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USD/CAD went wrong, tips on money mgmt

  • #1
  • First Post: Mar 22, 2012 10:48am Mar 22, 2012 10:48am
I知 still new to trading so I知 trying to get the right psychological mind set for this.

I made a trade yesterday by shorting USD/CAD. The mistake (and I知 not sure how to fix this yet) was the Stop Limit (SL) was 80 pips. The reason I kept it so much is because I have seen high volatilities in this currency pair before and have hit SL before. Please note that I didn稚 put more than 5% of account equity at stake (on this trade or any other trade)

I placed a trade of two lots and it went against me. After that I got into position knowing that now I have a sell signal. But I exited that position out right away (without any loss) because in my mind, I was feeling that I知 doing revenge trading. That is against my rule and I知 glad to have develop a discipline of not doing this.


I知 actually looking for any tips comments from some of the experienced traders here if they can give me some input. The age old question is still there for when to TP or SL but more than that, I知 wondering if there is anything wrong with my Money Management?


Any comments or your own experience would help when you were still in the stage that I知 in right now.

Thanks
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  • #2
  • Mar 22, 2012 12:55pm Mar 22, 2012 12:55pm
Your overall analysis was wrong. I have a chart showing me nothing but bullish signals. Wish I could share it with you, but I need the money.

G'luck!
lowest draw down possible please.
  • #3
  • Mar 22, 2012 1:19pm Mar 22, 2012 1:19pm
5% in my opinion is way too much. wouldn't you feel a lot more comfortable risking 0.5% instead?

Risking 5%, if you hit 20 SL in a row, then you have to double your account to get back to where you started.
  • #4
  • Mar 22, 2012 1:34pm Mar 22, 2012 1:34pm
There's nothing wrong with your MM. Risk a half percent and you will never make anything.
Just do some study on the daily and 4H charts of the trend lines and keep up with news/equities.
It's strange sometimes how currency movements seem to predict news in advance. You'll get it.
When the Joker is in the deck.. fear not and play it well
  • #5
  • Mar 22, 2012 2:00pm Mar 22, 2012 2:00pm
Quoting Svm
I知 still new to trading so I知 trying to get the right psychological mind set for this.

I made a trade yesterday by shorting USD/CAD. The mistake (and I知 not sure how to fix this yet) was the Stop Limit (SL) was 80 pips. The reason I kept it so much is because I have seen high volatilities in this currency pair before and have hit SL before. Please note that I didn稚 put more than 5% of account equity at stake (on this trade or any other trade)

I placed a trade of two lots and it went against me. After that I got into position knowing...
5% might be a bit high, but you could do worse. Let me ask you something else. Do you actually have a profitable plan? Cause it seems like you just trade by feel and just try to avoid your past mistakes. Profitable traders don't make mistakes, they just trade their profitable plan. A losing trade is not equal to being a mistake, it has to be part of the plan.
And lastly, if you don't have such a profitable trading plan, then no money management will save your account from blowing up.
  • #6
  • Mar 22, 2012 10:20pm Mar 22, 2012 10:20pm
Money management aside, do you even HAVE a trading system or methodology?

You should google "position sizing" and "expectancy" in the same search.

Or read something like Van Tharpe's book on the same subject to measure whether your system (if you have one) can make money, and if it CAN make money, what your money management "techniques" are doing to screw things up for you...

Good luck!

Quoting Svm
I知 still new to trading so I知 trying to get the right psychological mind set for this.

I made a trade yesterday by shorting USD/CAD. The mistake (and I知 not sure how to fix this yet) was the Stop Limit (SL) was 80 pips. The reason I kept it so much is because I have seen high volatilities in this currency pair before and have hit SL before. Please note that I didn稚 put more than 5% of account equity at stake (on this trade or any other trade)

I placed a trade of two lots and it went against me. After that I got into position knowing...
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #7
  • Mar 23, 2012 4:14am Mar 23, 2012 4:14am
The thread subject is about money management, which is more important then the system used.
If we had a system that "worked", money management would become irrelevant, and then you could go in with 10%... 50%...
The system is only there to help us follow some sort of standard in taking decision and maintain discipline, otherwise we would all trade on how we feel when we get up from bed.

