Today I am doing a special article and Video about how to determine your trade size in the forex market. This is a crucial part of money management that many traders don’t have a complete grasp of and that hurts their trading. There are many ways to manage size and manage money in forex. The most important thing is that you always have total control of your risk. IF you do that your account will never be in danger of catastrophic loss– meaning a margin call or blowing the entire account.

Trade Size Matters:

I am sure you have heard how to do this many times and you are thinking not another money management article! However my question to you is have you mastered this and do you practice trade size and money management sizing religiously? If the answer is no, I want you to make a decision right now that you are going to start taking responsibility for your risk and stop trading recklessly. Can you do that? YES you can.

Listen if you want to make a change in your trading make your committment and write it in the comments and then as a community we can hold each other accountable for our trading. Get a friend to help you.

I have a real life situation for you. I recently lost 30 lbs, I tried several times to lose the weight but never could do it. Until one day I met some friends that inspired me to give it one more try. So I did, then I failed for a week, tried again, and failed again. I was determined to make it happen so then I started educating myself on what to eat and practice discipline in portion size. I started to show some progress then that encouraged me so I gained confidence. Once that confidence kicked in it gave me strength to follow my plan with more discipline. After that losing weight was easy, the whole problem was me the entire time!

So I am going to make a guess that YOU are the problem with your trading! So I am hear to encourage you and tell you that you can do it! Go ahead and make that decision right now that you are going to take control of your trading destiny and control your risk. Put that comment down and an entire community of traders will be on board to help you.

So How do we do this:

1. Make the decision
2. Write down your account value.
3. Determine how much you will risk per trade. Either a % or a Fixed Dollar Amount such as $100
4. Then find a trade on the chart and calculate the stop loss.
5. After the stop loss is calculated use our Forex risk calculator to determine your trade size.

*I have two good articles about Trade Managment I recommend using a risk to reward of at least 1 to 2. If you can get it higher than that it is even better. Here is another good video about the benefit allowing your trades to be larger winners than a losers, risk to reward ratio is so important to profitability.

We have a new Forex Risk Calculator coming out in a few days which will be much improved over the one we currently have, I will send an announcement when that comes out.

I was writing an article and Trading this morning and saw an entry I like to look at. It is based on a Forex strategy article that @Nathan wrote a while back. If you want to learn that strategy go ahead and read the article. But for now just look at this trade I entered at the time of publishing I am very close to being stopped out but it isn’t over yet so I am going to post it.

Trade Video below:

I was just going to delete the recording, but then I watched it and thought it was kind of funny, so I decided to post it.

Not only is it amusing, but it is also something that happens often in the markets. Stalking the perfect entry is wise trading, but you have to make sure you don’t pull the trigger when it doesn’t set up according to your entry rules.

Anyway, enjoy my failure!!

 
By the way, please forgive some of my bad zooming during the video–I was a little off target at times, but you don’t miss anything important

Please leave comments on what you think about this trade also if you like seeing my trades please let me know. Also please follow me on twitter so that you can get the results of this trade I am sharing with you.

The Video below is an actual trade I am taking on a live account and I am going to publish the results of this trade when it is finished. It might be several weeks from now or it could be next week, so don’t forget to keep checking back with our site so that you can see the results.

In my recent article, I suggested that the Euro might be stuck in the triangle for a while to come–I was WRONG.

So now, I am trying to figure out where to go from here. I am going to quickly write up the possibilites I think could happen, and I would like to get your opinion on what you think Euro is going to do.

The Euro broke through the bottom line at the 1.3000 level with a strong bearish bar yesterday. The bar closed well below the horizontal support zone, showing that it was definitely a true break.

So the questions is: Now what do we do?

The level has been broken, but that does not mean that we should just jump on the side of the breakout.

There are 4 things that I believe can happen here.

1. The first thing that might happen is that the Euro crashes into a downtrend. It doesn’t hesitate much, today’s bullish bar turns into a big tail pushing it further down and it follows through for a long time to come.

2. The second thing that could happen is that the Euro bounces up (like it is now) and retests the line that it just broke, and then continues downward, beginning a new downtrend.

