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![]() | Hi guys, submitted by getmrmarket to Forex [link] [comments] I have been using reddit for years in my personal life (not trading!) and wanted to give something back in an area where i am an expert. I worked at an investment bank for seven years and joined them as a graduate FX trader so have lots of professional experience, by which i mean I was trained and paid by a big institution to trade on their behalf. This is very different to being a full-time home trader, although that is not to discredit those guys, who can accumulate a good amount of experience/wisdom through self learning. When I get time I'm going to write a mid-length posts on each topic for you guys along the lines of how i was trained. I guess there would be 15-20 topics in total so about 50-60 posts. Feel free to comment or ask questions. The first topic is Risk Management and we'll cover it in three parts Part I
Why it mattersThe first rule of making money through trading is to ensure you do not lose money. Look at any serious hedge fund’s website and they’ll talk about their first priority being “preservation of investor capital.”You have to keep it before you grow it. Strangely, if you look at retail trading websites, for every one article on risk management there are probably fifty on trade selection. This is completely the wrong way around. The great news is that this stuff is pretty simple and process-driven. Anyone can learn and follow best practices. Seriously, avoiding mistakes is one of the most important things: there's not some holy grail system for finding winning trades, rather a routine and fairly boring set of processes that ensure that you are profitable, despite having plenty of losing trades alongside the winners. Capital and position sizingThe first thing you have to know is how much capital you are working with. Let’s say you have $100,000 deposited. This is your maximum trading capital. Your trading capital is not the leveraged amount. It is the amount of money you have deposited and can withdraw or lose.Position sizing is what ensures that a losing streak does not take you out of the market. A rule of thumb is that one should risk no more than 2% of one’s account balance on an individual trade and no more than 8% of one’s account balance on a specific theme. We’ll look at why that’s a rule of thumb later. For now let’s just accept those numbers and look at examples. So we have $100,000 in our account. And we wish to buy EURUSD. We should therefore not be risking more than 2% which $2,000. We look at a technical chart and decide to leave a stop below the monthly low, which is 55 pips below market. We’ll come back to this in a bit. So what should our position size be? We go to the calculator page, select Position Size and enter our details. There are many such calculators online - just google "Pip calculator". https://preview.redd.it/y38zb666e5h51.jpg?width=1200&format=pjpg&auto=webp&s=26e4fe569dc5c1f43ce4c746230c49b138691d14 So the appropriate size is a buy position of 363,636 EURUSD. If it reaches our stop level we know we’ll lose precisely $2,000 or 2% of our capital. You should be using this calculator (or something similar) on every single trade so that you know your risk. Now imagine that we have similar bets on EURJPY and EURGBP, which have also broken above moving averages. Clearly this EUR-momentum is a theme. If it works all three bets are likely to pay off. But if it goes wrong we are likely to lose on all three at once. We are going to look at this concept of correlation in more detail later. The total amount of risk in our portfolio - if all of the trades on this EUR-momentum theme were to hit their stops - should not exceed $8,000 or 8% of total capital. This allows us to go big on themes we like without going bust when the theme does not work. As we’ll see later, many traders only win on 40-60% of trades. So you have to accept losing trades will be common and ensure you size trades so they cannot ruin you. Similarly, like poker players, we should risk more on trades we feel confident about and less on trades that seem less compelling. However, this should always be subject to overall position sizing constraints. For example before you put on each trade you might rate the strength of your conviction in the trade and allocate a position size accordingly: https://preview.redd.it/q2ea6rgae5h51.png?width=1200&format=png&auto=webp&s=4332cb8d0bbbc3d8db972c1f28e8189105393e5b To keep yourself disciplined you should try to ensure that no more than one in twenty trades are graded exceptional and allocated 