gold is trying to break down...
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DislikedHi Gary,
Thanks for your message. I'll attempt to go through my entries as I think this is as equally important when deciding upon targets. Well as you know, having read FXP's thread, the entry criteria, trade with the longer term CCI, use the shorter CCI to get you in with a 123 move usually being a safer option to confirm s/r. Even though, often the case may be that waiting for the 123 move to happen means loosing out on a few pips.
When I see an opportunity, the first thing I look at is where could it go, then if that is to occur, where should it not go. When I first started few years back, I placed every trade with a positive r/r ratio or stops being in the right place. As many, doubled my account, then get cheeky, forgot all about r/r and lost the lot. What I have learnt, above everything else is that stops NEED to be in the right place. You're looking at this trade, or the opportunity to trade because you feel that the instrument will move to X price. Have belief in yourself, because what you'll find is that more often that not, you're right. Why do so many novices get burnt?? From speaking to various new traders, it's too tight stops! Now, having a good r/r ratio is one thing, and having the stops in the right place is another. Or is it? Well, firstly, I guess what is a good r/r ratio, 1:5, 1:2 or 1:1.5. This is a personal matter but personally I'm happy with the last two. The way I manage the trades, is to close 1/2 the position at target 1, and 1/2 at target 2 (or 1/3 if there's three targets). To clarify, I think having a good r/r is great, I'd say a minimum of 1:5 but above all the stops need to be above/below previous lows/highs and/or s/r levels. Yes it may not hit the level before hitting your target, but that's what you want, right? A level that is unlikely to hit if your analysis is right.
As for where I get my target levels from, usually the 1st target is on the 5/15 min chart then the rest is on the time frame above. Something to note is that I often reduce my SL to break even so that my risk is minimal. OK, so the opportunity cost is there, you could have banked £10 per point an 100 pip, instead you took 100 @ £5. But, in my opinion, that's the money management side of trading. Plus you have given youself the opportunity to maximise you pips. This way, as your stake increases from say £10 to £20, you're still banking 100 pips @ £10 when closing 1/2 a position.
In relation to the thread, the problem I am finding is trying to chat in the room, and trade whilst posting setups on here. In particular, the shorter time frames, as often by the time you have posted, the moves have started. This is something a few of us are working on and hopefully we should have a setup to accommodate for this.
I hope this helps answer your questions, if you would like to discuss the matter in more detail, feel free to add me on Skype: hemal_pandya
Best Regards,
HIgnored