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In this article, I’m going to share with you a little secret of mathematics and risk management. I formulated a simple law that expresses a win-win situation in risk management coming from risk/reward ratio analysis and the different mathematical outcomes and ideas that spiral off these simple and yet powerful notions. As we all know, good trading comes from the triple intersection between good trade location, good risk management and your ability to master yourself. This tripod cannot function properly if one of the elements is out of balance. So, in here I’m going to give you the key and some wise concepts about the second element: risk management. If you apply these principles, you’ll notice that your trading will become more solid and consistent over time. Also, you’ll have the ability to be wrong in your trading decisions most of the time and still come out with a little profit or at least breakeven. By having that in the back of your mind, you'll be able to eliminate some of the bad emotions about trading like risk aversion and the desperate need for absolute accuracy all the time. Before we worry about how much precise we can be with out strategy with need a insurance pla…
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alifari avatar
alifari 4 Sep.

Nice article +

Likerty avatar
Likerty 11 Sep.

I would concentrate on risk management in the charts rather than risk management on the capital. Its almost garanteed for a newcomer to loose its capital anyway. I would suggest to focus on price action trading - sort out the KEY levels which to bet against and manage the risk acording to support/resistance

ebiesczad avatar
ebiesczad 12 Sep.

I agree. You have to focus on price action to get good trade location. However, in this article I'm just talking about risk management and how it can give you peace of mind in relation to risk taking. I am talking about risk management in the charts and in the capital.. Bottom line, I just proved mathematically which risk/reward levels you should srtive for in order to have an statistical edge over time. Sure you'll need trade location, but that's a different animal. I'm just talking about capital protection over time and consistency.

Likerty avatar
Likerty 21 Sep.

Statistical edge is sure the necessary thing, but with bad entries/exits - it wont help anyway:) Piece of mind comes with understanding of what you doing (understanding what market movers are doing) - not just putting less of your equity on single trade. And on stressfull conditions one is surelly analysing PA more closely - so its not a bad thing - you dount need to avoid stress - it makes your iron harder:)))

Likerty avatar
Likerty 21 Sep.

I agree on your points here, but What I'm trying to say is that most of newcomers are way undercapitalised to be able to adopt text-book money/risk management and because of lack of understanding what PA is doing - they will lose anyway.. So, in the end - after loosing several deposits, if one still has any motivation left - the only way to make up in this business is to analyse hard the PA and try to make more than loose..

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7/58
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               Trading the markets, especially Forex, is one of the most intriguing of endeavors that you can undertake. What do I mean? It’s the fact that you can make lots of money if you know what you are doing and in the same breath, lose lots of money if you don’t. So how do you figure if you know what you are doing, or you think you know but you don’t? How do you know that you don’t know? These are serious questions that a struggling trader needs to come to terms with. Since it’s so easy to win and equally easy to lose, then to keep winning on a consistent basis becomes a struggle for most traders. If you this is you, read on as I have some powerful antidotes which I call “chicken soup” for you – much like having some real chicken soup when you are under the weather to get you up and running, taking these antidotes will help you with your struggling as a trader. It will turn you from being a struggling trader into a profitable one.Quest for the Holy Grail          One of the most serious flaws of a struggling trader is the inability to stay focused on a single strategy or method i.e. chasing the Holy Grail. You can watch this happening in any trading forum you visit. Every ti…
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fzavier avatar
fzavier 6 Feb.

Not only chicken soup, but plenty of pasta and steak is in the stove. Be sure to be back for your helpings. :P

fzavier avatar
fzavier 20 Feb.

No one is thirsty? Come have your chicken soup ... its full of nutrition and the best part is its totally FREE. Yes!

fzavier avatar
fzavier 22 Feb.

The psychology part of trading is THE most important part of your trading success, even higher than your trading methodology. Yes, you heard it right.

doctortyby avatar
doctortyby 26 Feb.

few succeed...think outside of the box

fzavier avatar
fzavier 27 Feb.

that's right.... you need to think outside of the box. But what keeps you in that box? Where are the boundaries? What are your objectives? All these must be considered.

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48/65
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Many of beginner traders start to ask themselves either in
their own mind or even searching in google search engine or if they are keen
learning through many forex courses and forex textbooks.
I know this is not an easy task but to tackle and to answer
this, the traders themselves must know about their personality better at first
rather than looking for solutions outside their boundaries.
Most traders are often trapped by the brokers, forex courses,
forex signal service and many others similar profile to have a super duper hype
of easy cash flow in trying their system or services in a demo account.
In a way, it is true that a demo can help traders to
understand more of how the forex market works and how to start trading. But do
not think that trading forex is very easy as it happens to many novice traders.
It is very common that brokers often set a trap for novice
traders by trading on the demo first and become billionaires easily the next
month or the next year. Is this how you train yourself at the beginning? Or the
brokers help in training you by giving an over leverage feature into your
account?
I think you know what I mean by that. Now I will bring you
deeper and you will real…
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Tinktank avatar
Tinktank 22 Jan.

True words.

Tinktank avatar
Tinktank 22 Jan.

..but you could further explain exactly how newbies can attain the right mindset for successful trading. I'll be looking forward to your next article.

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42/100
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Is there
one? Believe me - there is!
But it’s not like the Holy Grail
or just any old "super" indicator system either.  Nope, not even
EAs (Expert Advisors) or trading robots. But there is definitely a distinction
that separates a consistently successful trader from the unsuccessful
ones. 
 
You have just taken your first
step into the world of trading and you are optimistic that you have stumbled
onto a surefire vehicle to retire within a year or two as a multi-millionaire.
And you had typed your resignation letter to throw at your boss at the first
indication that you had arrived in the professional arena of trading. Cool!
 You sign up with a broker and start with a demo
or practice account. You are thinking in your mind - watch out boss!
So you start trading with an easy to follow system of 5 and 10 EMA crossover
system. Each time there is a crossover, fire the engine and place a trade.
Ouch! It’s so easy, you could almost kick yourself for not knowing this easy
way of money making. Why do people still work 9 to 5? Why work at all? You feel
so fortunate to know about the trading world.
 
 Due to beginners' luck you
get 6 straight wins and you are in an euphoria. But truth be tol…
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ritesh avatar
ritesh 22 Dec.

Wishing you a very happy and prosperous New Year. +1

AdrianWS avatar
AdrianWS 26 Dec.

great article, loved reading it very useful. merry xmas +1

fzavier avatar
fzavier 27 Dec.

thanks ritesh, same to you

fzavier avatar
fzavier 27 Dec.

thanks adrianWS, great to hear you liked it

fzavier avatar
fzavier 29 Dec.

It seems the article submission has been frozen this week. Unable to upload. Guess will upload for January 2012 then.

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