I have a few questions for people who trade fundamentals/sentiment, or even with a fundamental bias (Eg "in the direction of strength/weakness"). I would really appreciate if anyone could take the time to answer
These questions essentially boil down to trade management.
1. Where do you put your stop? (before a recent high/low, before a certain MA, etc)
If you get stopped out, what would make you re-enter a trade?
I'm assuming that you get stopped out despite no change in fundamentals; after all, if you trade fundamentals, you would get out if sentiment/fundamental bias changed. In case of a stop-out, would you think that maybe fundamentals had changed and seek to confirm/reject your fundamental outlook?
2. What percentage do you risk per trade? Do you scale in? If so, how?
As an example, I've tried to attach a screenshot of AUDUSD earlier this year. This is an hourly chart, showing the period from 20March to 14May, 2015. I wasn't actively watching forex at that time, but I remember the Aussie being weak for a long, long time. However, anyone who entered at the bottom:
- would have been stopped out
- would've had a large drawdown, if the stop was beyond the peak - which brings to mind what lot size/risk percent you'd trade? And what kind of risk:reward you'd seek?
Regardless of being stopped out or in drawdown - after the right edge of this chart, AUDUSD goes down sharply.
How best can you manage such a trade?
These questions essentially boil down to trade management.
1. Where do you put your stop? (before a recent high/low, before a certain MA, etc)
If you get stopped out, what would make you re-enter a trade?
I'm assuming that you get stopped out despite no change in fundamentals; after all, if you trade fundamentals, you would get out if sentiment/fundamental bias changed. In case of a stop-out, would you think that maybe fundamentals had changed and seek to confirm/reject your fundamental outlook?
2. What percentage do you risk per trade? Do you scale in? If so, how?
As an example, I've tried to attach a screenshot of AUDUSD earlier this year. This is an hourly chart, showing the period from 20March to 14May, 2015. I wasn't actively watching forex at that time, but I remember the Aussie being weak for a long, long time. However, anyone who entered at the bottom:
- would have been stopped out
- would've had a large drawdown, if the stop was beyond the peak - which brings to mind what lot size/risk percent you'd trade? And what kind of risk:reward you'd seek?
Regardless of being stopped out or in drawdown - after the right edge of this chart, AUDUSD goes down sharply.
How best can you manage such a trade?