Yeah I get what your saying. That’s what I started doing. Here’s how i determine risk.
When I have 2k It will go like this assuming I choose my high risk tactic if I am ready by then… If not these numbers will be reduced by half (when I start trading with a few hundred it will be proportional to this type of risk management)
2k account balance.
2 trades per day or however long I can hold them
Each trade will have $500 invested in them, so that’s a total of $1000 invested of my $2000.
Each trade will have a 40 pip stop
So If both trades lose, I will lose a total of $200.
If both trades win I should take roughly $500 just by hitting 100 pips. (past few weeks my trades have been averaging around 100 pips and should continue to stay that way if not improve)
Now lets say I win my first trade and take $500 or whatever. This is where it gets interesting. I would still only place $500 in each trade until my account balance hits $3000. When I hit $3000, then I would increase trade size to $750 per trade etc.
Now assume I lose my first trades and possibly a few more on top of that (worse case scenario). Until I my account balance gets pretty close to $1000 would I then cut my risk, If I went down to only $1500 or like $1200 or so, I would still continue to put $500 in each trade. This way If i lose a few trades I can still make all the losses back faster than I lost it. And, I would be taking full advantage of a nice winning streak as well rather than cutting my risk because my account balance and not taking full advantage of the streak.
I still have to work on entries. That will greatly reduce my chances of getting stopped out. Days like 6/05/2014 EUR/USD are days that I am most worried about. Depending on where I got in and even though I got the right direction and longed EU, I could easily have gotten stopped out due to the crazy amount of draw down EU had that day. I do not want to get the signal right and still get stopped out, that is highly upsetting. I’m still working on how to predict future movement and draw down but that’s coming along nicely (I have a few nice ideas I’m toying with).
Now onto logical support and resistance levels. I agree on the numerous fake outs etc. That’s why I try to make sure my stops are at least 15 pips (the goal is 20 pips or possibly more) away from the highest high or lowest low.