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Risk management in trading
There are hundreds of articles on risk management in trading on the internet that cover various aspects of it. I’m not going to repack the content that is available out there but focus on my view on risk in trading and my strategies for risk and exposure management. To begin with, let’s define what risk in trading actually is. For me the definition would be as follows: Risk is the probability of losing the capital. So, risk management involves working with probabilities and undertaking measures to reduce the probability of losing the capital. When considering risk in trading, we can speak of probabilities of losing the capital exposed during…
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Morning routines and trading results
A few days ago, I noticed that there is a strong correlation between the way I start my day / my morning routines and my trading results. If I start the day the right way, it usually ends with profit, and if I don’t, it usually ends in red or at break-even. This pattern repeated over and over, so I’m very happy that I finally noticed it. I immediately decided that from now on, I would be doing things the right way. So, here are the key differences: Losing day morning I get up too early or too late. I don’t know what to do with myself and wander around.…
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Trading for a living – what’s needed to make trading a stable source of income
When one is planning to open a company, the first step should be writing a business plan. Or at least its financial part, to see what it will take for the company to break even and then to be profitable. Correct me if I’m wrong, but when it comes to trading, we need to conduct a similar analysis to see if the „profit margin” on the „product” will be sufficient to cover all „costs” and generate net profit. In this article, I share my thoughts and methodology on the subject. And no, it is not another article on a trading plan and why you should have one. A trading plan…
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Five forex websites I use daily
With the abundance of financial websites and services for forex traders, one can get easily overwhelmed by all the information and opinions around. On top of that, there is constant distraction caused by the ads blinking in every corner possible and the risk of being exposed to content not relevant to your trades that might throw you out of emotional balance (like breaking news about accidents, crime, dramatic photos, etc.) Over the years, I followed each major financial website on the market for a while, especially websites for forex traders like fxstreet, dailyfx, etc., and I would like to share my opinion on what’s worth your time. But before we…
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Convictions, beliefs, and trading
Why at all think, talk, and write about things like convictions or beliefs in terms of trading? After all, trading is about making money, not psychology or some esoteric stuff. Is it really so? Isn’t it the trader that makes money? Or loses money, since according to statistics provided by brokers, around 70-90% of traders lose money. Traders are humans with their human flaws, traumas, and other psychological or emotional baggage that may influence trading. If we consider all this, a closer look at the trader’s mindset may lead to interesting discoveries and solutions to problems they encounter in their daily trading. Our convictions and beliefs may play a more…
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List of regulators worldwide
Regulators ensure that forex brokers follow the law and meet minimum requirements to secure clients’ funds (e.g., keep their money in a segregated bank account so that they can be refunded in case of a broker’s bankruptcy). Regulators also make sure that brokers can provide a secure and transparent trading environment for traders and have sufficient resources to facilitate trading. Choosing a forex broker regulated by a strong watchdog in a country that has a rigorous legal framework can provide traders with an added layer of protection and peace of mind. Countries and regulators known for their strict regulatory framework: Financial Conduct Authority (FCA) – UK Swiss Financial Market Supervisory…
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How to run replay in TradingView on two timeframes simultaneously
In theory, it is impossible to run replay in TradingView on more than one instrument and one timeframe at a time. However, there is a simple trick that allows us to bypass this limitation. If you open one instance of TradingView in the Windows desktop app and another in your browser you will be able to run a separate replay in each of these instances. This way you can run replay in Tradingview on two timeframes or on two different instruments at the same time. It’s very useful if you need to do some backtesting. You can even put the TradingView desktop app and web browser windows next to each…
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Trading hours
According to various online trend analyzing tools “forex trading hours”, “forex market hours” and “forex schedule today” are among the most often searched terms in Google related to trading. Since there are a few more nuances than just London open and New York open, I decided to post my take on this subject 🙂 . Best time to trade Forex The Electronic Communications Network (ECN) which connects market participants and facilitates the vast number of FX transactions is operating 24h a day starting from Monday 8:00 AM Sydney Time until Friday 5:00 PM New York time, except for a few bank holidays like New Year or Boxing Day. This constitutes…
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Hedging in forex
What is hedging? Hedging is a risk management strategy. It allows us to limit drawdown on losing trades as well to protect open positions in an event of rapid price fluctuations. Hedging a position can be nothing more than opening a second trade of the same value, on the same currency pair, but in the opposite direction (direct hedging). For example, if one wants to hedge a short position, opening a long position is required, and vice-versa. Once the opposite position is open, the losing trade stops generating losses, since the loss on one trade is offset by profit on the other one. This is the simplest hedging strategy forex…
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Understanding currency cross pairs
Cross currency pairs – introduction There are 28 main currency pairs traded on the forex market. The major currency pairs or the majors are EURUSD, GBPUSD, AUDUSD, USDCAD, USDJPY, USDCHF, NZDUSD, and the minor currency pairs or the minors are EURGBP, EURCHF, EURCAD, EURJPY, EURAUD, EURNZD, GBPJPY, GBPCHF, GBPAUD, GBPNZD, GBPCAD, CADCHF, CADJPY, CHFJPY, AUDCAD, AUDCHF, AUDNZD, AUDJPY, NZDCAD, NZDCHF, NZDJPY. When we log onto a trading platform we see quotes available for any of them. What we don’t see is that for the minors, which don’t include the US dollar in their symbol, the exchange rate is actually calculated from two major pairs. Let’s take the CADJPY as an…
Forex – Trading – Freedom