 Good morning all. So I thought I would make a video on trade management, I guess some trade psychology during I guess a risk-off environment and you know, we are in a risk-off environment at the moment today being 24th of February 2022 Putin orders Russia attacks across a Ukraine dark day. So Russian leader says US crossed the line with NATO expansion Biden says Western allies will impose severe sanctions. So what does that, you know mean in in currency land, right? And One of the things I guess if you haven't heard me say this before because you're new to do, you know to the discord mentoring group Or even if you are have been here for a while and maybe forgotten certain things It's always best to have I guess a refresher as well. So For those of you who haven't been in the group that long have joined recently This is going to be obviously your first time when it comes to really kind of trading and understanding, you know Maybe risk-on risk-off concepts and how to really kind of I guess trade and manage your trading During an environment like this. Now the first thing to really understand and accept is that nobody knows What is going to happen? Right? No one knows what is going to happen You know minute-to-minute, you know hour-to-hour so Just understand that you have to be you have to Understand and embrace almost the uncertainty of it right uncertainty and when I say embrace uncertainty I mean just understand that don't try to know try to figure out what is going to happen with the we deal with probabilities and possibilities in in trading and and So we have to just understand that there's a possibility and a likelihood of something happening over another and whether we want to Trade in that environment because not trading is a choice as well Yeah, doesn't mean that we must trade in every single environment There is a time where we can sit on our hands and we should sit on our hands if things are very uncertain But when it comes to trade management And really our trading psychology one of the things That we should really be aware of is Understanding that our position size management in maybe an uncertain environment such as what we're dealing with right now Yeah, and there's a rule of thumb. I guess our risk positions or my risk position Is based on Basically my 10 trade losing streak if I was to have a 10 trade losing streak and I have right for For what it's worth. I have I think that the longest losing streak I had was 15 many of you know, it wasn't necessarily on, you know, 15 different currency pairs It was when I was being Many years ago when I was being silly placing, you know, pending orders on, you know, eight nine ten different pairs and And doing silly things that I shouldn't have been doing back in, you know When I was first started trading right and I lost 15 trades in a row But anyways, the point is is that a 10 trade losing streak can happen now if you do have a 10 trade losing streak Yeah, if you did have a 10 trade losing streak, right? What would be The maximum risk on your account that you would be willing to accept meaning if you had a 10 trade losing streak And you risk 1% on a trade. Yeah, are you willing? Are you willing? Yeah To accept a 10% draw down on your account. Yeah 10% draw down on your account if yes, then that's fine, right? Then then then then, you know, you risk 1% on a trade. Yeah, some people are not me. I'm more risk averse So personally if I have a 10 trade losing streak, yeah, I generally will risk somewhere between zero actually zero point Five to zero point three percent. Yeah three percent on trades depending on the environment Yeah, so the most I will lose in a 10 trade losing streak. It doesn't happen very often quite rare But you know when it if it does happen and when it does happen Then you know, the most I will lose on a draw down. Yeah if things always, you know Keep going against me is is five percent is the maximum, right? Is is is what I'm prepared to lose on a 10 trade losing streak. Can I use 11 12 13 15, etc. Yes, of course we can It's it's highly unlikely although it is possible But that is really the mindset that you have to You know Have because this is possible a 15 trade losing streak is possible a 20 trade losing streak is possible Nothing is impossible in this world, right? So base your position size on an extreme Yeah, and in the whatever that extreme is whether it's 10 whether it's 20 whatever it is You think is the extreme use maybe 10 as a baseline Then divide that up into per trade and if you're comfortable with that that should be your your trade as a caveat to that Though while you're learning to trade while you're learning us a technical strategy or fundamental strategy and methodology I really advise the lowest amount of risk that you should take You know if you can take 0.1 percent on a trade Per trade then that should be it that should be it right? I guess and I understand that not everyone can risk 0.1 percent on a trade because they have smaller accounts I definitely understand that but it should be the smallest risk percentage that you can possibly risk per Per position size so Um That should be really where your mindset is and once you've figured that out The next really step not necessarily in order But one of the things you should think about is knowing when to risk less than normal per trade and again I and I say again, but