Low Trade Risk

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65# High Proability Low Risk trading

Support and resistenze with EMA’s

Submit by Leo 09/04/2020

High Proability Low Risk trading is a system that identifies high probability low risk

Time frame 5 min or higher.

2. Exponential Moving Averages

a. 15 EMA applied to High

b. 15 EMA applied to Low

c. 200 EMA applied to Close

3. MACD (12, 26, 9 applied to Close)

Trading Rules High Proability Low Risk trading

1. Price and EMA channel are above 200 EMA.

2. Price makes a swing low above the 200 EMA, which means red SR dots must form

2. Price closes above the dodger blue EMA 15 (applied to high).

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3. Enter a buy trade if MACD histogram is above the signal line. For additional

confirmation (optional), the MACD histogram is above the zero line as well.

4. Stop loss along the magenta EMA 15 (applied to close).

5. Take profit at 1:1. You have an option to trail your stops instead of, or along with,

placing a hard target. Trail your stop under every new swing low or magenta 15 EMA

The 200 EMA is way below the price and the 15 EMA channel. Price closed above the

upper channel line and the previous SuppRTF level before closing. At this point, the

MACD histogram is above the zero line and crossed above the signal line, so we can

place a buy trade.

Set the stop loss along the lower channel line and the take profit at the same distance as the stop loss. If you have time to monitor the trade, you may trail the stop loss along the magenta line then under every new swing low that formed, based on the newly formed red SuppRTF dots.

1. Price and EMA channel are under 200 EMA.

2. Price makes a swing high under the 200 EMA, which means blue SR dots must form

2. Price closes under the magenta EMA 15 (applied to close).

3. Enter a sell trade if MACD histogram is under the signal line. For additional

confirmation (optional), the MACD histogram is below the zero line as well.

4. Stop loss along the dodger blue EMA 15 (applied to high).

5. Take profit at 1:1.You have an option to trail your stops instead of, or along with,

placing a hard target. Trail your stop above every new swing high or dodger blue 15

Below is a sell trade on the USDCHF 1 hour chart. Price and the 15 EMA channel had

been under the 200 EMA for some time now indicating a down trending market.

Price breaks under the magenta line and the red SuppRTF. At the bottom, we can see

that the MACD histogram is below the zero line and the signal line, so we can place a

sell trade at the close of the candle.

Set the stop loss along the blue channel line and the take profit at 1:1. In less than 30 minutes, price tagged the take profit and the trade was closed.

Share your opinion, can help everyone to understand the forex strategy.

Is Low Risk Trading Possible?

A common perception among the general retail investing and trading public is that in order to garner large profits, you must take on big risk. So where does this view come from? Who perpetuates it? And is it necessarily true that low risk trading isn’t possible?

Can Low Risk Trading Result in High Profit?

This view comes from the fact that most people perceive volatility and leverage as high risk. Therefore, if one engages in the markets during periods of high volatility using a leveraged product, the odds are very low (high risk,) but the profits can be huge if things work out. This is the common perception. In essence, the belief is that because most people are risk-averse they should settle for only mediocre returns as higher returns are only reserved for those willing to take on higher risks.

I’m sure most of you know that a belief system is not always created on the basis of factual information, but sometimes on a lack or distortion of information. In other words, ignorance can also produce beliefs. In this case, there are many folks that have a vested interest in telling you that low risk is commensurate with low returns. These are the same people that tell you that it’s impossible to time the markets, so don’t even try. The lesson here is to be careful where you get your information and make sure you always do your homework.

As to whether there is any truth to the idea that there must be high risk in order to have high profit margins, long time readers of these articles know by now that it is indeed possible to take trades with very little risk when you can find the turning points. On one hand, it’s as simple as finding where the institutions have their unfilled orders. But on the other, implementation can be very challenging for some.

When we look at putting on a trade, the three most critical components are the stop, the entry and the target. For the lowest risk entry, we should always enter the market as close as possible to the point where we are going to be proven wrong. This would be where there are pockets of unfilled orders that originate a strong move. We refer to these as supply and demand levels. In the chart below, we can see what the picture of a low risk entry may look like.

In it, we can see that the Swiss Franc Futures on this day rallied off a congestion area (highlighted in yellow) and then pulled-back into that zone. The retracement into the zone presented a trader with a very low risk trading opportunity. The reason this was a low risk trade is because the entry was fairly close to the point where the level would be invalidated; put another way, the point where we would be proven wrong. In addition, since there was no supply for a good distance, this increase the profit potential thus making this trade a great risk versus reward opportunity. In this example, if you had traded one contact of the Swiss Franc Futures, the risk was approximately $337.50 for a profit of $1500, and they told you had to have high risk. This can only be done by having a strong understanding of institutional supply and demand.

