Justin Kupper - known trader who has behind him a huge experience of trading in the Forex market. He is also a manager and supervises the work of independent financial Internet projects, collaborating with major companies Accelerized New Media and portals.
In addition, the world's financial markets, Mr Kupper known for his articles. They are distinguished by an interesting approach to the trade and for the benefit of market participants. Very often, new traders do not pay attention to risk. For them, the risk is not an element - component for successful trading.
But look at trading from a different angle: a global analysis will allow you to become aware of the fact that several transactions can leave a trader without a fortune (even if it is to work and earn more than a year and the money were given to him is not easy).
But the main reason for "plum" as time and is not following the rules - a banal failure to comply with the risk management rules. In this article, we will tell you about the important points and submit a strategy that will minimize risks and prevent loss of resources, protect profits.
1. Planning. Learn to plan for all operations, all transactions in the market. Think of one good quote San Tzu, which says to us: "Every battle is won before it started."
We interpret the words of the philosopher in the direction that victory depends primarily on planning and strategy, carefully thought-out and selected. Battle of the same - the second question. But most importantly, preparing for battle, prelaunch planning. Therefore, many market participants are trying to stick to a definite plan and follow clearly the waste system.
Why it is worth to start trading plan? The first and most basic - is planning to determine the place where will be placed stop-loss orders and take-profit. Experts are always up to date and know very well how it is necessary to open and close positions (what amount to operate at the same time). Thus, they are calculated in advance the result - calculated yield, based on the possible price movements.
If the planned yield expected more, it shows a good signal for the transaction. This is the strategy planning and trading of real professionals of the currency market. You can not say about the tactics of newcomers just made their first steps on the stock exchange Forex.
Most of the new traders do not have a clear and effective system that allows them to identify (in advance) entry point and an exit strategy (of products). For them, the characteristic of excessive emotionality and not able to control the situation in the trade, make informed and rational decisions.
And the main mistake, which makes it difficult for most beginners, of course, is the inability to grow revenue - they are not given the chance your profits run. Despite the vast amount of literature, books and articles on this subject, they do not take into account these tips, ignoring them. Traders simply are not able to fix the damage and do not allow profits to run, ignoring the trading system.
2. Point number two: Stop and limit orders, and their levels
What is it? Stop levels - such a price, which is guided by, the trader is planning to enter the market, while taking the loss. But often, it happens that the planning and tactics crumble stops working (due to various reasons).
That is why every trader should have politiku- loss tactics, build it so that the pre-placed stop orders. Active use of stop orders makes it possible to minimize the losses psychology, avoiding its formation, the trader neutralizes all illusions about the market return.
Thus, one of the most important tasks is it effective tactic of Forex trading. For example, if the price falls below a key support level, all experienced players tend to have time to close all the trading positions, and do it as quickly as possible.
But there is another vision of the market situation. This type of orders to take profit. It orders to lock in profits. Very often it happens that the price moves are very limited in the direction favorable to the player.
In this situation, we are also at risk: we can not get a certain amount of profit. In these cases, the experts decide on the profit: quite often, after this may start the period of consolidation.
3.Pravilnoe and efficient placement of stop orders. Basically, all merchants prefer to choose a method for the analysis of two- or technical work with fundamental analysis.
But for the professional, it is important to be able to combine both methods - combining fundamental and technical analysis. For example, before the release of important economic data, one can either hold a position (technical analysis), or close it.
Not to close profitable deals, rational use of techniques and work with moving averages. After all the moving averages are the most appropriate method to determine the level of orders. They are very easy to calculate and monitor market well.
The most commonly used times of moving average is 5, 9, 20, 50, 100, 200-day value. At the same time, it is best to rely on a specific market and pay attention to the price reaction in the past. You can also display the protective order on the basis of support or resistance trendlines.
The main thing - to determine the levels reached before that, the price will start to respond to the trend line. But do not forget that before you calculate the placement of protective levels and limit orders, it is important to consider these aspects:
1. If the market has a high level of volatility, it is necessary to use a moving average with a large time interval (longer). This is done in order to avoid tripping orders randomly.
2. It is important to orient the moving averages to certain price range, if trade is conducted on the long-term scale, it is important to choose a moving average with a longer interval of time (this minimizes the number of signals that are supplied).
3. Protective orders are set close to 1.5 times the maximum-minimum range. This is done in order to avoid accidental snagging.
4. placement levels are continuously monitored. If you want, you need to make corrections (low volatility - shifted downwards).
5. Consider the most important economic events or news: Unexpected news could have an impact on the market).
And another important point: how to determine the expected return? In addition to the procedure for determining the placement of orders levels (protective and limit), it is necessary to determine the average and expected return parameter (for all transactions concluded). This will allow the player to effectively distribute their transactions: organizes a choice of more profitable deals.
Thus, the trader (if he plans to become successful) simply must know when to enter and exit the market. For this purpose, protective orders: determined in advance, where a more favorable deal. In addition, it is necessary to plan, develop an effective trading strategy in advance to assess their chances of achieving the desired result!
Based on materials WELTRADE