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  1. #1
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    help with risk and reward

    Hello
    I知 very new to trading I been trading for about 4 months and I知 still trading paper money because I知 not ready to go live. Mainly I trade the morning (8am to 12pm EST) and I trade forex and futures and my goals are small 25 pips a day or 5 points in NQ or 20 in YM. I have a trade plan and my rules for entry and exit. At the beginning I was over trading and that was the main problem. Right now I知 having a problem with RISK and REWARD. I can稚 find a good balance. Right now my losers are bigger then winners for an example I have good weeks that I make 100 pips in a week and then I have bad week that I lost 140 pips in a week.

    And I wondering if anyone went thought something similar and maybe give me some tips how to overcome it and also are my goals achievable?

    Thank you for any help

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  3. #2
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    Without knowing the details as far as the inner workings of the system or systems you trade, it's hard to give specific pointers. In my evolution as a trader I went thru the same issues. This whole issue boils down to the fact that you are not in alignment with either one or both of tradings cardinal rules. You are either not cutting your losers in a timely fashion, or not letting your profits run, or not doing both of them. One idea that was very detrimental to my own trading was the idea that I would approach the market every day and look to make "X" amount of money per day. While it is comforting for us to think or believe that trading is like other occupations where we can show up for "X" amount of time per week and get paid "X" amount of dollars, the markets just don't work that way. Chasing this dangerous idea can lead to many bad trading habits over time. First off, it can lead to overtrading and big losses on those days when the market just does'nt cooperate with us and give us our "easy" 25 pips a day. So instead of quitting after, let's say two or three losers in a row, we continue trying to chase the 25 pips and end the day with 5 losses which will now take 3 days to make up. Secondly, on the days when the market obliges us with an easy 25 pips, we quickly exit our trade at 25 pips and close up shop for the day while the market continues to run another 100 pips in our direction without us. If you want to survive and prosper as a trader you absolutely MUST be there on those occasions when the markets smile upon us and give us those big winners. Taking a predetermined 25 pips or 5 points per day will not cut it. It's those days when we are handed big profits that allow us to absorb the losing streaks and still come out with profits left over. So my recommendations would be to:
    1. Drop profit targets if you are using them. Instead look to ride every winner for all its worth by letting the market not a target tell you when to get out. You NEED those days when the market bestows a big winner that's 2 to 10 times bigger than your initial risk.
    2. Use market-based not money-based stops and honor your stops under absolutely any and every circumstance. Always take the very first exit a losing trade allows you.
    3. Don't micromanage your trading on a daily basis. This business operates under it's own rules that look nothing like the rules most other jobs conform to. It's unrealistic to expect "X" amount of $ per day. Lengthen your horizons and keep score on a monthly or quarterly basis. If you're trading with a quantifiable edge, you need to turn over enough trades to allow that edge to begin asserting itself. This won't happen on a daily basis.
    Good Luck....

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  5. #3
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    Thanks for a reply.

    and you are right today was a perfect example I took my 24 pips and 29 points in YM but the market want to give more I just didn't take it. I have to take all the profits that I can get and I have take advantage of days like today.

    last month I start to do my totals on monthly bases. I will keep doing that a daily is to small of a time frame.

    Thank you for the help.. I tweak my trade plan and test

    Happy trading

  6. #4
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    Try to learn scale in and scale out bassically when you got a winner add more and when you not sure any more to stay in for example at a chart point confluence zone or whatever then close a partial part of your position for example 80% and let the rest run with trailing stop.

  7. #5
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    Thanks that is a good idea, I will try that.

    Thank you

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