Quote:
Originally Posted by zoreli
Thanks to all of you for the advices.
Since I will have small account (about $5000.00) my idea was to get small profits (10 pips) and to go out. However, due the losses that would not be possible.
I will try to play like this:
SL:35 pips, Take Profit on 70 pips.
I will not take my profit on 10 pips anymore and we will see. That's why virtual money are for. Waiting to hear more advices from you guys.
Regards, Zoreli
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$5000 is not such a small account .. many people start with far less!
Basically you do not want to risk more than 3% of account size on any one trade .. some say no more than 1%. With $5k, 1% is $50 or about 50 pips, so that is a generous stop loss.
If you are doing multiple mini-lots (and as a newbie with $5k you should only be doing mini lots) then you could risk 25 pips per position & hold 2 positions.
3% at risk would allow you to hold 3 positions with a 50 pip sl per position.
And so on.
Taking profit is not that rigid .. sometimes you will take profit at 10 or 15 or even 5 pips when you planned on 50 .. it depends on price action once you are in the trade. Better to take 10 pips of profit than to ride trades to your max stop loss each time!
Your stop losses should be rigid, because you must not risk too much of your account on any one trade (and believe me, I still need to work on that part!! It is not always easy...) and most importantly, you need to know BEFORE entering a trade:
Why am I entering this trade? (there should be 3 good reasons)
What is my profit potential?
What is my stop loss?
What would make me close the trade (you only need ONE good reason to get out)
3 good reasons to enter .. only one to exit.
I'm still working on practicing what I preach! Although I know WHY I am entering a trade, what my pt & sl are, and even what would make me leave the trade .. I am still guilty of finding 'excuses' to stay in the trade once I am in. Like .. "I will get out if price retraces below the last candle" Then when it does, I move to a higher timeframe chart and say .. 'well, on this timeframe it actually could move down a bit more & still be valid'. In other words I turn a short term trade into a longer term one, or find other justifications to stay in .. and end up losing pips when I could have just cashed in 5 or 10 pips, instead of the 50 I hoped for (because price began to be sluggish).
You also need to consider the time factor when going into a trade .. if you are trading off the 15 min chart, you want price to move in your favor a lot sooner than if you are trading a 4 hour chart.
And one of the keys to forex success imho is trading multiple lots. If you think a trade is a valid one, put on 2 or even 3 positions, not just one. Then you can take profits quickly from your first position, move your stop to break-even (your entry price) on the remaining one or two positions . .. and now you are trading with free money
A few years ago a trader called bunnygirl invented the BGX or bunnygirl cross, which was basically a moving average cross on the 30 min chart. The system was good & reportedly she became a millionaire & retired from trading .. but .. what made that happen was not so much the BGX system but the fact that she always opened 4 positions. #1 she took profit at 10 pips, moved stops on the other 3 up 10 pips. #2 she took profits at 20 pips and moved stops on remaining 2 to breakeven.
#3 tp was usually 30 pips .. and #4 she let ride as long as possible to catch the major runs, trailing a stop 50 pips behind.
Powerful.
Hope that helps
