trader, knowledge alone is not enough. Many beginning traders get confused by this and think they are risking more with a bigger stop or less with a smaller stop; this is not necessarily the case. What is disposable capital?
Remember, trading is a marathon, not a sprint, and the WAY YOU WIN the marathon is through consistent implementation of risk reward combined with the mastery of a truly effective trading strategy. The key is that if youre really trading like a sniper and youve mastered your trading strategyyoure unlikely to have a lot of losing trades in a row, so the fixed risk model will be more beneficial to you. Checkout Nial's Professional Trading Course here.
First you need to decide how much money in dollars (or whatever your national currency is) you are comfortable with losing on the trade setup. The account forex index-Indikator size is actually a margin account and you only need to deposit enough in an account to cover the margin on positionsso you could have the rest of your trading money in a savings account or in a mutual fund or even precious. Traders who think they dont need to be organized or who arent disciplined, usually behave this way out of arrogance. You adjust your position size to meet your pre-determined risk amount, no matter how big or small your stop loss. I know that many of you have been tempted to buy one of the fancy sounding Forex trading robots out there, with a name like Forex Turbo Pip-Blaster 10,000what unsuspecting newbie wouldnt be tempted? The proper knowledge and implementation of risk reward gives traders a practical framework to do this. Sure you will draw your account down a bit quicker when you hit a series of losers with the fixed model, but the flip side is that you also build your account much quicker when you hit a series of winners (and recover from draw. This point applies to normal retail traders (not investment banks and hedge funds). I personally believe the R model makes traders lazyit makes them take setups that they otherwise wouldntbecause they are now risking less money per trade they dont value that money as muchits human nature. We can see two different price action trading setups; a pin bar setup and an inside-pin bar setup.