brain storming - everyone please join us :)

hi guys,
yestreday night while reading a book i got an idea - already i got a full course about how to build up a new ideas by diffrent ways one of this ways it is brain storming and the game is easy.

normaly you need 3 guy (miniumm) to do that and more is better recomind number is 7 people.
first you chose a topic.
then each guy right 3 ideas about that topic on a paper
then they pass his paper to next guy and while he reading his friend ideas he most build up next 3 ideas and keep going like this until you gather 100 or 200 ideas
then you go for anilaysing this ideas for the best one

we will do like this first the topic
how about :
how to reduce the risk on the trading.

everyone before adding new ideas just please copy last one new ideas and then add on it so next guy he see all the ideas i will gave example now
my idea is :
1- reduce the lot size

1- reduce the lot size
----
2-don't trade in range markets.


i think everyone got it

we will change the subject eveysome time

and be free don't think about how stupid the idea is like mine

3. Don't trade in trending markets. I have been at a trading convention last week and gathered some insight into the profitability numbers of fxcm's client base which clearly indicate that the probability of a trade closing in positive is inversely correlated to the average volatility of the session. (of course this is up to the system traded).

4. Also another statistic was that the overall winning percent correlates inversely with the effective leverage being used. (a trader who used 5:1 was 10% more likely to be profitable than a trader using 500:1).

1. I would like to comment on your first point. How to reduce the risk on trading is a complex topic and has a few different "layers". This starts at position sizing (increasing decreasing stable, lot progression , scaling in and scaling out) over trading not correlated symbols and ends with separate your capital among different brokers
A SL should not be used as a reduction of risk but it should protect the idea of the trade. If you believe you are in an uptrend there is a price level at which this assumption is falsified. You put an sl to protect your idea risk comes alone from the position size.

Take out of this post whatever you want. I guess there are a few bits to work with.

Get better at trading. Your losses will be smaller and risk will be lowered Assuming you have solid money management according to your statistics

How to reduce the risk in trading? The easiest way to reduce the risk is to trade very small size! Or to stop trading altogether.(this way you will never lose a single cent)

But if you want to make money (big money) with low risk, there is only one way!

Follow these steps:

1. You need good accuracy in order to manage the risk well, and you need high trading frequency in order to accumulate and compound your capital efficiently and at a faster rate. All this means - Forget about long term trading, forget about swing trading, forget about the big "trends"........ it's ALL NONSENSE, and you will never make real money this way, and also you will never learn how to trade or how to properly manage the risk!
For the small trader with limited capital, there is only one way to the big money - You have to become VERY good SCALPER! You need good win rate (min 55-60%, the higher the better) and a relatively stable RR, ( ideally close to 1:1 or better.)
REMEMBER, The scalpers are the best risk managers, and the best market timers!

2. Decide how much you can afford to lose and still be OK with that. (for example $1K)

3. Take that $1K risk capital and split it to many small parts, for example 20* $50.

4. Put 1 part ($50) in a trading account.

5. Trade this small account with high leverage and try to double it 2 times. (50*2=100, 100*2=200)
If you fail - take a break, reevaluate, and then go back to step 4
If you succeed, then move to the next step ( 6 )

6. Withdraw the profit, add it to the risk capital, and leave only 100 in the trading account.

7. Go back to step 5 and try to double the new balance another 2 times (100*2=200, 200*2=400)
If you succeed, then move back to step ( 6 )
If you fail - take a break, reevaluate, and then go back to step 4

8. Repeat this "doubling - withdrawal" exercise until you double your risk capital (in this example when it reaches $2000)

9. When you reach step 8 ($2000 risk capital), Take a break for some time, then Go back to step 4 and start new trading program (this time you start with $100). If you reach a point where your risk capital drops below 1000 , then go back to the beginning (start new trading program with 50)
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10. Repeat the whole trading program for as long as you want (until you become rich, or until the moment when your trade size is too big to scalp)
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What are the benefits from all this?
1. Your maximum risk never exceeds your risk tolerance (your risk capital).
2. You learn how to manage your money. You will not only become more disciplined, but you will become excellent risk manager! You will learn how to survive in the long run. (only the traders who know how survive in the long run will become rich)
3. You will accumulate A LOT of trading experience, and ultimate you will become better trader( there is absolutely no doubt about this)
4. You have the chance to use the power of exponential growth and over time to accumulate large capital base, and so eventually trading could become your major source of income.