Nothing wrong with 5% trade on the 1hr chart??
I think is all wrong to risk 1/20 of your account on one trade on a low timeframe, specially if you are new to the business.
  • #8
  • Mar 23, 2012 9:08am Mar 23, 2012 9:08am
Quoting cesare76fx
The thread subject is about money management, which is more important then the system used.
If we had a system that "worked", money management would become irrelevant, and then you could go in with 10%... 50%...
Either you have a wrong perception of reality or you are not long in the game yet.
Having a system is THE MOST IMPORTANT thing. Let's go with poker or black jack for example. If you don't know the odds and don't play with a system, then you will ultimately lose, no matter how your money management is (assuming only professionals are on the table).
And of course money management will never be irrelevant. Just because I have a system that works in the long-run, doesn't mean that I can go in with 50 to 100%. Wrong money management can destroy the expectancy of a system.

But without a system the best money management will not save your account from depletion.
  • #9
  • Mar 23, 2012 10:16am Mar 23, 2012 10:16am
you will ultimately loose at black jack, playing against the house.... unless you count your cards... and if you do, you get kicked out.

Poker is a different story.

Trading, another story again....

I am not saying that you can toss a coin, use the right MM and be profitable, but nearly....

An average system with good MM will make money. Average MM (like 5% per trade) with a "good" system will not.

FYI I have been long enough in the business to tell you that is not the system. The system is personal, some people will do well with an MA cross, some other use price action, some other love indicators, volume analysis and some do well watching the stars and the planets. The point is, if you risk too much you get burned soon or later, whatever the "system".

I am talking about a system here, a plan is a different story.

Then... just because the author of the thread is asking advice on MM, I do not understand why people have to assume that he doesn't have a system.
  • #10
  • Mar 24, 2012 5:11am Mar 24, 2012 5:11am
Quoting cesare76fx
If we had a system that "worked", money management would become irrelevant, and then you could go in with 10%... 50%...
And the award for the most stupid thing I have read all week goes to.......
  • #11
  • Mar 24, 2012 11:46pm Mar 24, 2012 11:46pm
Quoting cesare76fx

An average system with good MM will make money. Average MM (like 5% per trade) with a "good" system will not.

FYI I have been long enough in the business to tell you that is not the system. The system is personal, some people will do well with an MA cross, some other use price action, some other love indicators, volume analysis and some do well watching the stars and the planets. The point is, if you risk too much you get burned soon or later, whatever the "system".

I am talking about a system here, a plan is a different story.
Excellent, some of the basics of 'trading' rarely seen around here! Not that many people will take any notice or even understand what you're talking about, they're way too busy looking for ways to predict price direction!



Quoting cesare76fx

5% in my opinion is way too much. wouldn't you feel a lot more comfortable risking 0.5% instead?
5% risk is ridiculous from every perspective!
  • #12
  • Mar 25, 2012 12:10am Mar 25, 2012 12:10am
Quoting Svm

I made a trade yesterday by shorting USD/CAD. The mistake (and I知 not sure how to fix this yet) was the Stop Limit (SL) was 80 pips.
If an 80 pip stop was the level at which your analysis was proved wrong then why do you think it was a mistake?
  • #13
  • Mar 25, 2012 12:14am Mar 25, 2012 12:14am
Quoting Svm
I知 still new to trading so I知 trying to get the right psychological mind set for this.

I made a trade yesterday by shorting USD/CAD. The mistake (and I知 not sure how to fix this yet) was the Stop Limit (SL) was 80 pips. The reason I kept it so much is because I have seen high volatilities in this currency pair before and have hit SL before. Please note that I didn稚 put more than 5% of account equity at stake (on this trade or any other trade)

I placed a trade of two lots and it went against me. After that I got into position knowing...

Number one problem is your risking 5%. WAY TOO MUCH !

