biggest part of your risk management

[OscarR]

Knowing when NOT to trade should be the biggest part of your risk management strategy.
What is your strategy?

 

[VasilTodorov]

that is totally correct
patience is the best tool you can have in the market and it is necessary for all

 

[Fin_Trader]

Your trading strategy shows when not to trade. That is, to enter the market you need certain conditions, the rest of the time you just need to wait.

 

[Lee.me]

Knowing self-control IS my risk management .

 

[Fin_Trader]

It is also important when trading to use a small lot in transactions so that possible losses are small. This way we control risks and ensure the safety of the deposit.

 

[Polakandil]

Like most traders, stop loss is one way to mitigate risk in my trading plan, whatever it is, I realize that retail traders can only follow the market and cannot control the market, therefore risk management is a crucial thing in my opinion.

 

[Fin_Trader]

Using stop losses in your trading is the right way to limit your losses. And I don't see any point in taking the deposit into the minus, trading without a stop loss, when it is clear that the conditions of the strategy for the transaction did not work and now it is unclear when the price will stop and reverse. And will your deposit survive until this reversal?

 

[panchovilla84]

The following is forex specific:

risk management for individual positions

1) I will only risk between 0.10 - 0.20% of my NAV per position. The closer my entry is to my SL, the less I risk.
I know most traders recommend 1-2% but thats way too much for me based on my style. Especially since i'm trading multiple positions.

2) I use a trailing stop but only after price moves in my direction and starts to trade in a new range. After this im looking for a failed pullback with signs of price exhaustion that creates a new temporary swing high/low, then a subsequent resumption of price back in my direction. The new swing high/low will then become my new SL. It's also important to note that this new swing high/low must be somewhat significant on higher timeframes in order to be validated

3) Once the conditions above are met, I'll consider pyramiding additional size into my position as long as the current trend/momentum remain in place. I dont pyramid out.

risk management at the portfolio level

1) I keep track of net currency exposure and correlations and try to limit them as much as possible

2) Ideally, I try to have no more than 10 open positions but my absolute max is 14.

3) I spread my entries out over time in order to avoid over trading during a drawdown

4) I dont enter positions prior to high impact economic releases

5) I stop entering new positions during prolonged drawdowns and will resort to only managing current positions during these times

 

[somrat4030]

The following is forex specific:

risk management for individual positions

1) I will only risk between 0.10 - 0.20% of my NAV per position. The closer my entry is to my SL, the less I risk.
I know most traders recommend 1-2% but thats way to much for me based on my style. Especially since i'm trading multiple positions.

2) I use a trailing stop but only after price moves in my direction and starts to trade in a new range. After this im looking for a failed pullback with signs of price exhaustion that creates a new temporary swing high/low, then a subsequent resumption of price back in my direction. The new swing high/low will then become my new SL. It's also important to note that this new swing high/low must be somewhat significant on higher timeframes in order to be validated

3) Once the above conditions are met, I'll consider pyramiding additional size into my position as long as the current trend/momentum remain in place. I dont pyramid out.

risk management at the portfolio level

1) I keep track of net currency exposure and correlations and try to limit this as much as possible

2) Ideally, I try to have no more than 10 open positions but my absolute max is 14.

3) I spread my entries out over time in order to avoid over trading during a drawdown

4) I dont enter positions prior to high impact economic releases

5) I stop entering new positions during prolonged drawdowns and will resort to only managing current positions during these times

I like this information.

 

[panchovilla84]

I like this information.

Thank you, happy to share anytime

 

[benji177]

Yeah, that's a very nice point. Though that's also a tall order in and of itself.

 

[Lazarsblck]

Not using a SL and TP has the death penalty for your account.

 

[Polakandil]

Not using a SL and TP has the death penalty for your account.

Stop loss is like a brake in a vehicle, to anticipate bumpy and winding road conditions. When on a sharp corner, the brake can be used to slow down the vehicle so it can turn more safely.

 

[Fin_Trader]

In addition to using stop losses in your trading, the right step is to calculate a safe lot size in your trades. After all, if, for example, you entered the market with a large lot and even set a stop loss, then the loss on such a transaction can be impressive. Therefore, only depending on the size of SL can we correctly calculate the lot size of a transaction, clearly understanding how much money we are willing to lose if the transaction is unsuccessful.