Now, the first consideration when trading the forex market should be your ris.
Now, we've got the perfect tool to make sure you control risk on every trade.
Now, I started my trading career almost thirty years ago in the trading pits in the city of London And I vividly remember the first thing my old boss said to me when passing my exams, and into the trading pits with the very first time.
He said to me, “Andrew don't lose the bank's money”; wasn't go make a fortune, it was don't lose.
And it was that very first lesson that I had thirty years ago that still resonates with me today.
Now, of course we all know that losses are an integral part of trading and no honest trader will ever tell you that they don't have losses.
But the issue I want to talk to you today about is risk.
Every trader you take in the market has risk.
Trading is a risk business, and that's absolutely fine.
But far too many traders fail in this business because they don't appreciate risk.
And they don't know how to control it and manage it to their advantage.
Now, some of you will have seen my previous video already, the Albert Einstein's theory of the eight wonder of the world, and that's the power of compounding.
For those that have not seen it had a chance to watch it.
I encourage you to do so now.
The link is above this video here.
Now, for those that understand the concepts of the compounding theory, this video will be very useful for you.
So as personal trainers, we appreciate that in order to achieve a long-term success, we need to understand and implement the compound theory.
But understanding the compound theory is one thing.
How do we actually apply it in our Forex trading? Well, there's a whole bunch of calculations that we need to work out in order to fully implement the compounding approach.
Ultimately you need to calculate the size of each trade based on a number of ever-changing variables.
For instance, the value of a lot or the contract differs for one pair to the next.
You have to take into consideration the constantly changing balance of the funds that you have in your trading account.
You have to consider the predetermined percentage risk being applied to each trade.
A quarter percent, half percent, one percent or whatever that is.
Now, the size of each trade is also dependent on where your stop is placed, and that as you record is the price level at which you would exit the market if the trade goes against you.
Of course you can use an Excel or spreadsheet or try to calculate all this manually but my god! That's a tedious, let alone a cumbersome task.
That's why we've developed in this tool, which is yours to download today absolutely free! Now, this tool will do all the hard work for you! It will work out the size of each trade based on all those variations that I've mentioned.
The percentage risk the stop loss levels and so forth.
So clearly by using the power of compounding will increase the dollar amount you're risking on in profitable periods but it will reduce it and protect your account in losing periods.
This tool will also enable you to look at risk in a different light, okay? You consider risk with respect and give it the respect than its so deserves.
It's the only way to consistently grow a trading account.
Now, this is a quick look on the screens, and I'll show you how this powerful tool is used in action.
Okay, so as we've said you can download this tool now from the link below.
It's an expert advisor or an EA that basically means, it works with mt4 or metatrader4 trader platforms.
So once you've downloaded and installed the tool it's gonna look something like this You'll see a green line and a red line.
The green line is your take profit target and the red line is your stop loss level.
And you can adjust these up and down wherever you want to place these exits in the market.
Now, the important thing to note here is the risk analysis.
We've put in a risk tolerance here of 1%.
Remember when your compounding, you want to have a predetermined risk amount on the accoun.
The risk percentage won't change the value of that dollar risk.
It will of course change as the account grows and indeed goes into drawdown so at the moment, we've got a 1% risk.
I can change this to half percent, quarter percent or whatever it is.
1 percent on this account which is a $10, 000 pretty much practice account.
1 percent on that is about $97.
I'll never be risking more than 1% if indeed I need to move my stop Let's stop loss level lower.
Then of course.
My lot size will change.
It's gonna work out the lot size that I need.
To maintain a 1% risk in this currency pair.
This is the Pound- Australian dollar We know one lot is 10 Australian dollars, but I'm working in US dollars.
So the tool works it out converts it all, tells you exactly what you need.
The lot size in this particular currency pair, the pound against the Australian dollar.
Now, if I was to click the buy entry it's gonna know that I want to place a buy order and these are gonna be by level so I can do that now and You'll see the buy order has been entered and the lot size is 0.
17 There's the symbol, prices down here below.
Ok now, I'll just close that out.
It is only a practice again.
Not to worry! So I've closed that trade.
If I was to place my profit target below where the current market prices, then the tool is gonna work out automatically; that I am going to be a seller.
And it would click to sell.
It would default as a sell again.
I can adjust my risk/reward ratios here I can move my profit target lower down.
I can move my stop loss level in again I'm only risking the 1% of the account still less than $100 less than 1% of 10, 000 okay, so my dollar risk is never going to change But the risk reward ratio will change as I move my profit targets away And my stop loss levels and up and down and so forth click to sell or place an order there as well another cool feature about this is we can also use a Pending orders so clicking pending order will allow you to treat the place in order away from the current market price So the current market price for example is trading at 76 58 if I want a pending order I will have a pending order above where the market prices at the moment basically means.
I'm a seller I want the market to rally up to my pending order where I'll sell take profit targets down here and the Stop-loss slightly above that swing high gives me the risk reward ratio 2.
06 to 1 it's going to trade point 1/8 of a lot Maintaining my maximum risk 1% of the account will never trade more than 1% So clicking the sole limit would place that order in as a cell you see a very very powerful tool keep you focused on the risk keep you focused on maintaining the same risk profile essential when you're Compounding in the markets and that is the only way to make long-term gains on a trading account Ok so don't you found that insightful and indeed useful you can download the tool free of charge from the link below? As always if you enjoyed the video give me a thumbs up if you didn't enjoy the video give me a thumbs down Leave a comment subscribe to the channel if you haven't already done, so make sure you follow us on Instagram Thanks for listening and till the next video goodbye.