Very true! We need to define our risk in DOLLARS and IN ADVANCE.
If the SL that a setup needs is more than what we can afford to lose, we let the trade go.
Hallo BA,
That can still work, there’s no hard-core rule
A traditional approach is to risk x% of your balance per trade [ e.g 2 or 3 % of balance per trade, meaning it will take 50 or 33 trades respectively to get margin called ].
Main advantage of this is: profits are compounded faster.
Main drawback is: when your profits are up and you get a series of losses, you are hit hard. So recovering from losses takes more time (than alternative below).
Another approach is to use the DOLLAR value of x% always.
So, if 3% of starting balance equals $100, then always risk $100 per trade, regardless of whether you’re on a winning streak or losing streak.
Main drawback: profits are not compounded as quickly as first approach.
Main advantage ( which for me is the clincher ): recovery from losses is quicker
So in summary: either risk a fixed % of your balance, or a fixed $ amount ( whichever option you choose, apply it consistently ).
Thanks for replying, that is great and makes me feel much better about my current set up. I definitely prefer the DOLLAR value of X% as I’m lousy with numbers (I’m just an ex-actor!) and this method is much simpler for my tiny brain to handle. I am going to go and read the link you added now.
I think they ( EURJPY H4 and GBPJPY H4 ) were both A+
Price on both has been moving to places it’s not been in years, and pullbacks in strong moves can be shallow (esp on D1).
So lower TFs (e.g H4) present better opps since the pullback is more defined [ with the recent D1 highs acting as new support ]. In this case, the H4 pins were on formed at previous D1 highs.
I was in the EURJPY trade as well. Since I followed my process (including risk determination in advance), the loss did not sting, the trade was probable as all others, and I’d given it a chance to work out. More will come
Hi dudest
I took this one and I got stopped out . a question . Can we move our Stops to BR when we get to a very strong SR or VBRN and don’t take profit ? If we want to tp , the RR is not gonna be good .
Thanks dude, I woke up this morning and was going to go back and analyze all the YEN trades that were stopped out this morning and share my results as well, but you just saved me some time! Appreciate it. About all three…
I think the key thing that I personally missed (which you touch on) is the strong selling at that peak in price.
GBPJPY- 8 bars / 32 hours of selling (including reversal) before PB. The high was tested multiple times, and each time sold off. The two bearish candles immediately following should have been a strong signal that the downside is prevailing. There was some indecision at the high, seen by price contained in a tight range for about 6 candles, then broke down. If there were stronger pullbacks as price was declining, rather than pretty much going straight down, there may have been more buying opportunity for others to step in and push price up. A nice tight stop should have been placed at that key level to minimize losses. This PB was mint, it’s just what happened beforehand doesn’t jive with what we expected price to do.
EURJPY- Pretty much the same thing here, but the selling post-high was twice as strong. Almost all of the candles pre-PB closed toward the LOW, indicating strong selling pressure taking out the 2 strong bullish candles off to the left. Profit easily could have been taken here and in the GJ trade as price did spike a little bit, but, overall, the momentum was down on both. That massive bearish candle after the spike high with the long wick should have been more of an indicator to look to go short here.
NZDJPY- Going to monday-morning quarterback this one. Honestly, I shouldn’t have been in this trade and shouldn’t have risked what I did. It was stupid and a major mistake on my part.
-Almost same thing here, that high was tested, and price trickled down perfectly with the bulls unable to make any ground. In this case, pretty much every bearish candle closed at the low, indicating lack on buying interest at all. The PB formation was legit, but I think my stop was too deep (low of PB rather than break of Support). Price retraced well over 75% from the previous swing. I didn’t read the picture here. There are longer wicks pointing north as price came down, again, indicating strong selling pressure and lack of buyers. I think that if this PB formed maybe at that first swing back up high as it came down, it would have had a higher probability of testing and breaking through 83.4.
Need to add one more thing I just thought of: Right before the high was tested on each pair and reversed, there were massive bullish candles one after another. This is a strong indication that the end of a trend may be around the corner, and a reversal in play due to the exhaustive nature. I’ve seen when these strong movements occur toward the end of a trend, the market is likely to reverse because a key level is approaching and price was like a magnet getting their quickly. That momentum was completely stalled.
UZ- Yep that’s a pin alright. I don’t think there is any trade though. It looks like price has been bouncing around in range after that upward move. I don’t see any indication that a long position here would be profitable. Price has sold off the 4 previous weeks, with that 10.292 level holding strong. It was tested 8 times.
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