those of you who know me in the way that I trade and I've made videos on this is that I Have more of a risk on bias right a risk on bias meaning I believe that That human beings have a problem solvers right and eventually we solve problems the the the the Russia Ukraine War escalation stations will be resolved right nobody wants to live in perpetual war We generally want pieces. It's the war is not good for the economy And it's just not good for for for lives, etc So from that perspective, there's always a need and a want To want for a resolution, right? So from that perspective in a risk on you know in a risk-off environment. Yes You know money would tend to flow into safe haven assets for example or safe haven currencies, I should say Like for example, the Swiss franc and the Japanese yen Now, you know, you guys know that I'm you know a buyer of for example the commodity currencies You know the Canadian dollar the Australian dollar And the New Zealand dollar more recently that the Australian dollar I think Should should wanna is that is a bit undervalued again We have to kind of wait for the data to support that narrative Right and against the for example the yen and the Swiss franc Now in a risk-off environment, you should have price I mean the the the yen and the Swiss franc are the safe haven currencies that will generally tend to strengthen But if you understand, you know fundamentals I Guess more more risk on sentiment and you know fundamental analysis when it comes to monetary policy inflation interest rates, etc Generally should should prevail in the long term risk-off sentiment Can last for a while it can last for a short time again because of the need for Humans to want to come to a resolution and just generally have you know peace So from that perspective risk if you're trading for example, you know the CAD yet Yeah trading the CAD yen and my bias would be to the long side, right now in a risk-off environment You would probably see prices do something like this Yeah, in a risk-off environment where the yen is getting stronger than the CAD because money is flowing into the Japanese yen In an environment like that, I will still be long because I'm not looking at The taking advantage of the risk-off sentiment. I'm understanding that risk Sentiment yeah can push prices to where to bargain prices that when risk on comes back I have a lot more upside and a lot more risk reward Yeah, but getting back to I guess knowing when to list risk less than normal This is an environment where I will risk less than normal if I understand that there's a possibility of risk You know risk off sentiment coming into the market or we are in a risk-off environment Then why would I you know risk? 0.5 percent On on trades, right? It doesn't make any sense Lower the risk sentiment, you know 0.3 even 0.2 percent in an environment and when things start to come back to more risk-off I say risk on and there is more of a resolution. Yeah, then I can increase my position size And go back to normal. So that's all part of risk management So again reducing position size Yeah, and the number of positions that as you you know, you guys should know is that I generally will risk at least three positions on each trade one market order and Two pending orders sometimes three pending orders if I'm very very bullish on a currency pair But generally I will risk three positions now what you can do with if you risk three positions as well What you can do is actually just risk two positions, right? So not only reduce your position size But but have maybe one market order and one pending order rather than two pending orders Or just risk one position and that could be either a market order or or a pullback pending order, right? But these are the things that you need to consider in an environment where You know the market is uncertain Of course, you can just sit out until things do get back to normal and another thing as well Is looking is is to shift your focus to maybe higher time frame setups and the reason Why this is is because on a lower time frame is very hard to you know to to understand which level I mean with us. We're looking at obviously daily supply and demand zones, right? We should be but when it comes to When it comes to The amount of supply you want to see or the amount of demand you want to see in a candlestick. Yeah So for example, let me just bring this out, right? So let's say for example, that's your candlestick right there. Yeah And let's say for example, this is this is a cancer you want to get involved in now If this is a one-hour time frame, yeah, it's very difficult to understand that prices, you know Coming down to a level whether that one-hour, you know pin bar or whatever the candlestick is doji that you want to You know look to trade is enough of a signal in an environment like this That it's going to signal really a A Reversal because this could just be profit-taking right this could just be profit-taking as prices continue to go down Yeah, but if you're looking at that as maybe a daily time frame chart or a 12 hour or an eight hour, for example You have actually eight hours worth of demand. Yeah, rather than one hour or 15 minutes Yeah In that candlestick formation to then assess what has happened over that eight hours Then you can say all right then well Within that eight hours. We did get some positive news within