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Ah Losses – books can be written on those 😀 As you disclosed something from past, let me share something of my own :
I was still very young ( but will learn 😀 , when in front of the whole Bank, all the dealers on the desk and General Manager present , went Short on USDJPY – 105.75 , very confident ….calm…full of myself…It moved against me a bit, but not much…fine…part of the game…next morning, Chief dealer on the desk calling me at around 6 am – hysterical….rate was on 107.50…position wasn’t small…I explained him that all is OK, it is just an Uptick and soon they’ll go for below 100 ( perfect target at 80 and possibly new low…no questions asked…Of course it went 109….112….I was forced to close it at 115….
I moved to USDDEM – end of story 😀
P.S. I still remember some significant rates for different currencies , and even use them as part of my passwords 😀
Bobby –
I would like to offer a sample of how incredibly accurate I can be. But based on a loss. THE perfect loss.
Years ago when on the phone with my CTA partner in New York, I bought Dow futures at the exact high tick. That tick remained the high for 6 months.
My partner could not stop laughing. My reputation got around a bit after that. You must have a sense of humor in this business.
I did close the trade quickly lol.
The perfect loss.
Markets are manipulated from the stone age of course, but what makes it interesting is the fact that all those manipulations make sense at the end of the day – looking at charts one can easily spot ( IQ needed 😀 “rules” that drive the market.
Different manipulators with always different agendas exclude each others in the process – for one to earn the other has to lose – so bottom line : look carefully and use their manipulations in your own favour….
And example of my earlier post. Years ago another CTA in New York and I would time Dow futures based on a Dow Jones Newswire commentary that came out at exactly 11am PST / 2pm EST every morning. The market would almost instantly go strongly the opposite direction of what the commentary said. This went on for over a year with only the rare occasions it did not transpire that way.
If you pay attention you can find how, when, and where markets are being manipulated.
We have all said a lot about trading in geopolitical turmoil’s, but I would like to mention something that is directly causing a havoc within all those trading on Small time frames ( just like me J
No matter how good your system/strategy is, right now we have to rethink our entry and stop loss levels – every now and then we can see some “unnatural” spikes happening where they shouldn’t be.
In reality, your trade would be just fine if there wasn’t that silly spike….hitting your stop loss just for fun.
So what to do?? Well, idea of widening my stop is not something that I favour – so for me better solution is to move to a bit bigger time frame ( from let’s say 4min chart to 10 min chart, or even bigger) as those spikes would be more natural and easier to avoid.
Just my 10 cents worth….
EURUSD
So far Support at 1.10500 held it’s ground, but looking at 4h chart the danger is still looming.
4H Chart
Close of this 4h bar ( in about 30 min) above 1.10700 would release the pressure for at least some time.
However, close below 1.10600 would signal yet another test of the previous low.
Daily Chart
Based on the Daily chart we have the following :
Supports : 1.10500 , 1.10000 & 1.09500
Resistances : 1.10850 , 1.11150 & 1.11450
A look at the day ahead in U.S. and global markets from Mike Dolan
With Middle East tensions dialing back up, U.S. port workers on strike and global industry under the cosh, the final quarter of 2024 promises to be a bit edgier for world markets than the relatively serene first nine months.
The fourth quarter was barely underway on Tuesday when 12 months of intense conflict in Gaza and Lebanon spilled over again into another direct standoff between Israel and Iran – jarring recently listless energy markets and provoking some limited hedging of risk assets.
ALERT
USDJPY spikes up on this
Japan’s PM Ishiba says “we are not in the environment for an additional rate hike.”… Newsquawk.com
US500 4 HOUR CHART – Retracement or more?
Backing off from its record high and needs to re-establish above 5700 to ease a retracement risk,
Stocks weighing hooes for a sift landing vs. geopolitical risks, election uncertainty and Powell indicating a less aggressive Fed
WSJ: BOE Warns of Sharp Correction as Geopolitical Worries Mount
The BOE’s Financial Policy Committee has repeatedly warned that valuations of many financial assets, particularly equities, are “stretched”
This is worth repeating from How Should You Trade in a Geopolitical Marketl
A “geopolitical market” needs a continuous flow of news to keep risk elevated.
