Risk management

As beginners we’re cautioned that we should not risk more than 1% of our trading account capital, then we’re told NOT to place SL too tight to allow market volatility take place :roll_eyes::roll_eyes: how does these two concepts correlate?

They don’t because they are two differing scenarios. If your SL needs space then you should understand that a higher risk is essential and if that exceeds your maximum risk tolerance then you either forgo the trade or amend your risk minimum.

What I do is to set a daily risk exposure on open trades at 5% and keep to it. Which means I can have one 5% trade or five 1% trades or anything in between not exceeding 5%

One trading fault made by many traders is keeping the same lot size for every trade. Which if you think about it, doesn’t make sense.

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i wonder if anyone thought of these why
1.why 1% ? why 2% ?
2.why stoploss?

i know there’s official answer,i just don’t buy it.

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Yeah, thanks. I just do what works for me on the Daily and 4H entry chart as I move the S/L around once the trade is open and just keep the same lot size. Very amateurish but I also move the T/P to a RRR 1:1.

Both of these movements involve distances between resistance zones and 3X ATR from the 30m chart. As an aside because my selected trades are trend following, I focus more on the T/P and the likelyhood of it reaching my target. That could involve reviewing the weekly chart for guidance.

So, I hope that my beginning answer to a newbie is to highlight the attention needed when deciding to make a trade. In essence, the wider the S/L, whatever lot size you use, is at a greater risk exposure. That is mathmatically correct, isn’t it ?.

Regards, Steve369

Let’s go back to basics. If you toss a coin 100 times - try it - the outcome should be in the 45% - 55% zone.

What also happens is that there are consecutive heads and tails. I’ve counted 13 heads and 8 tails in this exercise.

So if this scenario were live trades you could be losing 13% or 8% in any one session - and without a S/L in place you’ll be on the fast track to blowing your account… A one or two percent risk protects you from consecutive losing movements, and you live to fight another day.

On the 25th of May 2020 I lost out on 13 consecutive and different trading pairs…

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I get that, thanks. Very useful, however I stick to a fixed lot size which is probably the wrong way around, but as I’ve already opened a trade, I can manipulate the S/L and T/P instead of reducing my lot size. It’s swings and roundabouts how we trade differently as long as we get to where we want to be.

Fortunately, I’m well within my daily risk 5% max e.g. when I use a 0.03 lot size, as I trend trade minimally. So whether I use your formula - I’ll try it out on a demo account as a comparison - or continue with my method is neither here nor there.

Regards Steve369

A one or two percent risk protects you from consecutive losing movements, and you live to fight another day.

this is the blind point im talking about ,FX make us believe that SL is a must ,or we will blow it ,99% of traders never question about it.

while the fact is no , you don’t have to "surrender your trade"as other told you ,you don’t have to "admit your mistake"while you are not making any .90% of your SL will eventually become profit in 2 weeks,tte problem is how to deal with the rest 10% stagnant position , to figure it out ,is the REAL point of learning FX.

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thank you Jackbt for you reply ,yes i made language mistakes ,please pardon me .
statistically ,many trader take 2% risk ,to avoid major drawdown.yet ,only 1-2% trading making long term profit from FX ,so this 2% thing just not very convincing to me.

im skeptical to everything ,and i don’t follow rules,so FX is only fun if we are different .

I take it you can provide evidence…

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i have nothing to prove , i already have it ,i just wish anyone who have a close mind like me ,will found my post and get to the correct path .sorry i can’t give you the answer directly ,but i can assure you 0% risk and 100% winrate is completely do-able.

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As I said every time, success comes with following up and getting know every feature of the platform that you trade. Then risk management will be installed to your skills automatically.

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