What is risk management?

Forex risk can be discussed in 3 major points:

❏ Exposure = how many lots you risk when you open a position?

❏ Duration = For How much time you open a position?❏ Frequency = The volatility level of the market.

Step 1

Don’t trade big lots!

You should trade small lots especially if you are a beginner at Forex trading…Or if you have not a significant capital to invest…

Step 2

Don’t take large risk

Taking large risk means that you are going to lose your money quickly…… The market is not merciful

Step 3

Do not enter a trade if you are in doubt

if you are not sure or you are in doubt…Do not enter the trade…Otherwise, if you have entered a trade and it doesn’t behave like expected…Or you are confused…Get out immediately from the market!

Step 4

Do not over trade

You have to limit your trades in order to limit your losses…Grab just the profitable opportunities…And don’t let emotions control you…

Step 5

Place a stop loss every time you open a position!

The stop loss protects you to not lose all of your money when the Forex market reverses against you…Placing a stop loss limit your losses…The simple way to set your stop loss is to put it at the point that the price can not reach…

Step 6

Risk a specific % percentage of your account value on every trade you make

In order limit the risk on every trade you make…You need to risk 1-2% of your account value…

Step 7

Reduce risk on everysuccessful trade you make

You can reduce the risk of a successful trade by tightening your stop…If the price moves in your favor you should tighten your stop…

Step 8

Know the myth about the win/loss ratio

The win/loss ratio is used to rate traders…You can make money even if you have a bad win/loss ratio…

Step 9

Know when to close a trade

there are five reasons to close a position:Forecasting a Market changeFor a long time, your position displays a loss ( Forex market amend its direction on

three days so if your trade show a loss for more than three days, just close it )You have technical problems on your platform or on your computer.You suffer from emotional crisis.Bad news about the currency you trade are pending.

Step 10

Don’t go intensive!

If you sell EUR/USD and you buy GBP/EUR you must know that you have sold 2 lots of the same currency(EUR)…Be aware to not buy or sell multiple times the same currency…

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