Tuesday, January 12, 2010

Some basic rules for now.

1: never trade non active session again, meaning spread is 1.5 or more, except breakout of major support/resist point, such as the one ECB talk , and I should only trade with the breakout.

2: follow the direction of the breakout, and write plan before trade.

3: In trend following trade, buy or sell the ema62 bounce on 10s or 30s or 1 minutes chart.

4: In reverse trade, only the DIV setup with confirmation.



If any of these rules are broken, I need to write a reason for justification.


Some of the points I can think of, but not required for now:

* What would tell you the trade is wrong?

* Where might you think of adding to the trade?

* Rules that tell you when to take a break and reduce risk (trade size) in a slump

* Think of the what if scenario

Risk/Money management factors:
For example, a 30K USD account, with about 20 pips stop loss, a size of 50K lot, would create max los of 100$ per trade, that is 1/300 (0.33%) risk on each trade. So with 30K USD cap, u can get 1R at 100$, now the table:
1R    CAP
100    30K
500    150K
1000  300K
Looks like one should be live on trading easily with a 300K account. 
When to stop trading for the day: Loss of 5R
When to reduce size of trading: Loss of 15% (45R), with 1:50 leverage, the trading account only need to have 3K, the rest 27K can be in reserve account.

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