I only have a few posts here so far, not new to trading, although somewhat new to FOREX. I only switched over from the stock world about 6 months ago. I am currently working on changing my mindset and trading style from trading for $$$ gains to trading for %'s.
I like trading breakouts, and often set my stop loss just below the next support or resistance line depending on whether I'm trading a bull or a bear break. To help reference whether the trade will fit my strategy or not, and how much I want to put into the trade, I created an Excel spreadsheet to do all the math for me.
Here's how to use it:
Enter your account balance in the Parameters section.
Enter the percent you wish to gain your account by.
Leave the Risk (SL) % for you to play around with, but make the two Known Risk's your typical risk. You will have to change the names of the columns if you don't use .25% or .50%.
Also, you should already know your strategies Win/Loss rate as well as have a defined risk/reward ratio.5x
Find your next support line for the trade on your chart (not the table).
Observe how many pips it would be if the SL were enough below the support line to break it.
Find that number of pips under the different levels of Risk columns, and determine if the potential gain is reasonable for the trade.
To determine reason-ability, observe the next resistance line and see if the potential gain is far past the first resistance, or if it would even have to break several resistance lines to hit the target.
Also observe if you are being responsible and distributing the risk by looking at the Trade Size ($) and Risk/Pip ($). (Clearly having a SL of 2.5 pips and a potential gain of 10 to look for a 1% portfolio gain is just plain irresponsible.)
I hope this was useful to anyone! Comment back if it was!=)
Thanks!
David
I like trading breakouts, and often set my stop loss just below the next support or resistance line depending on whether I'm trading a bull or a bear break. To help reference whether the trade will fit my strategy or not, and how much I want to put into the trade, I created an Excel spreadsheet to do all the math for me.
Here's how to use it:
Enter your account balance in the Parameters section.
Enter the percent you wish to gain your account by.
Leave the Risk (SL) % for you to play around with, but make the two Known Risk's your typical risk. You will have to change the names of the columns if you don't use .25% or .50%.
Also, you should already know your strategies Win/Loss rate as well as have a defined risk/reward ratio.5x
Find your next support line for the trade on your chart (not the table).
Observe how many pips it would be if the SL were enough below the support line to break it.
Find that number of pips under the different levels of Risk columns, and determine if the potential gain is reasonable for the trade.
To determine reason-ability, observe the next resistance line and see if the potential gain is far past the first resistance, or if it would even have to break several resistance lines to hit the target.
Also observe if you are being responsible and distributing the risk by looking at the Trade Size ($) and Risk/Pip ($). (Clearly having a SL of 2.5 pips and a potential gain of 10 to look for a 1% portfolio gain is just plain irresponsible.)
I hope this was useful to anyone! Comment back if it was!=)
Thanks!
David
Attached File(s)
RiskRewardTable.xls
60 KB
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323 downloads