Wednesday, May 27, 2015
Day Trading Strategies: How to Manage Market Timing, Profits, Loss and Trading Risk
Hello... Good day for you friends, if you were day trader on your desktop or any forex trading platform, you need to manage the complicated of market timing, profits projection, loss acceptable, and your cash in hand of course there is a correlation between market timing, risks and profits.
Ideal condition or the best is to timing your trades, the lower your risk exposure and the higher the profit potential. For example, suppose the market (pick any) has a fund of 500 and finally tops out at 800. And for preventive action is suppose you use a stop-loss protection (recommended) whenever you enter a trade.
When you buy into a market, normally place your initial stop-loss just below the low of the day you enter long. So that would provide less exposure to risk?
A. Buying a 150 with a stop-loss at 100, or ...
B. Buying 120 with a stop-loss at 100.
What do you think, of course the correct answer would be 'B', as this will give an initial exposure of 20 points compared to 50 points. So What is exactly the difference between the two voices?
This is the actual trick, The difference is that with better market timing, the trader is able to get closer to the bottom with the option 'B' and therefore has less exposure to the risk to be addressed. Furthermore, due to the ever closer to the bottom of the market, this allows a greater rise (profit) potential as well.
If you start trading entering at 120 instead of 150, there is a surcharge of 30 points available for trade. Of course this example is extremely simplified, but don't get stressfull, The example is just to illustrate that most of your market timing seems to be, you will have less exposure to risk and higher profit potential.
For day trader, understanding this should prompt the trader to devote a good deal of time and energy toward strengthening its market timing skills and resources. some times traders need to be good at timing to go along with other important aspects of successful trading, such as a good money management, good risk management, overcome fear and greed, that trade with the momentum and the trend, at this point, the important thing is market timing will dominate your decision
After all, let me point you in the right direction. Avoid fundamentals as the main resource for market timing. News and rumors have little value if any. As for government relations, they have value 'when' are released more than what they contain. The actual reason for this is that, depending on the level of importance of certain relationships have in some markets, the markets often react to their release.
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