Once again we have our attention in one of our articles and specifically on How to manage risk when trading in Forex.
It must be clear that there is nothing in the world that allows everything to be 100 percent perfect in the world of trading, nor a way to avoid that there are occasions where the operations that are made end up generating losses, sooner or later happens, where we are safer, even there can be failure at least sometimes, the world of Forex will not be exempt from going through this situation, in this article we will put the necessary things to know about How to manage risk when trading in Forex,
What is risk management?
It is that base by means of strategies calculations of the risk that can be run at the time of making a transaction, there are calculations between 12 percent to 5 percent in which the success rate is, this proven by a system and other additional that can be taken into account, in which circumstances there is greater risk is something that has brought discussions, in Forex, will be our question, because we want to know how to manage the risk when trading in Forex, for this we must follow the following content carefully to see what it will bring us.
How to manage the risk when trading in Forex?
There is no perfection in Forex, a human, computer, signal or somehow know that a trade can become 100 percent correct in time, certainly if we can do some testing and optimization to make it possible with old data that is correct, but everything is unpredictable in the foreign exchange market, sometimes there are systems and signals that can help in many opportunities to be correct operations, only that at some point it can fail and it is good to know how to manage risk when trading in Forex, by not risking much you can not win much, is the thought of most in the form of complaint that goes against managing risk when trading in Forex, if it is true in some way, you can not trade without money in the Forex and more if you want to win, to get to risk too much and there is a gap in price is possible to lose all the money and even end up owing to our broker.
We have in our account $10,000, we risk $5,000 with the opportunity to win $5,000, if we can be positive we will reach $15,000, now it's nice like that but what if the result is the opposite, we will have only $5,000, now if we continue in the same way risking half of our balance and 99 percent has the system, it is negative again, we will have $2,500 left, This means that in order to get back to where we started we have to do the 4 times, if we fail again we will be left with $1250, which will go from 4 to 5 perfect gusts needed now, once we have fallen so much I think it is difficult to think that this method of trading could be trusted, even for a Forex, this is a clear way to manage risk when trading Forex.
In this example let's now say that we will use the maximum end of the recommendations to manage risk when trading Forex and in these is 5 percent of our account balance of $10,000 per trade we make, we will use 1:1, which represents a risk of 500$ in the first occasion of trading and we will gain 500$, if it turns out to be negative we will be 9500$, which means that we will have to lose in many more opportunities so that our balance is reduced to half and even to arrive at 1250$ of the previous example, certainly it is more complicated that our gains are higher and faster, the positive thing of this is that not everything will be risking in this Forex, where a single operation could leave us in loss difficult to recover, this example is safer in managing the risk when trading in Forex.
What else should we consider in order to manage the risk of Forex trading?
It should be noted that if you have not tried for a long time, managing risk in Forex trading, it is not recommended to take the risk of half of the balance you have in a single trade, even if you have tried enough it is good to go cautiously increasing the size in each trade, it has to be at our discretion and analyze enough before making the Forex and if our desire is to try something new, a demo account will be the best option, it is true that the accounts of this type will be filled faster and have little or no slippage, quite the opposite of a real account, which index in the reduction of possible gains, if it is well what is seen in the test, let's do it in the real and with the lowest possible amounts is that we must trade, to know the operation of our broker in the trade.
Forex and the daily trading signals that exist in the FPA have an example of the differences that exist from demo and live accounts, in a demo account is not difficult to capture a news spike, now for the case of a real account, we have to complete all orders perfectly if it is to capture the news spike by even the best broker, which means that even brokers prohibit the exchange of news, if you try to make a profit from this, you will lose it by being confiscated, if you lose money a news Forex, there are no refunds, here you have to know how to manage the risk when trading Forex.
It is possible that if we use for a long time the signals of Forex or in some other system, and we change it for one that allows us to be comfortable, we can ask in the same way that we did it to manage the risk when trading in Forex, now we will do it with this new system to the signals support personnel, which should have the sufficient knowledge of the risk for this system, it is necessary to emphasize that in spite of what they tell us, we cannot exceed our maximum personal risk.
A historical record of the gains will be important to keep in mind, this for a Forex signal service or any system, trading room or trading method, where the actual results will be different.
It is easy that we can establish the risk that it can represent with the majority of brokers, only that in each operation the stoploss must be established, managing the risk when trading in Forex can be done just like in any system, the stoploss will be determined according to our negotiation method, we must calculate the maximum that we can lose in an operation, our broker if it allows us to operate with the lowest amount exceeds our maximum risk we can omit the Forex or simply look for a broker that if it corresponds to our amounts.
Where the stoploss of our Forex is established, we have that some brokers are better to close our order, in comparison there are others that have a bad slip and perform the Forex at a bad price for anyone, so we must manage the risk when trading in Forex in order to compensate for the possible loss that the landslide would bring us, so a better runner would have to look.
It must be considered that if we leave a Forex open, once the New York business session comes to an end on Friday afternoon, when the Tokyo market opens a price gap is possible, in these circumstances many Brokers do not pay attention to the stoploss, that if the gaps in this is lost more than planned, where the price will be even more against, so it is important to understand managing risk when trading in Forex, market dynamics, methods of our broker, before the market closes I think we should close all Forex and open them on Sunday when the market opens.
It is recommended that you start with a combination of backtesting and with a demo account to prove, nothing to publish live, you have to consider that the coin tosses are accurate in half the time, it will not be difficult to make face or cross of 3 to 4 times in a row, having the confidence of the method we can perform Forex live exchanging money, to be sure of the operation of real market conditions with our broker, but we must always manage the risk when trading in Forex, so as not to exceed of the maximum amount per operation, we can increase, highlighting that even the best system fails and surely.
We must keep in mind that it will be possible for us to have considerable gains if in most cases we carry out some Forex Trading without considering the risk management when trading in Forex, we must first learn to avoid losing as little as possible.
In this way we finished this explanation of the Forex and that we had specifically How to manage the risk when trading in Forex, we hope that the content is understood and the necessary utility is provided.
Other Articles Related
Forex: What is leverage 1 100?Forex: What is the difference of Forex and Binary Options?Forex: How to succeed using scalpingForex: How is a PIP calculated in Forex?Forex: What is the scalping method?Forex: What is a Pip in Forex?Forex strategies: How to get 30 Pips a day in ForexForex: How are Pips counted in Forex?Forex: how does Forex work?Personal finance: How to manage my finances efficientlyForex Trading: Leverage Policies of a Forex BrokerForex Trading: What is an automatic Trading Robot?ForeForex Trading: Manage risk when trading ForexForex: How is Forex's broker's trading platformForex Trading: Is Forex a broker or a dealer?Forex Trading: How to know which is the best automatic trading robotForex Trading: do Automatic Trading Robots work?Forex Trading: Commission Structures and Costs in the Forex MarketForex: What countries have regulations for Forex?Forex: What is and how is a capitalization made in Forex?