What's the difference between analysis and trading?
Analysis says what might happen; trading says what you'll do when it does, with size and stops attached. Beginners are often good analysts and poor traders because the two use different skills.
How did you cross from one to the other?
- when you realised a correct forecast didn't make money
- the first time you planned risk before direction
- what you'd teach a beginner about the gap
The position sizing guide is where analysis becomes trading.
Background: Position sizing: how to risk a fixed percentage per trade
How much you trade matters more than where you enter. A step-by-step method for sizing positions from your stop-loss and the amount you are willing to lose.
How do I calculate lot size from risk?
Divide the amount you are willing to lose by the stop distance in pips multiplied by the pip value per lot. For $50 risk, a 25-pip stop and $10 per pip per lot, that is 0.20 lots.
What is the 1% rule in trading?
A guideline to risk no more than 1% of the account on any single trade, so a losing streak doesn't cause a drawdown you can't recover from. It is a starting point, not a guarantee.
Comments
Log in to join the discussion. Comments follow the community guidelines.
Log in to commentLoading comments…