No body is going to tell u their best strategy , this is the bitter truth of trading, develop ur own strategy and then think whether u can share ur successful strategy with anyone,answer is no
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Personally when I used to trade,
- All my trades wouldn't have me taking a bet with same amount. Trades that I was more sure off would have me take bigger positions and lesser otherwise. This way, the idea was that most of my trades would have me take position with much lesser capital, so if I loose money I loose small.
- Typically as a trader averaging downwards is not a good idea. So if you are wrong, it doesn't make sense to throw more money to bring down the average price to make it right.
- I would have a time stoploss. As a short term intraday trader, if the market doesn't move in a particular direction immediately, I would exit it.
- Reduce the trading size as much as possible when there are news events, most of the times they tend to chop you in both directions.
These are some of the things I used to follow. But I guess trading is a process of self discovery, figuring out what works the best for you.
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Majority of the people stop looking at their trading accounts when they are in Loss but same people will check stock prices 5 times a day when they are making profits.
So to minimize loss and maximize gains just do the reverse, Cut Your loss quickly and be ruthless about stop Loss Levels. But when in Profit, do not worry to loose paper profits, and do not hurry to move your stop loss to break-even price with slight movement in your favorable direction.
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A VERY SIMPLE STRATEGY TO INCREASE UR PROFIT AND REDUCED UR LOSSES
FIRST OF ALL DEFINE UR RISK FOR SINGLE TRADE. FOR EXAMPLE
MY CAPITAL IS OF 1LAKH SO I WILL TAKE A RISK OF MAXIMUM 2% i.e. 2000 RS PER TRADE.
NOW BEFORE TAKING A POSITION CALCULATE UR STOPLOSS AT THAT POINT AS PER UR RISK.
AND ACCORDING DECIDE THE STOPLOSS, STOPLOSS AND SIZE (LOTS) ARE INDIRECTLY PROPERTIONAL SO LARGER THE STOPLOSS SMALLER THE TRADE SIZE.AND VICE VERSA.
NOW ONCE UR TRADE IS SHOWING POSITIVE DIRECTION INCREASE UR SIZE, AND TRAIL UR STOPLOSSS, DONT EXIT UNTILL U SEE SOME SIGN OF REVERSAL.
IF THE TRADE DOESTNT WORK IN UR DIRECTION JUST EXIT WITH A 2% LOSS AND WAIT FOR THE NEXT OPPORTUNITY.
USING THIS STRATEGY U CAN GET 1 :3 RISK REWARD RATIO.
ALSO ONE GOLDEN RULE, NEVER TRADE A MOVING MARKET ALWAYS PLACE UR ORDER AT OPEN OF NEW CANDLE, IT CAN SAVE UR LOTS OF MONEY.
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One of the most important risk management factor is ‘Risk-Reward Ratio”. Mathematically, it’s the ratio of Risk (Money that could be lost), and Reward (Target Profit) for any particular trade. For Ex: If you are willing to risk 1000 Rupees for a target profit of 2000 Rupees, then your risk reward ratio comes to 1:2. Before adopting any trading strategy, it’s necessary to gauge its risk reward ratio for a long term. Most of the modern trading platforms have risk-reward ratio in their back-testing report. Risk Reward ratio of 1:2 is considered good for any trading strategy, and anything less than that can vanish your capital in the long term.
Let’s take an example to understand the significance of risk reward ratio. A trader has developed a Trading strategy with Success Rate of 40% (40 out of 100 trades ends up in profit). When he back-tested his system he found the average Risk Reward ratio for the period of 10 years comes close to 1:3. That means his profit his thrice than his losses in the winning trades. If he loses 1000 Rupees in 60 losing trades, and gains 3000 Rupees in 40 Profitable trades, then his overall profit would be (403000-601000) 60000 Rupees. It’s a good profit considering that only 40 out of his 100 trades are winners. However, we tend to ignore this fact and always try to improve the Success Rate instead of Risk Reward Ratio. Also newbie traders realize profits quickly and allow losses to grow, which makes risk reward ratio miserable.
Read more about the calculation of risk-reward ratio in the below link:
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