Equity Management Money Managment Risk Reward

[Danny boy]

I think you mean $3 per pip here but agent 86 has got it in one

 

[Froso@FXNET]

I think this is where I'm going wrong, In the last 2 months I have earnt over 2500 pips but have actually lost money over this period. I am obviously not looking at risk and reward correctly. Happy to receive any pointers.

Its good sharing from your experience , its surely hard for anyone who have desire to keep consistent but in contrary condition its easily for decrease the performance of tradiing , so that is the importance of risk and reward setup . not always we can get hundreds of pips when doing this business and incertain times loss will be achieved . So decide the risk and reward that suitable for our system

 

[dkami]

Just my 2c worth on the topic

If trading with leverage you risk should be determent by % of account balance you are comfortable with loosing, therefore your lot size is determined by how many pips your SL is from your entry. This could be 5% or higher of account balance for a PRO trader or 2% or lower for a beginner. I would recommend 1% for a newbie but every trader has their own tolerances and is really up to the individual!

Another thing to consider is you could have more than 100pip SL even on a H1 chart with a great entry (IMHO any smaller timeframe than H1 is just gambling), After all Mr market determends where the strong support/resistance is and not the retail trader, So for example if you had a 3k account balance and you put on a 0.3lot ($3 per pip) with 100pip SL you are risking 10% of your account and with 10 loosing trades in a row (which is not uncommon even for a PRO trade) @ this risk level I think we can all do the math's

I think there's only a couple of ways to cut down your RR whatever the ratio, 1st is to get a entry as close to where your SL needs to be, but this is not always possible which could lead to the 2nd which is scaling into the trade. One thing to note is even if you get a better entry if your RR is 1:2 stick to that as it's easier to get the market to pay you out 50pips than 150pips or at the very least take half the trade off the table @ 1:2 RR and move SL to break even

 

[nahiyar]

I think this is where I'm going wrong, In the last 2 months I have earnt over 2500 pips but have actually lost money over this period. I am obviously not looking at risk and reward correctly. Happy to receive any pointers.

Not see what get during trading , evaluate your loss too . after a week or month if your profit is much then you are doing good. Other wise one time profit is nothing. Actually risk and reward management is main thing in forex trading.

 

[Froso@FXNET]

Not see what get during trading , evaluate your loss too . after a week or month if your profit is much then you are doing good. Other wise one time profit is nothing. Actually risk and reward management is main thing in forex trading.

You are very true , therefore between risk and reward must be proportional with available capital . with that when win rate not less than 50% of entire position then surely our account will grow sooner or later

 

[Mneri]

I am glad that risk assessment has become an actual topic today, because most traders look at the profit, completely forgetting how much they can lose if the analysis turns out to be wrong or there is some speculation in the market. You are doing a great job!

 

[Vo32ss]

It seems to me that many people have problems with this because they need to estimate the value of a pip and the level of stop-loss, and traders often overlook it, especially when they are just starting their way in the market.
But it is better to study this topic qualitatively, it is always important for capital security.

 

[Talar]

Very useful information, thank you for your help, I'll apply it.

 

[Ezerelaugh]

It’s true that risk and rewards are connected. If you take a higher risks, higher will be the rewards. It depends on every person’s financial and other constraints on how much risk they can afford. Risk management is quite necessary wherever you invest your money. Analyzing the potential risks and then setting up things accordingly is the right way to secure yourself from huge losses.

 

[Purekiller]

I fully agree that money management is one of the most important things in trading, especially for beginners. Many new traders lose their investments almost immediately due to inexperience and incorrect capital allocation. Therefore, it is necessary to correctly calculate the risks of your deals to develop a suitable trading strategy. These things in a complex will help you to avoid unnecessary losses.