Risk Management In Forex Trading

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Risk Management Tips for Forex Trading

In this article we will discuss risk management in forex trading. Like other businesses, forex trading does not escape the name of risk. I personally always encourage new traders to minimize risks when they start trading. Below are some tips for managing risk. I hope this helps.

First (and most important ) : Don’t use “Hot Money

Never use money that you can’t have when you lose. Sometimes traders like to ignore this, and feel bad things won’t happen to him. But like it or not, trading with “hot” money will still affect your trading performance. Believe me.

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If you use money that you can’t relate to, there will be feelings of anxiety, the mind becomes chaotic and irrational. If that happens to you, then mentally you have already lost, you will lose in a landslide manner. This is a reality, or at least the possibility of your loss will be very significant (loss of 60 percent of capital or more).

Second: Don’t expect to get a “Jackpot”

The second most important thing is don’t expect you to get the jackpot tonight. Start with small lots and adjust to your capital. Make a secure transaction. No need to make large percentages every day. Remember, achieving profits consistently is far more important than making multiple profits.

Third thing: Use Stop Loss

Use stop loss correctly. Prices don’t always move in the direction you expect, so you need a safety net to stop losses. The trick is to install stop-loss in a place that is sure to touch the price if your trading assumption is completely wrong. Stop loss is like an emergency door and must be executed when your position is clearly wrong.

Conclusion

Trade with the money that you can relinquish in the event of the worst scenario, trading with a lot size that makes sense, and controlling risk with a stop loss will minimize the catastrophe that might occur.

The tips above will not prevent you from losing money, but at least this method gives you the opportunity to survive. Too many traders take a wild approach to trading that sometimes works for a while, and remembers no perfect system. When a disability in the trading system appears, the result is fatal.

Rain removes a day’s drought a year, the work of a year is lost in a day. Do you want it like that?

author
Forex4Live.com is a forex trading system website that started to be published since 2011 and has been used by thousands of traders around the world. The system is very simple and accurate, priced at $ 167 for a lifetime membership with no monthly fees or hidden fees. Our team created this system by testing thousands of indicators then selecting 23 indicators and combining them into one great trading system.
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