Idea by Scrat (ForexFactory)
Main plan: Always accept the loss at your emotional tolerance level.
Strategy: Always adjust and reduce dollar per pips to a level that you feel comfortable with, when you lose.
Standard Risk Management:
Main plan: Always accept the loss at your emotional tolerance level.
Strategy: Always adjust and reduce dollar per pips to a level that you feel comfortable with, when you lose.
Standard Risk Management:
- Identify the Risk (Losing) of level.
- Learn to forget about how much you will win.
- Instead, we only focus on the level we willing to accept the lose
Classical Scenario.
You see and recognize the potential trade on EU Pair, so you want to make a trade, but before we open the trade,
Step One - Identify the risk
You see and recognize the potential trade on EU Pair, so you want to make a trade, but before we open the trade,
Step One - Identify the risk
- Where does my stop loss go?
- How much i will lose?
- If the trade goes against me? Do i ACCEPT the Risk of Losing?
If YES, proceed to next step.
If NO - Adjust the dollar per pips until you ACCEPT the RISK or DO NOT TAKE THE TRADE.
This is critical and very important, you have very honest with yourself here. You must be able to say to yourself, THIS IS THE RISK I AM PREPARED TO TAKE ON THIS TRADE AND I WILL UNCONDITIONALLY ACCEPT THAT IT MAY BE A 100% LOSS.
If you cannot do this then YOU DO NOT TRADE.
Step Two - After we ACCEPT THE STEP ONE
Where do i take profits? For example, we may put on 2 contract and take profits on first contract at with risk reward ratio at least 1:2. We may let the the second contract profits run and we may closed the second contract once we see 'trend' in EU reversed.
THIS IS OUR PLAN... Now, we want to focus on TRADE UR PLAN.
Step Three
If NO - Adjust the dollar per pips until you ACCEPT the RISK or DO NOT TAKE THE TRADE.
This is critical and very important, you have very honest with yourself here. You must be able to say to yourself, THIS IS THE RISK I AM PREPARED TO TAKE ON THIS TRADE AND I WILL UNCONDITIONALLY ACCEPT THAT IT MAY BE A 100% LOSS.
If you cannot do this then YOU DO NOT TRADE.
Step Two - After we ACCEPT THE STEP ONE
Where do i take profits? For example, we may put on 2 contract and take profits on first contract at with risk reward ratio at least 1:2. We may let the the second contract profits run and we may closed the second contract once we see 'trend' in EU reversed.
THIS IS OUR PLAN... Now, we want to focus on TRADE UR PLAN.
Step Three
- Do i believe in my plan?
- Do i have 100% absolute faith in my plan?
If the answer to this is NO - Make a NEW PLAN.
Do not TRADE until you UNCONDITIONALLY ACCEPT YOUR PLAN.
Step Four
Trade Management - If you are trading the H4 time frames, so no need to check your charts UNTIL AT THE START OF NEW CANDLE in H4.
If you have been HONEST with yourself and ACCEPTED YOUR PLAN then there is NOTHING TO DO until
Do not TRADE until you UNCONDITIONALLY ACCEPT YOUR PLAN.
Step Four
Trade Management - If you are trading the H4 time frames, so no need to check your charts UNTIL AT THE START OF NEW CANDLE in H4.
If you have been HONEST with yourself and ACCEPTED YOUR PLAN then there is NOTHING TO DO until
- You will either be stopped out FOR LOSS which you have already ACCEPTED and are no longer concern for you, or
- You get PROFITS
You must learn to BELIEVE I YOUR PLAN, so always PLAN THE TRADE & TRADE THE PLAN.
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