Good morning, Traders!
We’ve made it to Friday, and that means it’s time to wrap up another week of trading, enjoy the weekend, and get ready to start again on Monday!
Reviewing some of the important data that supports my strategy is one of the best ways to prepare for the trading week. And one of the biggest concerns I get from many of my students is the risk that’s involved in trading.
Anything involving money is inherently risky. That is simply a fact of life. However, because of the risk of financial loss, trading may make a lot of individuals anxious.
However, if you use the right strategy, you can mitigate the potential for loss and make sure you win more trades than you lose!
Keep reading to learn how to properly gauge and manage risk while trading the futures market. It’s information critical to your success as a trader!
Formula For Growth
A formula for growth is applied in futures trading. You’re not going to win every single trade, so you’re going to need a strategy. You must accept the reality that there is a risk you will lose some of your money when you enter a trade.
Trading is never viewed as simply one, two, three, or four trades. For you to have a better understanding of the formula, we’ll call ten trades “one block”. Keep in mind that you should always set a minimum of a 10-trade or one block when it comes to succeeding in trading. Placing ten or more trades will help you generate more profit.
The formula helps you to estimate the percentage that you’re going to lose or win on a single trade with a one-block minimum. For example, say that you win six blocks and you lose four. If you know that you’re going to be a 60% winner, you have to have a plan for this.
Risk Vs. Reward
Let’s look at this from a different angle. Say that you see you’re going to win double the amount that you lose, or you’re trying to win $200 per trade.
By playing six trades, you’ll get $1,200. With the formula mentioned above, all you have to do is double, triple, quadruple, or add more to your initial trade to win more profit in the end.
So, for six trades, you might get $1,200, but you’ll lose $400. All in all, you’ll end up with a net gain of $800 for every ten trades.
What happens is this; if you start trading and immediately lose $200, you might think that the strategy is not working and give up. However, you’re going to prevent yourself from the $1800 net gain that the formula is supposed to give you. You have to understand how many times and how much you’re going to win and lose.
Now that you have the basic information to help you understand how to manage risk, it’s time to take the next step toward becoming a winning trader! You need to stop making excuses and move forward. You’re account won’t grow unless you make the trades, and I’m here to help.
Keep On Trading,
Mindset Advantage: Control
What you can control… accept that others are at the wheel of the market.
Unless you’re managing a billion-dollar-plus account… odds are very good that when you make an entry – you’re not going to move the market on your own.
No… the market isn’t responding to your entry, or your account, or your track record. It’s doing its thing based on institutional activity. The sooner you recognize this, the sooner you’ll be able to start making better entries and managing tighter exits.
Why? Because you need to trade with the institutions, not against the market. This means that you should focus on controlling what you can actually control.
Let the rest go and enjoy your trading!
Traders Training Session
Stay tuned for my next edition of Josh’s Daily Direction.
And if you know someone who’d love to make this a part of their morning routine, send them over to https://joshsdailydirection.