Article Trade Management Q&A

T2W Bot

Staff member
1,454 55
We can spend hours searching for the perfect pattern but fail miserably when its time to turn opportunity into profit. As it turns out, most traders do a poor job managing positions, regardless of experience level.
I?ve received hundreds of questions about this subject over the years and have complied them into a Q&A to help you make the right choices during the trading day.
Q ? What time-frame charts do you use in real-time?
A ? I track daily, hourly, and 15-minute charts for all my setups and positions. I don’t look any other time frames, except for an occasional glance at the weekly charts. This arrangement doesn?t change with liquidity, sector or any other variable. I watch these charts simultaneously on three screens, so I don?t have to toggle back and forth.
Q ? Should I trade with limit orders or market orders?  Does it matter whether it’s a buy, a sell, or a short? Do you use mental stops or physical stops? 
A ? I trade through a direct access interface and use limit...
Continue reading...
 
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Rhody Trader

Senior member
2,620 264
In this article, Alan Farley answers some of the questions he gets asked frequently in regards to trade management.
 

Tuffty

Well-known member
442 8
"I’ve never placed a market order on a short sale, and don’t recommend it under any circumstances."

What is the reasoning behind this?
 

FXSCALPER2

Established member
964 280
I run for cover whenever someone mentions tight stops. This is, frankly, a very stupid suggestion. I trade FOREX and one thing that really pisses me off is gurus talking about tight stops. Tight stops are like buying a lottery ticket. I never understood people who try to trade Cable with a 30 pip stop, for example. You will get stopped out all the time.

The other overrated nonesense is r:r ratio. This has zero relevance to whether you will succeed or not. if someone goes for 100 pips witha 30 pip stop, his r:r is better than 3:1. What about his odds of being stopped out? I would rather bet on someone who uses a 100 pip stop and a 30 pip profit target.
 

wasp

Legendary member
5,107 877
FXSCALPER2 said:
I run for cover whenever someone mentions tight stops. This is, frankly, a very stupid suggestion. I trade FOREX and one thing that really pisses me off is gurus talking about tight stops. Tight stops are like buying a lottery ticket. I never understood people who try to trade Cable with a 30 pip stop, for example. You will get stopped out all the time.

The other overrated nonesense is r:r ratio. This has zero relevance to whether you will succeed or not. if someone goes for 100 pips witha 30 pip stop, his r:r is better than 3:1. What about his odds of being stopped out? I would rather bet on someone who uses a 100 pip stop and a 30 pip profit target.
Not read the article yet, but in reponse to your post, I am completely on the opposite of your opinion there. Tight stops and R:R with 30 SL and 100 target is a much better strategy IMHO.
 

sjalmond

Junior member
18 0
Risk and Reward

I'm with FXSCALPER2 on this - people shouldn't reject a system on its R:R ratio alone. I'm much more interested in a system's Expected Outcome and Volatility. I don't care what the R:R ratio is, as long as the Expected Outcome is positive and I can afford the Expected Volatility.
 

wasp

Legendary member
5,107 877
sjalmond said:
I'm with FXSCALPER2 on this - people shouldn't reject a system on its R:R ratio alone. I'm much more interested in a system's Expected Outcome and Volatility. I don't care what the R:R ratio is, as long as the Expected Outcome is positive and I can afford the Expected Volatility.
With 30 TARGET and 100 STOP:

3 wins = 90
3 losses = 300

I know what I'd prefer...
 

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