Even if there is only one unshakable rule of trading, then it should be the following: – «stick to own stop–orders". Before each entry into the auction, you must know your pain threshold.. This will allow you to always be confident., that you are in control of your losses and will not give in to emotions while trading.
Working in the field of trading is very hard – there are a lot more losers here, than successful traders. And almost always traders fail, and not because their ideas were wrong, they just got too emotionally unbalanced during the bidding process. This failure is due to, that they closed trades too early or let their losses drain all their capital quickly.
Risk must be predicted. The best time, to think about possible risks, is the time to entry into trades - until your brain is clouded and the price maneuver does not determine the decision. If you already have an open position and want to continue holding it until then, until it turns into a winner, then you must clearly understand, what, Unfortunately, this doesn't always happen.
You should think ahead, what moment or event will be critical for your order and place a stop order, based on findings. I emphasize again, that the risk must be predicted before, how do you enter the auction, and you must stick to the selected options. Never let your emotions force you to change stops prematurely..
Risk
Every deal, no matter, how clearly do you imagine its result, is an assumption, based on facts. In trading, you can never be sure of anything. 100%. There are too many external factors in the market, that can make a change in the movement of the tool. Sometimes fundamentals can change the trading environment, and sometimes there are unpredictable factors, such as option barriers, daily rate setting, central bank purchases, etc.. Make Sure, that you are prepared for this kind of accidents, setting your stop order in advance.
Profit
On the other hand, profit is also impossible to determine in advance. During price fluctuations, the movement can be just huge or quite small. In this case, money management becomes extremely important.. Referring to the rule «don't give to the winner become defeated", defending our right to receive maximum profit, using a trailing stop. But this is possible only if, that the situation is under your control.
For this, having received a predetermined level of profit from an open transaction, you will be able to move your stop order to the breakeven point, and then, having determined for themselves the possible losses from the profits already received, continue to move the stop order following the price movement.
Make friends with current general direction movements prices.
The market is subject to change. Trends can last for days, weeks, sometimes even months. This is the main reason, why most trading strategies focus only on them, Believing, that one correct entry in a strong trend can offset any losses, received when trading on the lateral movement. And even though, that there are excellent tactics for working on a flat, that generate significant profits, the main desire of any trader will always be to catch the trend.
Nevertheless, lateral movement – not uncommon on the market, so protect your deposit with a stop- orders needed. The easiest way to protect yourself from losses is to fix the break-even point. If the trend still marks itself, then in this case we can get the desired result without the risk of loss.
The trading process must always be divided into the use of strategy and money management, since both of these factors are integral parts of profitable trading. Each open trade – this is an experience, which should teach you how to use strategy correctly, see the market, develop patience and firmness of character. Especially this concerns traders, having tactics, which is almost always profitable..
Wrong open position – this is an experience, from which you need to take out not only adjustments to your work, but also resilience – accept the loss and move on. Main, so that each of your new transactions is thought out in advance from entry to exit. And when you master this skill, your emotions can't control you, no matter, how much do you currently operate – one thousand dollars or one hundred thousand. Always remember: winning in trading – question of the quality of the strategy, but losing is always the lot of experience.
Materials taken from Fortrader magazine
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okbm(“http://nysetrader.net/risk-mozhno-sprognozirovat-no-voznagrazhdenie-prognozam-ne-poddaetsya/”,”Risk can be predicted, but the reward is unpredictable.”)
