Hi Folks,
Im a newbie and i have 2 questions on account management:
When we talk about risk per trade, for example set a stop loss at a maximum of 2% per trade so that you cannot lose more than 2% per trade, does this percentage include the leverage you are using or is it on your base account?
I have read alot about risk reward ratio and 1:2 seems to be the common target. so you stop out at 1 and take your profit at 2 times that, but what if the trend is a large one in your favour and you stop out at 2 times your loss, dont you lose out on huge potential profits. Do you follow the trend with a trailing stop or re-enter with a smaller lot size? Just looking for a strategy on this, apologies, im sure this is covered in the school but im not fully finished it and some of the details have probably gone in one ear and out the other!!
If it’s a strong trend & your position closes out at 2R then be thankful that your trade closed out in profit. However your target should be set from your analysis prior to entering the trade, if you deem it a strong trend, then you could adjust your target to 3R. It’s a tricky one as exits are subjective, everyone will think differently. Do you wait for a price action signal to exit? Do you move your stop to break-even & see how it pans out? Do you move it to bank 1R profit with a 1R trailing stop? There’s many options & it’s different strokes for different folk.
There are quite a few methods you could use. Personally, if I risk 2%, I will move the stop to break even when it is positive 2%. When it reaches 4% I book half the trade and move the stop up on the remaining half to the 2% mark and then let it run looking to catch the bigger move
It is important to find a positive ratio for any strategy that is being use in trading . Most time using a minimum of 1:2 risk reward ratio can help limit losses when the market might turn against you.
When we talk about risk per trade, for example set a stop loss at a maximum of 2% per trade so that you cannot lose more than 2% per trade, does this percentage include the leverage you are using or is it on your base account?
yes leverage are added to this calculation. what this 2% all about are not simply with losing trade, but more related to % margin.
for example 5000 usd at 1:100 leverage, for each 1 lot size ( 10 USD per pips movement) need 1000 margin available, means it;s using 20% margin (5000:1000 = 20%). so when our trading plan are only use 2% margin, means it should 100 USD margin, at 0.1 lot size.
2% losing trade, means 100 USD, means your stop loss could be vary depend on your lot size. use same size 5000 USD, leverage 1:100. set maximum risk 2%, use 0.1 lot your SL are 100 pips, no need to related to leverage, goes with 1 lot your SL are only 10 pips!!
hope you’ve got the point beneath this “2% risk” setup.
Risk to reward of 1:2 is really good , but for in real practical not easy as we imagine , so many factors that make such strategy for account management going smooth implementation , moreover about greediness , this factor really great impact to not do as smoothly in implementing of account management , so beware of such factors
I think you’re overcomplicating it.
2% risk means that if you have a $5000 account you set your stop loss so that you risk losing a maximum $100 (2% of $5000)
The number of pips this equals varies depending on the lot size and currency pair.
Theres a calculator in the tools section that you can use until your more familiar with this
Account management is a technique in which we plan how much risk will be safe in any trade . how we have to choose lot and leverage so that our trades will become good for us . Without account management trader can just loose by taking high risks.
it seem I cant attach both .exe and ex4 for the EA file. these nice tools are downloaded from tickmill website at tool section page, have a check on these free EA. cant afford to post the direct link, seem inappropriate to put down direct link though.
