FOREX
RISK MANAGEMENT.
I received many emails asking me how can I be that heavily loaded ahead of huge catalyst.
The answer here is probably the most important thing a Forex trader must achieve and is directly linked to
that mindset characterizing successful traders either on Forex or on Derivatives.
The big catalyst being on the Euro: Right now on EurUsd I have -1M on the lower range targeting 1.0550
area with a total exposure of -2.3M and this with a highly leveraged 10k initial account. The current
floating P&L on EurUsd, since I am way heavier near the current price is like -$500. On all the other
positions (excluding EurUsd) I have exposed 2.20M with a floating P&L around +$22K. My account value
(banked in) is around +17k, that is our account has made +70% until now. It's already a huge profit in
such a short time many traders dream of. But what is important is that I don't expose my account and its
current value but my floating P&L. Here due to that mindset I talked about, my risk tolerance concerning
the floating P&L is very high though never blind and concerning my account value I am highly risk averse .
If you're not able to accept huge fluctuations in your floating P&L (though without impacting your account
value) then the way you trade is weak (and you generally use TP and stops). It's as detrimental as
accepting losses on your capital value.
To make it short: Trade with your floating P&L not with your account. And to build a significant floating
P&L you can trade with, you need to understand thoroughly what's happening and not rely on guts or some
systematic illusion.
Hope this helps.
From what we said above:
RISK MANAGEMENT.
I received many emails asking me how can I be that heavily loaded ahead of huge catalyst.
The answer here is probably the most important thing a Forex trader must achieve and is directly linked to
that mindset characterizing successful traders either on Forex or on Derivatives.
The big catalyst being on the Euro: Right now on EurUsd I have -1M on the lower range targeting 1.0550
area with a total exposure of -2.3M and this with a highly leveraged 10k initial account. The current
floating P&L on EurUsd, since I am way heavier near the current price is like -$500. On all the other
positions (excluding EurUsd) I have exposed 2.20M with a floating P&L around +$22K. My account value
(banked in) is around +17k, that is our account has made +70% until now. It's already a huge profit in
such a short time many traders dream of. But what is important is that I don't expose my account and its
current value but my floating P&L. Here due to that mindset I talked about, my risk tolerance concerning
the floating P&L is very high though never blind and concerning my account value I am highly risk averse .
If you're not able to accept huge fluctuations in your floating P&L (though without impacting your account
value) then the way you trade is weak (and you generally use TP and stops). It's as detrimental as
accepting losses on your capital value.
To make it short: Trade with your floating P&L not with your account. And to build a significant floating
P&L you can trade with, you need to understand thoroughly what's happening and not rely on guts or some
systematic illusion.
Hope this helps.
From what we said above:
- Your first goal is not to make pips but to build a floating P&L you can use as a substitute for your capital .
- You must take partial profits to slowly but steadily grow your account and your margin capacity (like what we do with the TP for -1M on EurUsd so we can handle the turbulence after the Fed hike if any).
- You must diversify you exposure to limit the correlation of your positioning with companion pairs and other trades like we are doing on GBP and AUD.
- Never take parallel risks like being badly exposed on the Euro while in the same time adding to the AUD.
- Accept significant fluctuations on your P&L only when consensus is well established.
- You must acquire a mindset highly tolerant to floating P&L fluctuations so you can deal with intraday volatility, re-positioning and liquidity search.
- Don't be blinded by the size of your floating P&L, take into account that a shrinking P&L is also a factor questioning your view.
When the question "When do we take profit?" becomes irrelevant to you this is when you start acquiring that unique and needed mindset.
Last edited: 11 minutes ago
Rien ne sert de courir il faut partir à point.