Frequently Asked Questions...
What happens to your car if you rev it high and demand a lot from it?
What happens if you accelerate fast a lot and drive your car like a Nascar driver? lol Does it ruin the engine faster? Need more tune ups? etc?
What actually happens? More gunk buildup in engine?
Answer:
Unless you are mechanical, and you can fix it when it breaks, I would recommend not doing it.
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Whole Foods Parking Lot - Music Video [HD]
How To Trade With Multiple Lots - The Challenge of Multi Lot Trading!
Once, you have mastered trading with a single lot, you should think of trading with multi lots. Trading multi lots is a milestone in the trading evolution of trader. However, you should know this fact that putting multi lots is a double edged sword and comes with an increased level of risk. The risk can be quick and fast and the drawdown proportionately larger than a single lot. The challenge is to decide when to trade multi lots!
How do you know this is the time to trade with more than one lot. How about trading with two lots? Why not trade three lots? How do you know three lots will be better than two lots? These decisions should not be made in an arbitrary manner. A trader should develop a mechanism that informs him or her when to trade multi lots.
This mechanism can be called the inner confidence indicator. A trader should develop an inner confidence indicator on the scale of 1 to 10 that can inform about the high probability setup trade. For example, if a trade has many elements of confirmation, it will be ranked 10 on the confidence level. A many element confirmation trade can be something like a trade setup with Fibonacci Levels at the support or resistance, there is alignment with the trend, the price is probing the Bollinger Bands and so on then you know that you have a high probability trade setup.
Now, suppose the trade setup gives a high level of confidence but not the best, you can assign it a number of 8 on the scale. Suppose, you have a hunch that this is a good trade setup, you can assign it a level of 6 on your inner confidence indicator scale. A number of 4 might be setup when there is a divergence, the range might be narrow and the trade may not look good. A level of 2 may be a very poor setup something that tells you this would be not at all a successful trade.
Over time, as you keep on using your inner confidence scale, you will be able to know this is a high probability trade. In the beginning, you may trade on your hunches but with the passage of time, you will be able to develop the inner scale that tells you that this is a high probability trade.
Learn to break each trade into Financial, Technical and Psychological. Financial is how much you are ready to risk in that trade. Technical is how good the quality of the setup is. The indicators will tell you this. Psychological is something unqantifiable. All these three elements or what you call factors contribute to a trade. You cannot separate them from one another.
So the best approach is to trade 3 lots when you have a high probability setup and you have identified it on your inner scale. The first lot should be aligned with the financial. The second lot should be aligned with the technical aspects of the trade something like the range width. Suppose the range is 60 pips wide. The first lot should have a limit of 20 pips. You can set the limit to 40 pips something shorter than the other side. The third lt can be like a wild card.
You see, the trader has control over the stop loss risk control strategy as well as the profit limit strategy that has control over the stop losses. The trader can set these orders. But achieving the profit targets is not in the hands of the trader. It depends on the market. Market conditions vary with profit potential from 5 pips to 50 pips or more. A good trading strategy is to set the profit target at 20 pips something that is possible with ranges offered by the market even under small timeframes. The objective of the trader should be to master making these much pips and if he want more he can add more lots and learn how to manage them.
Mr. Ahmad Hassam has done Masters from Harvard University. Learn this powerful Fibonacci Retracement method FREE that pulls 500+ pips per trade. Get this highly profitable Magic Breakout Forex Strategy by Tim Trush and Julie Lavrine FREE!
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