Speculating in the financial markets is about putting money at risk with the expectation that for that risk, we will be compensated commensurately. If that’s the case, doesn’t it make sense that we would only take trades that offer the lowest risk, highest probability (no guarantees), and highest profit potential? To do that however, we need a strategy that produces profits on a consistent basis, the self-discipline the execute that strategy and the focus to achieve our goals. Ask yourself if you have any of these when you trade; because if you don’t, you’re most likely taking high risk, low probability and small profit trades, and who wants to do that?

8 Strategies That Offer High Return With Low Risk

I’ll never forget the conversation I had with a potential new client interested in investing some money for about a five year holding period.

“Jeff, I’m looking for an investment with zero risk that guarantees my principal and I can cash it out whenever I want with no penalties. Oh yeah, I want it to make between 8-10%”.

I was waiting for the punch line but it never came.

He was serious. Seriously jaded that is.

When the financial markets become unsettled, investors naturally look for lower risk investments. But what this guy was looking only exists in Never Never Land.

If you are retired, or just a few years away, the safest course of action generally is to invest in totally risk-free investments, such as money market funds, certificates of deposit, and U.S. Treasury securities.

And I’m sure you already know this but these investments are not going to pay you the 8-10% that guy was seeking.

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But if you are not approaching retirement, you’re almost certainly looking for investments that, while safer than the stock market in general, also pay higher yields than what you can get on super safe investments. And let’s be honest: the returns on totally safe investments are downright dismal these days.

For example, yields on 10-year U.S. Treasuries currently pay less than 2%, while 30-year Treasuries pay only a little above 2.5% . And that’s only if you tie your money up for a full decade or more, with little or no chance of capital appreciation.

If you need higher returns, including some potential for growth, you will need to look for assets that provide a comfortable balance of high return and low risk. Low risk means that there is a reduced chance of losing your principal, but one that may be offset by a higher return than you will get from investments that are completely risk-free.

Fortunately, there are more than a few worthwhile investments that qualify as high return and low risk. And you can get even higher returns on some of these investments if you hold them in a Roth IRA . Not only will that enable your investments to grow on a tax-deferred basis, but when the time comes to begin making withdrawals, you can receive them on a tax-free basis.

1. Dividend-Paying Stocks

There are plenty of companies that pay dividend yields that are much higher than what you can get on completely risk-free investments. For example, pharmaceutical manufacturer GlaxoSmithKline ( GSK ) currently pays a dividend yield of over 6%, while data storage giant Iron Mountain ( IRM ) pays nearly 6%. (These aren’t recommendations to invest in either company, but examples of what’s out there.)

Dividend-paying stocks also have one major advantage over risk-free investments, in that they enable you to participate in capital gains. That’s in addition to the dividend income that you receive. Though they may bounce some in the short run, the combination of dividend income and capital gains can provide impressive long-term investment results.

Dividend-paying stocks are not totally risk-free, of course, but they tend to be far less risky than other stocks. Part of that is because they tend to be better known, better established companies. Not only have they been around longer than most other companies, but they also usually have a long history of paying dividends.

High dividends also provide a strong measure of protection from price fluctuations during bear markets. While the market may hammer growth stocks, dividend stocks are less vulnerable to deep declines precisely because of the dividend. That’s at least partially because dividend paying stocks become more popular with investors during bear markets, since capital gains are harder to come by.

Grant Bledsoe, financial planner at Three Oaks Capital Management and founder of AboveTheCanopy.us says: “Additionally, qualified dividends are taxed at favorable rates. If you’re in the 25% federal tax bracket or higher, you’ll pay either 15% or 20% on any qualified dividends you receive. If you’re in the 10% or 15% brackets, they’re tax free.”

In addition, a generous dividend makes it easier for an investor to hold a stock through a declining market. After all, the investor is receiving regular cash flow from the dividend, often at a rate that’s higher than what can be earned on completely risk-free investments. Also, as bear markets drop stock prices in general, the yield on a dividend stock goes up. That makes the stock more attractive to new investors, and can make dividend-paying stocks among the best performers early in a new bull market.