5% of account balance risk. It really should be a rare moment when all the stars align for you. Notice that the nice thing about dealing in percentages is that it scales. Say you start out with $100,000 but end the year up 50% at $150,000. Now a 1% bet will risk $1,500 rather than $1,000. That makes sense as your capital has grown. It is extremely common for retail accounts to blow-up by making only 4-5 losing trades because they are leveraged at 50:1 and have taken on far too large a position, relative to their account balance. Consider that GBPUSD tends to move 1% each day. If you have an account balance of $10k then it would be crazy to take a position of $500k (50:1 leveraged). A 1% move on $500k is $5k. Two perfectly regular down days in a row — or a single day’s move of 2% — and you will receive a margin call from the broker, have the account closed out, and have lost all your money. Do not let this happen to you. Use position sizing discipline to protect yourself. Kelly CriterionIf you’re wondering - why “about 2%” per trade? - that’s a fair question. Why not 0.5% or 10% or any other number?The Kelly Criterion is a formula that was adapted for use in casinos. If you know the odds of winning and the expected pay-off, it tells you how much you should bet in each round. This is harder than it sounds. Let’s say you could bet on a weighted coin flip, where it lands on heads 60% of the time and tails 40% of the time. The payout is $2 per $1 bet. Well, absolutely you should bet. The odds are in your favour. But if you have, say, $100 it is less obvious how much you should bet to avoid ruin. Say you bet $50, the odds that it could land on tails twice in a row are 16%. You could easily be out after the first two flips. Equally, betting $1 is not going to maximise your advantage. The odds are 60/40 in your favour so only betting $1 is likely too conservative. The Kelly Criterion is a formula that produces the long-run optimal bet size, given the odds. Applying the formula to forex trading looks like this: Position size % = Winning trade % - ( (1- Winning trade %) / Risk-reward ratio If you have recorded hundreds of trades in your journal - see next chapter - you can calculate what this outputs for you specifically. If you don't have hundreds of trades then let’s assume some realistic defaults of Winning trade % being 30% and Risk-reward ratio being 3. The 3 implies your TP is 3x the distance of your stop from entry e.g. 300 pips take profit and 100 pips stop loss. So that’s 0.3 - (1 - 0.3) / 3 = 6.6%. Hold on a second. 6.6% of your account probably feels like a LOT to risk per trade.This is the main observation people have on Kelly: whilst it may optimise the long-run results it doesn’t take into account the pain of drawdowns. It is better thought of as the rational maximum limit. You needn’t go right up to the limit! With a 30% winning trade ratio, the odds of you losing on four trades in a row is nearly one in four. That would result in a drawdown of nearly a quarter of your starting account balance. Could you really stomach that and put on the fifth trade, cool as ice? Most of us could not. Accordingly people tend to reduce the bet size. For example, let’s say you know you would feel emotionally affected by losing 25% of your account. Well, the simplest way is to divide the Kelly output by four. You have effectively hidden 75% of your account balance from Kelly and it is now optimised to avoid a total wipeout of just the 25% it can see. This gives 6.6% / 4 = 1.65%. Of course different trading approaches and different risk appetites will provide different optimal bet sizes but as a rule of thumb something between 1-2% is appropriate for the style and risk appetite of most retail traders. Incidentally be very wary of systems or traders who claim high winning trade % like 80%. Invariably these don’t pass a basic sense-check:
How to use stop losses sensiblyStop losses have a bad reputation amongst the retail community but are absolutely essential to risk management. No serious discretionary trader can operate without them.A stop loss is a resting order, left with the broker, to automatically close your position if it reaches a certain price. For a recap on the various order types visit this chapter. The valid concern with stop losses is that disreputable brokers look for a concentration of stops and then, when the market is close, whipsaw the price through the stop levels so that the clients ‘stop out’ and sell to the broker at a low rate before the market naturally comes back higher. This is referred to as ‘stop hunting’. This would be extremely immoral