USD/CAD went wrong, tips on money mgmt
I知 still new to trading so I知 trying to get the right psychological mind set for this.
I made a trade yesterday by shorting USD/CAD. The mistake (and I知 not sure how to fix this yet) was the Stop Limit (SL) was 80 pips. The reason I kept it so much is because I have seen high volatilities in this currency pair before and have hit SL before. Please note that I didn稚 put more than 5% of account equity at stake (on this trade or any other trade)
I placed a trade of two lots and it went against me. After that I got into position knowing that now I have a sell signal. But I exited that position out right away (without any loss) because in my mind, I was feeling that I知 doing revenge trading. That is against my rule and I知 glad to have develop a discipline of not doing this.
I知 actually looking for any tips comments from some of the experienced traders here if they can give me some input. The age old question is still there for when to TP or SL but more than that, I知 wondering if there is anything wrong with my Money Management?
Any comments or your own experience would help when you were still in the stage that I知 in right now.
Your overall analysis was wrong. I have a chart showing me nothing but bullish signals. Wish I could share it with you, but I need the money.
5% in my opinion is way too much. wouldn't you feel a lot more comfortable risking 0.5% instead?
Risking 5%, if you hit 20 SL in a row, then you have to double your account to get back to where you started.
There's nothing wrong with your MM. Risk a half percent and you will never make anything.
Just do some study on the daily and 4H charts of the trend lines and keep up with news/equities.
It's strange sometimes how currency movements seem to predict news in advance. You'll get it.
And lastly, if you don't have such a profitable trading plan, then no money management will save your account from blowing up.
Money management aside, do you even HAVE a trading system or methodology?
You should google "position sizing" and "expectancy" in the same search.
Or read something like Van Tharpe's book on the same subject to measure whether your system (if you have one) can make money, and if it CAN make money, what your money management "techniques" are doing to screw things up for you...
The thread subject is about money management, which is more important then the system used.
If we had a system that "worked", money management would become irrelevant, and then you could go in with 10%... 50%...
The system is only there to help us follow some sort of standard in taking decision and maintain discipline, otherwise we would all trade on how we feel when we get up from bed.
Nothing wrong with 5% trade on the 1hr chart??
I think is all wrong to risk 1/20 of your account on one trade on a low timeframe, specially if you are new to the business.
Having a system is THE MOST IMPORTANT thing. Let's go with poker or black jack for example. If you don't know the odds and don't play with a system, then you will ultimately lose, no matter how your money management is (assuming only professionals are on the table).
And of course money management will never be irrelevant. Just because I have a system that works in the long-run, doesn't mean that I can go in with 50 to 100%. Wrong money management can destroy the expectancy of a system.
But without a system the best money management will not save your account from depletion.
you will ultimately loose at black jack, playing against the house.... unless you count your cards... and if you do, you get kicked out.
Poker is a different story.
Trading, another story again....
I am not saying that you can toss a coin, use the right MM and be profitable, but nearly....
An average system with good MM will make money. Average MM (like 5% per trade) with a "good" system will not.
FYI I have been long enough in the business to tell you that is not the system. The system is personal, some people will do well with an MA cross, some other use price action, some other love indicators, volume analysis and some do well watching the stars and the planets. The point is, if you risk too much you get burned soon or later, whatever the "system".
I am talking about a system here, a plan is a different story.
Then... just because the author of the thread is asking advice on MM, I do not understand why people have to assume that he doesn't have a system.
Number one problem is your risking 5%. WAY TOO MUCH !
On another note Cesare76fx is bang on. An average system with good MM is the basis of being successful.
Forget the yahoos that brag about their High W/L ratio. A high W/L ratio means nothing.
Thank you gentlemen, I have not been around the factory for some time and I was wandering if something changed in here big time or if it was just me....
Good trading to all!
average system with good MM will make money, wow, such a bs guys, i wonder how is it possible that 95% traders are loosers and here in the forum i see that actually almost everybody is making money,
finding the real edge in the market is one of the HARDEST thing to acomplish so pls dont come up with things like AVERAGE system, something TA based with RRR 1:3, its the same fallancy, all you change is yout probability distribution function in the end
if you have average system with as you said "good MM" and you are making money it is pure randomness and series of luck and in the long run you will get ruined by the probability law of big numbers and spread....
Guys, there must be something wrong here.
At the end of the day, the goal is making money in the long term.
If you do them one way or the other, it's your fbzines.
Here someone opened a thread asking what was wrong with his MONEY MANAGEMENT.
And lots of poster starting preaching about systems, how bad it was that he doesn't have a system and worrying about silly MM.... how BS it is to say that MM is more important than a system... bla bla bla
Do you people sell systems??
You can make money with a stupid moving average cross if you have a plan, solid MM, right approach and trade management. The system is the last thing IMFO, not everyone's.
So, go and relief your stress with someone else.
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