Hello, Daily Direction readers!
We’ve made it to Friday, which means it’s time to wrap up another trading week, relax over the weekend, and get ready to start all over again on Monday!
Going through some of the main facts that support my strategy is one of the greatest ways to prepare for the trading week. The risk associated with trading is the most prevalent concern I get from my students.
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: Execute
In the end, trading is about execution. A detached, matter-of-fact execution that takes into account market data. It’s those darn emotions that get in the way.
What if you were able to execute every trade like you were cleaning up after a great meal with friends or family?
Instead of each entry or exit being the heart-pounding, drama filled moment that it is (for many) – remove your emotions and treat it as though it just needs to be done.
Like taking out the trash, you don’t think about it. You don’t shed any tears over the 5 day old ravioli or hamburger buns that you’re throwing away. Why waste another second on that trade?
Good or bad. Simply execute. And free yourself to see the market from a different point of view.
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.