Risk Management

Forex risk management:

The forex market behaves differently from other markets. Forex market cannot be controlled by any partaker. This market is the fastest and biggest in the financial world, but just like any other speculative business, there are chances for a higher profits as well as higher losses. The unpredictable nature of currencies is what attracts the investors to trade and invest in this market.

You need to ask yourself: “How much can I afford to lose?”

Some risk management issues you can come across:
-Lost deposits
-Volatile markets offering profit opportunities
-Delayed confirmation of deposits
-Unexpected corrections in currency exchange rates

Close your positions with take profit (TP) feature
This allows the traders to exit the market with a pre-determined profit target.
If you are in a sell position then you will need to place the TP under the current market price.
If you are in a buy position then you will need to place the TP above the current market price.

Take control of your risks with stop loss (SL)
This allows the traders to exit the market with a pre-determined profit target.
If you are in a sell position then you will need to place the SL above the current market price.
If you are in a buy position then you will need to place the SL under the current market price.

Golden rules for forex:

In a bullish market, be a buyer and in a bearish market be a seller.
If you go against the market you will need to be ready to lose.

One of the most important rules of risk management in Forex market, is that you should never risk more than you can afford to lose.

Successful traders need to have the ability to control their emotions.

Those who have a stubborn nature don’t tend to perform well in the Forex market.

The following tips can save you a few dollars:

Once you find the most suitable trading style. You should never break these rules below:

-Use stop-loss and never extend them.

-“Do not keep all your eggs in the same basket”. Do not risk all your money on one trade.
You can even use sub accounts to separate your capital.

-The trend is your friend. Go with the trend not against it.

-Never risk more than 1-5% on 1 trade. You can see an example table for risking 1, 2, 5, 10, 20% from a 10.000 dollar account.

-Never stop learning!

QEForex Team