Safest way to trade?

[zaysev36]

r:r

Lots written on this in text books and educational/training material. Most of it is very similar, you must strive for 1:2, 1:3 is better, never accept 1:1 etc. Much of this originated in the US, mostly from the great stocks bull market that ran through the 80's and 90's. This was when trading reached the masses. But beware, there are unspoken assumptions in the words of wisdom -

1. calculated r:r came from stocks: maybe you trade in indices, forex or commodities so how applicable is it there?

2. the stocks studied were US stocks, nothing in the FTSE, certainly nothing in the Nifty 50 or Japan etc.: see above

3. most of the stocks were galloping, that's why they were interesting - so, tech stocks, IPO's, private investor fascination stocks, gold miners, oil well drillers etc. - we're not talking Severn Trent here

4. we're only talking going long - there was previously no mass market way of shorting US stocks, and who wanted to anyway?

5. one r:r rule applies to all trade/entry patterns, and also to long-term swing trades and also to 10 minute daytrades - why?


Occasionally, very very occasionally, you see a trader recommending 1:0.5 or 1:0.25 for a specific purpose. I'm not able to say what's right or wrong for every trade for every trader, but I can say there's room for debate and different approaches.

Okay, so you're talking about 1:2, 1:3 - but how do I achieve it? IPO stocks long-term, is that your point?

 

[zaysev36]

Don't trade, that's the safest one.
If your risk tolerance tends to zero. You can never be a trader rather you will tend to lose more money everyday in order to recover losses....

If you can except a loss & live with it. Then you will be a better trader & on next day you will make money.

Telling you from my experience.

Well, by low risk tolerance I meant how little risk I'd like to face, not that I can't accept loss and live on. So perhaps you'd rather give me some example of lowest risk possible from your experience?

 

[Pat494]

If you can't stand the heat ( risk ) then flip hamburgers.

 

[rexlord]

Stay away from any system which promises "high probability" anything.
As a very rough guideline, anything that claims win rate 65% or above is a red flag, the higher above 65%, the bigger the red flag. If it's a high probability system you've come up with yourself - you've probably made a mistake in your backtest.
Of course, it is possible to have higher win %, but you are getting into the territory where some of your losses will be wiping out weeks worth of profits.

Also stay away from anything that promises "low risk". No such thing. The tighter you set your stop losses - the higher your risk. Because tight stop losses push your win % so low that no big winning trades are going to cover the large amount of your small losses.

The safest way to trade is a demo account.

 

[zaysev36]

Stay away from any system which promises "high probability" anything.
As a very rough guideline, anything that claims win rate 65% or above is a red flag, the higher above 65%, the bigger the red flag. If it's a high probability system you've come up with yourself - you've probably made a mistake in your backtest.
Of course, it is possible to have higher win %, but you are getting into the territory where some of your losses will be wiping out weeks worth of profits.

Also stay away from anything that promises "low risk". No such thing. The tighter you set your stop losses - the higher your risk. Because tight stop losses push your win % so low that no big winning trades are going to cover the large amount of your small losses.

The safest way to trade is a demo account.

Well, perhaps I was approaching trading with a wrong prejudice. Glad I've started this thread before diving into actual business...

 

[Pat494]

The safest way to make money is on Zulu. You can get people to follow your trades even on a demo BUT you have to be good enough. In the top 20 at least.

Did you follow up on this idea ? Completely risk free and with the possibility to make REAL money. Plus have all the fun while practicing.
I do this but as yet have not attracted any followers. However I have a master plan in force as of yesterday and hope to start soon.

 

[sun11]

Well, by low risk tolerance I meant how little risk I'd like to face, not that I can't accept loss and live on. So perhaps you'd rather give me some example of lowest risk possible from your experience?

How about risking 2% per trade, that works for you? you will get 40+ attempt before blowing the account.

 

[zaysev36]

Trading online can involve technical analysis like studying stock charts to uncover patterns of price movement that may recur in the future or fundamental analysis as studying the fundamentals of the underlying company to determine prospects for the future. If you really want to make a profit, wait for earnings season.

Yeah, I've already figured as much myself - was quite impressed with how much volatility you can find there.

 

[zaysev36]

How about risking 2% per trade, that works for you? you will get 40+ attempt before blowing the account.

Why yes, that I kinda like!

 

[zaysev36]

I've wondered about this myself. I think that if you're going to trade, you have to do some serious due diligence.

Well that's quite general and obvious. Some examples of such diligence, perhaps?

 

[mlawson71]

I don't know about june_girl7, but I don't leave the platform unattended when I have open positions. I am always aware of any near support and resistance levels, things like that. Sometimes I get called paranoid, but I prefer to be safe than sorry.

 

[zaysev36]

I don't know about june_girl7, but I don't leave the platform unattended when I have open positions. I am always aware of any near support and resistance levels, things like that. Sometimes I get called paranoid, but I prefer to be safe than sorry.

I wouldn't call this paranoid by any means. If anything, it looks like a sensible approach...

 

[zaysev36]

If you want to be getting money from the market, all you need to be doing is to be a fan of the stop loss usage. For me, I think that the best way to secure trade in Forex money management is to respect.

Not to argue, but overexciting about stop losses could lead to slow and almost inevitable loss

 

[tar]

Not to argue, but overexciting about stop losses could lead to slow and almost inevitable loss

So what ? All traders have losses , you have to embrace losses to make it in this business , everyone has a stop loss , if you dont put a stop loss then your whole account is your stop loss .

 

[darktone]

lol. if your size to acc is big enough, your whole acc + some can disappear in a single tick. stop loss or no stop loss.

taking loss is as important as profit. But you don't have to take em on a stop.

 

[NVP]

If you want to be getting money from the market, all you need to be doing is to be a fan of the stop loss usage. For me, I think that the best way to secure trade in Forex money management is to respect.

rule 1 of trading use a stop loss.........even if you make it a hard stop that rescues you from meltdown and chose to trade on soft stops its up to you

but please use one ............please ?

N

 

[rexlord]

Telling someone to "use a stop loss" means absolutely nothing.
You could risk 1-2% of your capital per trade AND use stop losses religiously. And all of your trades could be losers and you bleed your account to $0.
If you don't know how you will manage your winners and set your stop losses way too tight - nothing will help you.
There are many parts to trading which all have to work together.

 

[tar]

Telling someone to "use a stop loss" means absolutely nothing.
You could risk 1-2% of your capital per trade AND use stop losses religiously. And all of your trades could be losers and you bleed your account to $0.
If you don't know how you will manage your winners and set your stop losses way too tight - nothing will help you.
There are many parts to trading which all have to work together.

True , but first step is to manage risk .

 

[zaysev36]

Telling someone to "use a stop loss" means absolutely nothing.
You could risk 1-2% of your capital per trade AND use stop losses religiously. And all of your trades could be losers and you bleed your account to $0.
If you don't know how you will manage your winners and set your stop losses way too tight - nothing will help you.
There are many parts to trading which all have to work together.

Yeah, exactly my point! A stop loss is a useful tool, but just like with any other tool if you don't know how to use it properly - you might cut yourself and bleed your account to death.

 

[thunderboy]

The best way to be safe is to earn ample amount of knowledge regarding Forex Trading. You need to learn how to trade with Forex. The best way would be through Demo Account.