B.S. Trading with Kenneth Lee

Enjoy the Holiday.

Now that is my idea of a white Christmas. Enjoy your time with the family

Merry Christmas to all.

hi every body
please show me supply demand level in this pic

Hi Davidtrader

I draw S&D on your chart. Please note that you need to look left to spot more significant fresh level.

To find level you own you should look for the levels that had the strongest away movement. also try to look at several TF like Daily and H1 (if you trade by H4)

I also added H4 Chart with more history (looking left) to find fresh levels.

Another thing to mention is that EU is currently hitting new lows. so levels for Demands (by H4 and up) need to be pulled from January 2011 and prior to that.

My trading plan is trading SD within a context of a trend so I will be looking for fresh levels of Supply at the moment.

So we can see what risk management is suppose to do but how do we as a private one on one trader. Use or need risk management . In a commercial environment we can easily wrap our heads around the idea that having a person responsible for providing security for the companies and customers funds can be very critical. Protecting it from massive losses from one or many sources.

Many of us only see risk management as the risk we assign to each trade which is a simple mathematical formula, The distance of the stop from your entry times the amount of money per pip . Say a stop of 32 x $1.00 would be $32.00 you are risking for that trade plus any commission you maybe paying. So that is very simple and straight forward.

But that isn't what risk management is all about that is more what the cost of trading is and you will have already accept that before you ever take your first trade. Risk management is the protecting your total account from massive loses which can result in us having to quit trading all together or maybe just for a while as we build up more funds to attempt again. I can tell you from personal experience that having to start from scratch is not a good feeling. Plus we should not have to if we apply some type of real risk management that has the goal of stopping us from becoming a out of control trader just like the ones we read about in the news. How did professional trading services risk management fail so totally to lose billions of dollars from a single trader.

It can be only a couple of issues one they were ALLOWING the individual to risk more than any other trader with the firm was allowed and then juts used them as a sacrificial lamb when it all went so very wrong.

Or they really did not have any risk management rules in place that worked. Be cause it is hard to believe that a risk manager would allow a single person to risk more than allowed which would jeopardize his own position with the company. But something failed or the only other choice would be total fraud which we don't have to consider as it is hard to steal from ourselves.
The idea isn't true theft but the attempt to make more percentage by risking more on a failing trading idea. Now that sounds like our main focus to our own risk management.

We need a secure and sane idea to protect us from losing more than what would be a reasonable amount for the style of trading we are doing. It has to be a part of your trading not something that is alien to it. Maybe a amount that can be recovered by positive trades in a given amount of time based on your past historical trading gains.

Like if you make a solid 10% gain a week then having a total of 20% loss should not be a surprise during a bad run when the market maybe doing a reset after a period of constant moves.

Many may find that to extreme but it is a fact if you go for bigger gains you will also have some periods of bigger losses than others going for less. The key is to accept that as normal and be able to continue on with your true trading plan without any emotional bias. That is the main focus of Risk Management. To allow us to continue trading in a constant fashion without losses changing our metal state. So we could say Risk Management equals Stress Management.

The hard part is coming up with a usable plan that we can enforce as individuals. We need to place a portion of our trading equity in a place where it can not be used without some fore thought then at the very least we will know without any doubt that we are stealing from ourselves. Some may just place a portion in a sub account or even leave it in a separate bank account, then in either instance you will have to do a separate and different set of key strokes to move that money from risk free to being able to risk it as well.

You may be saying this is a dumb idea that it is all my money and I can control my own money and risk. But many will find that this is really not the case once you start trading and you find yourself in the spot where you just can't bear to lose anymore trades and know that if you just add a bit more or take another one right now you can make it back. This is the risk we need to control. Just a moment of maybe having to think I know I shouldn't be touching this risk free
money right now is all we need to break a cycle of complete failures. This is the same spot pro's find themselves and where the risk managers job could have saved them and their companies from utter failures.

We should add to our risk free accounts as we grow. Then we will always have that, to continue after some type of large failure. There are many reasons that fund could be needed. A huge move could slip your stops or jump them and wipe your working account out totally. It does happen. You could be distracted and forget to close some positions on a Friday and find yourself upside down on opening Sunday night. It doesn't always have to be a complete fault of our own. We are just part of a global economy and market. We see complete countries failing and we can't be arrogant enough to think we are superior to all those people that had run most of those massive amounts of money for years. We do need some risk management to be more protected than they were as our personal finances are even more vulnerable then theirs ever were.

How we each decide to approach this is a personal choice and depends on many factors somebody standing outside couldn't understand. If your just trying to learn this and have a steady stream of cash flow from other sources your idea of risk management will be totally different than the guy with a small account that saved for a year to just be able to open his first account. The second person should find a way to protect his a lot more secure than the first.

