Need Risk money management advice - I have 85-80% winning Rate!

From what you've described, I can only conclude you really don't have a "system", much less an 80% win rate.

Consider this:

1. IF you really had an 80% success rate, why would a well defined stop-loss bother you? You should be able to recoup the loss in the subsequent trades.
2. Assuming you did try to implement it, but still cannot recoup your loss, that would mean:
   1. Your risk:reward ratio is extremely unfavorable to the point - even with 80% success rate, you'd still bite the dust. If this what you're doing, you really don't have a system. You're hoping the market turns around before you get a margin call. This is called wishful thinking.
   2. OR you don't have an 80% success rate.

   
   

3. Finally, the reason why you don't have a system with 80% win rate is because, you're now trying to add a stop-loss component in your system. So this isn't the OG system, it's an entirely new system which would require another round of testing to see if it can achieve 80% win rate with the new addition.

Hi,

Sorry to hear that you're having issues with this. I, myself, had this problem a while back, and let me tell you, it's frustrating, so I understand your frustration. However, I was able to overcome this, and things have been very good ever since.

So here are some suggestions that I have:

1. Develop a system that has risk management built into it
   1. What I mean by this is that you should develop or learn a system where the stop loss and take profit is already defined. For me, this was learning the supply and demand method. With that method, you can place your stop loss right outside of the zone and have your take profit to the next zone. Usually this lead to 2:1 up to 5:1 trades, and they had a fairly high winning ratio.

2. Work on trader's psychology
   1. In my personal experience, I believe that the markets are much more mental than you think. Much less analytical. I say this because if it were all about being intelligent and smart and finding patterns where no one else can, a lot of people would be professionals. However, that's simply not the case 99% of the time, so the trader's mentality is very important.
   2. Markets are random, yes, you can learn what drives them, but still they are fairly random. The definition of random from Dictionary.com is: "proceeding, made, or occurring without definite aim, reason, or pattern". There is no definite pattern to the markets. So get used to it, lose the pride, and let losses happen.

3. Accept losses
   1. No one is perfect, just let it happen, but make sure to manage those losses responsibly.

Hope that helped or spurred some thoughts and ideas in someone's brain.

Thanks,
Sunny

i will advice u not take risk more then 5% of your account.

Hi E300,

Don't you think the opposite would work better? Cutting your losses short and letting your winners run?

I know it sound cliche, but the truth is that it works, specially on trending markets.

If you do that, all your losses will be tiny and you'll have small/medium wins that will cancel the losses out, but every once in a while you'll catch a big move and profit greatly from it.


Good luck, and good trading! -Ryosuke

Absolutely! I mean how is your account going to deficit the big losses against the small wins ? It could be way around or with small wins and small losses that way your account can at least make up for the losses

The guy did not come to FF since october 26.

Usually, it is easy to have a nice pourcent winner if the Stoploss is big, and the takeprofit small, something like sl =2000, tp = 20.

Depending on that depend the money needed to stand martingale doubling lot each time.

maybe this guy will provide this kind of EA :

http://www.forexfactory.com/showthre...=611999&page=3

I did some excel on the Crude Oil for the last month (no worries this is relevant).

And being the newb i am the first thing i did was check correlation on a candle basis. So if candle 1 goes up candle b goes where on avg.
Result: The market isnt that dumb checking 2k candles i ended up with guess what 49,6% (thats a straight random walk).
Next thing i checked was okay lets take the avg change of all those candles and only look at candles which are above avg.
Result: some correlation on avg the longer your candle the higher the chance that theres a correction (depending on how long i required the candles to be i achieved a hit ratio of winningtrades of 60% by just going opposite to the last big candle the second said candle closes).