behaviour and the way to guard against it is to use a highly reputable top-tier broker in a well regulated region such as the UK. Why are stop losses so important? Well, there is no other way to manage risk with certainty. You should always have a pre-determined stop loss before you put on a trade. Not having one is a recipe for disaster: you will find yourself emotionally attached to the trade as it goes against you and it will be extremely hard to cut the loss. This is a well known behavioural bias that we’ll explore in a later chapter. Learning to take a loss and move on rationally is a key lesson for new traders. A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; it doesn’t care whether you make money or not. Bruce Kovner, founder of the hedge fund Caxton Associates There is an old saying amongst bank traders which is “losers average losers”. It is tempting, having bought EURUSD and seeing it go lower, to buy more. Your average price will improve if you keep buying as it goes lower. If it was cheap before it must be a bargain now, right? Wrong. Where does that end? Always have a pre-determined cut-off point which limits your risk. A level where you know the reason for the trade was proved ‘wrong’ ... and stick to it strictly. If you trade using discretion, use stops. Picking a clear levelWhere you leave your stop loss is key.Typically traders will leave them at big technical levels such as recent highs or lows. For example if EURUSD is trading at 1.1250 and the recent month’s low is 1.1205 then leaving it just below at 1.1200 seems sensible. If you were going long, just below the double bottom support zone seems like a sensible area to leave a stop You want to give it a bit of breathing room as we know support zones often get challenged before the price rallies. This is because lots of traders identify the same zones. You won’t be the only one selling around 1.1200. The “weak hands” who leave their sell stop order at exactly the level are likely to get taken out as the market tests the support. Those who leave it ten or fifteen pips below the level have more breathing room and will survive a quick test of the level before a resumed run-up. Your timeframe and trading style clearly play a part. Here’s a candlestick chart (one candle is one day) for GBPUSD. https://preview.redd.it/moyngdy4f5h51.png?width=1200&format=png&auto=webp&s=91af88da00dd3a09e202880d8029b0ddf04fb802 If you are putting on a trend-following trade you expect to hold for weeks then you need to have a stop loss that can withstand the daily noise. Look at the downtrend on the chart. There were plenty of days in which the price rallied 60 pips or more during the wider downtrend. So having a really tight stop of, say, 25 pips that gets chopped up in noisy short-term moves is not going to work for this kind of trade. You need to use a wider stop and take a smaller position size, determined by the stop level. There are several tools you can use to help you estimate what is a safe distance and we’ll look at those in the next section. There are of course exceptions. For example, if you are doing range-break style trading you might have a really tight stop, set just below the previous range high. https://preview.redd.it/ygy0tko7f5h51.png?width=1200&format=png&auto=webp&s=34af49da61c911befdc0db26af66f6c313556c81 Clearly then where you set stops will depend on your trading style as well as your holding horizons and the volatility of each instrument. Here are some guidelines that can help:
For example if you stop understanding why a product is going up or down and your fundamental thesis has been confirmed wrong, get out. For example, if you are long because you think the central bank is turning hawkish and AUDUSD is going to play catch up with rates … then you hear dovish noises from the central bank and the bond yields retrace lower and back in line with the currency - close your AUDUSD position. You already know your thesis was wrong. No need to give away more money to the market. Coming up in part IIEDIT: part II hereLetting stops breathe When to change a stop Entering and exiting winning positions Risk:reward ratios Risk-adjusted returns Coming up in part IIISqueezes and other risksMarket positioning Bet correlation Crap trades, timeouts and monthly limits *** Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer. |
