If You Can’t Follow Risk Management, Don’t Trade, let's talk about this
Risk Management is only skill that can Save you in this Brutal Market. And it's your Responsibility to Master it. Here are few tips from my side that I learned over time
• Scale in and Scale Out:
This is the technique I learned with experience and I can say that this is the one of the best way to manage your Risk to Reward Ratio. This is Risky for those who can't manage their Risk and I will never advise beginners to follow this.
→ According to this technique first thing that matters is grip on your Edge. When your Entry setup forms you go in with small risk e.g. 0.5% and when it starts to show strength and move in your direction start to scale in with same amount or lot you opened at first Entry but here your sl will be tight. If you risk is 0.5% in 1st Entry here your risk should be around 0.25% with the same lot size. One thing that matters is How you Put your Sl and how you master Sl placing, In next Thread we will discuss about that.
→ In the Same way if it looks like your setup isn't looking strong but you are in with 0.5% risk and market is ranging around Entry, you can start scaling out your position in small percentage. In this way if sl hits you will lose only 0.3% or something around that.
This is one of the best way to manage your R:R on low R:R setups
• Build Your Risk Rules:
→ Build your Risk Rules, like risking 1% to 2% in a Day. If you are high frequency Trader try to Minimize your Risk in Each Trade.
→ Don't go aggressive in your High Quality Setups. Keep the Risk Similar in Every Trade. Because a 40% Winrate Trader can become Profitable with managed Risk but one with 70% Winrate can't be profitable with bad Risk Management.
• Journal Your Risk Management Behavior:
→ If you stop journaling your Trades you will continue to start Revenge Trading and Irregular behaviors. You will Start to Break your Trading Rules and Eventually end up blowing Your Account.
(P.S. This Image is Ai generated)
