Risk management strategy

Thanks for sharing. Do you have a mentor?

Don’t trade reversals, only confirmed trends.
As long as your take profit is greater than your stop losses and you strictly adhere and not improvise trades, even a 50% win rate can be massively profitable.
Oh yeah, and avoid news events.

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First understand the forex market, know about leverage, make a good trading plan, do set your risk - reward ratio, manage your emotions and practice on demo regularly.

According to me, the simplest risk management strategy is always using stop loss in my trades.

i have just seen a risk management plugin for MT4 anyone use any thing like this.

For me, the simplest forms of risk management on a trade is placing a stop-loss order. I never trade without stop loss.

I totally agree with you, making an organised risk management system can definitely help in determining the leverage as well as will help in minimising the risks.

You can try not to risk more than 2% of your trade and also use some tools and strategies to reduce risk. I usually go with stop loss and limit orders for executing a safe trade.

I prefer using stop loss. The benefit which I have got through this is I don’t need to monitor my holdings daily, it automatically limits the loss on my position that starts making an unfavourable move.

There’s no one risk management strategy that you can brand to be the best. Everyone’s cool with the one that won’t suit the other trader. Like I was quite happy with placing the stop-loss but my sister’s still confused with the concept. She’s happy trading with low leverage.

I also use stop loss in all my trades. It’s like a free insurance policy where I am charged my regular commission once the stop loss is reached.

Looks like everyone has their own reasons for using a stop loss. So, here is mine. With the help of a proper stop loss, I stay on track as there is no emotional interference which could have been a big issue for an emotional person like me.

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That’s true. I know it’s not as easy to control your emotions as said. But stop loss really helps in getting an edge over the market. When I want to use stop loss while trading with turnkeyforex and avatrade, I use the simple formula to do my calculations and I am good to go.
Take Profit = opening price + price change in points.
Stop Loss = opening price – price change in points.

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Hi [1010011010,
Nice binary name. Love it!

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just about to test out an EA and looking at having a min of 50% win rate but looking for single entry so no DD will feed back on how this goes.

Yes, I agree with you. I have not traded on this system but would like to try.

The one that works for you. Build one for you and you will do good.

Great post. It is possible to learn something from such informative posts.

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The one that you build for yourself on the basis of your market experience.

Risk Management is my favorite trading topic, by far. What will allow you to gain confidence in the markets? (Risk Management) What removes huge losses from the 5 possible results of a trade: Huge win, small win, breakeven, huge loss, small loss? (Risk Management) How can you start taking bigger risks to make bigger rewards without blowing up your account? (You guessed it, Risk Management!)

Know your risk:
This sounds very simple but most new traders enter a position knowing their profit potential but not their risk. This simple risk management concept could make a huge difference toward your overall monthly profits.

Know your correlation exposure:
Correlation is a word used in hedging strategies, pairs trading strategies, and statistical arbitrage, but it doesn’t mean that the concept is too complicated for a small account retail trader. Correlation exposure is the additional risk you are taking due to placing positions across like moving pairs or products (if you aren’t trading forex) in the same direction.

say you are buying S&P futures and buying DOW futures because they both qualify for an entry based on your trading plan. You risk 1% per trade, but do not take into consideration that both indices have been heavily correlated (been moving the same way) due to the markets “risk-on” bias over the past few months. You thought you took two separate trades to diversify your risk, but in reality you took one position at 2% because there is a high probability that both trades will have the same results.

Selecting one of these positions over the other helps you avoid taking on additional risk and may increase your accuracy over the long term.

Trade at specific times:
This is another over looked risk management tool. Watching the market all day, especially for new traders, will cause you to over trade. Period.

The thought of compounding your money and/or taking advantage over your edge through the law of large numbers (both very real concepts), allow new traders to over trade with confidence. By controlling when you trade and limiting the amount of time your stare at the screen, you reduce the number of unnecessary (usually losing) trades from your trade journal. (Keeping a trade journal is another risk management tool but I feel my response is already getting too lengthy, haha.)

There is a lot to say about such a topic and I did my best to keep it from being too much all at once. Please reach out if anyone has any questions on the matter and I would be interested in giving a further explanation.