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  1. #1
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    Risk Management in Forex Trading.

    Risk Management in Forex Trading

    Risk Management in Forex Trading is a term that is very important in trading world and at the same time is a major point which mostly gets out of focus when traders start real time trading. The first and foremost difference in trading a demo and a real account is the human psychology. The point is here that how to overcome this problem?
    The best way to go is to practice hard and I strongly recommend to practice for at least 3 months as this time period will cover up learning the different time frames as well during that time; a trader can experience all effects of fundamental news and attributes.
    Devise and test a risk management strategy over that period without changing it, no matter it is not providing any profits, just keep using it and analyze your strategy after 3 months of so that you can average out all the good and bad runs you had during that time.
    Now coming to other part, i.e., devising a good risk management strategy. Originally the market used to not be for the small traders as brokers only allow standard lots or micro lots. Therefore if you are trading a small account, you are risking too much for a trade. In the recent years, there are introduction of new brokers that allows you to trade even 1 unit. This way, you can still apply the same proper risk management strategy or else your account will be blown before you know it.
    To devise a risk management plan, first of all figure out what is the risk percentage per trade? For example, how much percentage of the account can be lost in the worst case of a trade?
    Usually good traders make 1-2% as a mark to risk per trade. Next you have to set a percentage % of how much can you lose in your forex account (your maximum drawdown). For example, if you lose 30% – 50% of your account using a system. You should stop trading altogether and reflect back on your system. Find out why is it not working and where to tweak it to improve your future trades.
    Once the maximum drawdown and the risk percentage per trade is defined, Always keep your stop fix and don’t extend it while you are winning trades.
    I have seen traders extending their stops in hope that the market will come back and they won’t have to face loss in that trade. Believe me, often I have seen traders getting them into this situation and loosing out all account. There will also be times when you will be just stopped out and market will reverse, even in those cases don’t get disappointed and keep following the same strategy.
    Therefore, even before any one starts trading, one has to devise a proper risk management. With a proper risk management system and combined with a good trading system, you are on the right track to success in forex trading.

    Ezekiel Chew
    Asia #1 Forex Mentor
    A complete professional forex trading system that even newbies can apply instantly.
    Asia Forex Mentor's forex course is now FREE!

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  3. #2
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    absolutely right with what you have write is very important that risk management in forex trading, I have read articles about risks management the effect of which makes us cautious in forex trading. and certainly can minimize losses

  4. #3
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    Quote Originally Posted by kivanger View Post
    absolutely right with what you have write is very important that risk management in forex trading, I have read articles about risks management the effect of which makes us cautious in forex trading. and certainly can minimize losses
    Risk management is how much we really need to start trading. many start trading but they don't know how much they need. simply because theirs a minimum it does not mean that amount is enough to trade. that's why when we put SL we don't know what is the right amount for SL simply because we don't know money management.

  5. #4
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    Risk management is a major factor to watch out for when it comes to trading online in Forex. A trader should watch out the risk factor and try to reduce it to the greatest extent which is possible. For example, a trade taken with a well planned strategy and with a tight SL and TP though technical analysis has a very low risk then other positions taken without any analysis.

  6. #5
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    Quote Originally Posted by adnan007 View Post
    Risk management is a major factor to watch out for when it comes to trading online in Forex. A trader should watch out the risk factor and try to reduce it to the greatest extent which is possible. For example, a trade taken with a well planned strategy and with a tight SL and TP though technical analysis has a very low risk then other positions taken without any analysis.
    Is that risk management all about? risk management is different. what you describe above is forex trading strategy. Risk management involve the pair that you are trading. the volatility of that pair and the amount of money you have. Its not still going to do with the details of planning and putting SL and TP. its a job of trading strategy. As you can see theirs risk management, money management and forex trading strategy each one has its owns specific roles.

  7. #6
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    The risk management is much more important than any best indicator we have or technical strategy we have on Forex trading here. Because with the good Risk management, we know how to handle the margin account, and not to waste the money on our account here.

  8. #7
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    Quote Originally Posted by luke1 View Post
    The risk management is much more important than any best indicator we have or technical strategy we have on Forex trading here. Because with the good Risk management, we know how to handle the margin account, and not to waste the money on our account here.
    Totally true. This is the main reason why some do loss money in forex. they have the right forex trading strategy but they don't have right risk management and they loss. Its like you have the best fighter jet and you still loss simply because you don't know that your fuel is low. lols.
    In handling margin account you need to check three things. capital, leverage and lot size.

  9. #8
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    An effective capital management strategy is an essential attribute of the financial markets. Without high-quality money management it is impossible to stay on the market of forex trading. For successful forex online trading, the player must be able to identify risks in each transaction. This will not only save money, but also multiply it.




    http://www.forex-metal.com/affiliate/46199/2

  10. #9
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    When you will starts your forex business you need to learn more and more about forex. Actually now a days forex is a good and legal business but there are also risk too. So we need to learn more and more and then we can earn more and more.

  11. #10
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    Basically Forex business is a good place for people to star with. People must learn more about forex trades and start earning in it. Search Online for learning more about it.

  12. #11
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    Getting freaked may be the first thing that might happen to new traders .But be patient and keep on going .And soon you will find out how things work round here.

  13. #12
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    Risk management so that it could be done well indeed requires patience as well as from traders, that is able to carry out all handling plan the risk according to the purpose of trading with minimal risk and the profit
    Your trading journey starts at FXB Trading

  14. #13
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    Quote Originally Posted by Irina View Post
    Risk management so that it could be done well indeed requires patience as well as from traders, that is able to carry out all handling plan the risk according to the purpose of trading with minimal risk and the profit
    That risk is the first thing we have to manage well, because the risk is very large. So traders to always be in the level of good trading skills where to we will be how to work good trading on the run by being able to risk can we manage so that profits will be consistent

  15. #14
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    You can learn a very good management strategy from freshforex. Even better, you can learn new strategies that take into account various risk managements strategies.

  16. #15
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    Quote Originally Posted by pipmtw View Post
    You can learn a very good management strategy from freshforex. Even better, you can learn new strategies that take into account various risk managements strategies.
    true! I have been using their facilities, webinar, etc. to learn these and also applying risk management into my trading. do you also know that FreshForex won the award of best trading experience?

  17. #16
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    Quote Originally Posted by Rikrish Shrestha View Post
    Getting freaked may be the first thing that might happen to new traders .But be patient and keep on going .And soon you will find out how things work round here.
    True. Having emotional difficulties when you are new is not uncommon and you can face them. There is nothing to be embarrassed about. Only learn from them and move ahead. One thing to remember is there will always be risks so learn how to manage it.

  18. #17
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    While measuring the market impact of government is both difficult and outside the core competency of many investors, the opportunities affected are often simply too valuable to be the ignore.

  19. #18
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    Where we really should be able to manage risk as well as possible, with the risk we can manage then we will be able to run this forex trading is able to generate its profits. That trader is trying to keep on improving the ability of better trading so that we can trade with more leverage and understand how to manage good and true trading

  20. #19
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    Trader must have good trading management, risk or money management. Using stop loss and take profit can be way to minimize the risk in forex, protect our fund from losing money in bigger amount. We also need to try to maximize forex analysis to make us get maximal result.

  21. #20
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    Risk management is indeed vital! Forex trading is risky, you can go broke in such a short time period. Manage your risks and money properly.

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