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STOCK MARKET TRADING.: 5 Habits That Help Forex Trading Newbies - BabyPip...
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STOCK MARKET TRADING.: 5 Habits That Help Forex Trading Newbies - BabyPip...: 5 Habits That Help Forex Trading Newbies - BabyPips.com
Money Management In Forex Trading : How to Risk Reward Ratio To Protect your Account in Forex Trading >
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stephenadebiyi |
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MONEY MANAGEMENT IN FOREX TRADING :HOW TO USE RISK REWARD RATIO TO PROTECT YOUR ACCOUNT IN FOREX TRADING .
Risk reward ratio is one of the tools a Forex trader needs to protect its account from losses .This simply allows you to calculate how much you intend to give away if the odds is against you compared to how much you intend to earn if they work in your favor . An example is a situation where you set up a stop loss of 10pips and a take profit of 20pips , giving you a risk reward ratio of 1:2. I have had the opportunity of monitoring some trader accounts to find out what exactly could happen to their accounts . I learnt that many trader always short changing them self because of fear . He places an order with a stop loss of 50pips and take profit of 5 or 10 pips .The reason some have given this type of trading decision has been that it would be easier for price to reach the take profit than to the stop loss .
But , instead of short changing yourself this way ,you can own a trading system or strategy that is good with definite market / price . If you are trading along with the trend , you stand a better chance of having a good risk reward ratio .My trading strategy often allows a risk reward ratio of 1:5 . This system is for news trading . If you are not a news trader , I will suggest you work out something that give you at least 1:1.5 or 1:2 risk -reward ratios. 1:3 may be way too much for a technical trading system . With a good risk reward-ratio, you can make up of any lapses your trading system might have .
For example if you spot 10 trading opportunities in a week trading only news events , and happen to loose 5 and win 5 which is 50:50 . With a risk reward ratio of 1:5 one of the system I use offered (assuming you risk 6pips on a trade ) 5 losses will equal 6x5=30pips. And with a Take profit of 30pips on the other 5 trades , you will have 30x5=150pips.
Net profit = 150 - 30 giving you 120pips .Find out what works best for you and protect your account .
http://www.onlinestocktradingmagazine.blogspot.com
Risk reward ratio is one of the tools a Forex trader needs to protect its account from losses .This simply allows you to calculate how much you intend to give away if the odds is against you compared to how much you intend to earn if they work in your favor . An example is a situation where you set up a stop loss of 10pips and a take profit of 20pips , giving you a risk reward ratio of 1:2. I have had the opportunity of monitoring some trader accounts to find out what exactly could happen to their accounts . I learnt that many trader always short changing them self because of fear . He places an order with a stop loss of 50pips and take profit of 5 or 10 pips .The reason some have given this type of trading decision has been that it would be easier for price to reach the take profit than to the stop loss .
But , instead of short changing yourself this way ,you can own a trading system or strategy that is good with definite market / price . If you are trading along with the trend , you stand a better chance of having a good risk reward ratio .My trading strategy often allows a risk reward ratio of 1:5 . This system is for news trading . If you are not a news trader , I will suggest you work out something that give you at least 1:1.5 or 1:2 risk -reward ratios. 1:3 may be way too much for a technical trading system . With a good risk reward-ratio, you can make up of any lapses your trading system might have .
For example if you spot 10 trading opportunities in a week trading only news events , and happen to loose 5 and win 5 which is 50:50 . With a risk reward ratio of 1:5 one of the system I use offered (assuming you risk 6pips on a trade ) 5 losses will equal 6x5=30pips. And with a Take profit of 30pips on the other 5 trades , you will have 30x5=150pips.
Net profit = 150 - 30 giving you 120pips .Find out what works best for you and protect your account .
http://www.onlinestocktradingmagazine.blogspot.com
Money Management In Forex Trading Simplified : 4 Proven Ways To Conquer The Forex Tading Market .
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stephenadebiyi |
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MONEY MANAGEMENT IN FOREX TRADING SIMPLIFIED : 4 PROVEN WAYS TO
CONQUER THE FOREX TRADING MARKET .
This edition of the proven ways to conquer the Forex trading market as a money management tips in Forex trading will show you how anyone wanting to delve into FX trading will succeed without even been a professional trader .