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What is Risk Management in Trading – Forex Forum
For any trader, managing risk is essential to success. But what exactly is risk management? In this blog post, we’ll explore what risk management is and how it can help you become a successful trader.
We’ll also look at some common mistakes that traders make when it comes to managing their risks. After all, if you’re not managing risk appropriately, you’re just a gambler. So if you’re ready to learn more about risk management, read on!
What is Risk Management in Trading?
Risk management is the process of assessing, controlling, and managing risk within a trading portfolio. This involves defining trading goals and understanding potential losses that could occur as part of the trading process.
It also includes identifying potential risks, such as market volatility or sudden changes in the market, understanding how these risks can affect your profits, and taking steps to limit potential losses.
In general, risk management should be a priority for all traders. By properly managing your risks and using effective strategies, you can minimize potential losses and increase the chances of making successful trades.
Common Mistakes When Managing Risk in Trading
Unfortunately, many traders make mistakes when it comes to managing their risks. Here are some of the most common mistakes that traders make when it comes to risk management:
Not Setting a Trading Plan:
Many traders don’t have a detailed trading plan, which is a key component of risk management. Without a trading plan, traders are more likely to take risks that could have otherwise been avoided. It’s important to establish clear trading goals and a plan for how to reach those goals.
Not Understanding Risk:
Many traders fail to understand the risks associated with certain trades, which can lead to serious losses if they don’t take the time to research and understand the risks involved. It’s important to have a thorough understanding of the markets you’re trading in before taking any risks.
Not Taking Advantage of Stop Losses:
Stop losses are an essential component of risk management, as they help to limit potential losses in the event of a market downturn or sudden changes in the market. However, many traders don’t take advantage of stop losses and end up taking larger risks than necessary.
Over-Trading:
Over-trading is a common mistake made by many traders. This involves taking too many trades, which can lead to losses if the market turns against you. Look, all traders love the price action. It’s exciting to take a position and watch your P/L go up and down. But don’t become addicted to the price action for the sake of just having a position. It’s important to only take trades when the setup is right and avoid over trading.
Not Diversifying Risk:
Diversification is another important part of risk management. By diversifying your trades, you can spread out risk and limit potential losses if the market turns against you.
Why is Risk Management Important in Trading?
Risk management is a critical factor in success when trading in the markets. It involves understanding and controlling what could potentially impact your trades and actively analyzing scenarios that may occur.
Without proper risk management, traders are leaving themselves vulnerable to potential losses which could be catastrophic for their investments.
Good risk management also allows traders to effectively assess opportunities and make better decisions that take into account volatility or leading indicators of future market performance.
Simply put, risk management can provide peace of mind so traders can enjoy the highs of profitable investments while minimizing losses when markets start to dip.
What are Some Common Risk Management Strategies?
Common risk management strategies used by traders include setting stop-loss orders, limiting capital exposure, and diversifying investments to minimize volatility.
Another essential approach for traders is to set predetermined targets for both profits and losses to help stabilize your exposure. To further limit potential losses and maximize gains, traders should always be aware of economic news and other world events that might affect the market.
How to Implement Risk Management in your Trading Plan
Implementing effective risk management into your trading plan is incredibly important for successful and profitable trading. It can help you to control the amount of draws you take in any given trade, and it can also protect against large losses which could potentially wipe out your entire trading account.
A good risk management plan should include determining the amount of capital at risk on each trade, setting predetermined stop-losses to limit downside exposure, and having a strict, disciplined approach towards minimizing losses:
never increasing position size
never risking more than you are comfortable with, and always controlling potential risk-reward ratios.
Taking the time to set up a comprehensive yet flexible risk management plan will put you in a better position when it comes to positive returns in the long run.
Risk management is an important part of trading. It allows you to trade with less stress and more confidence. There are many different risk management strategies, so it is important to find one that fits your trading style.
Proper risk management can help you make money in the long run by preserving your capital and preventing you from making careless mistakes.
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