Quote:
Originally Posted by rhodytrader
DO NOT think this way. This will lead to putting your stops too close. Figure out what your need to risk in pips for the trade, then figure out the contracts. Do not do it the other way around.
This seems backwards to me. I only have 1 reason to enter a trade - the set up matches my criteria. That's it. Quite a few things can get me out of a trade, though.
Why would you take any trade that isn't a valid one?
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Rhody, I'm talking to an absolute beginner .. you have to think back to when everything was new. The example of setting a stop at 25 pips was just an example of HOW to think of max pips stoploss as it relates to overall account size. It is not a recommendation to set X amount of pips on any trade.
And your 1 reason to enter a trade is actually a whole series of reasons because your setup consists (I would assume) of more elements than just the shape of one candle, or the direction of one ma.
Of course you wouldn't take a trade that is not valid .. but that is how an experienced person thinks. For a brand new trader they have to learn how to decide if a trade IS really valid. When people are just getting started, they are often timid & uncertain of their decisions, so they just do one position, like putting one toe in the water.
I am trying to say to first have confidence in your decision BECAUSE of all the reasons (= your setup) that are causing you to take the trade .. then you can put on 2 positions or more and let some ride to potentially greater profits.
For someone who is brand new, I am just trying to keep it really really simple.
