Direct from the desk of Dane Williams.
To tackle this question, we need to consider my risk focused approach to forex trading.
I know I keep saying it, but it really is crucial for traders to adhere to strict risk management principles.
The most common advice given is to risk no more than 2% of your account on any single trade.
With a $10,000 account, this means risking no more than $200 per trade.
Now, let's set a reasonable profit target.
To aim for consistent growth, traders often use a 1:3 risk:reward ratio meaning that in this case, targeting at least a 6% profit on each trade.
So, if we assume one positive trade per day, that would be a gain of at least $600 on a $10,000 account.
However, as I’m sure you very well know by now, you’ve gotta understand that not every trade will be a winner.
Losses are an inevitable part of trading.
Yep, even for the most experienced professional traders!
Once again, the key to sustained success is effective risk management.
On a $10,000 account, instead focus on using stop-loss orders to limit potential losses on each trade.
For instance, if you set a 2% risk per trade as mentioned earlier, you could place your stop-loss at a level where your potential loss is always limited to $200.
Always start with your downside risk and only then can you work out how much money you can make per trade and thus potentially per day overall.
Moreover, diversifying your trades across different currency pairs can help spread risk.
This means you're not solely reliant on the performance of one currency within your pairs, reducing the impact of a single bad trade.
Another crucial aspect of risk management is position sizing.
Adjust the size of your trades based on the stop-loss level to ensure that you're not risking more than 2% of your account on any trade.
This way, you can weather losing streaks without blowing your account.
Furthermore, keep a close eye on your trading psychology.
Emotions can often lead to impulsive decisions and deviations from your trading plan.
Staying disciplined and sticking to your predetermined risk and profit targets is paramount.
Remember that no matter what your forex signal provider tells you, trading is not a guaranteed path to daily profits.
The forex market can be unpredictable, and there will be days when losses occur.
The goal is not to make money every single day but to manage risk effectively and aim for consistent, sustainable gains.
No matter the time it takes for this to occur.
You can only play within the conditions that the market gives you.
Therefore, with a $10,000 account, you can aim for a daily profit of at least 6% while risking no more than 2% on each trade.
However, for risk of sounding like a broken record, successful trading involves more than just making money in a single day, week or even year.
It's about preserving capital through prudent risk management strategies forever.
Stay disciplined, diversify your trades and manage your emotions and you’ll follow the right path.
Best of probabilities to you.
PS. And before anyone asks, yes, the answer is exactly the same for crypto traders with $10,000 accounts.
Posted Using LeoFinance Alpha
6% seems like quite a bit per day and I don't think it comes that often though right? Also, don't trades sometimes take days to play out.
If you use the suggested risk of 2% per trade and take trades with a 1:3 risk to reward ratio, then that 6% is just the 1 trade.
How long that takes to get a setup and have it play out to completion will depend on your strategy.
Yes, it could be days.
But there are plenty of strategies that use tighter stops and thus a 6% target (or 2% stop for that matter), may not take days to hit.
That is cool. But what about scalpers, is the rule still the same for them or it changes
It all depends on the risk:reward of their scalping strategy.
But a word of warning...
From my experience, I'd say 99.9999% of scalpers lose money.
They either don't use stops and end up wiping all their little wins with the 1 loser that completely goes against them.
Or their 1:1 risk to reward just isn't sustainable long term.
Oh that is very true
Wow. I am a scalper though but it will really be risky for any scalpers not to be using stop loss. It does not sound cool but yes a lot of people make that mistake
!pizza