Like all the good traders always ramble about,i m rambling again in front of you about trading Psychology.
What is trading Psychology?
Yeah they say fear Greed and again Fear Greed,but why the heck fear, greed and all.
What is fear?
Fear of loosing money,fear of not being in a trade,fear of being unsuccessful.
Which fear do you have if number one you are not so good trader.
If number 2 u r dead trader why the hell do you think the setup u missed was last on this planet.
Fear of being unsuccessful comes from lack of confidence in your system,u should not trade in fact ask yourself why do i fear of being unsuccessful did u not demo trade before going live account.
If u did demo trade then u should know your system works and will work for sure.
Here are the necessary steps for success.
1. You construct a method for yourself,i said method and not a system,because systems make u a robot a method has enough room for professional thought.
2. You demo trade that method unless u have 3 consecutive moths in profit.
3. You fund your account with sufficient capital so you can trade successfully,sufficiency is for not being capitalized,it is a business treat it like one.
Micro Account: 1000 $
Mini Account: 4000 $
Standard account not before 100000 $.
4. You trade your real account just the same way you traded demo.
5. Never Scalp,that is a system killer unless you have got years of experience.
6. Never look at your order once it is placed,u stay there u ruin it it will get the fear part out of you.
7. You never take profit fearing downturn,or never get greedy becoming a hero.
If your system works why fear u will not get good profits.
And when u know ur system says final target exceeded why the hell u r maxing out.
You just set and forget your order.
Leverage:
You never get hoaxed into leverage schemes offered by brokers,it is a trap,because leverage is decided by individual positions not first hand.
Say you are a intraday trader or a position trader u wanna open a position and wanna trade ur position and levergae are decided by the trade you are taking.
Here you go,my formula is listed below.
Your Capital= X $
Your Risk= R%
Your Reward i assume is same as Risk but let us take it Ri %
Now Your Stop size in pips say is SP=Si
Now here is the formula:
Your Risk is maximum % of your account you want to loose and you dont wanna risk more then 1 % of your account.
Say your Risk in Dollars is :
R $= (R%/100)*X
Where * is multiplication
And / is division.
So Stop amount in dollars = (R%/100)*X= R $
And what is your dollar per pip:
It is equal to R $/Si= Dollars per pip.
For mini account with USD as second currency $ per pip is always 1 $ and for standard it is 10 $.
Say your Position size is X2.
You buy counter currency sell base currency ie go short.
Let exchange rate be= Z (where Z is an integer)
now let us say rate changed and now it is =Z1
Let the base currency units sold be= B1
And Counter Currency units bought be= B2
clearly at any point
When you go short,the currency equivalent is always as follows.
B2=Z*B1
Now exchange rate after you go short is Z1 after a while so Now :
B22=Z1*B1 is currency equivalent now.
Your profit in Counter currency units is:
(Z*B1)-(Z1*B1)=M
If it is coming negative you are loosing money.
Now M is your Profits in Counter currency.
And M/Z1 is your profit in Base currency.
And let your profit in pips be= TPi
Now $ per pip = M/(Z1*TPi)
And this dollar per pip is equal to dollar per pip as mentioned above:
So: R$/Si=M/(Z1*TPi)
Put the value of M in this equation.
So your General Position sizing equation is as below:
{B1(Z-Z1)/(Z1*TPi)}={(R%/100)*X}/Si
or Simply B1/Z1={(R%/100)*X}/Si
Take spread on your own.
(Z-Z1)=TPi
Where: Z is previous exchange rate.
Where: Z1 is present exchange rate.
Where: B2 is counter currency units.
Where: B1 is base currency units or position size.
Where: TPi is profit in pips in trade.
Where: Si is Stop loss in pips per trade
Where: R% is riskk % of your account.
Where: X is your account capital in dollars.
Where: S is bid ask spread.
Example solution,i want to short Euro/Usd
at 1.2500 and my account size is 200 $ and my risk is 2 % and trade says my profit in pips excluding spread will be 40 pips but my stop loss is 20 pips.
And spread is 3 pips.
1.2500-Z1=40 pips
Z1= 1.2500-.0040
Z1= 1.2460
B1/1.2460={(2/100)*200}/20
B1 =0.2*1.2460
B1 =0.16000 units
or 1600 units of currency approximately.
Or i should say you, purchase on only 1600 units sell or buy of base currency.
your leverage is 1600/200=8
Which is true leverage of 8 :1 for this trade
As your account size will increase leverage will decrease and that is why if your following proper MM you will never open random accounts with mini or micro lots but a custom lot broker or MT4 broker.
Hope this helps equations can be mixed up watch your maths.
Here is my gift to TJ one of my good ones and maybe last one.
