Something a little weird is happening in my trading.
Roughly 90-95% of my trades are winners for the past month.
This usually doesn’t happen, I’ve been having days where not 1 trade loses money.
Frankly it’s a little unsettling because this isn’t how things usually work and I’m a little afraid I’m going to do something stupid to my account with regards to risk management.
Should I reduce my risk to 0.5% per trade or keep it at 1%?
I place roughly 5-10 trades per day, I’m very short term.
At least you;re not saying “the market’s changed” - I don’t believe in voodoo.
Either this is a statistical variation or you are actually placing and/or exiting your trades a little differently. Have you changed anything at all?
To decide whether to increase your risk, you should know the answer - a statistical variation will revert to the long-term mean, while improved trading has a new mean and might tolerate greater risk.
I only traded EUR/USD and I only took short positions. Both before the recent peak at 1.09 and after.
I chickened out of riding the move from 1.09 down to 1.06. I only caught the initial move down to 1.084.
Major mistake missing out on that imho
Majority was made in the range bound moves before the rise and after the fall.
Usually I trade long and short but I had a strong short bias here, not sure if it was silly to maintain that bias during the rise. I’m in for such short periods of time that I didn’t get hit by any of the upward moves.
So the difference was that the winning trades were shorts and were with the downtrend, and you ignored potential long opportunities during the downswing? Doesn’t that tell you something?
I would say enjoy it while it lasts, because we all go through up streaks and down streaks. I would just keep risk consistent. Consistency is the best thing you can do in trading IMO.
Here’s my advice. I know this is going to go against common trader community advice but it has been working for me. Put some money in an account that will really hurt you to lose. I mean don’t just trade a small $500 account or so. Put in a few thousand dollars. Practice trading it with strict risk management. Whatever you think will work, just try it but make sure you NEVER risk more than 1 or 2% max of your account per trade. I am willing to bet that you will not blow that account. Why? Because you know how much money is on the line. You will make it last. Survival is the first step to profitability.
I actually do see a lot of sense in what you are saying Themadinvestor. In matter of fact that way Nyad55, you are going to learn how to use a good risk management strategy. I think that this is one of the things you firstly need to focus and plus this is after all is the topic of the thread. So I would agree with the Themadinvestor and advise you to open an account with a good deposit and try to manage it so that at all times your risk is not above I would say 1% judging on your recent losses. I try to focus my strategy on only few winning positions and so my account is not too overloaded. That way even if the price on all my positions turn against me I will not reach a margin call level, meaning that I will not be able to loose all my money. And I can only wish you good luck and give you last piece of advice.
My piece of advice is to start trading with the trend on more long term positions, find a good risk-reward ratio that works for you and use a good stop loss level.
You can maintain the pace you are at for now, you should do otherwise only if you notice that things might go wrong or the market is taking a turn. You should be thinking of ways to improve and not go back.
Voodoo economics? The concept that if there’s a necessary position needed to maintain a status-quo that it will be filled by somebody rather than nobody. Obviously this principle is relevant in the Forex today.
Don’t take it too harsh on you. This is a very common situation, we all have ups and down, what you can really do is to try with another currency pairs, don’t go to deep, just to see how it works. If you try with the same risk but come with the different results – that means you are on the right track, just suffered from other circumstances.
Forex is not for persons who easily give up, the market can be very messy and unpredictable when it wants to be. It requires courage and persistence to achieve anything in the market.