I am currently experimenting with a new money management system.. The system might be still bias in nature as it needs my subjective assessment on the chart therefore as much as possible, I will make my rules and guidelines strict so that it will be easy to adhere.
Below is the daily chart of the AUD/USD.. My system will be mainly based on higher time frame chart (daily and 4 hour)... Basically I am giving a point system to the cues I get from the chart before deciding on the risk to take... My max risk [no matter how confident I am] per position will be 5%...
I have started off with an ac of 7800 USD thus my max risk will be 390 USD. Based on the chart, theres some cue i taken...
a) price surge up over the past few sessions and the price broke the recent high but reversed strongly to the low.. [pin bar fakey - weightage 0.5 [2.5%]
b) the trend of the currency is downwards and my trade is opened in accordance to trend. 0.15 [0.75%]
c) I have used market order so seeing this as a bad entry, I want to reduce my risk... weightage -0.05 [ -0.25%]
Total Risk taken : 3%
Since the currency is trending downwards, I have set my limit to 2X of my risk (160 pips target).. I have checked against the chart and the limit is still some distance away from the reversal point (0.88) which is a possible "target"
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