But also think about the ultimate challenge that is to have a positive growth at the end of every week month and year. So no matter what your start and situation is or was, A plan is a most to move forward safely and securely. Because the larger our accounts become the more need to protect them will be as well. A two tier approach works best for me and allows me to continue my education into trading no matter what. A portion of my equity is in a sub account as well as a portion that is in a bank. These are separate from my working account. It is easy to move a portion of profits to my sub account then every now and then siphon some of that off into a bank account.

A separate trading bank account makes it easier to control taxes and costs of trading as a business expense paying for all your up front cost from that account.

I know everyone is waiting for the trade management portion of this , But in reality the risk management is the number one in importance as it will allow us to keep trading.

If your trying to make a living off trading you have to have some safe guard to protect enough equity to always take the next trade. If your just yoyoing around and starting new with money from a different source and you have a good week or two or even a few months and decide to go full time as a result of that short period of success if you don't have some type of risk management in place the odds of you failing completely are very great.

So take the time to setup a Money management and risk management system now and live by it. It is not your trading plan it is how you manage your accounts funds and is number one in my view.

It's taken me 3 years to get to the point where I'm actually starting to think in terms of "how much can I lose on this trade" vs. "how much can I make on this trade". It is very cliche, but once you actually start to understand what this means, it changes the game and how you view risk. Once "how much can I lose" becomes second nature in my thinking, I know I will have reached a new milestone in my trading.

The 'mindset' of protecting your wealth really helps stop the account from bleeding to death, at least for me.

Better late than never I guess, but 3 years, seriously!?!?

It never ceases to amaze me how many people just wander into this business off the street, trading, on margin, in an unregulated market which they don't understand, underfunded, overleveraged, with unrealistic expectations.....and then they're surprised when it all goes tits up and they lose their shirt

Nice thread by the way....


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A nice enlightening read for the holidays.

pipmutt,

If not for those.......we would not have gains, but you are right on.

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kenneth Lee, thanks for those great words of wisdom! I believe it takes time and losing money to get to the question where you will ask yourself how much can I afford to lose? and how big leverage am I gonna go with this time? of course, money management will calculate everything for you as long as you know your maximum risk you can afford to lose.

I've been trading for 3 years just like LasVahGoose, and now I am thinking seriously about being disciplined and protect my capital first and second thinking about the profit. I do believe it takes time and lots of pain to become disciplined in controling how many lots you can purchase and what percentage of your money you want to risk, respecting stop losses etc...

Yes it did take me time to get to the point where I have no choice but to be disciplined and follow the plan of my money management. I found out that I was away leveraging my account too much even though I knew about leverage. I use to see 20 to 1 and 10 to 1 as normal gearing, but after the pain of losing with great strategies that 10 to 1 is way tooo big to control the risk of money management. This will be an other subject about leverage traders gear their accounts with, but if everyone of us respect their money management plan, believe me you will save years of pain and money. We all try to grow our account as quick as we can, but if you go small according to your money management plan, the account will grow bigger and with consistency.

My regards,

Took me about 9 months to realize this fact.

I have taken the last 2 weeks off to refocus a bit and been re-reading through the pdf again. I have a couple questions and hope that some of you can help me clarify a few things.

1. Ken you mentioned mornings are the best time to trade. I am East Coast like you, are you talking about London and New York opens or just, for example 5am-10am EST?

2. When talking larger time frames, what is a good rule of thumb with intraday charts. I like the 30min so do I look at the 4hour or Daily for big picture? What about the 15min, do I look at 1h and 4h? I know it's about my style/plan, just wanted to see what is working for you guys?

Have a happy New Year!

1. I'm sure he means London morning as this session generally has higher liquidity and volatility.

2. There is no right or wrong. Choose timeframes you are most comfortable with. I don't like the h4 timeframes, so I use d1 for bigger picture, h1 to find trading opportunities and m5 for entry.

Happy New Year!

Euro going up from tomorrow and the week after..

zamfir,

With E/U going up as it would appear to have hit a strong demand level today, that is a CT counter trend trade. So are you considering an ATM (quick in and out) CT trade or wait until the trend returns .... or some of both? What do you see that makes this week and next week's trading by the big boys continue in a counter trend?

Lou,

I could be wrong, but i m just seeing a demand level on the daily. Also euro has be in a downtrend and selling for quite sometime now. Should remain up the next upper supply level atleast. Big boys will push up the price only to drop again..hehehhe..lets wait and see..

The level just looks interesting.

I agree very interesting. I just went back on the Weekly chart to approximately this time last year. The weekly candle, took a nice move up after hitting this demand zone.

oz chart