All actions (trading, investment, arbitration) of any market participant should be sharpened not so much for profit, but as much as possible due to minimization of risk from any variants of the situation development. By default, any trader / investor must take care of protecting his funds regardless of the timeframe and strategy.
In all financial organizations - banks, all kinds of funds, hedge funds and just private trader and propfirms, the basic postulate is not to lose! They all have posts / units responsible for tracking, calculating and controlling the risk - the probability of a drawdown of the account / subaccount is not more than some value in% or $, and known before the commencement of trading. Workers who do not comply with these conditions are simply kicked out instantly and irrevocably without an explanation of the reasons.
Many traders do not really imagine what level of losses is acceptable for their successful activity in the market. And this is a very serious mistake! In trading, the system through which the trade takes place (at least, should be placed) becomes the cornerstone. The system is pre-checked statistically (trade statistics at least on the reverse data - back-testing according to the preliminarily rigid rules of entry / exit / the size of the position or its part), and confirmed in practice.
Only statistics and will give an idea of the possible risks, subject to viewing the same type of market without abnormal shocks. You can apply different filters (from technical analysis, fundamental analysis, time series, just do not trade during the news, etc.), which again statistically improve trading performance, reduce risks, increase the expectation, the Sharpe ratio.
The maximum allowable loss in the transaction must be determined before entering this trade!
According to statistics, the greater the risk, the greater the profitability of the system and, correspondingly, the less stability. According to the classics, stability is a sign of skill. It is a stable increase in the account is unattainable (unfortunately) the dream of many traders. No investor, the trader will not like the profitability chart of the "saw" type with a wide spread of pros and cons. This is not correct from the standpoint of long-term expectations.
Therefore, in our forecasts / signals, we always adhere to the rule - as soon as possible after the opening of the position, go from the "either earn or lose" state to "or earn a little or earn more." We leave the key word "earn", but from losses we try to leave as soon as possible and faster. It is much more comfortable to be in the market, knowing that in any case the account will increase (no matter how much, it is important - it will increase).
How to achieve success in trading?
First of all, the position must consist of several parts (multiple or 2 or even better 3). Before the opening of the pose is determined and considered a risk (in the event of an incorrect price movement and an emergency jump out of the market, we can afford to lose no more than some pre-known amount of funds). Hence the distance to stops is calculated - the result of exit on the stop-loss should not exceed the risk on the transaction.
continuation below
All those who wish receive free access to our indicator of OPEN INTEREST (link below)
Training in trading with the possibility of obtaining a funded account
We welcome your feedback and comments!
Liked - sign and put like!
In all financial organizations - banks, all kinds of funds, hedge funds and just private trader and propfirms, the basic postulate is not to lose! They all have posts / units responsible for tracking, calculating and controlling the risk - the probability of a drawdown of the account / subaccount is not more than some value in% or $, and known before the commencement of trading. Workers who do not comply with these conditions are simply kicked out instantly and irrevocably without an explanation of the reasons.
Only statistics and will give an idea of the possible risks, subject to viewing the same type of market without abnormal shocks. You can apply different filters (from technical analysis, fundamental analysis, time series, just do not trade during the news, etc.), which again statistically improve trading performance, reduce risks, increase the expectation, the Sharpe ratio.
The maximum allowable loss in the transaction must be determined before entering this trade!
According to statistics, the greater the risk, the greater the profitability of the system and, correspondingly, the less stability. According to the classics, stability is a sign of skill. It is a stable increase in the account is unattainable (unfortunately) the dream of many traders. No investor, the trader will not like the profitability chart of the "saw" type with a wide spread of pros and cons. This is not correct from the standpoint of long-term expectations.
Therefore, in our forecasts / signals, we always adhere to the rule - as soon as possible after the opening of the position, go from the "either earn or lose" state to "or earn a little or earn more." We leave the key word "earn", but from losses we try to leave as soon as possible and faster. It is much more comfortable to be in the market, knowing that in any case the account will increase (no matter how much, it is important - it will increase).
How to achieve success in trading?
First of all, the position must consist of several parts (multiple or 2 or even better 3). Before the opening of the pose is determined and considered a risk (in the event of an incorrect price movement and an emergency jump out of the market, we can afford to lose no more than some pre-known amount of funds). Hence the distance to stops is calculated - the result of exit on the stop-loss should not exceed the risk on the transaction.
continuation below
All those who wish receive free access to our indicator of OPEN INTEREST (link below)
Training in trading with the possibility of obtaining a funded account
We welcome your feedback and comments!
Liked - sign and put like!
As soon as we entered the transaction (bought or sold the asset), we try to close the first part of the position so that all our total expenses for the transaction are already covered by the profit from the 1st part of the pose. As an option - knowing your expenses (spread, commission, possible price slippage, other costs), we know the minimum number of ticks that need to pass the price. We close the first part when passing the distance no less, the rest of it is transferred to the breakeven.
All! We passed into the right state! At least we will not lose. The rest of the position with a further move in our direction is simply podtralivayem and gradually close the course of price movement. It is possible to close part of the position at the end of the main impulse, leaving just a part of the pose, just in case.
If your broker / exchange does not give you the opportunity to defend yourself - change without hesitation. More money and nerves will be more valuable.
This applies to the Pump / Dump options first.