Forex Tip – Position Size

Establishing the correct position size is difficult for most traders.  Even experienced traders screw this up all the time and it’s so simple.  Brokerages, forex trading system designers, and a number of “gurus” will tell you to risk “only 2%” per trade.  The question becomes, 2% of what?  2% of my open equity?  2% of my total account equity?  What about accounting for current risk?  All of these questions must be answered in the fixed percentage scenario.  I apply a much more advanced money management plan to intraday trading, but it doesn’t have to be that hard.

In my trend following trades, I ALWAYS figure that I’m probably wrong when I enter the trade.  That’s right.  I always think I am wrong, every time I enter a trade.  This forces me to use sound leverage.  In my trend following systems, I typically use 1:1 leverage.  That means that for every 1,000.00 in my account, I will trade 1,000 units.  To save you some figuring, that’s about a dime a pip on the majors for every thousand dollars I have in available equity.  That doesn’t sounds like a lot, does it?  What that means, however, is that for every 100 pips I earn, I increase my equity by 1%.  That becomes HUGE over the course of a year in a trend following system.  Take a serious look at my actual trading results before you make up your mind.  I think that when you do, you’ll see that 1:1 leverage is more than adequate to build serious wealth.

I’ll talk more about the mindset in a later post.  For now, just review your past performance and apply a 1:1 leverage to each trade.  How did you do?  Look at my performance and apply the 1:1 leverage.  How did I do in 2009?  Did I beat your fund manager, 401K, IRA?  Keep in mind that one of those pairs, a big one, was traded at 5:1 leverage!  I almost never trade at 5:1 leverage, but the stop loss was so small on the first trade that I was willing to take a chance.  I still thought I was wrong, but it made financial sense to increase the leverage.

If you’re ready to sign up and receive my trades, please sign up today!

Good Luck!

Tim

Recent Change To Trade Setups

I’ve had a few questions lately regarding the addition of the  Trade Plans that I publish most days.  I say “most days” because there are days that my advice is to simply sit the market out. 

This style of trading works well in most markets.  It’s nothing new.  It’s not a new or different system than I’ve been using since the start of MME.  It’s just a different way of delivering the same trades that you’d get when I am using pure price-action / support-resistance.  The real value is that it allows you to trade your own systems with the added benefit of having your technical analysis outsourced. 

This week alone, I’ve provided five trade setups, and have had five winners totalling 342 pips.  That’s not bad for holiday trading, and some of the most stress free trades I’ve sent this year!  Some of you have gotten even more pips from these trades! 

If you have any questions regarding how to use the daily trrade plans or weekly forecast, don’t hesitate to ask.  I’ll be more than happy to help out any way I can.

Tim

New “Market Bites” Video Posted (Fibonacci Trading)

Check out the new video HERE!