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4/38
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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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22/67
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You will find out a definite answer to this
question that haunts every trader. You will see the results of a comprehensive
study of 127 indicators. And THE WINNER IS…? You would most likely never have
guessed it. It is an indicator that every trader knows and many
traders use. The question is whether they use it properly and profitably. Should
you use it? Read on...
The study of
127 indicators
In this book of 800!!! pages the author and his team present
the results of testing the performance of 127 indicators for a period including most of the
previous century for Dow Jones Industrial Average. (Note: the study doesn’t differentiate
between indicators and oscillators.)
Unfortunately a similar study doesn’t exist for the FX
market. But indicators are indicators because technical analysis is technical
analysis in any market so let’s see whether we can learn from this study something
for our FX trading
They compared results of the performance of the
Buy&Hold strategy with a strategy using a particular indicator. There were
some other rules which are irrelevant for this discussion.
The tested indicators included also the indicators
that are widely used in FX trading like:
various types
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scramble avatar
scramble 18 May

@robert: you are right! i read again whole article and so i understand i got it wrong last time. stress gives this and many other kind of thigs!
good luck :-)

DaddyPapi avatar

The people who actually have the holy grail indicator(s) are busy making money from it and dont want to share it..otherwise they would lose their edge

belman avatar
belman 24 May

Well done +1

Furian avatar
Furian 28 May

Most efficient indicator is into our head. To understand what BBWEB (big boys with endless balance) try to do in particular time frame with intention to induce some sentiment which will be wiped soon after majority of day traders start to think "ok I go in this direction" Someone must lose if some other win. Fake sentiment is most deadly sword for majority of traders as well as 'recomendation" from some "good names"

HansFX avatar
HansFX 14 July

Good article. This also explains why all indicators only work in certain market regimes. It's important to constantly test which indicators work best at a given moment for a certain currency pair. You can either do this by using MT4s back-testing framework, or by checking for example my link, where they test different forex indicators on recent price series. Make sure to set "include transaction costs" to true in the settings.

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35/100
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Most likely you’ve never heard of three sisters named Susan,
Judit and Sofia Polgar. Next to you, they probably have more to do with your
success as a trader than anyone else. I know that’s a pretty bold statement,
but it’s true none the less. So who are they and how can they have such an
impact on you if you have never heard of them.
When the three sisters were still young, their parents
decided to try an experiment with them. The thesis statement for the research was
simply “Geniuses are made, not born” The girls were educated at home and were
specifically taught to play chess. Each of the three sisters are currently
internationally ranked chess players with several titles for each of them, as
well as Grandmaster status.
As it turns out, science is now proving the Polgar parents
correct. One scientist currently studying how people become experts in their
fields is K. Anders Ericsson. In his research, he has found specific traits in
people that are highly successful in their fields and has been able to lay out
specific guidelines for achieving greatness.
First the research states that three conditions must be met
for someone to be judged an expert, and they are:
The expert consist…
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ikhall avatar
ikhall 2 Dec.

Thanks @hakala, I am looking forward to the articles this month. I saw quite a few good ones last month.

jhfxer avatar
jhfxer 4 Dec.

Nice, well thought out article. Where can I get the ericson articl u talk about? +1

ikhall avatar
ikhall 5 Dec.

jhfxer, I sent the link to you. Thanks for the input, I'll check you articles and comment.

ritesh avatar
ritesh 10 Dec.

Nice article, a must read I'd say. keep more coming +1

skytrader avatar
skytrader 18 Dec.

+1, i did not read thos one before, although it ws your first this month! nice idea... looking forward to your next ones!

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