![]() | Vandal RP 18+ | Freshly Wiped Economy 8/21 |TRAP HOUSE'S|Radial Menu's | GANG TERRITORIES | Car Finance & Repo |NEW-HOUSE FINANCING| Mayor | Surgeons | MOONSHINE | Skills | Player Shops | Heists & Missions |DRIFTMODE |300+ car list | BOUNTY HUNTERS | Crafting | CAD/MDT |Mechanic Workorder Tablet| Active Dev |Drag Speedway | Drift Track submitted by BennysMotorWorx to GTARP [link] [comments] https://preview.redd.it/1q84daatnt861.png?width=512&format=png&auto=webp&s=a0b4dd0c59b38a8073eb0f4c066ec057b166943a Vandal city is a Semi-Whitelist sever, meaning you can come check out the city and all the amazing features, if you decide to stick around fill out the whitelist app to apply for all the different orgs/pd/ems and mechanics. People come and go but the stories and impressions will last a lifetime! Join Vandal City RP today! website- https://vandal.city Discord-https://discord.com/invite/pygu6k9 Twitter- https://twitter.com/vandalcityrp Facebook-https://www.facebook.com/VandalCityRP YouTube-https://www.youtube.com/channel/UC7VCzAfH6UyyoRiu9gIegtg?view_as=subscriber ~update~ *new car trailers* *NEW CUSTOM CAR DEALERSHIPS** **NEW Dragstrip and Drift Tack w/ Driftscore** *NEW* TRAPHOUSE *180 new custom wheels* *shoot range to increase stats* *New way of Planting* *player shop search menu with custom banners* *new drug Herion* *New Heist-Port of Los Santos* *NEW- Radial Menu's for PD,EMS,Mechanics,Vehicle,crim, and clothes.* *Recently updated UI* *Recently Wiped Economy! 8-21-2020* HOME OF BOUNTYHUNTER & PRISON BREAK HEIST BOUNTY HUNTER-As a bounty hunter you will track down and capture fugitives who are wanted for large sums of unpaid fines. Once in custody, bring them to 1 of 2 courthouses to be processed. If successful you will receive half of the bounty and the PD gets the other half. https://preview.redd.it/jzim72dvnt861.png?width=320&format=png&auto=webp&s=aa1ce247ecd1cb7ac96c0678bcc7dbce96a56c63 PRISON BREAK-Something we have been working on for a bit is now ready to be released. This is 100% Original Vandal content. Unless you and your team are the type to plan and prepare, don't expect it to be easy. Getting help from other inmates may increase your chances of escape, but what awaits you on the outside is a whole other ball game since responding cops will be on high alert. https://preview.redd.it/brdvk0cwnt861.png?width=960&format=png&auto=webp&s=62df80ab14d443c5f6d26632d59ecc152a224f4e GANG TERRITORIES- Gain influence on territories by selling drugs,killing cops or other gangs, by having greater numbers in the zone, each zone has a perk like drug lab or money wash, police gain influence by killing, arresting, or having greater numbers. Think you have what it takes to be the top gang in the city? VANDAL CITY MOONSHINE RUNNERS- Want to run Moonshine? you will need a still so you can Cook,Ferment,and distill, and then sell the fisnished product to Bar owners for a cut. The only people who have access to do shine runs are club/bar employees. The club/bar will get a piece of every moonshine run that's completed but be warned, police aren't the only thing to watch out for when doing these runs. https://preview.redd.it/qfcqcdzxnt861.png?width=981&format=png&auto=webp&s=d208dd47e36b49e73836a02ddbfef26b26b8e7af TRAPHOUSE- • Sells a random amount of each drug type every 10-20 minutes • Can be owned by one person or a gang • Drugs sold from a Traphouse receive the MAXIMUM price (unlike street sales which flucuate) • For every cop that is on, sale prices increase by 5% (max 25%) • The more drugs you put in a Traphouse, the higher your chance of selling bulk amounts • Traphouses activate with more than 10 people online (able to be taken, starts selling drugs) • Traphouses do NOT call the cops when being taken • Traphouses only appear on the mini-map. Icon is a little cocaine bag and when being taken, will pulsate • There is a very small chance a Traphouse notifies police that it is active • There are a total of 5 Traphouses (for now) • To take a traphouse, you must be armed and hold it for 10 minutes • Dying or leaving the area will cancel the takeover • A successfully capped Traphouse cannot be re-taken for a period of 20 minutes Vandal City now has their own radio station, when your in the city listen for all the top hits,news,local business ads, giveaways and more! SERIOUS ROLEPLAY PROPERTIES with purchasable FURNITURE Crafting Player run businesses casino More clothing options Legal Jobs that reward unique crafting items Balanced Economy Black Market Pink Cage Motel! Unique crafting items Custom Locations/Cars Debit Card Bank & Store Robberies Chop Shop House burglaries Multiple Drugs (Weed/Coke/Meth) Events (PlayeStaff) 300+ car list Easy to use Race Mod Drifting Mod Skills • Stamina - As you run or swim, you will gain stamina which allows for longer running and swiming • Strength - You gain strength by working out at the gym. This