Happy Tuesday, Daily Direction readers!
One of the greatest ways to build our trading strategy is to go over some of the crucial details that are foundational to success.
The most common worry I hear from my students is how risky trading can be for new traders.
Anything that involves money is incredibly risky. That is an unavoidable truth of life. That’s why trading makes a lot of people nervous. The potential for financial loss is very real.
However, if you use the right strategy, you can mitigate the potential for loss and make sure you win more trades than you lose!
Continue reading to find out how to properly assess and manage risk while trading futures. It’s crucial information for your trading success!
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.
But before you go: I want you to check out my latest discovery. This “money magnet” phenomenon will change how you approach trading for the better. Here’s all the details you need!
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.com/ to get signed up!