Rule # 1: Expectations about what is not to be expected

In the current environment, you have to accept that anything can happen.

Holding positions over the weekend can become extremely risky, as there is likely to be a large gap after the market reopens on Monday. Even holding overnight positions on instruments like Indices (inactive 24/5) is much risky than usual.

Therefore, traders should consider their position size and overall risk level if they still want to hold orders over the weekend or overnight.

Rule # 2: Define your limit

You need to determine what level of risk you are willing to accept for each position individually and on your trading account as a whole. This will make you less likely to overtrading or risk the market more than intended.

Example 1: Mr. Teo is a cautious trader. Therefore, he sets his maximum risk to willingness to risk each position at 0.2% and maximum risk for the trading account at 1%. This means that he cannot lose more than 1% of his total balance, even if all of his positions are stopped (however, in the case of negative prices, the overall loss can be large. more than 1%).

Example 2: Anh Ti prefers to accept the risk and sets the maximum risk per trade to 1% and the maximum risk for his account to be 5%. Therefore, he is willing to lose 1% of his total account balance per trade and is willing to lose up to 5% of his total account balance on all positions combined.

You should have those rules before you start trading and calculate the risk you will bear before entering your orders!

Rule # 3: Know when to take a break

Trading can be a headache, especially during times like this. Therefore, it is important for a trader to know when you have reached your limit and rest.

For example, if you've reached the maximum amount for consecutive losses or the maximum drawdown you are willing to accept on your account, you can take a break and reconsider your approach. before starting trading again.

This doesn't mean giving up trading, but simply thinking about the past days and figuring out what happened and what you could do differently:
  • Maybe there are only some changes needed to your strategy either
  • You are trading an unsuitable instrument, either
  • Do you need to revise your risk management rules?
Rule # 4: Sizing positions

When the market is flat, traders can place tight stop-loss orders and still execute profitable trades.

However, when the market is moving as fast as it is now, you should be aware that placing your stop loss too close to your entry point can send you off very quickly, especially if the spread in the market is wider than normal conditions.

To ensure you don't take undue risk by moving your stop loss too far from the entry point, you can reduce the size of your position to reduce the amount of risk you are taking.

Example: Anh Ti is considering buying GBP / USD at 1.16 with a stop loss at 1.1450. He usually places his SL 50-100 pips away from his entry point, but he thinks under current conditions he needs to stop loss as far as 150 pips from his entry point. Therefore, in order to ensure that you do not exceed your set risk, you will reduce the size of your position so that the maximum risk remains at 1% of your account balance for this trade, according to the rule of law. your personal risk management.

Rule # 5: Explore different markets

Traders have a wide variety of trading tastes - some prefer to trade in quiet market conditions, while others prefer fast-moving markets like rollercoasters.

If you focus on just one asset class or just a few currency pairs, then it is time to look at other tradable things. Volatility has increased across all asset classes, but if you scan through all the available trading instruments you can find some places where volatility has yet to reach the ceiling