will unlock perks along the way (being able to lift someone up at 50%) • Lung Capacity - As you swim under water, you gain more lung capacity over time • Shooting - The more you shoot the more you gain this skill. Same perks as the GTA game (check their wiki) • Driving - Gain this by driving faster than ~35mph. Same perks as the GTA game (check their wiki) • Cooking - As you cook, you will gain this skill which will unlock better food recipes to give higher nutrition points • Nutrition - Gain nutrition from eating good foods. The higher your nutrition, the faster you gain physical skills like Stamina and Strength. • Hunting - Gain this everytime you slaughter an animal. Higher skills will increase yields. At 25% you gain the ability to get leather from the animal. At 75% you unlock the Muskett at the weapon shop • Fishing - Gain this skill by fishing. The higher your skill, the better chance you have at doubling your reward (catch 2 instead of 1) • Citizen - This one you gain just by being on. For every 10%, you gain 1% on every legal job goods you sell. Committing crimes or going to jail lowers this. • Criminal - Comitting criminal acts increases this. Higher Criminal score means not being able to use the legal gunshop but you also get perks like being able to wash money at a better rate, depending. Going to jail will lower this drastically. • Drugs - This skill is gained every time you successfully sell drugs to a local. For every 10% skill, you gain 1% on every drug you sell • Planting - This skill is gained every time you successfully grow something. The higher the skill level, the higher your max yield can be *Dying causes a loss of 25% for Stamina, Strength, Nutrition and Lung Capacity Player Owned Shops • Shops are purchased by going to the “Buy Shops” icon • Shops can be stocked with any item. • Shops can be robbed of 10% of the money in the shop • Robbing a shop requires actually breaking the safe (with any weapon) • Robbery cooldown is many many hours for player owned shops. Persists through restarts/crashses. • Shops can order some items at a reduced cost but must wait several hours for the shipments • All shops pay a daily rent (currently $500) LSPD/BCSO (Whitelisted) EMS/LFSD (Whitelisted) Mechanic (Whitelisted) Gangs (Cartel, Mafia, MC, etc) Boxer Fishing Fueler Lumberjack Miner Reporter Security Hunter Butcher Tailor Taxi Trucker BOUNTY HUNTER! SHOPS/GAS STATIONS There are shops and gas stations around the map where you will need to refuel your vehicle or buy things like repair kits. ILLEGAL JOBS You can do any number of things from robbing stores, chopping cars, selling drugs and burglarizing houses. There are also criminal gangs and businesses that are player run that make doing some of these activities easier. GANG PERKS The Lost MC guys have as 25% increase on store robbery payouts, called the “Intimidation Factor”. The Mafia have a “No Witnesses” perk which means their gunshots are hidden from police because no locals call the cops on these guys. This is just a couple examples of the custom additions we’ve made. DRUGS The big thing with some cities is that all of their drugs are usually locked to whitelisted orgs. Here you can create 3 types of drugs with uniquely different ways of manufacturing each type. https://preview.redd.it/dxekyyy2ot861.jpg?width=1433&format=pjpg&auto=webp&s=be9a717c87c97ea862e251923d67bbaa10fdc71d https://preview.redd.it/gogigft7ot861.jpg?width=1522&format=pjpg&auto=webp&s=860d3696b66cbcda825fd52a77612bd4e638058e https://preview.redd.it/aoiksa69ot861.jpg?width=1910&format=pjpg&auto=webp&s=e1b8364f9e42df0668dd2ef6123012bfbe0c5401 https://preview.redd.it/c949eoqcot861.jpg?width=1459&format=pjpg&auto=webp&s=a64321dc08a3d5a000f23c0210e42285d7e48927 https://preview.redd.it/ff04957eot861.jpg?width=1861&format=pjpg&auto=webp&s=6dd2b40728f1ca0cd920c2b14283443ab3b7ef6b https://preview.redd.it/wtacmrafot861.jpg?width=1584&format=pjpg&auto=webp&s=6582439375c62333138a8eecefe15dc8be53657b https://preview.redd.it/pfyh7l8hot861.jpg?width=1024&format=pjpg&auto=webp&s=450ee62eeba704cee918f505228a7fd0f3371c01 https://preview.redd.it/zjqcl86jot861.jpg?width=1571&format=pjpg&auto=webp&s=46ced4ef43b0c7b7ddb256b374faed3230950351 https://preview.redd.it/hfqad19pot861.jpg?width=1920&format=pjpg&auto=webp&s=dc63128cea07693f7fd7602be7583292f9986e05 https://preview.redd.it/ep2eo0hrot861.jpg?width=1920&format=pjpg&auto=webp&s=2ae911862b113872ca3bf2ca19883e4a16dd9d75 https://preview.redd.it/ks0rhjluot861.jpg?width=1920&format=pjpg&auto=webp&s=0802cf146a3baa896d455c7495dee2339fca5d3a |
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