that day. We did get some positive news Yeah, within 24 hours. We did get positive news on you know the Russia Ukraine tensions and then that will be enough Confluence to and enough demand potentially to want to enter into a trade and again I know traders are going to say well the risk reward is is is skewed I have to have you know more risk more reward because that might represent, you know a hundred pips for example rather than Maybe 20 pips for example on an hourly time frame chart when it comes to you know your entry and your and your stop loss But that's not really, you know the point you shouldn't really be thinking like that because if prices come down to a level where Where riskers and as I said before risk off sentiment pushes prices to bargain areas where we want to be buyers If it's pushed price down enough you should have enough upside potential You know to risk maybe you know 100 if you have an upside potential maybe 300 pips 400 pips right to the upside So it's you know more about perspective plus as well. This should really represent Still, you know, you're zero point, you know, three percent zero point two percent if your account is big enough Maybe if you can't risk that amount, maybe it has to be risk, you know, you have to risk zero point five percent On that trade or zero point eight percent, but whatever the risk is Yeah, whatever the position is or the size of the trade, it should still risk It should still be the same amount of risk percentage Plus as well, you've got the added bonus of time. Yeah time to understand Why this is maybe not just a profit-taking candle. Yeah on the way, you know Down or why actually within that time period we can see that and reading, you know New sentiment that things have actually got a bit better. Yeah within the past maybe they also yep Putin's announced that he's pulling troops back and rather than getting trying to, you know, jump in on an hourly time frame, which is, you know, very It doesn't carry the same weight that amount of demand and now it does not carry the same way as now the amount of demand that would You know take place over a day plus you've got the confluence of understanding, you know the news flows right and what is actually happening and And you know the resolution so from that perspective Shift your focus to our higher time frame setups, you know, they're safer Yes, you get less risk reward, but at the end of the day, it's not really about that It's about the protection of your capital and not basically death by a thousand cuts. So Again, should you trade in a risk-off sentiment is the question and Again, I've mentioned this before risk-off sentiment can end at any time Yeah, at any moment by the even by the time you watch this video There could be headlines where you know, Russia have backed down and there is a resolution, right? Nobody knows nobody can predict it Yes, there was a likelihood of it probably continuing but there is obviously the possibility that it could end and just for I guess just this screenshot just explain is I took a screenshot of it today F green Says that what happens next in Russia has finally What happens next as Russia has finally invaded Ukraine What is going to be the long-term effect on the markets will the risk of sentiments? Perpetually prevail and he says he doesn't think so and I have to you know agree Yeah with this statement and I expect the market to eventually price in the war. It always does, right? It prices in everything and Gradually bounce back as I was saying before with humans And we are our needs for peace and not perpetual war And I know there are you know, there's the military industrial complex, etc And and whatnot, but at the end of the day, I do believe that peace is the way forward and So the war and gradually bounce back sometimes soon even if war rages on And he would be looking to buy the dips on the dollar the CAD the Australian dollar the New Zealand dollar versus the Swiss And the the end and the Swiss franc cross pairs absolutely in my opinion And I totally agree F green and that's my position as well and Again, we understand that nobody knows no one's I'm not trying to time I'm trying to we're not trying to tell everyone when the bottom is going to be in and when You know when the war is going to be over. That's That's a silly but at the end of the day Risk of sentiment can end at any time remember that the market is an auction at all times there are buyers and sellers. Yeah, there are buyers and sellers and If you don't recognize that the market is always an auction meaning that the market is never always gonna go down in a straight line The market cannot go down in a straight line Yeah, even if the path for these resistance is to the downside You will have moments where you have fair value auctions, for example And there is an opportunity to potentially, you know buy at certain levels And then if if if for example, this is obviously, you know price in this is time If for example during this time where we have, you know fair value auction, you know There is a resolution in in with the Russia Ukraine War then the buyers in this auction. Yeah price auction Many of you may recognize it as a sideways moving market a range consolidation, etc If during that time, let's say for example, that's today and then this might be for example next week or next month If during that