I lost $6,000 in a single day of trading because of improper risk
management and I do not want you to make the same mistake.
Welcome back to the channel, everybody.
My name is already and this is the moving average a show.
Or we talked about everything day trading to help you guys be better
and more profitable on a consistent basis.
A lot of new people when they get into day trading as they have
completely the wrong perception on how much money they're going to
make and how to mitigate their risk every single trade that you enter
has a potential downsides.
That is your risk of the money that you're willing to lose on a single
trade.
And the reward ratio.
The risk-to-reward ratio is very, very important, do not go one to
1121 is the worst.
That means for every $10 you're willing to make, you're willing to
risk $10, meaning that you would have to win over 50% of the time to
cover, that risk, reward ratio pushing it just slightly to a 1/2 to
completely mitigate that risk.
Meaning that to $10 losses in a row, would be covered by 112
Dollar win.
So let's jump right into the charts.
And let me show you exactly how I had the worst trading day I've ever
had.
Okay, we're looking at the German 30, the Dax index.
It's basically the German equivalent of the u.s.
30.
Now, at the time I was a RS.
I advocate that the RSI is the greatest thing ever.
You sell at 70 and you buy at 30 and this one thing, plus my risk
management was completely non-existent this screwed me over so hard
in.
This was the hardest lesson that I had to learn, but because of this
hard lesson, I am now a substantially better traitor.
And I'm here to help prevent you from having the same mistake.
So, let me show you what happened right here.
I saw the price start coming up.
I do not like to trade the market open because there's so much
volatility very long Wicks and it's just it's too Reckless for me.
So essentially I saw this high before I'm right here.
And I saw a high point on the RSI trading above 70 was like cool.
It's still early in the morning, I'm not going to go in on this trade.
I waited for the trade to go down for a few hours and then right here
the price hit the lowest point on the RSI at the 30 level.
And so I went in on a long position, right?
At the close of this candle right here.
The next candle started to print green and I was like, this is
amazing.
It's going to go long.
I was extremely happy.
I knew that I could make a couple hundred bucks on this trade.
As you can see right here, the trade started to go up.
I was very happy.
I was like, I'm the world's greatest day trader, and I'm going to be a
millionaire in the next week.
At this point right here, I was up approximately $113.
Then the price started to drop back down and I was like, that's okay.
The next candles going to print.
It's going to go green.
It started right here.
It started going up.
I was happy.
I was up about $120 and then it started to drop.
I was like, it's okay, it'll be fine.
The price will come down a little bit and then it'll shoot.
I was so wrong that looking at this makes me sick to my stomach.
As you can see right here, the trade started to go down further and
further and further and further all the way to here.
At this point, I was down a massive amount of money.
Then I saw this massively long Wick right here and I was like, cool.
This is the bottom, we're literally sitting at 14 on the RSI.
There's no way that it can go down from this.
So I got in on another position of the same size in a by.
I took this trade up, I was in profit and I was happy.
I was going to close it once this one got to break even and I was
going to walk away for the day, then my nightmare started the price
started to go down.
Both trades were negative and I eventually got margin called right
about here to trades almost $6,000 in one day and I was gutted.
This is what you get when you trade without a stop loss.
This is what you get when
You trade, without a specific risk-to-reward ratio how much money that
you're willing to risk and how much you're willing to gain.
You have to have specific parameters because if you don't, then you're
letting your emotional mind, makes the decisions.
And trust me when I say the drawdown that your mind is capable of
versus how much profits you're willing to take is so dramatically
different, it would blow your mind.
So, looking at this, in hindsight, I would have never traded it
whatsoever.
Knowing what I know now, but had I had proper risk management.
I would have got it in on this position.
I would have had a take profit level of, I don't know, the previous
highest high and a stop loss, and a nice comfortable range in
accordance to how much money that my soul is willing to lose this
easily would have hit my stop-loss.
I would have walked away from the trade, and I would have looked for
my next entry, but because I didn't have proper risk management, and,
because I had no stop losses, I had no take profits.
I just willy-nilly entered the market and figured I can
Judge went to get out and I was severely wrong had I just let this
play out.
I would have hit my stop loss, and they're like a couch that hurt, but
I know what I did wrong.
So, I know you probably already watched six or seven videos on proper
risk management, but I wanted to make this video a little bit
different and share a personal experience with you guys and let you
know how devastating it can be without the proper strategies steps,
and rules set into place for every single tray that you make after
this, I no longer place a trade without creating a stop loss at a take
profit before I hit that buy or sell button, I will not enter a trade
and I know a lot of you are saying to yourself right now, but already
I'll be fine.
Like if I don't have a stop loss, you know, I'll watch the price is
diligently and you know if it goes too far down I'll just close it.
Let me show you.
One example, really quick on why?
That's a bad idea.
This right here is gbpjpy at the beginning of February.
The
Here, everyone saw that, we were in a clear and concise downtrend.
So they were looking for short positions, all indicators, everything
that I was watching showed that it would be continuing on the
downside.
And then a news event, came out and in 5 minutes, this happened.
This one candle, right here, was 64 Pips in 5 minutes.
That's the time.
It takes to go to the bathroom.
If you went to the bathroom at this 5-minute candle, your account
would have been blown with.
No, stop loss, not only that.
But this price since February 4th has continued up time and time and
time again over and over and over going all the way up to right here.
You would have been so screwed, have your account, even had $1000000
in it and it was just a small trade, this would have margin called you
just to give you some perspective.
On a larger time frame here is that date.
Since that 164 pic 5 minutes,
Handle the price has gone up 869 Pips when everybody was thinking that
it was going to go down.
So I can't stress this enough.
Make sure you never ever place a trade without having a stop loss and
a take profit set in.
You can move your stop losses along the way as the price continues in
your direction.
And if you need help with that, you can watch this video on Market
structure and helping you move.
Stop loss has two different levels of structure.
I hope you guys enjoyed this video.
I hope you got some value out of it.
I hope you learned a lesson on proper risk management in day trading.
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