Hello. I'm still in the demo process but before I go live, I want to make sure I have my money management down pat. So far it's been fine but I need to be 100% confidently sure.
My trading style is to buy/sell a position and look to take 20 pips. However, if the trade goes against me, I'll take a second position in the same direction, 20 pips behind that. By averaging the two positions, I should be able get out earlier when it rebounds.
My risk/reward is 1-to-1. My total risk per trade is 1.5%. So for example, I sell the AUDUSD for .8020 with a TP at .8000 for .5% position. If it goes to .8040, I'll take a second .5% position with a SL of .8060. The first position will also have a SL of .8060. If it reaches .8060, I'm out 1.5%.
1) If I have to take a second position, I've put 1.5% at risk. So my TP should be for 1.5%. In this case, I should seek TP at .8000. Is this correct? This has me baffled because if I'm averaging positions, I thought I should be able to get out earlier.
2) If however, my first position went directly to .8000, I'd take my 20 pips. However, that is a .5% return on trade. Of course I should be happy, but it seems strange that this more "successful" trade returned less than the 1.5% one.
Please help me understand the logic of this MM. Or please offer any other forms that work for you.
Much appreciated!
My trading style is to buy/sell a position and look to take 20 pips. However, if the trade goes against me, I'll take a second position in the same direction, 20 pips behind that. By averaging the two positions, I should be able get out earlier when it rebounds.
My risk/reward is 1-to-1. My total risk per trade is 1.5%. So for example, I sell the AUDUSD for .8020 with a TP at .8000 for .5% position. If it goes to .8040, I'll take a second .5% position with a SL of .8060. The first position will also have a SL of .8060. If it reaches .8060, I'm out 1.5%.
1) If I have to take a second position, I've put 1.5% at risk. So my TP should be for 1.5%. In this case, I should seek TP at .8000. Is this correct? This has me baffled because if I'm averaging positions, I thought I should be able to get out earlier.
2) If however, my first position went directly to .8000, I'd take my 20 pips. However, that is a .5% return on trade. Of course I should be happy, but it seems strange that this more "successful" trade returned less than the 1.5% one.
Please help me understand the logic of this MM. Or please offer any other forms that work for you.
Much appreciated!