2. Preferred Stocks

Ty Hodges, certified financial planner at CCWMgmt.com says: “Uniquely, a sub-sector, preferred stocks also have many of the advantages of bonds in that they trade in a very tight range, they pay a regular dividend, and they are higher up in the capital stack than equity. In addition, if a company is forced to reduce dividends, it must first kill the dividend to the common stock before the preferred stock making them an appealing option for part of your income portfolio.”

This is a different way to play dividend stocks, but a way to do it with even lower risk.

Preferred stocks are just what the name implies: stocks with a preference ahead of common stocks. That means that preferred stocks have a higher claim on the company’s earnings and assets than common stockholders do. For example, when a company declares a dividend, preferred stockholders must be paid ahead of common stockholders.

Preferred stocks are practically a hybrid between common stocks and bonds. This is because preferred stocks have more predictable dividend income. For example, a preferred stock generally has a certain dividend level, while common stock dividends will only be paid upon declaration by the Board of Directors – which can also decide to either reduce or even eliminate the dividends of common stock.

Preferred stock status is even more important when a company has fallen on bad times, and particularly when there is a possibility liquidation. Stockholders in general are a paid only after bondholders and other creditors of the company are paid. But preferred stockholders will be paid ahead of common stockholders. In fact, should a company suspended its dividend entirely, preferred shareholders are entitled to receive dividend payments in arrears before common stockholders begin receiving any.

Naturally, dividend yield will be important for preferred stocks. Generally speaking, preferred stocks pay higher dividend yields than their common stock brethren. For example, Alcoa’s Preferred B stock currently pays a dividend of well over 8% , while the company’s common stock pays only 1.2%. (Once again, this is not an investment recommendation, but an example.)

3. Peer-to-Peer Lending

Peer-to-peer lending, commonly referred to as “P2P,” has been taking the investment world by storm over the past few years. This is largely the result of the financial meltdown a few years ago, when banks became very hesitant to make personal loans, particularly to individuals and small businesses. From an investment standpoint, P2P has provided welcome interest rate relief from the near zero interest rates that have existed at least since 2009.

The net result has been people coming to online lending platforms and securing loans for various purposes. But on the back end, those loans are being funded by individual investors. The two parties “meet” on P2P sites, and agree to work out loan terms. The entire process is streamlined and seamless. Borrowers can make application for loans anonymously, while investors can choose from hundreds of different loans to add to their portfolios.

Borrowers end up paying lower interest rates than they would at banks, while investors receive earnings that are many times higher than what they can get in certificates of deposit or money market funds at those same banks.

These investments are not entirely risk-free. Individual loans can go into default, and when they do it’s likely that you will lose your investment. However, when you invest through a P2P platform you don’t invest in whole loans, but rather in small slivers of those loans. These slivers are referred to as “notes,” and you can purchase them in denominations as small as $25.

That means that with just a $5,000 investment, you can spread your capital across 200 individual notes, each invested in a separate loan. This kind of diversification greatly minimizes the impact of a default associated with any given loan.

In addition, P2P investment platforms enable you to choose the criteria that you will use to determine which loans you will participate in. For example, you can decide that you do not want to invest in loans to borrowers below certain minimum credit score levels. Or, you can set the criteria based on a certain minimum debt-to-income ratio, or even loan term or type.

There are several P2P investment platforms available on the web right now, and more are arriving each year. But the two biggest by far are Lending Club and Prosper .

If you are looking for an investment with a solid high return, low risk, and predictable yields, you should look into these two P2P lenders. Fixed income returns greater than 10% per year are hardly unknown with this kind of investing.

4. Annuities

There is a lot of well-deserved hesitation when it comes to investing in annuities. This is in part because of the high fees associated with some of them, in addition to the fact that many annuities have been over-hyped and promoted as the answer to everyone’s needs, regardless of what those needs might be.

But the reality is that annuities can be an excellent high return, low-risk investment if they are offered by a knowledgeable financial advisor, and will work well within the investor’s investment needs and risk profile.

Annuities are complex financial instruments, and work best for more sophisticated investors. They are based on an annuity contract, which can contain numerous provisions that the investor needs to have a thorough understanding of.

Annuities are investment contracts that are made through an insurance company. You are turning your investment principal over to the company, and they are providing you with a guaranteed return at a stated rate. The return can be either fixed (“fixed annuity”) or variable (“variable annuity”).

Depending upon the specific type of annuity, the rate of return may be determined by the performance of the stock market. There are fixed-indexed annuities (commonly referred as “hybrid annuities”) that run with the stock market, but provide downside protection to limit your losses.