Good luck!

adding your sl in the right place,

normally when talking about risk, people mean the distance from sl to entry.
and that is what they are risking, so, does a smaller distance between sl and entry always mean smaller risk?
I believe no, a smaller risk is more likely to be stopped out, so then what is the odds the trade would be succsesful in comparision to a higher distance between sl and entry? obviously this is not something that people think about.

so in this case a smaller "risk" would actually mean a higher risk the trade would be unsuccesful,
and that is what it is all about isn't it?
to put the sl in the right place is important.

The simplest rule of all. Fade asian session ranges, follow them the rest of the time. Brownie points if you know the statistical reason as to why.

I really like the idea of doing this.. is this something you have done yourself or is being taught somewhere?

I love it. Great idea.

Reducing risk (the way I see it):

Random = gambling = risk. Reducing the time spent in a market that you can't predict is the only way to reduce your risk.

1: -Predict, don't react. Meaning you should not be in the market unless you some idea of what is likely to happen. Also, if you enter the market before something happen you still have a 50/50 chance of getting out with a small profit, even if you was wrong. If you wait till after, and it turns out that you was wrong, you will have next to zero chance of getting out above brake even.

2: Calculate your lot-size in relation to standard derivation (or daily range) of the instrument at hand and your equity/balance. How much daily % variation can you tolerate? 10%, 5% 1%? -Leverage, actual number of lots, tp/sl etc is irrelevant...

3: Then you are in the market (assuming manual trading), always ask your self: -would I have entered the trade if the chart looked like this? -The moment the answer becomes anything but a clear YES, close the trade independently of if you are in profit or not.

cut the losers

thanks guys for the ideas but please stick to the rule

make the ideas short and breve and copy the previose guy

1- reduce the lot size
2-don't trade in range markets.
3. Don't trade in trending markets. I have been at a trading convention last week and gathered some insight into the profitability numbers of fxcm's client base which clearly indicate that the probability of a trade closing in positive is inversely correlated to the average volatility of the session. (of course this is up to the system traded).

4. Also another statistic was that the overall winning percent correlates inversely with the effective leverage being used. (a trader who used 5:1 was 10% more likely to be profitable than a trader using 500:1).
5-Get better at trading. Your losses will be smaller and risk will be lowered Assuming you have solid money management according to your statistics
6-The easiest way to reduce the risk is to trade very small size! Or to stop trading altogether.(this way you will never lose a single cent)
7-adding your sl in the right place,
8-The simplest rule of all. Fade asian session ranges, follow them the rest of the time. Brownie points if you know the statistical reason as to why.
9- -Predict, don't react. Meaning you should not be in the market unless you some idea of what is likely to happen. Also, if you enter the market before something happen you still have a 50/50 chance of getting out with a small profit, even if you was wrong. If you wait till after, and it turns out that you was wrong, you will have next to zero chance of getting out above brake even.

10: Calculate your lot-size in relation to standard derivation (or daily range) of the instrument at hand and your equity/balance. How much daily % variation can you tolerate? 10%, 5% 1%? -Leverage, actual number of lots, tp/sl etc is irrelevant...

11: Then you are in the market (assuming manual trading), always ask your self: -would I have entered the trade if the chart looked like this? -The moment the answer becomes anything but a clear YES, close the trade independently of if you are in profit or not.

