Idea Of Risk Management In Forex

[moonchild]

Whether you're old or new to forex trading the idea of risk management is not new to you, you have read or even watch some videos that teaches this concept but even with all of the enlightenment surrounding this topic many people blow their accounts every single day.

My assessment is, most people that failed to incorporate risk management into their trading, started out with a small capital which makes it very difficult to manage, imagine you started trading with an account of 50$ and your risk management tutor told you to risk one percent of your account for each trade, how much do you think is the one percent of 50$ to start with, it's not possible at all.

The idea behind risking 1% is that, it will maximize your wins and minimize your losses, if you risk just one percent of your account for each trade, it will take you 100 trades before you can blow your account and hundred is quite a huge number and I don't think even a beginner can take one hundred trade and fail, so you see it's a numbers game and risk management is very important.

For example if you have a 1000$account 10% would be 10$ which is okay per trade using the lowest lot size. Your trade will have enough room to breath because your stop loss will a bit far.

 

[Mary Frederick]

The technique through which risk of trading is handled is called risk management. There are many issues that have direct and indirect control on risk. So, better risk management strategy is to take care of all those factors and make the perfect decision that can take you out of risk.

 

[Setho]

The thing about the forex market is that it is a very volatile industry and as such you can be able to make a lot of money while also lose a lot of money in a more distant than. This is why people have been able to bring out some measures that is aimed at making you not to lose so much money whenever you go wrong and that is what is known as a risk management .

The most important thing about risk management is that you should always do research and make sure that you are having a particular reason why you are opening every particular position .

The second principle of risk management is that you should always know when to enter a trade which is known as entry trigger
and went to exit a trade which is known as the invalidation point. At some point you can choose to put your stop loss at your invalidation point where the market is automatically going to conserve your losses whenever price reaches that particular range.

You should also have very good trade management activities which is your ability to be able to move your stop losses or to increase your position depending on how prices change it.