Hello,
If you can’t tell, I’m quite new to forex trading. I’m liking it a lot so far. Been using my demo account a lot. I first played around with just trying to make pips so I kept most of my lot sizes 0.1. I think I’m getting a better idea of using technical analysis so far so I thought it might be time to start thinking about money management. Since I’ve been doing a lot of this on my own, I would really appreciate it if someone who’s been at this for a while could step in and let me know how I’m doing so far just so I have an idea of where I’m at… it’s hard to evaluate myself without any outsider’s perspective.
I’ve been watching the USDJPY and noticed this interesting trend pictured below. It looks like it’s sloping down at about a 45 degree angle. It’s getting some resistance before heading down but the general direction looks to be like it’s heading down. I think it may hit below 109.890 before going back up and then going back down again at maybe just below 110.225. It’s hard to tell when this is going to end… maybe at time 18:00 after it’s completed the full 45 degree triangle… I don’t know which direction it might go. Right now it does look like it’s a strong bearish trend. BTW, I usually use candlesticks… I turned this into a line graph because it made the slope easier to see.
That’s my stab at TA. Now onto money management. My current demo account size is $10,500… if I only risk 1-5% per trade, that would be $120-$520 risk. With a standard lot, since it’s $10/pip, that would be a 12-52 pip risk… a mini lot would be 120-520 pip risk and a micro lot is 1200-5200 pip risk… does that sound right?
As for my system, I pretty much look at the charts and if I see a strong bearish or bullish trend, I will go with the trend. I like to start with the 4 hour chart to see the general direction, the 1 hour to get an entry and the daily chart for confirmation. I don’t really use indicators but sometimes I use the RSI to see if a zone is overbought or oversold. I don’t like to trade when it’s ranging because I feel like that would be better for scalpers with shorter time frames and my skills aren’t up there yet.
For my stop loss, I will place it at the last support or resistance zone. If I was right about the direction and the trade is going my way, I will move the stop loss either above or below my entry to make sure I get some pips… ie: if my trade is bullish, I entered the trade at 110.050, had my stop loss at 109.900 but now the market is at 110.200, I will move the stop loss to somewhere like 110.100 so if I get stopped out, I will get some profits… I used to use a take profit but I have taken profit only to miss out on pips when the market continues going my way… so I prefer using either a trailing stop or moving my stop loss.
Thanks so much if you actually read all of that… I really appreciate any thoughts on what I’ve been doing.