As a general rule, the higher the guaranteed return, the higher the risk on the annuity will be. Though annuities are not FDIC-insured like bank investments are, they are backed by the issuing insurance company, and often by another insurance company that provides additional insurance on the contract. On balance, these are relatively safe investments that can provide above average returns on your money.

5. Real Estate Investment Trusts (REITs)

Real estate investment trusts, commonly known as REITs, are something like mutual funds that invest in real estate. The funds are typically invested in commercial real estate, including office buildings, retail shopping centers, and large apartment complexes. The REIT can participate in a real estate project as either a direct investment (“equity REITs”), or by holding a mortgage (“mortgage REITs”) on the property. A REIT can also invest in both equity and mortgages, and such trusts are known as “hybrid REITs.”

A REIT can be invested in a single property, or in dozens of various real estate developments. The latter provides diversity, which can include different types of properties, located in various geographic areas. This can be important, because the real estate market may be stronger in one city or state than it is in another. There are also REITs available that invest in foreign real estate markets.

Unlike investing in real estate as a principal, REITs provide a strong measure of liquidity in your investment position. That’s because large REITs trade on major exchanges, so that you can buy and sell positions when you decide it is appropriate.

REITs can be excellent high-return, low-risk investments because they pay dividends and receive special tax treatment. Those dividend yields are commonly higher than what you can get on risk-free investments, and even higher than what is often available on dividend-paying stocks.

A REIT must have at least 100 shareholders with at least 75% of the trust assets invested in real estate, U.S. Treasury securities, or cash. Likewise, at least 75% of the trust’s gross income must come from real estate activities. The REIT must pay at least 90% of its revenue in dividends to its shareholders. Those dividends are tax-deductible, enabling the REIT to minimize or even eliminate income taxes, though the dividends are taxable to shareholders.

REITs can have dividend yields in excess of 10%, making them excellent sources of regular income. And if you are invested in an equity or hybrid REIT, you can also participate in appreciation of the underlying properties, as well as the dividend income distributed out of net revenues.

REITs also have the advantage that they represent a diversification away from stocks. That is, the investment performance of REITs is not closely correlated with that of either stocks or bonds. This can make them a superior investment during protracted bear markets in stocks.

You can invest in REITs directly, or through exchange-traded funds (ETFs) which will hold positions in several REITs at a time. As an example, the Vanguard REIT ETF (VNQ) has provided an annual average rate of return of 9.65% since its founding in 2004 .

If you want to invest into real estate direct, but not ready to a landlord, there are tons of new options available to investors now. Sites like Fundrise.com allow investors to crowd invest (similar to peer to peer lending mentioned above) into real estate properties with a small investment (as low as $1,000).

6. Barclays’s Aggregate Bond Index Fund or ETF

Consider buying a mutual fund or ETF that mirrors the Barclays U.S. Aggregate Bond Index. Why?

The Barclays index is made up of U.S. investment-grade bonds, and funds that mirror it have consistently produced boring and positive returns in most market environments. In fact, the index has produced positive returns in 33 of its 36 years.

The index includes Treasury bonds, government agency bonds, mortgage-backed bonds, corporate bonds, and a few foreign bonds traded in the United States. The index is not only broadly diversified by type, but by maturity and duration. (Duration is a fancy word estimating how much your bond values may decrease if interest rates rise. Lower is less risk.)

David Wilson financial planner and owner of FinancialTruths.net offers, “Index funds are also cheap (0.09% on average), which makes them attractive in this environment where yield is scarce.

Funds tracking the Barclay’s index have current yields of about 2.6%, and have produced total returns in excess of that over time with income reinvested.

The index which dates back to 1976 has lost money in only three years. Of those negative years, the worst was 1994 when it lost only -2.92%. “

Yes, there’s some interest rate risk. But with duration in the mid 5s (as compared with long Treasuries with duration in the 18-19 range), it’s worth a look for those who can’t tolerate any stock market exposure.

Now let’s look at a couple of financial arrangements that are not investments in the strict sense, but can have the same net effect

7. Credit Card Rewards

If you are a frequent credit card user, you can use that spending pattern to your advantage. There are several credit card rewards programs that will provide rewards of up to 5% just for using the card.

You have to spend money in order to live, so you may as well make some money in the process. Credit card rewards provide you with an opportunity to make money doing what you would be doing otherwise. Earning up to 5% on your purchases is a higher rate of return than what you can get on safe, interest-bearing investments. And best of all, you don’t have to put up any capital at all in order to get that “return.” It comes about as a result of your regular spending activity.

