To be in the trading game for the long run you need to have a good risk management strategy where you protect your capital. We are looking for the most probable trades with planned win to loss risk ratios using a calculated stop loss so we only risk a small percentage of our capital.
Know where your invalidation is before you enter a trade. Knowing where you are wrong is just as important as where you are correct.
It is normal to take losses when trading, do not be scared to take a loss in a trade, don’t let your emotions control your trades, you stick to the plan and if you lose the trade then move on to the next one .
At some point in your trading career you will start taking more wins then losses and that’s where we want to get to.
Always place a stop loss as it is there to protect your capital. Always place a take profit as it is there to stop you from being a pig and getting slaughtered.
Before we calculate our position size we make sure our trading plan has at least a 3-1 win loss ratio.
With a standard trade we want to risk 1% of our capital, if we have a really good trade set up that we are confident on we can risk 2% of our capital. And that is the maximum amount of loss we will take ever in a trade.
I hope this can help anyone willing to learn, I cant stress enough the importance of risk management.
This is just for educational purposes and is not an actual trade set up, I will not be taking this trade and nether should you, do your own TA and trade your own plan, that’s the only way to become a successful trader.