Hello everyone, I’m typing this on my mobile phone so I’ll be brief. I hope this technique improves your results or at least opens up your mind to thinking differently about risk reward and risk per trades.
Scenario
I enter a trade with a risk reward of 1:1. My stop loss is 10 pips and my profit target is 10 pips. I risk 1gbp per pip.
If my trade wins, my next trade will also have a risk reward of 1:1 and my sl and pt targets are also 10 pips each but this time I will risk 2gbp per pip.
If my trade wins I am 30gbp richer having only risked 10gbp on a risk reward of 1:1.
On my next trade I will revert black to using 1gbp per pip.
After every losing trade I will always only risk 1gbp per pip.
If you hadn’t put point 4 in there i would have said that you hadn’t thought it through.
However, what you are suggesting is like a day trading version of scaling but instead of adding to a winning trade you are increasing the bet size on a new separate trade. The difference being; and maybe this is key that on a trade that is already winning you may have a slight edge.
In your system if you lose trade 1 and then lose trade 2 and then win trade 3 and 4 …you have effectively risked 30gbp to win 10 gbp. Just combining trade 3 and 4 is slightly misleading imo.
I must have beginners luck. Yesterday I made 10 pips on EURUSD so I reinvested the ‘winnings’ today again on EURUSD and am now 30GBP richer. Both trades had a RR of 1:1.
Using math without TA = gambling
You have to know how to trade before you can actually play around with your risks and money management.
TA is a must to learn to trade Forex or Futures.
Dont play numbers game blindly. Math may save you from the market but might not earn you any a single cent. At the end, you mind will just tell you that trading is a waste of time and just give up.
If our big banks are using FA & TA for investment, isnt that trying to predict the market?
And who says we cant predict the market?
Although you may not be right 100% and pinpoint the price of reversal, you still can predict with high accuracy.
The problem lies whether you are skilful enough or not.
As long you master the whole trading stuff well (not your funny ideas), no more worries.
Whatever you use, it’s all about finding Demand and Supply thru charts.
The University of Babypips is here to adopt you with thr knowledge. Once you graduated, you need to earn experience just like you did in normal school and working for companies.
Btw, predicting up/down of the market is different from predicting win/loss sequence. Dont get mix up.
If people dont predict market’s up/down, why would people wanna buy or sell?
Predict is not what you think, is what the market is hinting you.
Not predicting = Trading bindly = Gambling
Recording your win/loss statistics is to boost your confidence in what you do, not for you to see your future’s win/loss.
I’ll put my argument in another way. You have your way of trading the market, I have mine. What I am suggesting is that you look back over your results to see if you can obtain an edge from changing your money management rules. Eg, if your win sequence is wlwlwlwlwlwlwlwl then there is clearly an edge to be gained from this. If your win sequence was wwllllllwlwlwwwwwllwwwl then there could be an edge to be gained from that.
So guys, who here has made millions trading the markets ‘as the experts teach us to do?’ Does anyone know a TA who has made a fortune trading forex, because I don’t?!
We’re not really trading though are we?! We’re gambling. We’re speculating on the movement of price and that’s it, just as the football gambler speculates on the outcome of a game. Unless we can move or control the market then all we are doing is guessing what the bigger players are doing. There is no buying or selling of anything, just pure speculation as to what price will do next. Some will get lucky, some will lose.
The more sophisticated hedge fund algorithms get, the more difficult markets will be to trade.
The definition of Risk on Gambling and Risk on Business are different.
Like I said, if you are buying and hoping you will win by luck, you are gambling. In football, people uses past statistics of how many times that team won and place bets to hope they win again.
They just place bets easily.
Strong TA traders knows where the market will move but they can be wrong too, just like making mistakes when you’re working then your boss will ask you to redo again. Market is our boss and if it move against us, we are flexible enough to redo our TA to change direction and not being stuck in one way. We do not enter trades easily and we do not hope to win, just chop chop get our job done and monthly salary will be base on how well we perform every month.
Algos are just factory machines, traders now will have to accept 3G and upgrade by learning how they work in order to survive in the market.
Out there, which company will pay you high when you dont know how to use technology or speak english? They dont even want to hire you lols.
You dont have to actually bother about algos. They are build based on TA plus they are almost similar to each other. People said long spikes created by algos always stop them out and they just like to blame on something.
For algos to create long spikes out of the blue means the mass of them are actually reading the same stuff = same rules. Dont you agree with my logic?
When they come into the game, it just matters whether you got profit or stop out faster just like news release.
We all need to adapt to changes to keep our job.
Not knowing what is going on, how to adapt, being lazy, is gambling.
Gamblers doesn’t need to put in any hard work to place their bets.
At least, that’s my answer, and I hope it’s yours, too, otherwise your trading career will at some point be curtailed by a disaster.
There is no time that it’s correct or sensible to increase your risk-exposure (stake) during a losing run, or to allow the risk-exposure of an individual trade to be determined by the outcome of the previous trade(s). It’s neither logical, nor reasonable.
Either your trading strategy has a proven edge over the market, or it doesn’t.
It if [B]doesn’t[/B], you should not be trading it at all, and will not be able safely to “make it profitable” by varying your risk-exposure.
If it [B]does[/B], then you should trade as much as you can, to exert your edge over the market, but it still makes no sense at all to allow the risk-exposure of an individual trade to be determined by the outcome of the previous trade(s). You don’t need to do that, as the fund will gradually grow anyway and you can safely increase the stakes as it does, by exposing to risk a constant percentage of your available funds for each trade. This is absolutely fundamental to successful trading, to the extent that people who don’t yet appreciate it should not be trading with real money.
Any edge that exists in the market is miniscule. The odds of finding a meaningful edge are 1 in a million perhaps even greater. The traders that made it took huge risks and that is what trading is all about - risk or ruin. You risk everything and make a fortune or you lose. It’s that simple.
[QUOTE=“useless23;700138”]Any edge that exists in the market is miniscule. The odds of finding a meaningful edge are 1 in a million perhaps even greater. The traders that made it took huge risks and that is what trading is all about - risk or ruin. You risk everything and make a fortune or you lose. It’s that simple.[/QUOTE]
…No one should listen to such a waste of a comment from someone who does not understand trading markets and it’s mechanics.