1.CHOOSING A RIGHT BROKER : There are many Forex brokers on the Internet today but not all are reliable . So , one needs to do a proper due diligence on any broker one intends using for trading .I have researched and based on my experience what you should considered when next you are choosing a broker .
1.Licensing and regulation .
2.Location of the broker .
3.Customer support services .
4.Trading platform .
5.Low spreads .
6.Quality Institution .
7.Extensive Tools and Research .
8.Wide range leverage options .
9.Account types .
Check over and see if any of the above is missing in your choice . A good broker should be able to have a trading platform that will provide its customer with all the facilities needed for proper trading . The spread calculated in pips is the difference between the price at which a currency can be purchased and the price at which it can be sold at any given point in time .Forex brokers do not change a commission , so the difference is their profit which could be called commission . In comparing brokers you will find that the difference in spreads in Forex is as great as the difference in commissions in the stock arena . Lower spreads save you money . Find a broker who will offers you all what you need to succeed .
2.STOP LOSS ORDER : Here we consider the second rule which says we should not risk more than 3% -5% of our core equity in any single trade . Remember core equity means Equity capital minus used margin in trade . Core equity is the same as free margin . Assuming capital of $1,000 . If you decide you are going to trade with 0.50 lot size , this rules will guide you on where to place your stop loss . Let us now assume you have a brave hearth to risk and willing to risk 5% of your $1,000 which is $50 . The next question you need asked is that how many pips will give me $50 on 0.50 lot size . Let us do a little arithmetic to get this right . If you understand that 1 pip 0.10 equals $1 then 1pip in 0.50 lot size will give $5 . Hence , we divide $50 by $5 = 10pips . What this now means is that your stop loss should not exceed 10pips. So if you spot a trade that would not allow you a risk for stop loss of 10pips you will need to do the following .
Reduce your lot size , or skip the trade . But you really need to develop a good trading system that will enable you manage risk . rising not more than 3% on a mini account and not more than 2% on standard account seem to be a good money management system which I can advice you to follow .
CONQUER THE FOREX TRADING MARKET .
This edition of the proven ways to conquer the Forex trading market as a money management tips in Forex trading will show you how anyone wanting to delve into FX trading will succeed without even been a professional trader .
1.CHOOSING A RIGHT BROKER : There are many Forex brokers on the Internet today but not all are reliable . So , one needs to do a proper due diligence on any broker one intends using for trading .I have researched and based on my experience what you should considered when next you are choosing a broker .
1.Licensing and regulation .
2.Location of the broker .
3.Customer support services .
4.Trading platform .
5.Low spreads .
6.Quality Institution .
7.Extensive Tools and Research .
8.Wide range leverage options .
9.Account types .
Check over and see if any of the above is missing in your choice . A good broker should be able to have a trading platform that will provide its customer with all the facilities needed for proper trading . The spread calculated in pips is the difference between the price at which a currency can be purchased and the price at which it can be sold at any given point in time .Forex brokers do not change a commission , so the difference is their profit which could be called commission . In comparing brokers you will find that the difference in spreads in Forex is as great as the difference in commissions in the stock arena . Lower spreads save you money . Find a broker who will offers you all what you need to succeed .
2.STOP LOSS ORDER : Here we consider the second rule which says we should not risk more than 3% -5% of our core equity in any single trade . Remember core equity means Equity capital minus used margin in trade . Core equity is the same as free margin . Assuming capital of $1,000 . If you decide you are going to trade with 0.50 lot size , this rules will guide you on where to place your stop loss . Let us now assume you have a brave hearth to risk and willing to risk 5% of your $1,000 which is $50 . The next question you need asked is that how many pips will give me $50 on 0.50 lot size . Let us do a little arithmetic to get this right . If you understand that 1 pip 0.10 equals $1 then 1pip in 0.50 lot size will give $5 . Hence , we divide $50 by $5 = 10pips . What this now means is that your stop loss should not exceed 10pips. So if you spot a trade that would not allow you a risk for stop loss of 10pips you will need to do the following .
Reduce your lot size , or skip the trade . But you really need to develop a good trading system that will enable you manage risk . rising not more than 3% on a mini account and not more than 2% on standard account seem to be a good money management system which I can advice you to follow .
- TO BE CONTINUED .
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