3. The third thing that could happen is that the Euro breaks right back up into the triangle that it was in before. In this case it would bounce back up through the 1.3000 and respect it as a level of support, and also respect the downward trend line that was forming. In this instance, we would expect it to channel between the triangle for a while longer before making the next break out.

4. The last thing I see happening is the Euro bouncing up and breaking out the top of the triangle. In this case we would consider the initial break a fake out, and we would see a bust of bullish movement throughout the next few days until it broke out of the top of the triangle. We would then consider this the true breakout and suspect the new trend to be bullish.

Those are the circumstances I think may happen, and I am currently leaning toward situation #2. What do you guys think?

Looking at the moving averages used in daily charts, it can be seen that EUR/USD is below all the three moving averages used. The traders will primarily look to enter around the short term level which is around 1.3070 level. In case the EUR/USD extends its upward trend, the next level it will look to target will be around 1.3170 where medium term and long term moving average are converging towards each other. Looking at the RSI used in the daily charts, it can be seen that RSI is just above 32 and seems to have enough space for EUR/USD to make a dip below 1.2900 level. With further dip at this stage might push EUR/USD up for some retracement and allow RSI is open itself up a bit more.

One such level is evident on the EUR/USD as we speak. Looking at a weekly or daily chart, the level becomes very clear. It is in the 1.3000 zone and it has held price several times and rejected it back upward. Over the past few months, each time it rejects price back up, it seems to have a little less “pop.” This is resulting in another level in the form of a downward trend line, which has also shown some pretty strong authority over price. We have a strong horizontal level, that is rejecting price upward + a downward trend line that is pushing price back downward, what does that equal? … A descending triangle!! Let’s take a look:

As you can see, price has struggled tremendously at the 1.3000 level. You can also see that there is a significant trend line forming. Remember that this is a daily trend line and support zone on the most traded pair in the world, so the levels I am mentioning are very powerful.

The all important question for us, as traders, is what do we do with this information. It doesn’t matter if there is clear technical indicators if we don’t know what to do about it. For me, this triangle means two things.

The first thing it means is that I should take advantage of these levels while I can. Often times what happens is that the level holds up just long enough for us to build our confidence in it and make an entry and then it breaks. With that said, I am of the opinion that these levels on the EUR/USD will hold until it tightens up more into the end of the triangle, so I will continue to trade of these levels until a daily bar closes above or below (depending on which level it is) the zone with some authority. It is not often that you get a level this strong, so I do intend to take advantage of it while I can.

The second thing it means for me is that a break out is coming. The EUR/USD is due for a nice long trending move. If it continues to tighten up into the end of the triangle, my feeling is that a massive break-out is coming. For me, that is what I am ultimately waiting on. I want to be on the right side of the next big EUR/USD trend, and I think the key may be waiting on this breakout. Expecting this is, of course, very speculative on my part, but I am just sharing my opinion with you all. I won’t make any trades until there is actual evidence of what I am suggesting actually unfolding in the market, but here is what I am guessing might happen:

And, yes, I know that I have some seriously impressive drawing skills on paint

That is what I am watching on the EUR/USD, let me know what you think with a comment below!

Looking at the moving averages used in daily charts, it can be seen that GBP/USD has gradually move above all three moving averages and is just above the short term moving average at the moment. The traders will look to enter around the level where medium term moving average is currently at the moment and it is round about 1.6080 level. In case the dip continues, we will see traders targeting long term moving average for entry around 1.5900 level. Break below that will indicate reversal of trend in long term as well. RSI is just below 62 and has more than enough space for an extended upward move.

Looking at the moving averages used in daily charts, it can be seen that the long term and medium term moving averages are above the current USD/CHF level and short term moving average is below it. The traders will primarily look to enter around the level where the medium term and long term moving averages are at the moment and also crossing each other. Such level can be seen around 0.9130. RSI is just above 46 and seems to have more than enough space for USD/CHF to take an extended dip.

Looking at the moving averages used in daily charts, it can be seen that the short term and medium term moving averages are below the current AUD/USD and long term moving average is above it. The traders will primarily look to enter around the short term moving average which is around 1.0400 level and the long term traders will look to buy around medium term moving average which is around 1.0350  level. RSI is just above 52 and seems to play no part at the moment.