So i have finally decided on a trading plan. Its very basic, i will scan for chart patterns on the all timeframes apart from the 1 min. I will use the 1 min TF to enter a trade as soon as support on the pattern is broken and a clear trend is established by going through certain psychological levels. I will also do some multi timeframe analysis.
However, I only have $1000 to trade so realistically i can only trade the $10,000 lots. This would give me a $1 a pip. I want to only ris 3% per trade so thats $30 risk to start. However i am worried that a 30 pip stop loss would fail from the beginning as the noise on the 15 min will take me out. so i was planning to wait untill the trend had fully established before entering. Is this too amateurish?
Please have a look at a trade i was looking to enter this morning. As you can see a Channel Down pattern formed at 7.30 UK time, support for the pattern broke went pass psych levels. This is pretty much my plan. What do you think about the money management? my initial capital? any relavant ideas?
What im trying to do is Demo with a $5000 AC to replicate as closely as possible my own capital. Trading with $60000 gives you an inflated sense of confidence and ego i think. Also i want to only risk 3% that would be 30 pips trading $10000 lots. However is that realistic or would i keep getting stopped out?
Also are pips calculated by minusing previous price from current price. i.e. price moving from 1.6399 to 1.6299 is the same as 6399 - 6299 = 100 pips??
But its not arbitary. What i have read on this forum is to only risk 2-3% of your capital. Intially my captal will be $1000 so my risk should be $30, so that would be 30 pips trading only $10000 lots. Therefore, is my risk too small due to the noise on 15 min charts? or is there soomething else im missing?
This is what the BP school taught me. First, determine the percentage of your account that you want to risk. In your case its 3%, so .03 x $1000 = $30. Next, decide how many pips away your stop loss would be at. Lets assume that you plan to set your stop loss 50 pips away. $30/50pips = $0.6/pips, $0.6/.0001 = $6000 or 6 micro lots would be your ideal position size. Of course, assuming that you’re not trading a mini account.
Too small? Risk can never be too small. If your asking if your size of stop loss is too small that’s another question. Firstly 30 pip stop is absolutely fine on 15 min chart if you are very selective about your trades even works on hourly. That is my average stop loss on those two time frames. Just remember as TF goes up so usually does SL. Consider the average true range of a pair on a daily basis and see how your 30pip stands up. For fiber and cable if your trading 4H or daily your most likely going to be stopped out. But in something tight like UsdJpy your going to be fine. Also I would consider at first using less than 2% to start. Especially if you just came from demo. Remember novices think about how much they can make pros think about how much they can lose. As a noob u will lose so protect your capital and learn as much as you can from your first account.
I have been studying the market since late 2008 and jumped right in live after learning indicators and making loads of demo dollors. I got burned and have not gone back to live trading. I realised that my biggest mistake was Money Management (i’ve realised its a cliche now) and my risk to reward ratio. I would trade 40000 and make a few pips and then trade 100000 and lose even more. And i would risk x to make y - with y being only like 10 pips.
I have now come to the realisation that trading S+R was how i made money on the demo AC and that i needed to stick to one lot and apply the above MM. Put in chart pattern analysis and im on to a winner right?
