Risk

[eldad 10]

Hi,

I would like to speak about Risk, and $$ value of your risk, in April I rise my risk levels and it took some days till I noticed that now I will gain more, this is something I am very proud to say happened, all the time I just thought what is the amount I am willing to risk, I didn’t started with what I wanted to gain, no, I choose what I am willing to risk in losing trades and according to this I moved on, this is a big difference in the way I see trading now days,

 

When I started to trade like many others I thought about one thing and one thing only, WIN, how much I can win, how fast I will win, how much I want to win per day, I had crazy numbers in my head, I am sure many of you out there have the same thing in your head,

 

This is one of the biggest problem for a trader: when you focus on winning you have a real problem to accept a loss, it is not part of the plan, you take high risks because you want this huge gains, buy 1000 shares so 1$ move will give you 1000$ profit, you don’t think about the other side, -1000$ and according to all studies the pain of lose is at least double then the happiness of a win,

 

If you will focus yourself just on wins you are not prepared mentally for the upcoming loss, and be sure they will come, because there is no “holy grail” in trading,

 

So what do I recommend? If you are a new trader start with a very small $$ value risk per trade (check the R system), start with 10$ a trade, this will allow you to lose many trades and still be in the game, to make many mistakes and you will make, you will find that you make revenge trades, you will lose control, and many other things that will be part of your formation as a trader, it is normal, again this is a marathon, it will take you at least a year or more (normally 2 and above) to really make money from trading,

 

With a low $$ value it is easy to accept a loss as part of the game (cost of doing business) and learn to focus yourself at what you are willing to risk in order to gain, you always have risk, have control over it, choose how much you are willing to risk in order to know if you are right or wrong, and if you are wrong no problem there is always new trades to make,

 

The best traders know to lose, they chose how much why they are willing to take a risk and lose, they don’t live it random movement they take control and responsibility over their actions, they might win but they are willing to lose,

 

Make the odds in your favor Day Trade.

 

Eldad Nahmany.

 

http://tobecomeadaytrader.blogspot.com

[fxfive 10]

Good post! I think that you have pointed very useful tips, specially for newbies, about how to manage risk. I also agree that newbies should control the risk by trading with small amounts. This will make them feel more confident with their traders and they won't be shocked when losing.

[CrazyCzarina 17]

In forex trades, spot and forward contracts on currencies are not guaranteed by an exchange or clearing house. In spot currency trading, the counterparty risk comes from the solvency of the market maker. During volatile market conditions, the counterparty may be unable or refuse to adhere to contracts.

[fxeconomist 11]

On 2/8/2021 at 3:43 PM, CrazyCzarina said:

In forex trades, spot and forward contracts on currencies are not guaranteed by an exchange or clearing house. In spot currency trading, the counterparty risk comes from the solvency of the market maker. During volatile market conditions, the counterparty may be unable or refuse to adhere to contracts.

What do you think about CFD trading? Is it reliable enough? In my opinion brokers that offer ECN shouldn't have this issue

[CrazyCzarina 17]

CFDs are quite attractive to day traders who would be able to utilize leverage for trading assets that would be more costly to buy as well as sell. CFDs could be quite risky due to low industry regulation, potential lack of liquidity, as well as the requirement of maintaining an adequate margin due to leveraged losses.
 

[fxeconomist 11]

On 6/19/2021 at 10:26 AM, CrazyCzarina said:

CFDs are quite attractive to day traders who would be able to utilize leverage for trading assets that would be more costly to buy as well as sell. CFDs could be quite risky due to low industry regulation, potential lack of liquidity, as well as the requirement of maintaining an adequate margin due to leveraged losses.
 

Can you suggest reliable liquidity provider which offers CFDs on stocks.I know Hotforex but need other brokers to try cross-hedging strategy. 

[CrazyCzarina 17]

Yes, have heard about it, and would definitely give it a try, after I have finished my learning process of the Forex Market.