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Manage the Risks in Your Forex Trades


As we keep on telling everyone who wants to try trading on an Ideal Trading Platform, the foreign exchange market is inherently and perpetually risky. However, we don’t discourage you to stop investing in this lucrative market. What we got are some advice that you can use to minimize and manage the risks in your forex trades.

Never Risk Something You Cannot Afford to Lose

This is the first and foremost rule that every trader in the foreign exchange market should follow, as gathered from expert reviews like FXempire Forex Review.

Many traders know the dangers and cheap thrills that accompany the act of risking something important—something they can’t lose. They go for the excitement and the nervousness. Sometimes, they even think that losing cannot happen to them. The truth is it will tremendously affect your trading performance.

If you are more of gambling than methodically trading, you stand to lose significant portions of your wealth. You could also lose money that was not intended for trading in the first place. And when you are in this kind of situation, or if it already happened to you, your ability to decide for your trades intelligently will certainly be affected. You’d be bound to make many mistakes.

Start from the Ground Up

Starting small is something every trader should experience, if only to make them realize that it’s the smartest way to start a trading career.

When you start small, you can make your trade size appropriate to your account balance. In the US, you are allowed to trade at as much as 50:1. However, that doesn’t mean that you should start that big. You just have to trade what you can safely trade.

You shouldn’t be opening $100,000 trades using only a $2000 account. You don’t have to obtain humongous percentages every day on your trades. What matters more is the ability of your trade and strategy to consistently give you profits.

Use Stop Loss Orders

Stop loss orders, as the name suggests, are orders that stops you from losing more than a predetermined amount of money.

There will be many, many times when your trades turn around and bite you, resulting to huge losses if not acted upon accordingly. What you can do is to place stop loss orders properly. Place it in a spot where you know your trade will reach once you prove your trading tactic wrong.

More on Stop Loss Orders

You can think of stop loss orders as your emergency door, where you can exit right away when things get frisky. The thing about stop loss orders is that traders think of placing it very, very close to their trade’s current price. If they do that, the price will surely hit it. The loss lies in the wasted opportunity to gain something more because of a poorly placed, poorly times stop loss order.

Bottom Line

The worst nightmare of foreign exchange traders is losing everything they have in a trade. To prevent that disaster, we suggest you strictly follow our advice above. It’s more like taking our word as gospel there, but those are proven effective by a lot of traders when it comes to managing their risks.

Keeping risks low will help you last the game longer than any other traders.

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