USD/CAD went wrong, tips on money mgmt
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Thread: USD/CAD went wrong, tips on money mgmt

  1. #1
    I'm new to trading so I'm trying to have the ideal plogical mind set for this.

    I left a transaction yesterday by shorting USD/CAD. The error (and I'm not sure how to fix this yet) was the Stop Limit (SL) was 80 pips. The main reason I kept it so much is because I have observed volatilities in this currency pair before and have struck SL before. Please be aware I didn't put more than 5% of account equity at stake (on this particular trade or any other trade)

    I placed a trade of 2 lots and it went against me. After that I got into position knowing that now I have a sell signal. However, I exited that position out immediately (with no reduction ) because in my mind, I had been feeling that I'm doing sin trading. That is against my rule and I'm happy to get develop a discipline of not doing this.


    I'm really looking for any suggestions comments from a few of the knowledgeable traders here whenever they could give me some input. The age old question is still there for if to TP or SL but more than that, I'm wondering if there's anything wrong with my Money Management?


    Any remarks or your own expertise will help when you were still in the stage that I'm in right now.

    Thanks

  2. #2
    Quote Originally Posted by ;
    And I disagree that MM is solved easily. It's the toughest part of any system and it's the #1 reason traders fail.

    A 70 or 80 or 90% winning system does not equate to profits.
    May I ask you to elaborate on that. 90% chance of winning .... Not equal to profits.

  3. #3
    Quote Originally Posted by ;
    The'chances' are in having a plan, executing it with money and commerce management and discipline and confidence. These are the items we can be accountable for. We are only given a directional bias to help us determine which way to exchange but as it is based on probabilities by A egy. If we can't control the results what does that leave us with? Statistics assist but they're no guarantee. In spite of a statistically established profitable system the majority would still lose entire.



    There...
    funny you cite statistics and probabilities.

    Let us suppose the market is random, you've got 1/2 probability of earning money on any given trade... let us say you take 3 transactions per night. What are the probabilities of you being profitable all 3 transactions?

    (1/2)^3 =12.5% or 1/8 that means the probabilities of you losing at least one trade is 87.5% or 25 percent of getting 2/3 right as 0.5^2.

    What does all of these mean well you have both likely probability of being incorrect in most transactions 12.5% so then the one trade you're profitable needs to pay

    1)transaction costs (disperse )
    two ) previous losses

    end....It's harder than it looks!

  4. #4
    Quote Originally Posted by ;
    let us assume the market is random
    Although, as I think you'll agree, it is not random (identifiable patterns do exist), seems to me the challenge is that we need to treat it as if it were because we can't be certain of the outcome of any particular trade.


    Quote Originally Posted by ;
    conclusion....It's harder than it seems!
    I agree to the extent that it is difficult to grasp the trading theory and to accommodate plogically, but once mastered I think that it's a lot easier than people expected.

  5. #5
    Quote Originally Posted by ;
    Expand that 60 times daily to per month/quarter/yr.... Same results. Blowout.
    I will repeat what I said in another way. You might well blow-out but that would be a result of plogical not mathematical issues.

    Your trading plan has to take that into account and therefore its wise to limit your risk to the 1-2percent range.

    Anyway risk% is immaterial until you believe you're consistently profitable. First you need to have a large enough number of transactions (probably 100 ) so you can ascertain whether your trading comes with a positive expectancy.

  6. #6
    Quote Originally Posted by ;
    Although, as I think you'll agree, it is not random (identifiable patterns do exist), seems to me that the problem is we will need to treat it as if it were because we can not be sure of the outcome of any specific trade.
    Do you have certain statistical data/analysis/study of technical pattern on big historic series of data which says: if x y happens or when this pattern seems and it looks exactly like this, there's 52-55% probability that price will go lets say 10 pips in this specific direction and 45-48% probability it is going to go 10 pips in the contrary direction??

    This could be definitely nice defined edge on the market, but I would like to see those figures

    it might looks from the chart history there are nice working patterns but I think that human's mind is functioning in a way that it sees all of the potential wonderful trades following the pattern occured and sees that the Wonderful risk reward in that trade etc.....but in fact there are dozens of possible trades overlooked

    only my 2 cents

  7. #7
    Quote Originally Posted by ;
    would you have certain statistical data/analysis/study of technical pattern on large historical set of data that says: if x y happens or if this pattern appears and it looks exactly like this, there is 52-55% likelihood that price will go lets say 10 pips in this particular direction and 45-48% likelihood that it is going to move 10 pips in the contrary direction??

    This would be definitely fine defined edge on the market, but I would love to see those statistics
    for virtually any egy that comprises a component of discretion you can analyse and create statistics on historical data as far as you need but in the end of the day every trade has it's own special set of circumstances. Sure, some people need evidence to provide them the confidence required to put trades while others it is pointless to a certain extent, they rely on their results and their personal experience.

    Only mechanical egies exist but I wonder how productive they are and their durability in this market. A normal example would be automated egies, the one's I've seen always seem to crash and burn, some spectacularly!

    In my opinion one size does not fit all. With the exception of some trading'rules' trading is a personal endeavour.


    Quote Originally Posted by ;
    it may looks from the chart history that there are fine working patterns but I think that human's brain is functioning in a manner that it sees all the possible wonderful trades after the pattern occured and sees that the fantastic risk reward in that trade etc.....but in fact there are scores of possible trades overlooked
    I agree, considering charts in hindsight can be misleading but they do provide up thoughts worth exploring further, it is up to us to do the leg work. Not only can it be a fun exercise but it means we can research and tailor a egy to suit our own style, personality, time frame, risk tolerance, goals, and ambitions.

  8. #8
    Quote Originally Posted by ;
    You need to google position expectancy and sizing in precisely the same search.

    Good luck!
    Thanks.

  9. #9
    Quote Originally Posted by ;
    If you go brief by that chart I can say you are going with your courage only and that's dangerous. Read the background for US CAD, US is in favorable anticipation of retrieval (could result in more powerful bullish support for USD) and Canadian is more or less like UK condition thesedays, not too bad but also not too great. I think USD/CAD has more powerful bullish pressure compared to bearish, but with increased part of whipsaw.

    If I could indie, why pushing your luck with that kind of choppy market? Why not pick clearer pairs for example USD/JPY extended...
    Thanks for this. I try not to exchange EUR/USD becuase I am not sure if I understand the background of EUR.

    Please specify clearer pairs.

    I try to steer clear of trading pairs with high spreads because my TP was only 30 Pips.

  10. #10
    Quote Originally Posted by ;
    5 percent is not too much in comparative terms. That's optimal Should you exchange less than 20 times a year. If oyu trade then that is far too much.
    No I exchange more often than that. Perhaps you are right. 5 percent is far too much. After reading the remarks I am starting to realize that it was likely both. System and Acceptable Drawdown.

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