On another note Cesare76fx is bang on. An average system with good MM is the basis of being successful.

Forget the yahoos that brag about their High W/L ratio. A high W/L ratio means nothing.

WOOF !
Master your Mind,,,Master the Market
  • #14
  • Mar 25, 2012 9:17am Mar 25, 2012 9:17am
Thank you gentlemen, I have not been around the factory for some time and I was wandering if something changed in here big time or if it was just me....

Good trading to all!
  • #15
  • Mar 25, 2012 9:55am Mar 25, 2012 9:55am
average system with good MM will make money, wow, such a bs guys, i wonder how is it possible that 95% traders are loosers and here in the forum i see that actually almost everybody is making money,

finding the real edge in the market is one of the HARDEST thing to acomplish so pls dont come up with things like AVERAGE system, something TA based with RRR 1:3, its the same fallancy, all you change is yout probability distribution function in the end

if you have average system with as you said "good MM" and you are making money it is pure randomness and series of luck and in the long run you will get ruined by the probability law of big numbers and spread....
  • #16
  • Mar 25, 2012 10:50am Mar 25, 2012 10:50am
Quoting katrooo
average system with good MM will make money, wow, such a bs guys, i wonder how is it possible that 95% traders are loosers and here in the forum i see that actually almost everybody is making money,

finding the real edge in the market is one of the HARDEST thing to acomplish so pls dont come up with things like AVERAGE system, something TA based with RRR 1:3, its the same fallancy, all you change is yout probability distribution function in the end

if you have average system with as you said "good MM" and you are making money it is pure randomness...
so true
  • #17
  • Mar 25, 2012 10:53am Mar 25, 2012 10:53am
Quoting cesare76fx
Thank you gentlemen, I have not been around the factory for some time and I was wandering if something changed in here big time or if it was just me....

Good trading to all!
yeah, some people started to think more critically and don't believe in every bs that was posted.
  • #18
  • Mar 25, 2012 11:27am Mar 25, 2012 11:27am
Guys, there must be something wrong here.

At the end of the day, the goal is making money in the long term.

If you do them one way or the other, it's your fbzines.

Here someone opened a thread asking what was wrong with his MONEY MANAGEMENT.

And lots of poster starting preaching about systems, how bad it was that he doesn't have a system and worrying about silly MM.... how BS it is to say that MM is more important than a system... bla bla bla
Do you people sell systems??

You can make money with a stupid moving average cross if you have a plan, solid MM, right approach and trade management. The system is the last thing IMFO, not everyone's.

So, go and relief your stress with someone else.
  • #19
  • Mar 25, 2012 11:37am Mar 25, 2012 11:37am
Quoting cesare76fx
Guys, there must be something wrong here.

At the end of the day, the goal is making money in the long term.

If you do them one way or the other, it's your fbzines.

Here someone opened a thread asking what was wrong with his MONEY MANAGEMENT.

And lots of poster starting preaching about systems, how bad it was that he doesn't have a system and worrying about silly MM.... how BS it is to say that MM is more important than a system... bla bla bla
Do you people sell systems??
Cause MM is solved rather easily. Just use a fixed fractional approach and decide on a max drawdown you allow, then look that the historical drawdown doesn't go above the threshold. But of course, that requires you to have a system in the first place, otherwise you can't do that.

Quoting cesare76fx
You can make money with a stupid moving average cross if you have a plan, solid MM, right approach and trade management. The system is the last thing IMFO, not everyone's.

So, go and relief your stress with someone else.
three of the four things you mentioned all relate to having a system. If the system would be the least important, then why do still most people lose in the long-run? Most people lose, cause they trade crappy systems that just don't have an edge. If you can't beat the odds or turn the odds on your side, then you won't be able to make profits in the long run.
  • #20
  • Mar 25, 2012 2:04pm Mar 25, 2012 2:04pm
Quoting Custos
then why do still most people lose in the long-run?
because of psychology, bad broker, stop hunting, bad luck, you didnt know that?
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