Hi Guys,
Please assist. I am struggeling with forex I’ve gone through the school but still cant find my way around.
How do I determine a reversal in the market? How do I work out where to place my stoploss if I only want to risk 1% of my portfolio? How to determine where to set my TP before another reversal takes place?
Regarding reversals, I recommend learning how to properly draw trendlines and reading up on candlestick pattern analysis - the former are able to provide good levels of support and resistance and the latter provide good signals for actual reversals.
Only ever as a “probability function”; never with certainty. You study and analyse and monitor, and recognise “set-ups” that “quite often represent reversals” - a significant enough proportion of the time for trading them to be likely to produce more profit, collectively, from the winners than losses from the losers (of which there will always be some).
Some basic understanding of probability and statistics is absolutely essential. (Recommended book: [I]Profitability & Systematic Trading[/I], by Michael Harris - Wiley 2007).
Key concept: you work out your position-size by starting off by knowing the appropriate size of stop-loss for your trade (according to the volatility, or with whatever other method(s) you use to determine that), and then from that working out what size of trade will represent 1% of your account, [B][U]not the other way round[/U][/B].
Again, this needs to be determined according to your trading methods/system. Not a very helpful answer, perhaps, but the reality. You set your TP wherever your research has shown that TP’s in that market, for that instrument, for trades of that type, have a [I]net positive expectancy[/I]. You’ll [I][U]never[/U][/I] know confidently that any [I]individual[/I] trade will produce a profit (and nor will anyone else). What matters is to know confidently that the next 100/200/300 trades of that type, on that instrument, with that SL and that TP, will produce a [B]collective[/B] profit.
On the subject of position-sizing, specifically, the first page of this thread will probably help you, if you read it carefully: 301 Moved Permanently.
Risk management isn’t just about stoploss, you have to manage your position size as well, according to your account.
when it comes to risk management, it is paramount to minimize your maximum loss so as to win in the long run. It’s more important also to know when your trade is bad than it is to know how to get into it.
Because risk is inherent in everything we do, one must handle Forex trade as a serious intellectual pursuit; that’s only when you can succeed in trading. Traders’ failures can be explained almost exclusively by their poor money management practices. So to help ensure this success, practice money management.
Gordie as the pipsology school has tought, master the fibo levels for placing your trades,use the bollinger bands to be sure and the moving avarages to know(not gues) where to place your trade.
refer to previous resistance and support levels to be certain. one one knows where the market will go but to be safe adjust your stop loss according to your flipped fibo levels to keep your profits once you’re in profit.
Risk comes from not knowing what you’re doing. Talking about managing risk, do what you understand. A trader must not get caught in a situation in which you can lose a great deal of money for reasons you don’t understand.
Also, risk management is about how many positions you have open at any one time.
Talking about open positions, a trader should put the period of time the trade is open to consideration. Newbies especially are advised to close an open position on time so as to avoid risk.
I would say that it’s always good to close your positions on time, regardless of your level of experience.
Experienced traders are very much aware that since the markets are erratic, opening a position for too long can pose serious risks.
Of course, any false move can represent a considerable loss in trade. Knowing how to handle money and know the market at the expense of this career is the secret.
I agree completely with you. Profitable traders have reliable and well-organized money management plan, which is the secret to their success in this trade. In addition to their success is a well-developed strategy that helps minimize their risks in trading.
They also have the experience, patience and discipline required to trade well. People often underestimate how important discipline is in this business.
Hi, everyone! Can any body advice good books about risk management?
Books to try …
The Mathematics of Money Management: Risk Analysis Techniques for Traders Ralph Vince (we all need some reliable understanding of what’s in this book, although not necessarily from this specific source, before trading with real money)
Profitability & Systematic Trading (Michael Harris) (more introductory)
[I]Trade Your Way to Financial Freedom[/I] (Van K. Tharp) - an outstanding starting-point on the subject (quite introductory - much of the second part of the book deals with position-sizing, which is probably the most important past of risk management for any aspiring trader to understand)
Books to [B][U]avoid[/U][/B] …
John Hull: [I]Options, Futures and Other Derivatives[/I]
John Hull: [I]Risk Management and Financial Institutions[/I]
David H. Romer - [I]Advanced Macroeconomics[/I]
(These are all very advanced, complicated postgraduate academic textbooks - they’re of absolutely [B][U]no[/U][/B] relevance to aspiring retail traders at all. I mention them only because - [I]astonishingly[/I] - I’ve seen them recommended here, not long ago, in another thread, and they’re enough to put anyone off! :o ).
Thank you very much for books list, especially for books to avoid 
I just tried second book and give up at the start, thats why decided to ask another
Books you should try are,
The Essentials of Risk Management
A Practical Guide to Risk Management
Financial Risk Management For Dummies
Financial Risk Management: Applications in Market, Credit, Asset and Liability Management and Firmwide Risk (Wiley Finance)
Financial Risk Management: A Practitioner’s Guide to Managing Market and Credit Risk
Risk management is powerful tool for trader . If he learns this art he can do successful trading. In forex all is about risk, as what we trade and how we trade all involves risk . He has to know what risk is proper for him and what should do to manage this risk.