Knowing how much of your capital to take risks at one time or one day in forex trading is the most basic thing in forex trading risk management techniques. Actually, this is not difficult you just need discipline and want to learn! Maybe you should take the time to think about this clearly because it is one of the most important things you should know about forex trading.
In general, a good rule regarding risk management in forex trading is to risk less than 2 percent of all your accounts in one single trade. Even if you trade on a demo account, this is very important because you need to be accustomed to taking the risk of small bits at a time. Of course, when you first start trading directly, you can risk less than 2 percent per trade.
Why did you risk less than 2 percent of your equity per trade?
Why would you risk less than 2 percent of your equity per trade if you have a great trading strategy that always produces very good results? This question often descends many beginner traders who are euphoric often win in trading. After all, if you risk 5 or 10 percent per trade, wouldn't you be able to make profits faster! You can imagine being able to profit a lot for an exotic vacation, buy an expensive car, make a better life, etc.
This is the wrong mindset. Forex trading is about probability. There is a classic mathematical formula called the Risk of Ruin Formula that uses different variables (win ratio, percentage of risky equity, etc.) to calculate forex trading strategy opportunities under certain conditions that can risk eroding your entire account balance.
To keep it profitable in forex trading, we get to the most important points revealed by this one formula, which are: "A great trading strategy can erode the balance in your trading account if it is played with a size that is too large. For example, to take a 10% risk from your trading account at one trading session is too risky (ideally only 2%) and even with a strategy that produces a win ratio of 60% (at a 1: 1 reward-to-risk ratio), you actually have good potential on this occasion to inflate the value of your account portfolio. "
On the other hand, if you use the same strategy and the risk is less than two percent per trading session, your chances of suffering losses can be ignored. With a risk of less than 1 percent, for practical purposes, reduce your chances of experiencing a total lost risk.
What are the professional traders' first priorities in risk management?
Both beginners and professional forex managers will first pay attention to this risk management concept, before even thinking about making a profit. Is risk management your first priority?
The basic concept of risk management in forex trading: "if you take a one percent risk per trade but open 30 trades simultaneously, it might negate your risk management because your total exposure is too high and you might have a 'same-side' trade running on correlated currency pairs. "
If you want to be able to last long in the forex trading session in the long run, proper risk management is a must!
After risk management, the next step is to control your emotions
You might think that you are tough enough and more than capable of following a trading plan and staying calm under stressful conditions, but think about something else that could have happened psychologically. Say you have a brilliant trading strategy that you have retested and tested a number of times in the future which resulted in a win ratio of more than 65%.
And let's say you risk one percent of your trading account per other trade. You have a family to watch out for and even if you trade with the money you have prepared (meaning not monthly spending money), you actually have high expectations for your capital to get even greater.
Now let's say this trading strategy takes you through account withdrawals by 32%. Will you be able to withstand the emotional and psychological pressure of such a large withdrawal? Remember, you have other people who need to control your performance and emotions too and dare to say "You have to be tough enough to trade like a professional trader."
Important points in forex trading risk management
The important point in forex trading risk management here is that you must be tough enough to trade like a professional. Trade is a war and you need the attitude and discipline of a soldier to conquer the market. The impact of losing trade on human psychology is much stronger than the trade won, believe it or not.
Even with a perfect trading strategy, you must be prepared to face losses and manage your emotions to achieve your goals. One of the most important characteristics of successful forex traders is the ability to bear trading losses.
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Can the Autopilot Trading Robot System Work in Accordance with the Realities of the Desired Conditions?
Does the forex autopilot trading robot system work well for beginners? In fact, many also claim that the system works much better than ordinary people in the fast-moving forex market. Currency trading is usually characterized by complicated technical analysis involving various mysterious indicators.
This does not provide obstacles for experienced forex traders. However, many forex traders prefer to add their own trading execution capabilities by using sophisticated software such as autopilot trading robots.
For all of us, forex trading software acts as a risk guard to ensure that we are not totally lost in trading positions due to misdirection. The best software requires a robot that can guard your position with caution even when you are away from the computer or gadget though.
Emotions often prove to be the main enemy of forex traders. Fear can hamper "buy" action when certain currencies plummet. Conversely, greed with emotion always pushes you to force a "buy" position even though there is a big risk of "loss" due to late "sell" or selling.
Automation with the autopilot trading robot allows you to avoid these conditions. You can be separated from the emergence of emotions that are often counterproductive to get better results in forex trading.
Foreign currency trading is international, which means markets open at various times throughout the world. One can choose their hours from morning to late at night. Forex is open 24 hours.
A professional TRADER who has been trading profit for decades is not difficult. But it will still carry out routine activities such as: Analyzing the Market, Conducting Buy & Sell Execution, Managing fund security in trading.
The easiest way to trade forex is using AUTOPILOT ROBOT. This robot is perfect for those of you who want to get a CONSISTENT Profit, even for beginners.
This robot never sleeps and can run your trade no matter the time of day. You can be on the golf course, the beach or outside the city, but your robot will work hard at home constantly reading the latest quotes and crosses throughout the forex market.
With your predetermined trading strategy and risk tolerance, this robot is able to identify the right opportunity and can get you in and out of position completely by itself.
As with all potentially profitable businesses, forex can carry the risk of loss as well. Many are trying to limit this risk by controlling through this trading robot. Automatic forex trading allows very rational robots to ensure you stay within risk parameters that you can control.