time war gets resolved and it's gonna look like an absolute bargain if we're trading You know these currency pairs like the dollar the CAD the Aussie dollar the New Zealand dollar against the the yen and the Swiss franc Right because those are those are currencies that you really want to sell in in a risk on environment or less risk off So from that perspective, there's always gonna be auctions the market Is is is not for speculation, right? Even though we speculate on the market the market is an auction between the market makers providing liquidity and and I guess the financial institutions who want to buy and sell at prices and if you don't understand that then Unfortunately, you what really are at disadvantage if you understand that you'll understand that there will always be pullbacks due to liquidity hunting and Liquidity providers, right? So liquidity hunting and the market makers who provide liquidity to the financial institutions The market cannot just keep trading unfairly. It doesn't happen like that, right? So there will be opportunities to buy And so again that coincides really with understanding You know the fact that you don't necessarily want to try to pick the bottom on lower time frames Look for higher time frames. Maybe shift your focus to to the higher time frames Look for the amount of demand that came in over a certain period of time and also look for the reasons Why if if there's no changing in resensitement or it doesn't look like it if things are escalating and you do see for example a bullish candle, let's say for example, you see it Prices have come down to an area and you see a really nice pinball, right pinball at a level of demand And you want to be a buyer at a cat against for example the Swiss frame. Yeah Now you're in an area of demand now. Let's just say that candlestick there Has has has formed at the end of the day, but in the news wires Things are getting, you know worse and worse and worse and worse, right? Tensions are escalating, you know death toll was going up, you know, there's Chemical warfare. Who knows just think of the worst things that could happen, you know in in war is that? And there is that is that really? Would that likely be profit-taking from a move down or would that is that likely to be a reversal? I mean again, nobody knows, but the likelihood is that we could see more, you know potential downside, right? whereas if that candlestick happens and we see Over, you know the period of a day This is maybe a daily candle, you know or a 12-hour candle and we've seen some positive news over the news wires That could then obviously more likely revert lead to a potential reversal, right or a pause So there are things that we can do and if you look at, you know What happened in I guess the worst crisis and the worst risk-off sentiment in modern times, right? COVID-19 go back to, you know a chart 2020, you know between February and probably April you'll see you'll see a massive Move to the downside as you know the risk safe haven currencies the yen was strengthening against for example the the dollar Right, you saw something like this happen over a certain period of time But then what happened is is prices went to the upside because the market then shifted its focus on a Global recovery, right? So global recovery meaning who is handling the The COVID crisis and lockdowns better than other currencies, right? And that was where money was going to flow risk-off sentiment doesn't last Forever it shouldn't last forever and even over a prolonged risk sentiment environment where we had the Trump China Trump Trade war back in 20. I think it was between 2018 2019 now 2019 We had a even though, you know prices for certain currencies risk-off currencies were strengthening We still had pullbacks. Yeah in those and large pullbacks in that in that sentiment And in that risk-off environment, yeah prices didn't go down forever didn't keep going down, right? It doesn't happen And if it does happen, it won't happen for long And if you understand the market mechanics and the way that the market has to work as an auction liquidity providers liquidity hunting You know, there are still opportunities in a risk-off environment to go long just as there are Risk in in a risk-on environment. Yeah, there are always pullbacks, right? When we see the market In a risk-on environment when everything is all good in the world and we see prices, you know going higher There's always going to be pullbacks, right? It's always going to be pullbacks in a risk-on environment So what makes you think that there's not going to be pullbacks in a risk-off environment? It makes absolutely no sense and while you're in that trade, let's say for example, you pick that trade you might, you know make a little bit You might not write you might make a lot who knows but at some point during this downtrend You could be in that trade and then while you're in that trade all of a sudden Again a resolution is found between Russia and Ukraine and then that trade then becomes a massive runner, right? That can be a 10, 20, 30, 40 to 1 type trade. Yeah, so it's not necessarily what happens in the short term It's really, you know, how you handle things in the long term and understanding fundamentals and value so with that being said um, I hope you found this uh, this this useful and um and take care guys and speak to you all soon