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Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in trading, you should carefully consider your investment objectives, level of experience and risk appetite. Do not invest or trade capital you cannot afford to lose. GlobalFX Club, a subsidiary of Wright Time Capital Group or anyone associated with published material on this site is not responsible for any loss from any form of distributed advice, strategy signal's, analysis, or content. Again, we fully DISCLOSE to the Subscriber base that the membership, individual parties, or owners shall not be liable to any and all members for any losses or damages as a result of any action taken by the subscriber from any trade idea or alert posted on the website(s) distributed through any form of social-media, email, the website, and/or any other electronic, written, verbal, or future form of communication . All analysis, trading alerts, charts, communicated interpretations of the wave counts and strategies (Ichimoku Cloud and Moving Averages), along with content from any media form produced by www.globalfxclub.com and/or the representatives are solely the opinions and best efforts of the author(s). In general Forex instruments are highly leveraged, and traders can lose some or all of their initial margin funds. There is no guarantee to trading or forecasting in the market and we can be wrong like any other trader. Please understand and accept the risk involved when making any trading and/or investment decision.
A great trader will fail without risk management, whereas an average trader can succeed with good risk management It is impossible to succeed without some system for managing your risk.
Probabilities Matter
While it would be easy to set a 10 pip stop and a 10,000 pip target (a nice 1,000:1 RRR), this type of trading still yields a negative result, because the odds of a pair moving like that is virtually nil, not to mention it would mean having equity tied up for years and years on one trade. Traders must look for setups with well-defined stops, and well defined targets. These stops and targets can be defined using any number of different strategies: moving averages, technical formations, Elliot Waves, Ichimoku, Fibonacci levels, etc. The trading system or strategy almost doesnt matter whatever works for the individual trader. The key is ensuring a healthy RRR by using well defined (and therefore significant) areas for stops and targets.
Rules, Contd.
After moving the stop to breakeven and taking profits, let the trade run to targets, preserving your RRR. Aggressive traders may wish to trail their stop in increments of their stop (trail your stop 20 pips every 20 pip move), which maintains a positive RRR. This set of rules will ensure that your RRR is never negative, and helps protect profits, while still allowing the trade setup to work.
Taking early profits requires traders to be correct far more often than is likely in the challenging world of forex. When taking profits early, make sure it is done in a way that preserves a positive RRR, as discussed above.
Conclusions
When planning your trades, remember to ensure a positive RRR; including any add-ons you have planned When actively managing your trades, ensure that a positive RRR is maintained through profit taking. Never move your stops (increase your risk). Trade setups have a stop and a target that are defined by price action; regardless of the strategy you use. Stick to your setup.