Forex Swing Trading in 20 Minutes – Position Size and Risk Management

Published on June 29, 2020

Explore Interesting Posts Relevant to Forex Position Trading Hands, Forex Swing Trading in 20 Minutes – Position Size and Risk Management.

It’s important to watch the other videos in the Forex Swing Trading in 20 Minutes video series for some context on this forex risk management and position sizing video:

Forex Swing Trading in 20 Minutes – Pairs to Follow and Setting Up Charts: https://www.youtube.com/watch?v=lwZEACzahec

Forex Swing Trade in 20 Minutes – Time Frames and Trend Trading Strategy https://www.youtube.com/watch?v=WWvwvigX8eM

Forex Swing Trading in 20 Minutes – Crotch Strategy and Strong Support and Resistance: https://youtu.be/LbdfQDN4-WI

The most basic risk management strategy is to control the amount you lose on each trade. I cap my risk to about 1% of my capital per trade. That means if you have a $2000 forex account, you can lose up to $20 per trade. If you have a $10,000 account, you can lose up to $100. If you have a $500 account, you can only lose up to $5 per trade.

Risking 1% may seem like a small amount, especially if you have a small account, but you can grow your capital rapidly by keeping your risk to 1%/trade. This is because even a losing streak of several trades in a row won’t hurt you. Also, your wins are always bigger than your losses, so even if you only win 40% or 50% of your trades you are going to be pulling cash out of the market. Over time as your account grows your percentage gains will translate into bigger dollar amounts each month. Keep risk to 1% per trade to enjoy that payoff.

Risk on each trade is determined by the pip difference between your entry and stop loss price, multiplied by the pip value and the number of lots you take on each trade. The video shows how you can fine tune your position size (without math) in order to find the exact position size. To see the math on calculating the ideal position size, see How to Determine Proper Position Size: https://vantagepointtrading.com/archives/2031

As always, find out more at my website: https://vantagepointtrading.com/ and in my Forex Trading eBook: https://vantagepointtrading.com/forex-day-trading-and-swing-trading-strategy-guide

Forex Swing Trading in 20 Minutes -   Position Size and Risk Management, Forex Position Trading Hands

Forex Position Trading Hands, Forex Swing Trading in 20 Minutes – Position Size and Risk Management.

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The Foreign Exchange Trading Position Strategy

Over the in 2020 and a half, there have been some terrific trends, a lot of significantly brief JPY initially, and afterwards the current lengthy USD fad. In these conditions, a great deal of investors begin to wonder why they are not making the kinds of trades where winners are entrusted to compete weeks and even months, accumulating countless pips in earnings while doing so. This type of long-term trading is referred to as “position” trading. Investors that are made use of to shorter-term trades have a tendency to locate this design of trading a wonderful difficulty. That is an embarassment, since it generally the easiest and most profitable type of trading that is offered to retail Forex investors. Right here I’ll detail a technique with rather basic regulations that just makes use of a couple of signs that you can utilize to try to catch and hold the toughest, longest Forex trends.

Select the Getting Currencies to Trade

Select the Currencies to Trade. You need to locate which currencies have been acquiring over current months, and which have been falling. A good duration to utilize for measurement is about 3 months, and if this remains in the same direction as the longer-term fad such as 6 months, that is very good. One basic means to do this is set a 12 duration RSI and check the weekly charts of the 28 greatest currency sets each weekend. By keeping in mind which currencies are above or listed below 50 in all or mostly all of their sets and crosses, you can obtain an idea of which sets you must be trading throughout the coming week. The idea, essentially, is “acquire what’s already been going up, offer what’s already been dropping”. It is counter-intuitive, yet it functions.

The Amount Of Money Pairs to Trade?

You must now have in between one and 4 currency sets to trade. You don’t need to try to trade too many sets.

Set up Graphes for all Time Frames

Set up charts on D1, H4, H1, M30, M15, M5 and M1 period. Set up the 10 duration RSI, the 5 duration EMA and the 10 duration SMA. You are wanting to enter trades in the direction of the fad when these signs align in the same direction as that fad on ALL TIMEFRAMES throughout active market hrs. That indicates the RSI being above the 50 degree for longs or listed below that degree for shorts. Relating to the moving standards, for a lot of sets, this would certainly be from 8am to 5pm London time. If both currencies are North American, you can extend this to 5pm New York time. If both currencies are Asian, you could additionally try to find trades throughout the Tokyo session.

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Determine Account Percent to Danger on each Trade

Choose what percentage of your account you are mosting likely to risk on each trade. Typically it is best to risk less than 1%. Calculate the money amount you will risk and split it by the Average Real Variety of the last 20 days of both you will trade. This is how much you must risk per pip. Keep it regular.

20 Day Average Real Range Away

Go into the trade according to 3), and place a difficult quit loss on 20 day Average Real Range Far from your entrance cost. Currently you must patiently enjoy and wait.

Positive-Looking Candle Holder Pattern in the Preferred Instructions

If the trade steps versus you swiftly by about 40 pips and reveals no indications of coming back, exit manually. If this does not take place, wait a couple of hrs, and inspect again at the end of the trading day. If the trade is showing a loss at this time, and is not making a positive-looking candle holder pattern in the preferred direction, after that exit the trade manually.

Retrace Back to Your Access Point

If the trade remains in your favour at the end of the day, after that enjoy and await it to backtrack back to your entrance factor. If it does not bounce back again within a couple of hrs of reaching your entrance factor, exit the trade manually.

Trade Degree of Earnings Double to Tough Stop Loss

This must continue up until either your trade gets to a level of earnings double your hard quit loss. At this point, relocate the quit to break even.

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Relocate the Stop-Up under Support or Resistance

As the trade relocates increasingly more in your favour, relocate the stop up under support or resistance as appropriate to the direction of your trade. At some point you will be stopped out, yet in a great fad the trade must make thousands or a minimum of hundreds of pips.

You can personalize this approach a little according to your preferences. Nevertheless, whatever you do, you will lose a lot of the trades, and you will undergo extended periods where there are no trades which is boring or where every trade is a loss or recover cost. There will be frustrating moments and challenging durations. However, you are bound to make money in the long run if you follow this type of trading approach, since it complies with the ageless principles of robust, successful trading:

  • Cut your shedding trades short.
  • Allow your winning trades run.
  • Never ever risk too much on a single trade.
  • Dimension your settings according to the volatility of what you are trading.
  • Trade with the fad.
  • Do not bother with catching the first sector of a pattern, or its last. It is the part in the center that is both secure and profitable enough.

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