September. I've been staring at charts and it's weird... I'm not feeling so comfortable... what's happening?... What happened to me?
I'm serious about my trading. So I'm going to test a strategy that I paper tested a long ago and had quite nice results. Let's see how good result in live trading. One of the most difficult part for me is the entry point. Timing is essential as for my previous experience. Sometimes I was late and almost every time I was early, so let's see if with some practice I can overcome this issue.
Well then, I'm going to start with the most important thing -I think-, money management. So as a rule I've read in many, many places, books, saw in videos and go on, that nobody should risk more than 3% of equity. That's really true and something that I'm aware from a while now. Other people says that 1% should be the number rather than 3%. It depends on the trader's personality so I feel comfortable with 3%.
I'm not going to talk in money numbers, but pips instead. With my actual account, if I'm willing to risk 3%, that should mean that my stop order should be aroud 43 pips if I trade one minilot.
Due my broker has a incredible over leverage of 200:1, I realize that I'm undercapitalized. "Luckly" I can trade half minilot as minimum position, so that means I could risk till 86 pips in all open trades. I could open two-halfsize minilot positions risking 40 pips each, 28 pips in three positions, or just 86 pips in just one trade.
Because of this undercapitalized account, I would have to trade in smaller timeframes because the stops would be more that likely close to the market. I would love to trade in bigger timeframes as my previous updates suggested, but due lack of money, I have not other option. In bigger timeframes the stop loss would be greater than my 3% risk limit.
So, as a conclusion:
Risk adding all open trades= 3% or 86 pips
1 open trade with 86 pips stop loss, or
2 open trades with 43 pips SL each, or
3 open trades with 28 pips SL each.
Timeframe to trade: (Difficult to say but analyzing the ATR, I would say...)
15 min chart --- max avg true range= 28
1H chart --- max atr= 38
4H chart --- max atr= 81
Next post I'll discuss my strategy...
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