Now you can saaay yaaay i found a strategy i found a strategy 60% winrate by just betting on reversal after a big candle and closing exactly 1 candle later. Woooohooow ...
Sorry its not as simple the market still isnt that dumb. I checked the avg drawdown after each candle and compared it to the avg rise if i wasnt correct problem: i ended up at my good ol 50% and no length adjustment could fix that sometimes id have made money sometimes id have lost. Take spreads into account and you loose a 100% period.

your "system" sounds a lot like that. Yes you achieve a 80% hit ratio by just loosening your entry and exit barrier but you dont look at the second picture of risk vs reward or overall profitability. You say its a winning strategy because it got a high winrate ... but winrate means nothing on its own.

You have a strategy yes but your strategy seems just as the market a random walk on your balance.

Continue to proceed with the study then our understanding of the forex trading business will be stronger, in line with that in time we will also gain experience that could be useful in almost same condition for our use in future trading.

Managing the risk is the most demand able ability in Forex market where risk is everywhere. My trading career, many times I fallen a great loss due to lack of exact risk management . now I am studying about this

If you have 85%-97% hitrate,just define SL number with which your system is "comfortable" and see the results...The 85%-97% hitrate is a killing with proper MM.
For example:
1.From 100 trades you have 85 winners and 15 loosers which negate all your profits from 85 winners.
2.You setup a fixed SL on every trade,your hitrate most likely will fall to 60-70%...this will be enough for you to be in profit.
Another example.
Your fixed Sl is 10 pips,lets imagine that your hitrate is 70%...in first case your TP is 5(+spread) pips,in second case your TP=1(+spread) pips:
1.From 100 trades you have 70 winners which brings you 350 pips in total,and 30 loosers with -300 pips in total...you are a little,but in profit.
2.From 100 trades you have 70 winners which brings you 70 pips in total,and 30 loosers with -300 pips in total...you are wasted your money.
And don't forget about comissions(if any).
So...if your trades don't bring you more then 5(+spread) pips...well,you are simply gambling.
Anyway,you get the idea.
________________________________________________________________________________________________________________________
Never use EA's without any SL functions in it...EA's don't care about you and your hard earned money.
Good luck.

Thank you for your concern about the risk mangling
but don’t try to experience in live account at all,
you can use demo trading for that.

When you try to make sure your risk management , please don’t use demo account , success in demo actually not work in live trading. so I think it is more appropriate to use micro account instead of demo to see at any performance risk or MM.

You know exactly what is wrong with your system - you are not using SL properly.

Risk should be 1% to 2% max per trade.
Risk/Reward should be min 1:3
Max exposure across all open trades at any one time should be 4%
Your win ratio of 85% is unlikely long term, but even with a 60% win ratio with above risk profile should put you in profit.
Good luck.

Managing the risk is a great skill in successful trading, we can’t avoid the demo trading which sometimes teach us how to manage risk. When you trade with high leverage in demo then you ll understand how much risk you have to take in live for avoiding loss. So please remove this immature thinking that demo doesn’t work.

RM is so much inevitable part of healthy trading life, actually despite of having most powerful analyzing trading strategies that’s not possible at all to make sure maximal result if you don’t know how to manage risk.

my rule of thumb is that you should limit your order sizes to 0.05 lot per every 1000 dollars you have in your account.
and you can only have 5 positions simultaneously with this size.


its simple, but its hard to adjust to it at first.

Haa haa. 10% risk not only stupid it’s just joking. 4-5% risk can be harmful to create profit with surely in spite of having good money management plan. So taking 10% risk can be an approach to invite deliberately huge losses.

Open a stop loss after you make some profit, to secure it.

but anyway, its very important to have some money on the account to be able to "Survive" those drops.

Also, make sure you open positions with low amounts according the the size of your account, as long as you are not getting too greedy I think you can do pretty good (at list according to what you just said)

Given that victors appear to greater than washouts in light of your maximum run-up versus draw down, it appears to me you are searching for an exchanges which are directional - which ordinarily implies bring down liquidity/higher unpredictability instruments. In the event that you have a market impartial system, a passage strategy which is skeptic for specialized investigation and so forth, at that point how are you evaluating the market you wish to exchange. Is it mechanical evaluating % change in value, ADX or some sort of variation? Or, then again is it instinctive/major, for instance, oil is unstable directional market right now 'I'll exchange that'.