This Risk Management Strategy Improved Gavin’s R:R
October 21, 2021 | 5:17 pm | Successful Traders
October 21, 2021 | 5:17 pm
We spoke with Gavin about his trading plan, insights, and lessons gained while trading in the Forex market and our platform as a funded trader.
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- Tell us a little bit about you.
I’m a freelance photographer and video maker, but I’ve been interested in trading for around eight or nine years, first drawn to it as a means of earning a second income stream.
That was my initial idea, a relatively simple and fun way of earning an extra income stream, but how wrong I was! As a complete novice, I signed up for a course along with a set of pre-determined strategies based solely on technical set-ups. I had a very limited idea of what I was doing and soon realized this was not as easy as I’d been led to believe! Feeling somewhat demoralized I quit after about a year.
A couple of years later I signed up for another program, this time more to do with trading news than the technical set-ups. It was the same story and after about eighteen months or so I quit, again feeling rather demoralized!
A couple of years later, still believing that to trade successfully as possible, I came across Financial Source, a trading terminal that introduced me to the importance of fundamental drivers and risk sentiment in forex trading and that coupled with good technical levels to trade from would increase the probability of success. It was like finding the pieces of a jigsaw puzzle and suddenly things started to make sense. This was around September 2020. The big piece of the puzzle still missing was psychology and discipline. It was an area I really needed to work on. Having the discipline to cut trades that aren’t working out, rather than hang on and hope has saved me from bigger drawdowns and bigger heartache!
- How long have you been trading?
Altogether about 4 years, I am a part time trader
- Briefly describe your Trading Plan and how it contributes to your success.
My trading plan now is all about the fundamental drivers of a currency pair and the accompanying risk sentiment. I will only trade in the direction that is fundamentally driving the pair and wait for technical areas to get in.
I will also try to stay very tuned to risk sentiment as that can upset the apple cart. I never trade with a full 1 or 1.5% risk. I tend to break the risk down into smaller chunks, say 0.5 or 0.25% bites as I feel that way I’m more in control. I can scale in and out of a trade depending on how well it’s going. It’s quite rare for me to let my full stop loss be hit, I will usually have come out by then or at least partially scaled out.
I think over time that has saved me from bigger losses. If the trade is going successfully I’ll bring my stop losses to break even as soon as I think it’s safe to do so. Taking profit is also important, and cutting my risk into smaller clips means I can take some profit at key levels but still leave the trade running if I feel there might be more room to go. Often I’ve watched a trade that was running well dwindle away!
- Share with us a challenge you faced in your trading career and how you overcame it?
I’d say it has all been challenging! Particularly the earlier times when it never seemed to work out. I think persistence has been key to developing a trading plan that works for me. Understanding my personality and developing an appropriate strategy has been key.
- How did you adjust risk management to your trading personality?
For me, the best technique is to cut the risk into smaller chunks. I have more control. Either that or to enter small, maybe with 0.25% or two clips at 0.25%, and build from there if the trade is going well. The only slight drawback is that it cost more in commissions and swaps but I feel it’s worth it.
- Describe a key moment in your trading career.
The key moment has to be passing The5%ers verification! It feels like all the effort has been vindicated. That I have started to develop the skills to be successful!
- How long it took for you to become a consistent trader, and what aspects did you change that helped you to become consistent?
To be honest about 3 or 4 years. Finding a trading strategy that suits me was really important, and then equally important is discipline. Taking my time to choose trades and be prepared to cut if they’re not working out. Taking some profit at key levels is also important.
- What is your mental/psychological strength, and how did you develop it?
Not to treat a losing trade as a failure. It is part of trading. Every trader, however good, has losing trades, and sometimes lots of them. But accepting it as part of trading and being willing to cut the trade, or reduce risk, if it’s going against you is, for me, really important. Patience too, I believe is vital. Choosing your trade because you have conviction it it. It’s so easy to find yourself in a trade you wish you weren’t in!
- What was your strategy to successfully passing The5%ers’ First Level?
I think it was developing a strategy that I was comfortable with and believed in, underpinned with discipline to risk management.
- How is trading for the5ers different from trading by yourself?
Trading with The5%ers has given me the chance to grow in a way that would otherwise not be possible. You also feel part of a community and passing the verification stage gives you some confidence, confidence that you have the ability to be consistent, which is important too. You have to take that confidence and shape it into a belief that you can succeed.
- What would you recommend to someone who is just starting with us?
I would say that they have a supportive and understanding team behind them. An opportunity to learn and develop their trading and a fantastic opportunity to grow capital.
- Share online resources that were/are significant in your trading development. Name and links are appreciated.
- Would you like to share anything else with us?
I’ve really enjoyed the challenge. It is an amazing opportunity and I hope to continue to grow as a trader and as an individual.
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