Most of our regrets in trading when we over trade to protect our position, and when the market reverse against our trade we execute another trade to protect our position, without knowing that we already over trade. Most of our trades we fail to put Stop Loss (SL), that when we have the wrong forecast our whole portfolio is at risk. Here are the basic steps of managing your risk:
First, you must have a plan and strategy or choose your own battle in order to win. If you try all types of strategies you may miss other strategies, for are not expert for all the strategies. Focus is the name of the trade. We have our own weakness, and our own weakness is that we cannot win all battles, so the best thing to do is to choose your own strategies to fight your own battle that is according to your strength. You can adopt at least one of the many strategies mentioned from your brokers, or from my previous blog.
Second you must compute your percentage of exposure or risk. The ideal risk is somewhere around 1-2% of your total portfolio. The more you expose more than an ideal percentage of exposure the more riskier are your trade, except you have a thorough knowledge in trading, and you are confident to expose yourself to a much more riskier trade.
Third, you should compute the total amount of exposed value using this formula. Number of Pips x Trade Size x Exchange Rate. Since we are using Dollar currency. We just multiply it to 1 which is equivalent to $1. Example 1000pips x .01 x $1.00 = $10.00
Fourth compute your Target Profit (TP) minus Stop Loss (SL) = Net Profit Trade $xx.xx
Coaching: Personal trade coaching is available with an actual price of Php80,000.00 which now value for only Php999.00 for coaching session.
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