How to assess risk when trading non-stop? Ways of approachesBarry Copeland 27 / March / 18 Visitors: 104
How to assess risk when trading non-stop? Ways of approaches
I just trade without stops. Traded without them almost always. As for the success of my trade, I will probably not go into details. But there is a result.
Therefore, I will venture to parse trading without stops "on the bones" in my own example.
The most important thing in any, absolutely any trading strategy, even with stops, even without it, is to limit the risks for each transaction and the total volume of transactions! Not in the sense that I set, say, stops per loss on one transaction, for example, 5% of the depot, and on the other 2% and all - your losses from these orders are ironically limited to 7%. You should not count on this. In the end, after all, stoploss may not work! For many, even reliable brokers, this happens, especially in times of high volatility and chaos in the market.
It is just necessary to assess the volume of opened transactions (the so-called deposit load) and the prospects for each of them moving in the direction opposite to their assumptions. That is, the maximum allowable loss. It is clear that it should not exceed reasonable values. Let's say for me it is 10 - 20% of the depot. With this approach, the deposit will withstand almost any, even the most unexpected cataclysms, and ultimately everything will come to its intended goal - profit.
It goes without saying, you need to choose the moments for opening orders, their directions, evaluate the prospects for each transaction very carefully and not at random. We are not here to gather to stupidly guess where this or that instrument will go. Like, well, let's risk selling the euro, now at this price, but just in case, we will insure with a stop. Such a "guessing game" will lead to nothing.
The result of a correctly selected, carefully verified and considered strategy should be a profit, not losses, even small ones as a result of stop triggering.
What to do if everything went wrong as intended? Yes, such situations do happen, well, how can one do without them. Here the mechanisms of limiting losses are already included: locking, outsourcing and manual closing of the transaction. Here, too, you must be able to properly use each of these methods, both individually and together. But, in any case, all of these options are already extremes. They simply cannot be brought up to business!
This is what we need to learn, to strive for this.
With competent trading, it is practically indifferent: the stops are applied or not. Since most of the opened deals immediately go into the black and compensate for losses from some unsuccessful decisions.
I personally strive for this kind of business management on Forex, I have been studying this for a long time and hard. Usually when I turn off the computer and leave it for a long time, I don’t care what happens at my depots. Since I know that nothing critical should happen there. Such a situation can only be in two cases: either when all transactions are closed, or if they are opened in such a way and in such a volume that they do not threaten a deposit in any way.
And this can be done without using the foot. I am sure about that.