Option Marked.Video Name:TOP 10 BEST FREE FOREX DOWNLOAD INDICATORS and SYSTEMS ...