Indicators and EAs in MT4

3 in One

Here's a little secret... the most important element in the market is not the news, it is the market action itself. Everything else is secondary. In my new video I explain exactly how we look at the market and how you can benefit from looking at the market the same way.

The new video is only four minutes long and I think you'll find it fresh, timeless and interesting.

The simplicity speaks for itself.

How to make money in crude oil

How Much To Risk Per Trade? - The 2% Rule

I recently got asked the question, how much should one risk per trade in forex? This is a good question, my recommended answer is to keep your risk under 2%, that way even if you get a losing streak of three trades in a row you only draw down your account by 6%. For even safer trading or for learners of the Forex Market I recommend even keeping the risk level under 1%.

Risk is an important part to asses in all investing, know your risk before opening any position that way you can deal with any losses that may occur in this business.



The 1% Rule

While no one wants to experience a loss on their account, it is an inevitable part of scalping. Because of this, it is always important to have a plan of action to manage risk before entering into a trade. While placing a stop is important, traders should also consider the 1% rule. This means that traders should never risk more than 1% of their account balance on any one trading idea. That means using the math above, if you are trading a $10,000 account you should never risk more than $100 on any one positions.

The 1% rule can also be coupled with a favorable risk reward ratio. Using a 1:2 setting, this means if we risk 1% in the event of a loss, at minimum we should look to close our trades out for a 2% profit. This would translate into a $200 profit on a $10,000 account balance. Now that you are familiar with the 1% rule, let’s look at our next risk management tip.



The 5% Rule

While no one wants to lose 1% of their account balance on any one trade idea, it is also beneficial to review the maximum exposure you have for your TOTAL account balance. The 5% rule reminds scalpers to never have more than 5% of their total account balance at risk across all trades. I also recommend this as a final cutoff point for trading. Meaning if you lose more than 5% in one day, it is probably best to call it quits and look to pick up trading again when the market is more favorable.

To put this into perspective a scalper with a starting balance of $10,000 on 5 consecutive open positions, at 1% risk per trade , your balance would still have $9500 remaining at the end of the day. This is critical because even on your worst day, you can still come back tomorrow and pick up your trading strategy! Also this rule can prevent revenge trading and accruing even more losses.



Risk Management

To help traders control and manage their risk, programmers at FXCM have created a simple indicator to help decipher how much risk is being assumed on any one particular trade. Once added to Marketscope 2.0, the FXCM Risk Calculator, as depicted above, has the ability to help a trader calculate risk based off of trade size and stop levels.

We walk through the application, as well as how to manage risk in several videos embedded into the brainshark medium. After clicking on the link below, you’ll be asked to input information into the ‘Guestbook,’ after which you’ll be met with a series of risk management videos along with download instructions for the application.

This cncludes the 8th and final installment of The Definitive Guide to Scalping.I hope you have enjoyed this series, and if youhavemissed any of the previous editions of this scalping guide you can catch up on all the action with the previous articles linked below.

Question - Should I Hold My Trade Over the Weekend?

5 Reasons Why Trends Are Your Friend?

• Easier
• Higher Probability
• Predictable
• Offers good risk to reward
• Largest trending market in the world

Have you heard the saying that trends are your friend. Well there is a lot of truth to that saying, let me share 5 attributes to why this statement is true for all traders.

What is Price Action?

A common beginner question to trading is what exactly is Price Action? Well, good question, let me sum it up for you.

Why Keeping Your Trading Simple is Important?

Introduction into the value of keeping your trading plan and trading practices as simple as possible. I will delve into discussions on how some traders fall into the trap of complicating a strategy that already works and how also to avoid doing it yourself. Keep it simple, keep it real and lastly keep it profitable.

How to profit from Bollinger Bands

Developed in the 1980s by John Bollinger, this oscillator is a technical indicator that incorporates the idea that volatility is dynamic, so the bands adapt as volatility increases and decreases. The tool uses a moving average with volatility bands placed above and below it. This provides the trader with a relative definition of high and low.

What Are Bollinger Bands?

Bollinger Bands can be used to identify W-Bottoms and M-Tops and help determine the strength of a trend. They can also help traders easily recognize highs and lows and can be used to find overbought and oversold areas. Since they are dynamic, they can be used on different securities with the standard settings.

Bollinger Bands are made up of a set of three bands that are plotted in relation to the security’s price action. The middle band is typically a simple moving average set at 20 periods. The outer bands are normally set two standard deviations above and below the middle band. If the price action becomes more volatile, the bands will widen. If volatility decreases, the bands will contract and move closer to the average.

W-Bottoms And M-Tops

Arthur Merrill, author of Behaviors of Prices on Wall Street, identified 16 classic chart patterns with a basic W shape and 16 classic chart patterns with a basic M shape. Bollinger Bands can be used to help spot these patterns. If the Bollinger Bands confirm a W-Bottom or M-Top, it could signify a potential breakout and possible trend reversal.

Overbought And Oversold

According to Bollinger, the bands should contain a majority of the price action, which means that a move outside of the bands should be considered significant. Generally, as the prices move closer to or break through the upper band, the market could be considered overbought and as the prices move down to or break through the lower band, the market could be considered oversold.

John Bollinger Webinar on Bollinger Bands® and Japanese Candlesticks

In this hour long webinar John Bollinger teaches the basics of Bollinger Bands and then discusses candlestick charts and how Bollinger Bands can be combined with Japanese candlesticks to provide more powerful analysis.

New And Advanced Ways To Trade With Bollinger Bands

Steven Primo

Steven Primo has been actively involved in trading the markets for over 32 years. His trading tenure began in 1977 when he was hired to work as a Floor Reporter, or "runner", on the floor of the Pacific Stock Exchange. Primo reached the pinnacle of his floor-trading career when he became a Stock Exchange Specialist for Donaldson, Lufkin, and Jennrette. As a Specialist he was responsible for making markets in over 50 stocks, a position Primo held for 9 years. Primo left the Stock Exchange floor in 1994 to focus on managing money and to teach his own unique approach to trading the markets. Scores of students, from beginner to advanced levels, have gone on to become successful traders after being introduced to Primo's proprietary methods of trading.