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1. Abstract.
I hope this post helps to understand one of the tricky situation at the moment of trade on news because is very risky and to give my view
on the new order wiget. This seems to be very interesting and useful but I think it could be best with some improvements.
2. Development.
2.1 Explanation trade on events.
Let's say that before a release event you decide to trade.
In this particular example I will re-create a setup based on a bear flag, so the entry could be placed below of the few candles low.
The stop loos above the last higher high, that means about 20 pips risk with a limit to the nearest lower low.
Till here seems to be a nice setup, also if you check the exponential moving average of 144, means strong downtrend.
Also, after check this setup you can say that the entry could be adjusted at the previous candle low as entry and the high as stop.
That means around 10 or less pips risk to trail the stops each candle.
But, the reality here is other.....
After the data comes on place, the price experiment a jump or explosive movement down side.
And with this filling the stops orders, first the order was filled down about 25 pips and that means your stop loss as well.
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Sebine avatar
Sebine 13 Nov.

Good job !

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1:1.5 Risk Management Strategy
Professional trading and risk management

Every day new Forex strategies appears, every day hundreds of people claims that they succeeded in the Forex because they make the holy strategy which can make millions of dollars and the strange thing that they want to sell it to you by 30-40 dollar, really if you search in the net about Forex strategies you will find tons of them but that’s not changing the fact that most traders lose their money in the market.
Why we lose in Forex:

  • Technical analysis is not enough :
You can read one or two books about technical analysis and then become good technical but you may read many books in technical, Japanese candles, divergence, Elliot, astrology and Gann, but you feel that you are not able to trade and if you open life account you lose all money very quickly.I mean by saying “technical analysis is not enough” that you may be wonderful technical but big Forex loser.
  • Fundamental analysis is not enough:

A lot of people knows a lot about countries finance and very careful to follow and predict the life news of counties markets, but really that’s not working because they ignore price levels and the ability for any cur…
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independeceday32 avatar

I totally agree with you, when one begins on forex most important is not to lose all the money in your trading account in the first three months, this risk management strategy  helps a lot !! good article !!

BilboFX avatar
BilboFX 16 May

Very good article and reminder about  the importance of money management, the first raison of a newbie complete loss of the account (I passed through this experience and learn it the hard way)

jezz avatar
jezz 16 May

As far as I know (and I don't know much) self discipline is the final holy grail. On the other hand, explaining to a complete bot not to risk more than 1, 2, 3, 4, 5% of the account means nothing. Why? All start accounts are up to 1000$, usually around 500$. So you tell me not to risk more than 5-20$ on my first trade ever? With 0,01mil in the game we talk about SL at 5 pips maybe, give or take a few. I simply think that risk to reward ratio doesn't apply to micro accounts which most beginners have. Self discipline and sticking to the strategy is the first step towards a good risk management

khalidamassi avatar

jezz,Thanks very much for your comment but in micro account every 10 pips (for EUR/USD) equal 1 $ ,so 1% risk of 1000 $ mean that you can make one micro trade with SL at 100 pips not 5 pips as you mentioned ... you enter with 5 micro trades with each 20 pips SL ...please take in your calculations." I simply think that risk to reward ratio doesn't apply to micro accounts " that's very bad thought because it will you off from the market sooner.

khalidamassi avatar

Jezz, I mean it will kick you off from market if you make risky trades and do not strict to reliable reward ratio.

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