Position Size and Risk Management

Trading with discipline is critical to successful trading. Having a disciplined approach helps you to avoid getting caught up in the trading emotions that often lead to very risky and unplanned moves. What divides profitable traders from those losing money is their focus on cutting losses. This behavior is difficult for many traders to learn, as limiting losses also proper money management, and understanding human nature will help you better.

The risk aspect of trading is critical. A trader needs to understand that only risking the same percentage of their equity per trade is the only way the math will work in their favor as well as their trading career. The idea is for the trader to understand that trading is always about probabilities.

You always have to have a stop loss which is always different on each trade, but the same risk/trade percentage makes the equation work. What we do is at a minimum risk between one or two percent(1 or 2%) of your equity per trade. The market and trading, therefore, are nothing more than probabilities.

Consequently, we believe in the win-lose idea, where a trade is not touched until it hits the extreme limit or stops.

The technique that can be used is to understand the areas where the other side of the market can be more active and as our strategy, we partially exit the market when the fifty percent retracement of the previous leg is reached in the new short-term trend. We only recommend this technique if your entry is between the FIB Extension 1.00 and 1.236 of the previous ratios.