I reposted the article from the Chart Corner article series on the Youtube Community Medio - Trade For Freedom for everyone to read again.
Hello everyone, it's Friday again. Are your trading results good this week? This is the second article in the series of CHART CORNER articles Share about non-technical but equally important issues that determine everyone's trading results. Let's start!
CHART CORNER 2: Risk management to become a successful trader.
I received a lot of feedback from many of you that your account was burned. Or this pair or that pair fluctuates too much, the US election news causes the market to fluctuate so much that I'm afraid to not dare to trade.
This is because people are not managing risks well. If risk management is good according to what I share below. You will never burn your account, never be afraid of strong market fluctuations (on the contrary, the more volatile the market, the greater your chances of making a profit).
Perhaps many of you, even though you have been in the market for a long time, are lacking this knowledge. Because many of you still want to play big lots, stuff orders, scalping, martingale,...
I want you to change this mindset immediately, because if you don't change, no matter how skillfully you apply my method or any method, I'm "sure" you will lose money in the future!
Burning your account is because you don't set a stop loss, enter an order with too large a lot, or stuff your order to burn your account. No matter how many profitable orders you have, just one time will cause you to be "kicked out" of the market. And this will happen sooner or later.
Investing and trading are different from gambling in that you can make the probability of winning in your favor. By adding knowledge and managing risks, not winning because no one in the world can do this.
The best risk management is to enter orders at risk of only 1-2% of your account for each order you enter. When your R:R ratio is 1:3 you will profit 3-6% of the money in your account.
That is, your winning rate is only 50% and overall you will always have double the risk you take (2R). For example, if you enter 10 orders in 1 month, you will gain 10R (ie 10 - 20% account).
Not to mention, if you move your stop loss according to your instructions to break even when the RR ratio reaches 1:1 or create new highs and lows, in orders that do not reach the target you will also break even or have a small profit. but no loss.
Managed this way, even if you lose 100 orders, you won't be able to burn out your account (I believe if you lose 4 or 5 orders in a row, you will have to stop and learn more knowledge). No matter how fluctuating the market is, at most you will lose 1-2% of your account. The faster you follow your analysis, the faster you will reach your target.
5 PRINCIPLES YOU NEED TO KNOW BY HEART
1. Risk per stop loss order is only 1 or 2% account
2. Put the same risk on each order, no matter how solid you think it is (eg: every order is only 1%)
3. Don't break the rules just because you lose a lot or win a lot.
4. Do not stuff orders or enter new orders when the old order has not brought the stop loss to breakeven.
5. Move the stop loss point when the order has a 1:1 profit or a keylevel has been formed to preserve capital or part of the profit even if the target is not reached
ORDER LOT CALCULATOR
Calculating 1TP5 Account Risk to calculate the number of lots to bet is not difficult, but it will be relatively troublesome for new players, so after thinking, I have created a tool to help you calculate the number of lots according to this risk.
I also write down the risk management principles there, so that every time you enter an order, even without me sitting next to you, I can still remind everyone to follow the principles.
You should save the bookmarks for easy use when needed and share the tool with other friends so that no one of you will burn your account again! If anyone watches my channel and says their account has been burned, I'll be very sad!
To be able to survive in the market, you must strictly and strictly follow these 5 principles. If you are negligent, you will disappear immediately.
Discipline is the key to success
I watch many channels, but I find your channel is the most ORIGINAL, QUALITY and GENUINE! Thank you for your contribution to the community.
Thank you
Hello Ad.
I have been following your youtube channel for a month but just found out about this website so I immediately started reading.
Wish you good health to continue sharing.
Thank you!
I just opened it and looked at your chart corner. It's true that I trade demo, backtest or forward test, I always use the calculator to calculate the pip number and then go to your Neutral Volume page. I traded for a whole month and only lost 4% of my account because of careless orders. Even though it's a demo, I still feel regretful somehow! I know discipline whether it's real or virtual. Thank you. Every day and night, I practice demo at least 3 hours/day. I never doubt that I will fail because failure is when we give up, right? Every time I wake up or go to sleep, I imagine becoming a professional trader and achieving freedom with the desire to help others.