Credit card rewards are only positive if you’re the type of credit card user who pays off your balance in full each month. If you accumulate balances, you will be paying anywhere from 10% to 25% on those balances, which will more than offset the rewards that you earn. The basic idea is to use credit cards the same way you would a checking account or debit card – by keeping spending and funding in balance at all times.

And speaking of high interest rates, here is a guaranteed way to earn a double-digit return on your money, completely risk-free . . .

8. Pay Off Your Credit Cards

If you normally keep balances outstanding on your credit cards, you are almost certainly paying a double-digit interest rate for the privilege. By paying your credit card balances off in full, those interest charges will go away.

Think about it this way . . . if you have $10,000 sitting in a CD paying 1%, but you also have credit card balances totaling $10,000 on which you are paying 12% per year, you would get a far superior return liquidating the CD and using the proceeds to pay off your credit card balances. Paying off those balances would be the equivalent of shifting your money into an investment that pays 12% per year, because it is an expense that you will no longer have.

If you do, there will be zero risk of principal loss on your “investment,” and a guaranteed perpetual rate of return of 12%. And once you do, you’ll put yourself in a position to take advantage of those credit card rewards benefits that we just talked about.

That combination is one of the very best types of high-return, low-risk investments you can make.

If you’re worried about the direction of the stock market, but still want to earn investment income that’s both safer than stocks, but pays more than risk-free assets, give some of these strategies a try.

Lower Risk Trading is More Profitable Than You Think!

Table of Contents

How Can Low-risk Trading be Rewarding?

As traders, we are always looking for ways to lower our risk. But then for us, it means proportionally reducing profit potential. So, traders often would take higher risk trades when focusing on the profit, or take a too low risk when focusing on the potential risk.

Controlling Risk is Our Job!

There are two main tools for controlling risk. 1) Lower position size – by decreasing exposure level per trade and taking on less trade volume; 2) Lowering the number of points a trader is willing to lose . Traders can reduce their risk per trade. When using these tools simultaneously or separately, the chances of risk becomes lowered considerably, and successes will be on the up-side.

Why Low-risk is King?

Traders’ philosophy is that first and foremost, we are responsible for the assets that we bring from home. We should be respectful and appreciate our assets so much so that we should secure them. As low as our risk is, so is the potential of our profit. There is a common claim that when we trade low risk – we land up taking a small profit. However, when traders are trading at low risk, they can trade over and over again without “traders” remorse. It is a long term profession, it is ongoing, and we can take tight profits from it over and over again.

When we plant the seeds of our account, we should feed it with the correct amount of food and water. Something grows – something crisp, something green ($$$$) and something fruitful. It multiplies. But for that, we need patience and low-risk trading. We should increase our account capital proportionally and responsibly over time too.

Can We Trade Low-risk and still Win Massively?

The 5%ers is a fund that encourages their traders to take low-risk trades with proportional profits. But there are rewards for this: milestone targets are at 10% net gain, and when trader reach targets, they receive 100% growth.

The Key to Controlling Your Risks

All traders can maintain levels of low-risk trading by using any trading strategies. To lower our risk by cutting the points is less flexible, especially considering if we are trading accurately according to our trading strategy plan! Because, if we see the way the market behaves according to price action, reducing the points that we risk is ignoring the price of the price action. In turn, if we ignore the way that price behaves, well then, we may find ourselves busted many times. So we would not advise changing that. For changing position size, we can cut as low as necessary and continue trading by the market profile or status that we trade accordingly. For example, Alan’s trading performance provides him with a 25% drawdown, and The 5%ers require a 4-5% drawdown. All Alan needs to do to match this, is cut his position size by the right proportion to meet 4% or less. If Alan cuts by 6%, he will be less than 4% as well as safe and able to maintain his strategy with no risk and The 5%ers will reward Alan reaches his target.

Final Thoughts

Trading by taking low risk, will guard our base resource and allow us to trade more comfortably with less stressing over potential and significant losses, It requires more patience for collecting smaller profits, but over time it rewards us with trading confidence and long-lasting trading career. Sometimes it perhaps urges someone to wish there was a way to hold the stick at both ends.

Remember, trading is a career; we are here to stay! Over-speeding is too risky in the trading business. Be a low-risk trader but grow fast.

The 5%ers has the fastest growing program in the industry and reward their traders with outstanding growth programs, especially for those who risk low.

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