As day traders, nothing has changed. We are still working from self -isolation as usual.
Okay, the market is more active but only in a relative fashion.
Something that profitable traders do before taking a trade whether consciously or not, is assessing a trade’s probability and balance maximum risk against the desired reward.
The currency market over the last few weeks has ballooned (several times greater) beyond anything I can recall.
Of course, this will be of no surprise to anyone, but it will catch out many traders—ironically.
The key to the risk/reward mentioned above is balance. Many traders will try to get too much compensation concerning risk. In other words, they will set their risk, which is out of balance with the market.
All that has happened from a technical trader’s point of view is that the movement in price has significantly increased. However, the different phases of the market cycle have not changed, nor has trade value or trade setups.
As this is a constant for us, we have seen no change in the number of trades taken on average and no difference in profit and loss.
Yes, the amount per pip that we trade is a lot less than average, but that is because our stop loss (our maximum acceptable risk) is in measurement terms further away—but so is our target.
Inexperienced traders will often try to maintain the amount per pip that they trade but at the same time minimise their stop position and therefore reduce their probability. (The stop is the point at which they have to get out of a trade because they got it wrong and the premise has changed). A strategy that is not profitable.
Once traders have completed their apprenticeship, we recommend an incremental staging of risk based on proven consistent profitability.
Our maximum risk per any one trade is 1.5% of the account size. (Often we will trade at 0.5% or 1% of account and scale into the deal if necessary as the trade progresses).
Therefore, is this a good time for someone to start to trade? We’d say most certainly not. Months of study, back-testing and paper-trading will not be enough.
That is because, with such a big market, a traders account size needs to be, well, big.