Hi, superjolt

Yes, I personally manage my money this way, and I know a few other pro traders (much bigger than me in terms of capital) who use similar MM system.
Of course many different variations can be applied, different risk parameters,.... but the core principle always stays the same.
I know that you understand mathematics/logic (and programming) and probably you can see why this method is superior in many ways compared with other methods.
The interesting thing is that I have never seen this in any book about trading, and I have never heard anyone to teach this method (in all those seminars, and courses........)
I guess that only real traders use this types of methodologies. The amateurs and the casual gamblers are just not interested in more advanced forms of money management and risk management. So, this method it not very popular.
But you know, in this business, the things that are popular, are rarely profitable!

correct..i agreed

you don't reduce risk

in trading, risk reduces you

Trading in ranging market is not really bad if you know the ranges and plan your trades accordingly. Here is an example: assuming EURUSD has been ranging from 80 -100 pips and I place my orders with 50 pips TP and SL each time, and the TP gets hit. I do not see anything wrong with that.

1- reduce the lot size
2-don't trade in range markets.
3. Don't trade in trending markets. I have been at a trading convention last week and gathered some insight into the profitability numbers offxcm's client base which clearly indicate that the probability of a trade closing in positive is inversely correlated to the average volatility of the session. (of course this is up to the system traded).

4. Also another statistic was that the overall winning percent correlates inversely with the effective leverage being used. (a trader who used 5:1 was 10% more likely to be profitable than a trader using 500:1).
5-Get better at trading. Your losses will be smaller and risk will be lowered Assuming you have solid money management according to your statistics
6-The easiest way to reduce the risk is to trade very small size! Or to stop trading altogether.(this way you will never lose a single cent)
7-adding your sl in the right place,
8-The simplest rule of all. Fade asian session ranges, follow them the rest of the time. Brownie points if you know the statistical reason as to why.
9- -Predict, don't react. Meaning you should not be in the market unless you some idea of what is likely to happen. Also, if you enter the market before something happen you still have a 50/50 chance of getting out with a small profit, even if you was wrong. If you wait till after, and it turns out that you was wrong, you will have next to zero chance of getting out above brake even.

10: Calculate your lot-size in relation to standard derivation (or daily range) of the instrument at hand and your equity/balance. How much daily % variation can you tolerate? 10%, 5% 1%? -Leverage, actual number of lots, tp/sl etc is irrelevant...

11: Then you are in the market (assuming manual trading), always ask your self: -would I have entered the trade if the chart looked like this? -The moment the answer becomes anything but a clear YES, close the trade independently of if you are in profit or not.

12: Thoroughly understand your trading method!

13: Don't curve fit when evaluating. Be truthful to self. Trust me it's hurts less...

14: Don't trade when you are tired. Pull the vehicle over and take a rest.

15: Don't trade with the rent money. If you can't walk away from it without loosing your lunch, you have to much risk capital in the account.

Proper risk/money management is the most important thing in forex trading.

General rule: make sure that 3 % is maximum capital exposure on anyone trade and 6 % maximum exposure on all open positions.
I personaly never risk more than 1 % per trade, and sometimes only 0.5 %.

NEVER, ever widen your stop loss! It will screw your risk/reward ratio. When you're wrong take precalculated loss like a man and move on to next trading opportunity. Trading is not about being right, it's all about making money while preserving your capital.

So be prepared to be on the wrong side of the market more often than not, it's nothing wrong with that. As long as your win/loss ratio is higher than 33 % (with risk/reward ratio 1:2) or 25 % (risk/reward ratio 1:3), you will be making money in the long run.

My personal record of last 5 years of trading is "only" 37 % winning rate with 1:2.4 risk/reward ratio, maximal drawdown of 9.3 % and risk of ruin less then 0.01 %.

It's all about safety first and being profitable second.

Reducing Risk via most of these methods also reduces your return. There is no point in de-risking to the point of tiny returns, you might as well put your money in a fund.

I have found the best way to reduce risk is to be more knowledgeable.
An expert in their chosen field can make an investment decision with much less risk than someone with less knowledge. Do the work. It's hard and arduous. None of the easy and seductive indicators that come as standard on most platforms will give you the edge required.

Also restrict yourself to a limited number of trades per month. It's amazing how sharp your senses get if you can only do 10 trades per month.

Sorry for breaking the rules.

Ignore this, it's passed on BS .