Minimize your losses and maximize your profits
Written by alanetoroHow much is the right amount to open a trade with? I use a very basic formula; I do not open a trade with more than 2-5 % of my equity. Then to cover myself even more I use the stop losses. The profits are also locked in as the trade moves into profit by reducing the stop loss and extending the take profit. So if the market pulls back, your stop loss will kick in and the position will close.
How does this all work? Let’s look at an example; my total equity is $3500, you open a trade for $100 at a leverage of x25, pip rate is 0.20 the entry price is 1.2500; you set the stop loss at minus 50 pips (50x.20 =$10) i.e. 1.2450, and your take profit at 1.2650 (that is a gain of 150 pips x.20 =$30 profit). Total risk was $10 if it hits stop loss. Profit is $30 which is a 30% gain.
Example
Total equity $3500
Enter position 1.2500
Investment $100
Pip value 20
Leverage 25
Stop loss 50 pips off 1.2450 (50 pips x.20 total $10)
Take profit 150 pips 1.2650 (150 pips x0.20 profit $30)
Total amount of risk to equity $10
Total profit $30
If the trade reaches 1.2800 by moving stop loss and take profit, the total profit is $60.
In summary:
Plan your trade and then trade your plan!
Low leverage
Set up stop loss
Set up take profit
Move stop loss to lock in profit
[...] openTen reasons why Mr. Obama will lose the Presidential race in 2012.Act of WorshipOnline DirectoryMinimize your losses and maximize your profits [...]
[...] your losses and maximize your profitsMinimize your losses and maximize your profitsMinimize your losses and maximize your profitsThe Forex 4x Pip Snager Review [...]
[...] 40 pips on the EURUSD.Why i can’t hit my stop lossLearning About The woods From the Black DogMinimize your losses and maximize your profits [...]
[...] NIJT Kaunas 2012 (Day 1 Review)Minimize your losses and maximize your profits [...]
[...] System Review*Download Cricket Trader – Betfair Trading System ReviewIBT Auto EATrading ToolsMinimize your losses and maximize your profits [...]
[...] OpenBook Traders Eye NFP for Gold DirectionNIJT Kaunas 2012 (Day 1 Review)Minimize your losses and maximize your profits [...]
[...] – Trading Chat Room and SignalsWhat is PottermoreQuestions And Answers On Squeeze Page ExamplesMinimize your losses and maximize your profitsLONGEVITY – Blog :Nokia lottery is a scam – Nokia Conversations : the official Nokia [...]