Regards
Taz
What is trading Psychology?
Yeah they say fear Greed and again Fear Greed,but why the heck fear, greed and all.
What is fear?
Fear of loosing money,fear of not being in a trade,fear of being unsuccessful.
Which fear do you have if number one you are not so good trader.
If number 2 u r dead trader why the hell do you think the setup u missed was last on this planet.
Fear of being unsuccessful comes from lack of confidence in your system,u should not trade in fact ask yourself why do i fear of being unsuccessful did u not demo trade before going live account.
If u did demo trade then u should know your system works and will work for sure.
Here are the necessary steps for success.
1. You construct a method for yourself,i said method and not a system,because systems make u a robot a method has enough room for professional thought.
2. You demo trade that method unless u have 3 consecutive moths in profit.
3. You fund your account with sufficient capital so you can trade successfully,sufficiency is for not being capitalized,it is a business treat it like one.
Micro Account: 1000 $
Mini Account: 4000 $
Standard account not before 100000 $.
4. You trade your real account just the same way you traded demo.
5. Never Scalp,that is a system killer unless you have got years of experience.
6. Never look at your order once it is placed,u stay there u ruin it it will get the fear part out of you.
7. You never take profit fearing downturn,or never get greedy becoming a hero.
If your system works why fear u will not get good profits.
And when u know ur system says final target exceeded why the hell u r maxing out.
You just set and forget your order.
Leverage:
You never get hoaxed into leverage schemes offered by brokers,it is a trap,because leverage is decided by individual positions not first hand.
Say you are a intraday trader or a position trader u wanna open a position and wanna trade ur position and levergae are decided by the trade you are taking.
Here you go,my formula is listed below.
Your Capital= X $
Your Risk= R%
Your Reward i assume is same as Risk but let us take it Ri %
Now Your Stop size in pips say is SP=Si
Now here is the formula:
Your Risk is maximum % of your account you want to loose and you dont wanna risk more then 1 % of your account.
Say your Risk in Dollars is :
R $= (R%/100)*X
Where * is multiplication
And / is division.
So Stop amount in dollars = (R%/100)*X= R $
And what is your dollar per pip:
It is equal to R $/Si= Dollars per pip.
For mini account with USD as second currency $ per pip is always 1 $ and for standard it is 10 $.
Say your Position size is X2.
You buy counter currency sell base currency ie go short.
Let exchange rate be= Z (where Z is an integer)
now let us say rate changed and now it is =Z1
Let the base currency units sold be= B1
And Counter Currency units bought be= B2
clearly at any point
When you go short,the currency equivalent is always as follows.
B2=Z*B1
Now exchange rate after you go short is Z1 after a while so Now :
B22=Z1*B1 is currency equivalent now.
Your profit in Counter currency units is:
(Z*B1)-(Z1*B1)=M
If it is coming negative you are loosing money.
Now M is your Profits in Counter currency.
And M/Z1 is your profit in Base currency.
And let your profit in pips be= TPi
Now $ per pip = M/(Z1*TPi)
And this dollar per pip is equal to dollar per pip as mentioned above:
So: R$/Si=M/(Z1*TPi)
Put the value of M in this equation.
So your General Position sizing equation is as below:
{B1(Z-Z1)/(Z1*TPi)}={(R%/100)*X}/Si
or Simply B1/Z1={(R%/100)*X}/Si
Take spread on your own.
(Z-Z1)=TPi
Where: Z is previous exchange rate.
Where: Z1 is present exchange rate.
Where: B2 is counter currency units.
Where: B1 is base currency units or position size.
Where: TPi is profit in pips in trade.
Where: Si is Stop loss in pips per trade
Where: R% is riskk % of your account.
Where: X is your account capital in dollars.
Where: S is bid ask spread.
Example solution,i want to short Euro/Usd
at 1.2500 and my account size is 200 $ and my risk is 2 % and trade says my profit in pips excluding spread will be 40 pips but my stop loss is 20 pips.
And spread is 3 pips.
1.2500-Z1=40 pips
Z1= 1.2500-.0040
Z1= 1.2460
B1/1.2460={(2/100)*200}/20
B1 =0.2*1.2460
B1 =0.16000 units
or 1600 units of currency approximately.
Or i should say you, purchase on only 1600 units sell or buy of base currency.
your leverage is 1600/200=8
Which is true leverage of 8 :1 for this trade
As your account size will increase leverage will decrease and that is why if your following proper MM you will never open random accounts with mini or micro lots but a custom lot broker or MT4 broker.
Hope this helps equations can be mixed up watch your maths.
Here is my gift to TJ one of my good ones and maybe last one.
Regards
Taz
