- Price action:
- Candle sticks/pin bar setups and patterns.
- Support/resistance levels, pivot points
- Price behaviour
- Round numbers.
- Hedging stratagem
- Breakout strategies: many breakout strategies.
Target: Base target is simply 50 pips per day. One day one could reap +100 pips, the next could be -50. One day could be +230, the next could be -100.
Money Management: I work with a 2% money management rule. If any one trade reached 2% of my account equity, it will be liquidated. If I have $100,000 in my account, I will have a maximum of $20 per pip.
I work the value per pip based upon the ATR of the time frame I'm trading. From the ATR I calculate the stop loss. I then can decide how much each pip will be worth, to give the trade room to move without hitting my 2%.
Example: 100,000 USD in account
- 2% = $2000 risk for the trade
- ATR = 125
- Stop = 150
- MAXimum Value per pip = 2000/150 = $13.33 pp
That's my approach. On higher probability trades I will have a higher value per pip, while still honouring the 2% rule: however, this is up to my discretion on what I think the probability of any given trade is.
I also work on a 20% money management rule, whereby if all positions I have open hit their stop losses, the total loss from all the positions would not exceed 20% of my account equity. Therefore, that would equal 10 positions, all at 2% risk, all hitting the stop.
Further to that, it is wise not to have the stop loss at exactly 2%, but before, to take into account slippage and any unusual events happening which causes the currency to jump ones stop loss / causes a long fill time.