Besides knowing about FX in general, another way to control your risk is to manage your trades without emotion. We know we should only trade with money we can afford to lose, but when we are losing (and winning) oftentimes we let our emotions get involved in our trading decisions. Doing so can increase your risks considerably so don’t let this happen!
Instead, determine a percentage you are willing to risk on each trade and stick with it. Some traders are willing to risk up to 3% or more on every trade. This may not seem like a lot to risk, but 3% of $100,000 is $3,000. When you have multiple trades open, it’s important to stay on top of the percentage that you have at risk because multiple losses can be devastating and one big loss can wipe out all of your other profits.
Most forex brokers provide the ability to set stop losses. You should determine your stop loss at the time when you enter a trade, and set the stop loss in the trading program. When your stop loss is reached, your trade will be automatically closed out, limiting your potential loss.
It is important to take the volatility of the market into account when determining your stop loss amount. If you set it too large, you could lose a significant amount of capital before the stop loss is triggered. If you set it too small, the random ups and downs in the market will mean that your position is being closed early, incurring additional transaction costs.
ForexGen provides a unique online trading experience based on our intelligent online Forex trading package, the ForexGen Trading Station, including the best online trading system.
No comments:
Post a Comment