When trading, a Forex Forex investor can double capital, and risk not only losing potential income but also the money invested. Deviation from the average of results expected to determine investor risk in financial markets.
This type of deviation can provide a large advantage or loss.
Risk management financial offers no guarantee of success in trading but collects important parts in trading. Every currency operation is a risk. That is why the use of management methods can reduce potential losses.
- Determination of stop-orders;
- Investment in capital shares;
- Trading trend online;
- Emotional management.
Risk management methods are used after opening positions. The main risk management method is the determination of orders that withstand losses.
Stop loss (literally means stop loss) – is a point where a trader exits the market to avoid a dangerous situation. You must specify a stop-loss when opening a position to avoid loss.
There are several types of Stop signals :
An initial stop signal – determines the amount of deposit or interest rate where the trader is ready to lose. When the price moves towards this point and reaches it, the fixed level position of the trader approaches, and does not exceed the predetermined losses of the trader.
A “trailing” stop signal – is when the price moves towards a position, and the signal stop is determined afterwards, according to the trader’s choice. If the direction changes, and the price reaches the signal, the trader exits the market and has the potential to make a profit (depending on the price when the movement starts).
Profit dismantling – is when pure profits have been obtained, and the position has been closed.
Stop signals at times – that is when the market is not able to get the expected profit at a time, the position is closed.